By on April 30, 2013

TTAC commentator Gannett writes:

This has now become an important question around our house: what’s the best/cheapest (not necessarily the same thing) way to drive 25,000 miles a year?

My wife commutes about 90 miles a day round-trip.  She has been driving a ’98 Crown Vic P71, but that’s getting to be about done.  I want to get her something newer. So I start looking around, and there’re a lot of choices.  But then I start running the numbers in my head.  25k miles a year.  That’s 100k miles every 4 years.  Holy crap.  By the time whatever-it-is is paid for it may be mostly used up.  Not good.

So now I’m in a quandary as to basic approach, and would appreciate the advice of you and the commenters.  Not about which car to buy, but what the buy/sell strategy should be.  Do we:

1)  Buy new or near-new and trade in 1/2/3/4/5 years (not fond of this as I hate initial depreciation, but I’ll listen).

2)  Buy an off-lease and trade in 1/2/3/4 years?

3)  Buy something 1/2/3/4/5 years old and run it into the ground?

4)  Buy something 1/2/3/4/5 years old and just keep it for one year?

5)  ??

Does the question make sense?  I’m trying to figure where in the vehicle’s lifetime to buy, and where to sell, to try and keep the capital cost per 25k miles, including depreciation, the lowest, but still keep reliability, etc., high.  Fuel prices are not really under consideration – there you pay for the comfort/performance you want.  I would probably want the sell-it mileage to not be more than 150k for reliability’s sake.

We’ve never dealt with this sort of annual mileage before (we moved out to “the country”) so this is unfamiliar territory.  I know other folks have this situation.  What to do?

Steve Says:

The smartest thing to do is expand your mileage expectations a bit.

Most cars these days with proper care will easily last over 200k, and a police interceptor like the one you have is often durable enough to get past the 300k mark. I have financed a lot of former police cars over the years and from my experiences, it’s easy to figure out why taxi companies use them in spite of the gas penalty.

They just don’t wear out and they take abuse better than nearly anything else out there. Even the new police cars don’t measure up to the Vic.

If you want to have a worry-free ownership then find a good independent mechanic and don’t cheap out on parts.

It’s that simple when it comes to these models.

If you’re still looking for a relative point where the depreciation is minimal and the longevity is respectable, I would say a 9 to 11 year old vehicle would be the ‘average’ sweet spot.

A rust free climate is a big help when buying the older aged vehicle. I bought two 03 models recently, an 03 Impala and an 04 Volvo XC70, and both of them will likely sell for about 15% of their new car price and I would roughly estimate that they have about 35% of their service life left.

But they are also both a bit over 150k. Five years ago the 8 year old vehicle with 100k miles was the sweet spot. Now for the same money, it’s somewhere around the 10 year mark with a spread between 135k and 165k on the mileage.

Sajeev Says:

I don’t believe people own a car perfectly suited to their pocketbooks, short term or long term.  Too simplistic. But this isn’t about owning a Camry and lusting for a Ferrari; this feeling is far, FAR more mundane.  The lure of newer Panther Love (5 year old Town Car vs. a beat up P71) or any scenario that surprises and delights is stronger than a strict budget for the next 8+ years of use.

Your eye will wander and you’ll think, “I coulda had this instead and not pay much more for it!” If we recommend a Corolla to replace the Crown Vic and you hate the seats after 6 months, will you keep it for long? Not likely. 

To avoid future email saying, “thanks for the advice guys but it was wrong, now I need a new car” I’m asking you to narrow down the parameters. The intangibles. The things that make us human beings, not robots! Get something you’ll actually like for this time period.  A car that, flaws intact, will still be interesting enough to avoid the lure of newer metal.  Panthers are good at that…if you actually like Panthers.

My gut is telling me to recommend a 2-3 year old Camry, Fusion, Accord, Altima or just about any other mainstream family sedan with a proven track record for reliability and (somewhat) low cost of ownership after 100,000 miles.  The Camry is kinda numb and isolating, so maybe that’s the best for someone who likes the ride of a Panther.  Again, if you actually like the ride of the Panther.

