California firm is driven by cost Calif. firm studies ownership of cars.

February 24, 1992|By Matt Nauman | Matt Nauman,Knight-Ridder News Service

SAN JOSE, Calif. -- Pete Levy, who spends almost all of his waking hours thinking about new cars, drives around town in a rather ordinary 6-year-old Toyota Celica with 50,000 miles on the odometer.

As president of IntelliChoice, a San Jose company that compares the ownership costs of new cars over five years and publishes the results, Mr. Levy spends more time behind the computer than behind the wheel.

"What we pride ourselves on is that we don't do the subjective," said Mr. Levy, 33. "We don't say it felt great, it smelled great, it handled the corners great."

For Mr. Levy and his staff of 20 at IntelliChoice, cars are something to be evaluated, compared, broken down into components and then put back together -- on paper -- five years later.

That, in simplest terms, is what IntelliChoice does. It takes a new car -- any car, every car -- and tells you what it'll cost to own and operate it for five years. Anyone can tell you that the 1991 four-door Ford Escort LX has a list price that's $600 cheaper than a four-door 1991 Honda Civic DX. IntelliChoice is the only one that can tell you that you'll spend $2,000 less operating the Civic for five years.

By taking a car's purchase price and then calculating its depreciation, financing, insurance, state fees, fuel costs, maintenance and repairs over five years, IntelliChoice can tell you whether the car is a good value compared with other vehicles in its class.

After gathering this information from auto manufacturers, the federal government, other companies and through its own research, IntelliChoice sells it through a variety of publications. It produces two books each year, "The Complete Car Cost Guide" and "The Complete Small Truck Cost Guide." Libraries, credit unions, banks and individuals are among its customers. The 1992 versions were published last week.

Mr. Levy moved to the West Coast 10 years ago after getting his master's degree in business from Harvard University. He spent a couple of years at Apple Computer Inc., but felt the tug of entrepreneurial instincts shortly after the Macintosh computer was released.

"The whole world didn't understand what it was," Mr. Levy said, but as an insider he knew the truth. "It's just amazing what this technology can do in terms of placing information on a piece of paper."

During that time, he was in the market for a new car. He had narrowed his choices to two or three models and then went looking to find which one would be the cheapest to own over time.

And he couldn't find an answer.

From that spark of an idea in 1984 through the publication of its first car-cost comparison guide in 1987, IntelliChoice was more concept than a reality. There was no office, no publications and virtually no staff. Mr. Levy and a few other people did the research and tracked down sources of information.

That first publication -- Mr. Levy believes it was the first example of data-base publishing in the United States -- got some good reviews and had moderate sales.

In 1989 and 1990, the book was named as one of the best reference books of the year by Library Journal. Other publications, from USA Today to Road and Track magazine, began to take notice.

Over the last three years, IntelliChoice has added photos of cars, refined and improved its graphics, and seen itself getting quoted in car ads.

Somewhere along the way, however, Mr. Levy decided that a book -- especially one that sells for $39 -- was too limited.

"We help car shoppers by presenting information in ways that are best suited for a particular person, which for me could be a book, which for you could be a report, which for somebody else could be over the telephone or through a fax machine or on-line."

In 1991, IntelliChoice started selling pricing ($14.95) and cost-comparison ($19.95) reports. Readers of Money magazine as well as people who buy insurance from State Farm and USAA are among those who can get the reports. IntelliChoice also sells them directly to individuals.

The reports now account for three times as much money as books sales.

(Mr. Levy wouldn't say how many reports or books IntelliChoice sells or how much money it makes. The company first became profitable in 1991, he said. A USAA insurance spokesman said his company's customers buy 6,000 to 8,000 reports a month.

"I don't think we've not doubled in size every single year. In fact, we've much more than doubled in some years," Mr. Levy said.)

The books aren't sold in bookstores -- except at A Clean Well-Lighted Place for Books in Cupertino and Books Inc. in San Jose. IntelliChoice doesn't do any advertising. Instead, it relies on a toll-free phone number and word-of-mouth from people who have seen a copy in the library or at their credit union.

Future plans, Mr. Levy said, include ways to make information available more quickly, such as through computers or fax machines, and publishing consumer versions of its two books with condensed information and a $13-$14 price tag.

Many driving enthusiasts, such as loyal readers of Car & Driver and Motor Trend, don't find much about IntelliChoice products to meet their needs.

"To some people, car buying is an emotional thing," Mr. Levy said. "They say, 'I don't care what ownership costs are. I'm not going to buy for ownership cost. I'm going to buy a car that looks best.' "

Gary Borofsky, an occupational therapist in Hastings on Hudson, N.Y., recently bought a cost-comparison report through Money magazine.

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