The Truth About Cars » Depreciation http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sat, 02 Aug 2014 03:20:50 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Depreciation http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Piston Slap: The Luxury Sedan Fanboi Fallacy http://www.thetruthaboutcars.com/2014/06/piston-slap-the-luxury-sedan-fanboi-fallacy/ http://www.thetruthaboutcars.com/2014/06/piston-slap-the-luxury-sedan-fanboi-fallacy/#comments Mon, 02 Jun 2014 11:58:13 +0000 http://www.thetruthaboutcars.com/?p=835145 Earl writes: Hi Sajeev, My wife wants me to sell our pristine, time-capsule 90 Cressida for a 4Runner (or similar) because we live in winter-world. I am looking at used 4Runners and the prices are crazy. Typically a rusted 1996-98 with 350-390,000KM will be asking $5,000 – $6,000CDN. I have seen Lexus LS with half […]

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Earl writes:

Hi Sajeev,

My wife wants me to sell our pristine, time-capsule 90 Cressida for a 4Runner (or similar) because we live in winter-world. I am looking at used 4Runners and the prices are crazy. Typically a rusted 1996-98 with 350-390,000KM will be asking $5,000 – $6,000CDN. I have seen Lexus LS with half the mileage, far better condition and all services done for that price.

What gives? Are 4Runners that good?

Sajeev answers:

Of course used 4Runners aren’t that good! Well, except they are that good for many folks.

Here’s the deal: you, much like me, have a soft spot for classic luxury (or near luxury) sedans. They are so nice, so affordable and give you so much more than any other road going machine.  And the Cressida isn’t a K-car derived New Yorker, it kinda gives the same thoroughly satisfying experience as a newer near luxury sedan. But for pennies on the dollar. An excellent value proposition that everyone should embrace!

The fallacy?  Nobody’s gonna embrace a cheap alternative to an Avalon under warranty. But everyone outside of Manhattan wants a beater truck (or truck based SUV) to carry shit, safely travel through snow, flash floods, non-KOA campgrounds, etc.  As much as my Lincoln-Mercury fanboi self enjoys the occasional compliment on my cars, I get cash offers on my 5-speed Ranger. On a regular basis: the market has spoken, son!

Is the 4Runner worth the money?  Sure, as they earned a reputation for great quality, excellent performance and even superior fit and finish. And the market reflects those opinions.  But that’s another fallacy: the quality gap at the fully depreciated level really depends more on service records. I’ll take a cherry Explorer/Blazer/Durango with a binder full of receipts over a rust bucket 4Runner with zero service history. Odds are both can be had for the same price.

If you are so frickin’ bad-ass enough to roll a choice Cressida, I don’t peg you as a lemming. The tone of your letter also proved the point. But if the sedan has to go to keep your household in balance, buy something other than a 4Runner.   Because, unless your Fanboi blood runs deep, Toyota SUVs and Trucks (especially Tacomas) can be a poor value for their premium asking price.

 

Send your queries to sajeev@thetruthaboutcars.com. Spare no details and ask for a speedy resolution if you’re in a hurry…but be realistic, and use your make/model specific forums instead of TTAC for more timely advice.

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Toyota Prius Best, Nissan Armada Worst in Consumer Reports’ Cost Per Mile Rankings http://www.thetruthaboutcars.com/2013/12/toyota-prius-best-nissan-armada-worst-in-consumer-reports-cost-per-mile-rankings/ http://www.thetruthaboutcars.com/2013/12/toyota-prius-best-nissan-armada-worst-in-consumer-reports-cost-per-mile-rankings/#comments Fri, 20 Dec 2013 12:15:49 +0000 http://www.thetruthaboutcars.com/?p=683522 The Toyota Prius was ranked at the top of Consumer Reports’ Best New Car Value scoring for the second year in a row. CR’s analysis ranked over 200 vehicles on performance, reliability and costs and determined that over five years the Prius will cost 47 cents per mile to own and operate. Lower depreciation and […]

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The Toyota Prius was ranked at the top of Consumer Reports’ Best New Car Value scoring for the second year in a row. CR’s analysis ranked over 200 vehicles on performance, reliability and costs and determined that over five years the Prius will cost 47 cents per mile to own and operate. Lower depreciation and operating costs for the Prius offset paying a premium for the hybrid.

“The Prius’ 44 mpg overall is the best fuel economy of any non-plug-in car that Consumer Reports has tested,” Rik Paul, the magazine’s automotive editor, said in a statement. “Though it’s not particularly cheap to buy, the Prius’ depreciation is so low that it costs less to own over the first five years than its initial MSRP. We call that a bargain.”

At the other end of the cost of ownership spectrum is the Nissan Armada, which costs consumers $1.20 per mile.

Factors going into the rankings are Consumer Reports’ own road tests, reliability predicted from the magazines’ reader generated data, plus a score calculated from depreciation, fuel, insurance premiums, maintenance, sales tax and repairs costs over five years.  Ten car categories were ranked, with the Prius coming out as the overall winner.