Catch my drift? Don’t even bother running the numbers until personal preferences are matched to test drives. 

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42 Comments on “New or Used? : The Blasphemy Of Accountancy Edition...”


  • avatar
    Truckducken

    As an occasional private party car seller, I’ve noticed that there seem to be two steep depreciation periods in a car’s lifetime. The obvious one is during the drive home from the dealership. The less obvious one is when the car gets too old for prospective buyers to get a loan. This typically seems to be at the 5-6 year mark. Thus my recommendation is an 05-07 Toyonda.

  • avatar

    I am trying a new experiment. In the past I have bought slightly used cars and driven them into the ground but at some point they become both unreliable and worthless. Our 1996 Acura Integra was bought new (my only new car)in 1995 and now has 312,000 kms on it, while the 2000 Mazda Millenia was bought used in 2002 and now has 210,000 kms. The Integra is fading away now but the Mazda is going strong. My wife desperately wanted a BMW so I just bought a 2009 328xi sedan with 50,000 kms on it that looks like new for her. Our plan is to drive it for four years and then replace it while it still has some value; I don’t want repair bills for an ancient BMW. Incidentally, the Acura cost much more to buy than the BMW!

  • avatar
    KixStart

    You don’t mention fuel costs. As compared to a 24mpg CV, a 44mpg Prius will save you $1500/year, at current fuel prices ($3.50 here). See if you can find a generously-equipped G2 Prius (’04-’09 models).

    • 0 avatar
      NormSV650

      Those years you could easily wipe out most of the savings/cost of the Prius with maintenance:

      http://priuschat.com/threads/2005-prius-241-000-miles-hybrid-battery-replacement-story.104985/

      • 0 avatar
        SherbornSean

        OK, so the Prius will cost you $1,500 to replace the battery once in the ehicle’s very long lifetime. But all the other maintenance/repair costs are far lower than a typical car,especialy a SV: brakes, tires and driveline wear-and-tear.

        Also, I’m not convinced a CV gets 24 MPG. At 18 MPG, the fuel savings alone approaches $3K/year, which would eat up the difference in depreciation very quickly.

        • 0 avatar
          NMGOM

          SherbornSean ….

          I’m not sure that you may not be simplifying things too much. Why?
          1) Battery replacement costs for Prius are nowhere near as low as $1500: try $2300** minimum;
          2) Tire-wear on any FWD car will be higher than a RWD car;
          3) Drive-line wear with any modern ICE car is no longer an issue;
          4) CV’s can get very good mileage: my friend’s old 2004 Honda CR-V gets 27.4 mpg on the highway, which is the commuting regime in the article.

          ** http://www.greencarreports.com/news/1077652_replacing-a-2001-toyota-prius-battery-pack-what-it-cost

          —————-

          • 0 avatar
            CJinSD

            1. The guy in the linked blog replaced his battery at 241,000 miles for $1,200 including a one year warranty on parts and labor.
            2. Tire wear on any 4,200 lb car will be higher than on any 3,000 lb car. You can buy tires that will last for 50K+ miles on the former and 80K+ miles on the latter, but if you ever really need to stop it will seem like false economy.
            3. Drive line wear is an issue on most ICE cars by 241,000 miles.
            4. I drove Panthers for 10s of thousands of miles without ever averaging 25 mpg for an entire tank. Highway runs to LA and back ranged from 20 to 23 mpg, depending on the age of the car.

          • 0 avatar
            SherbornSean

            NMGOM,
            We may have a wire crossed – I used CV as shorthand for a Crown Vic, i.e., Panther. Not sure why we are talking about Honda cute utes.

            My point is that if economics are the driver, you need to consider fuel economy in the mix.

