Case Study: Designing A New Vehicle

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(1) INTRODUCTION: Given the scenario of replacing the existing vehicle by purchasing a new vehicle or a used vehicle, we have analysed 4 financing options. This report contains the assumptions made, the variables taken into account, areas of judgement, relevant costs and the options chosen, other eclectic information considered for replacing the vehicle and concluding remarks of our decision with supporting information.

(2) VEHICLE PROFILE:

VEHICLE
SPECIFICATIONS
PRICE ($ AUD)
TOYOTA COROLLA
(Existing Car)
Model
1998

Trade-In: $ 4000/-

Engine
1.8L, MPi Delivery, 4-Cylinder, Petrol

Fuel Economy
8.0L/100km

Drive Type
FWD

Transmission
Manual

TOYOTA RAV-4
(New Car)

Model
CV - 2011

RRP : $ 30,990/-
FDA : $ 34,790/-

Engine
2.4L, VTT-i, 4-Cylinder, Petrol

Fuel Economy
8.4L/100km

Drive Type
4WD

Transmission
Automatic

NISSAN X-TRAIL
(Used Car)
Model
2003

RRP : $ 10,800/-
(excluding additional costs)

Engine
2.5L, Unleaded MPi, 4-Cylinder, Petrol

Kilometres
120,000 km

Fuel Economy
9.5L/100km

Drive Type
4WD

Transmission
Manual

(3) TEAM PROFILE:
MEMBER
Student Number
Profile
FROST, Rohan
3278499
SUBMITTING MEMBER
SHENOY, Ryan Luis
4106027
MEMBER - 1
CHEN, Chen
3928226
MEMBER - 2
JANGJAROEN, Waranon
3932916
MEMBER - 3

Responsibility Matrix:

(4) ASSUMPTIONS:
These are the ASSUMPTIONS to be considered while exploring the respective options:
1. Income: $ 3500/- AUD per week
2. New Job Profile: Project Site Manager
3. Previous Job Profile: Project Analysis Manager ($2200/week)
4. Marital Status: Married
5. Family Info: Wife, Two Kids
6. Lives in North Wollongong
7. Owns a house with a mortgage of $ 750/- AUD per week
7. Expenses: $ 500/- AUD per week
8. Car parking in a Garage (secure and locked)
9. Vehicle Maintenance Schedule is followed as per the vehicle hand book except during unexpected breakdowns.
10. Will own the purchased car for 5 years
11. Distance travelled per day - 150 km/day (on an average) - [From Wollongong to work site on the outskirts of Sydney].
12. Recreational activity: Outing with family every fortnight. Long family tours every 4 or 6 months.
NOTE: Consider any or all assumptions suitable or add any if required while exploring your tasks and options and writing.

(5) INFORMATION ON RELEVANT COSTS - AREAS OF JUDGEMENT **:
Following are the various parameters used in decision making regarding vehicle replacement analysis (Hartman, 1998):
a) Purchase Price: This is the procurement price of a new vehicle or also a used vehicle in this case. This information is available in the websites of vehicle companies, advertisements, etc.
b) Depreciation/Salvage Value: This is the estimated value of the vehicle at the end of its useful life. This information is available in various blue books available at local sources and online
c) Operating Costs: This is the running costs of the vehicle and depends upon the fuel efficiency, fuel costs and driving terrain.
d) Maintenance Costs: (i) Routine: These costs are defined in the vehicle manual as maintenance interval is mentioned in the manual with expected maintenance time over estimated prices. (ii) Unexpected: Difficult to define as these costs may arise due to vehicle failure or accidents, but estimates are done by insurance companies, car magazines depending upon driver statistics.
E) Financing Costs: These are the costs applicable while procuring a vehicle depending upon the terms of options like loans, leasing, financing, etc.
f) Insurance Costs: Insurance quotes are available through various insurance companies and can be got depending upon the type of vehicle and other factors.
g) Estimation of Inflation: Estimation can be done for single object or for all costs included, which is available through many
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