          • 0 avatar
            KixStart

            NMGOM,

            1. Norm’s article is about a fellow who got a salvage part for $1200, installed, 1-year warranty. There’s rebuilders who will get you one for $1800. What’s the failure rate? So far as I know, it’s quite low. I’d rather drive around dependent on a Panasonic/Toyota battery than another Ford transmission.
            2. You’re kidding, right? Rotate your tires.
            3. Depends on the car.
            4. A Honda CR-V is not a CV. Not nearly.

            —-

            SherbornSean,

            Actually, Fuelly reports suggest fuel economy in the mid to high teens for the CV. However, you do see single tank fills that hit 24mpg. CJ also points out that I’m optimistic. I supposed that the OP’s wife would be doing mostly highway driving, so guessed she might be hitting 24mpg. If not, yeah, mileage could be muich, much worse.

            In fact, I was surprised that the OP didn’t mention fuel economy. 25K is a lot of driving and 25K even at 24MPG using $3.50 gas in that cop car is a lotta donuts but fuel economy didn’t seem to be on the radar.

            Another unanswered question would be, “Why is she driving a CV now?” Did the OP pick it out for her because he likes or trusts them? Elderly relative that worked for Ford left it to them? They got a smokin’ deal on it?

            If she’s driving the CV partly because she likes a big car (particularly, the ride help you get from a long wheelbase), then maybe a small car is a bad choice for her. On the other hand, if she’ll drive anything that pulls in her favorite radio station, that leaves a lot of latitude.

          • 0 avatar
            Scoutdude

            Sorry CJ but you are wrong about the tires. Put the same quality tire on both a Prius and a Panther and the Prius will eat them up at a much faster rate assuming both cars are in alignment, the tires rotated and kept at the proper inflation. Yes the Panther is heavier but it also uses larger tires designed for that weight, actually designed for more weight than they actually carry. The Prius on the other hand needs special XL load range tires that are at their weight limit at least on the LF. So all said and done and those 80K tires will be done at 60K on the Prius while they can go 90K on a Panther. Of course if you purchase tires with a mileage warranty the point is sort of moot. If ever there was a case for buying a tire with a 80K or more mileage warranty it is when the vehicle sees 25K per year.

            24 MPG is easily obtainable in a Panther that sees Hwy duty and is in good operating condition. Before we could only get E10 in the areas I travel in, my Panthers regularly returned 26+ MPG on hwy trips. With E10 it’s 24MPG. Average every day driving on the other hand is 19.5 MPG with E10 while 21 was the norm pre E10.

          • 0 avatar
            CJinSD

            The first generation Prius, the one that looked like an Echo, was under-tired. It was the one that required the 185/65T14 XL tires that had high prices and short tread life. When the 2nd generation cars came out, they went to 15 inch tires that are normal load range and well within their capabilities on a car the weight of a Prius.

            My mileage experience in the Panthers is all with California gas, which may be the worst in the nation. Undoubtedly, I’d have done better with real gasoline. E10 is another price we pay for ignorance.

          • 0 avatar
            NMGOM

            CJinSD, SherbornSean, and KixStart…

            I apologize, guys. I did get my wires crossed here somewhere, and did not read thoroughly. Corrections well taken….Need more sleep.

            ———–

          • 0 avatar
            KixStart

            NMGOM,

            An apology? On the Internet? I’m impressed. Your parents raised some seriously polite kids.

            :)

      • 0 avatar
        Thinkin...

        Oh please. The likeliness of needing to replace a Prius battery is no more or less than needing to replace an engine and/or transmission in another car. Both are rare, and cost about very roughly $2k to remedy. (In either case, a used battery/engine/transmission can be had well cheaper.)

        Not that your reference point had 241k miles on it. Many taxies have eclipsed 300k on the original batteries. In most states the battery is warranted for 8 years and 150k, so if you’re super battery-paranoid, just pick up a 2010 model with 50k and you’ll have four worry-free years and 100k of driving before you can sell/trade it.

        And saving $1500/year on gas is nothing to scoff at. That’s $6000 over four years, which would give you plenty of room to replace a battery. And Norm – if we’re talking maintenance, a Prius oil change interval is 10k and its brake pads last ~150k. So maintenance will be less than half of most other cars.

  • avatar
    NMGOM

    Don’t forget the safety benefit that comes with the Crown Vic. That car can take quite a hit and still survive, while protecting its occupants. If your wife is traveling 90 miles per day, there is also a comfort and security feeling she may miss if you got her a small “commuter car”. Sometimes pure finances are not the only measure of overall “economy”. Remember, “Happy Wife / Happy Life”.

    —————-

  • avatar

    “Don’t even bother running the numbers until personal preferences are matched to test drives.”

    This here is the real wisdom.

    When people ask me, “What car should I buy?”, my answer is always the same: Figure out what you can spend, figure out what you want and need, make a list of the cars that seem to qualify on both counts, go drive them all, buy the one that calls to you no matter the nameplate.

    (Of course, 9 out of 10 people who take the trouble to ask me that question promptly go buy a Subaru or Toyota without test-driving anything else, but at least I try.)

    • 0 avatar
      danio3834

      This. People ask me this all the time, and usually say something like, “I want a cheap, reliable car for less than $5,000. It can be done, I’ve done it all my life, it’s not hard if you have a broad range of acceptable vehicles (I’ll drive anything for the right price).

      The people who ask that question often end up at the new dealer once they find out the payment plans they offer and roll out in a brand new econobox, in spite of what they told me they wanted to spend.

      • 0 avatar
        KixStart

        If you have good credit, interest rates on new cars are currently very low. A good used $5K car is hard to find, still something of a crapshoot and if you need a loan, the interest rate will be noticeably higher.

        Against that, a reasonable monthly payment for an econobox with a 5 year/60K mile warranty does not look too bad.

        • 0 avatar
          danio3834

          It’s usually a combination of laziness and being picky in that they can’t get exactly the car they WANT with the options they WANT at the price they NEED.

          2 WANTS > 1 NEED I suppose.

    • 0 avatar
      Lie2me

      I think two important guidelines to follow when getting any car for the long haul is 1) Buy a car you like. If you buy a car that someone else thinks is right for you chances are you resent it, because it’s not what you wanted 2) Buy a car that fits the way you use a car. Do you haul people, their stuff, kids and their stuff? Miata probably shouldn’t be on your list. Single and live in an apartment? Then you can probably skip the Suburban. Short commute? Then gas mileage isn’t a top priority. In my own auto-life the closer I stayed to these two guidelines the happier I was with the car and the longer I kept it which will save you a ton of money in the long run.

      As far as new or used? it’s almost a toss-up If you finance, new sometimes is your best bet plus it’s easier to get exactly what you want. For new to pay-off though, you really need to think long term. If your horizons are shorter or you anticipate a major change in the way you use a car, used is probably the better way to go

  • avatar
    smartascii

    I think the OP is asking a different question than the one that’s been answered so far. Cars are expensive, and he’s just moved, so it sounds like maybe the car expense is a requirement rather than a joy, and he wants to minimize it.

    Panthers excel at this, whether people like them or not. Getting a low-mileage example that’s less than 5 years old for under $10k is not very hard (at least outside of tax season), and these are cars you can reasonably expect to last 300k mi if you maintain them. Those 300k will take the OP 12 years. So, $10k for the car, probably around $1,500 yearly for maintenance, averaged out, and $4,400 for gas at 20MPG and $3.50/gal. Assuming gas stays static, which is a stupid assumption, over those 12 years, it comes to about $0.27 per mile, all in. Who can do better?

    • 0 avatar
      SherbornSean

      Again, the Prius has much better economics. Assuming $20K for a used one in good shape, you get $2,000/year in depreciation over 10 years, $1500/year in maintenance (probably overly conservative) and $2,000/year for gas. Even if you add in $300 for additional interest costs, you get $5,800/year to run the Prius vs. $6,900 for the Panther.

  • avatar
    jpolicke

    I think the best way to go would be to buy a low mile lease turn-in, put your 4 years’ worth of heavy mileage on it, and then sell as a still desirable 7-year-old car with higher than normal mileage. Find something comfortable, Asian, and without a CVT. Or a new Charger/300 with the Chrysler bumper-to-bumper lifetime warranty

    • 0 avatar
      danio3834

      The lifetime warranty was for powertrain components, and was limited to the first owner unfortunately. For someone looking for a vehicle for the long haul, that would have been an awesome deal at the time.

      • 0 avatar
        jpolicke

        Danio, I have the papers in my hand. I purchased bumper-to-bumper lifetime coverage for my ’12 Challenger. As long as the repair is less than the book value of the car, I get it for $100 deductible. Yes, it is limited to the first owner. Also available for CPO.

        • 0 avatar
          danio3834

          You’re talking about a Service Contract. I thought you were referencing the lifetime powertrain warranty that was standard on Chryslers between 2007 and 2009.

          You can buy a Service Contract for just about anything you want, for a price. In my experience, they usually aren’t worth the extra investment. Unless you live in Montreal and get the rustproofing and undercoating, then you’ll see a return when multiple panels rot out in 3-5 years.

        • 0 avatar
          tjh8402

          Depending on the state you live in, the Chrysler warranty that is lifetime bumper to bumper is transferrable to one person for a fee ( I think like $75 to $150). Depending on what the OP’s wife likes, that plus any Chrysler cars from a 500 to a 300 would make good sense. All depends on how much you want to spend. The person at Chrysler I talked to about the warranty (my sister was looking at new and used Grand Caravans) said you could get it on any CJDF car that was less than 4 years old and had less than 48k miles on it. Did not have to be CPO or even purchased from a Chrysler dealer. Just was more expensive on the older cars (we were quoted like $4.5k for a Grand Caravan at the upper end of that mileage/age limit).

  • avatar
    ClutchCarGo

    IMHO, the only way to fight the depreciation curve is to buy used and keep the vehicle as long as possible. My strategy has been to look over the Consumer Reports auto guide and look for cars with worse than average depreciation and better than average reliability. Find a good one of those models still under the remainder of the mfr’s warranty. You benefit from the steep early years depreciation yet have the safety net of the warranty to address any immediate concerns, then coast thru the rest of the depreciation curve until the car no longer serves your needs. And as Steve says, be serious about the maintenance. A stitch in time saves nine, and this concept doesn’t pay off if you don’t hang on to the car for at least 5-7 years since the resale value will be negligible. This also works better if you aren’t carrying a car note, letting you put aside some money during the car’s lifespan to purchase the next one.

  • avatar
    sco

    I’ve driven 25K/yr for the past 15 years and have faced the same issue. Whatever you get 1) it must be super reliable, you cant be in the shop driving that many miles 2) it must be economical, 30+mpg, anything less will kill you at the pump with that many miles 3) must be cheap- you will use up the life of the car in roughly 8 years 4) must make you happy enough to keep 8-10 years. I went with a new ’98 Civic EX followed by a 2 yr old 2006 Scion Xb, both have or will hit 250K and they have both been enjoyable cheap rides.

  • avatar
    Scoutdude

    I’d check out the 2010-12 Fusion Hybrid. I’m a Panther guy through and through but with that kind of annual mileage feeding one can be expensive. About a year ago we purchased a low mile Panther for the wife, with the expected 12-15K per year it was a good trade off vs the Taurus it replaced that only got about 1MPG better.

    However in that year’s time things changed in our household. Instead of working from home as my wife had done for years they are now requiring her to come into the office 3-4 days per week instead of 1-2 times per month. My daughter and her also decided that she needed to go to a different dance school that was not just around the corner. After one year of use it turned out that there were 30K miles put on the car.

    That does not appear to be significantly changing so we went and bought a 2010 Fusion Hybrid. It will cut the fuel bill in half 38.5 MPG in daily driving vs 19MPG the wife was getting with that Panther. The only real drawback is the much smaller trunk. However we still have the family truckster for trips to Costco and other times we need to carry a lot of stuff and the normal every day needs fit in the Fusion’s trunk. We figure it will save us at least $1500 per year in fuel, more of course if the price of gas goes up.

  • avatar
    7402

    At 90 miles a day, I’d start with the seats and other ergonomic factors (cruise control, anyone?). Then consider reliability, and then cost. Frankly, I wouldn’t consider a car without a decent stereo and an iPod interface, because that is how I would spend 90 miles a day in a car.

    I’d buy a 3-year old car (perhaps off lease) and drive it until it hits 8 years old. At that point it will probably still be under 200,000 miles and still be worth something. My experience is that about 9 years old, or a little more, most cars start experiencing non-drive-train failures (switch gear, electronics, etc.) independent of mileage that will nickel-and-dime you to death.

    And, yeah, probably a Honda Civic/Accord, Toyota Camry (skip the Corolla), or a Ford Crown Victoria.

  • avatar
    eggsalad

    I would find a 4-5 year old car with very low miles, say 30k. Make and model is irrelevant – whatever makes you happy. Drive it for 4-5 years until it becomes cost-prohibitive, then repeat.

  • avatar
    burgersandbeer

    To summarize Sajeev’s response, regret is expensive.

    The cheapest way out of this is to buy something like a Corolla and drive it for like 15 years. At 90 miles a day, unless you really like the car, this is a huge problem.

    Buy something you like and continue repairing it. Unless rust sets in, it is always cheaper. Even four figure repairs are worth it.

  • avatar

    Interesting that this boils down to Crown Vic Vs Prius. Funny how the aged car market creates different competitors.

    Sajeev’s advice is spot-on. You can run numbers all day, but it all evaporates when you find some new excuse to get out of the most optimal penalty box.

    I put 20k/year on my ’64 Falcon for a couple of years (2009-2011). Just shy of 20mpg, lots of oil changes and gas stops. Totally worth it.

    Oddball candidate: what about a 6MT Corvette?

    C5s and even C6s are getting cheaper every day, they get good highway mileage and (most importantly) they’ll hold value compared to other commuter appliances.

    • 0 avatar
      28-Cars-Later

      “C5s and even C6s are getting cheaper every day, they get good highway mileage and (most importantly) they’ll hold value compared to other commuter appliances.”

      Now that suggestion is some mad science, I like it.

  • avatar

    100k in four years is easier on a car than 100k in ten years.

    You should be able to get away with something used, 25k-50k miles, and drive it up to 150k with little issue, while avoiding that initial depreciation hit.

  • avatar
    Mandalorian

    However you get it, get your wife something nice. She will be spending a lot of time in this car and having goodies like Nav, heated/cooled seats, good sound system, etc makes those long hours shorter and more comfortable.

  • avatar
    daveainchina

    I hate sounding like my father but in this case his tastes for vehicles is almost ideal for you.

    I would buy used, I would buy 10 years old used. Maybe even older.

    Most importantly I would find a good independent mechanic that probably specializes in one brand.

    Hopefully either the Ford Crown vic and it’s brothers or Lexus LS specialist.

    In your case I would buy a 1999-2000 Lexus LS with about 80-120,000 miles on it. Drive it one year and then sell it (AT THE SAME PRICE YOU BOUGHT IT) And get a newer 2001 lexus LS with about 80-120,000 miles on it and repeat.

    Just keep doing that, you’ll get a constant change of vehicles that are pretty much dead reliable, hopefully you have a good local mechanic. Dallas area has a great specialist in Lexus.

    My point being that if you buy these high end vehicles at the year where the depreciation curve flattens you can essentially add miles and only pay for maintenance and fuel. You can then keep buying/selling vehicles at the same price and not lose anything.

    Of course there are a few things like state taxes and fees to worry about but maybe you make it every 2 years. Still my premise is sound, you can essentially drive the car for free and only pay fuel bills/maintenance.


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