Compact /Subcompact Cars
Best, Toyota Prius Four; Worst, Volkswagen Beetle 2.5L
Midsized Cars
Best, Subaru Legacy 2.5i Premium; Worst, Nissan Altima 3.5 SL
Large Cars
Best, Toyota Avalon Hybrid Limited; Worst, Ford Taurus Limited
Luxury Cars
Best, Lexus ES 300h; Worst, BMW 750Li
Sports Cars/Convertibles
Best: Mazda MX-5 Miata Grand Touring; Worst, Chevrolet Camaro convertible 2SS (V8)
Wagons/Minivans
Best, Mazda5 Grand Touring; Worst, Chrysler Town & Country Touring-L
Small SUVs
Best, Subaru Frester 2.5i Premium; Worst, Ford Escape SE (1.6T)
Midsized SUVs
Best, Nissan Murano SL; Worst, Jeep Wrangler Unlimited Sahara
Luxury/Large SUVs
Best, BMW X1 xDrive28i; Worst, Nissan Armada Platinum
Pickups
Best, Honda Ridgeline RTS; Worst, Ford F-250 Lariat (6.7L V8)

 

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Bark’s Bites: A Moment of Appreciation for Depreciation http://www.thetruthaboutcars.com/2013/12/barks-bites-a-moment-of-appreciation-for-depreciation/ http://www.thetruthaboutcars.com/2013/12/barks-bites-a-moment-of-appreciation-for-depreciation/#comments Mon, 02 Dec 2013 14:18:26 +0000 http://www.thetruthaboutcars.com/?p=668850 Everybody on the internet knows that buying new cars is just plain stupid. New cars, after all, are just “depreciating hunks of metal.” New cars depreciate an average of 20% immediately, and then go down another 15% each year after that, according to sources such as KBB and Edmunds. According to every message board I’ve […]

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Everybody on the internet knows that buying new cars is just plain stupid. New cars, after all, are just “depreciating hunks of metal.” New cars depreciate an average of 20% immediately, and then go down another 15% each year after that, according to sources such as KBB and Edmunds. According to every message board I’ve ever read, buying a new car will probably cause you to lose your house, get divorced, and be sent to the Chateau d’If for thirteen years.

But how true is that? And if it is true, does it matter? Let’s find out.

Like the best scientists (and by the best scientists, I mean Norman Osborn), I made the decision to test this theory myself several years ago, albeit not necessary intentionally. Since 2000, I have bought five cars for myself, all of them new. In order:

2000 Hyundai Tiburon (bought new in March 2000)

2001 Hyundai Santa Fe (bought new in June 2001)

2004 Mazda RX-8 (bought new in May 2005)

2009 Pontiac G8 GT (bought new in October of 2008)

2013 Ford Boss 302 (bought new in June 2012)

Each car was financed over a sixty month term, and only the Tiburon had any sort of cash down payment (you can read about how that happened in my epic tale of short-lived 944 ownership). Each car was traded in on its successor at a franchise dealership. In other words, I did exactly what you’re NOT supposed to do. How did it work out?

The longest I kept any car was nearly four years. The shortest was a little over a year. In each case, I either got out even up (Tiburon, Santa Fe) or I had positive equity on my trade(RX-8, G8). So, essentially, I leased the cars for varying terms from sixteen to forty-six months. How did I manage to do this without taking massive financial losses?

1) Negotiate the hell out of the price on the front end. With the exception of the Boss (which, at that point, was seeing an average of $5K-10K ADM), I paid significantly less than invoice for the car. My best purchase was on the RX-8. For a car that stickered at just over $30k, I paid $22,500, which included a $4K factory rebate and $4K of dealer markdown. I was able to accomplish this due to my patience and willing to buy a car from the previous model year six months into the current model year. It took over two weeks of negotiating to make this happen, including walking away from the deal entirely twice only to have the dealer call me back. Use everything that’s available to you. Maybe your employer is a GM supplier-find out. Get invoice numbers, not only on the base car but on options. Dealers HATE how much information is available to consumers now-more than one dealer has said it’s impossible to make money on the front end of a sale of a new car. Use it all. You’re not there to make friends. Which leads me to…

2) Finance, finance, finance-but only at a good rate. It’s amazing to me how many people will battle like crazy on the price of a car only to give it all back in the Finance and Insurance office. If you have a beacon score of at least 700 (and that’s auto-adjusted, meaning that even if you’ve missed a credit card payment or two over the years but you’ve paid your car on time, you should be fine), there is NO REASON to ever, ever pay more than whatever the best promotional rate available is. If you’re at least a 660, you can still negotiate down to a very good rate-nothing more than 3.9% over sixty months. Anything that’s less than the rate of inflation is essentially free money. I was able to get zero percent for 60 months on the G8, so the payments I was making three years into my schedule were actually worth about six or seven percent less in actual dollars than the payments I was making in my first year. If the dealership is trying to hit you with a rate over five percent, it’s because the F and I guy is getting spiffed on every point above and beyond standard rates he can get you to agree to. Back-end profits are about all a dealer has left nowadays-don’t give it away. Know your score before you go in and, even better, pre-arrange financing with your own financial institution so you have an offer in your pocket.

3) Try to buy interesting, desirable cars. Most modern dealers will have some sort of desirability index that they reference when deciding what value they give your trade. It grades the supply of similar vehicles in the market compared to the market demand for that vehicle. If you have a 2011 Ford Fusion, you are screwed. The supply of these vehicles far outweighs the demand. Get ready to battle. If you have a 2009 Jeep Wrangler with low miles, feel free to sit on your hands and wait for the offers to come in. I was able to leverage this in two cases-my RX-8 and my Tiburon (and if I’d been willing to wait a little bit longer, my G8, too). I got crushed on my Santa Fe. Nobody wanted a Hyundai with nearly 100,000 miles on it. Part of my two-week negotiation with the Mazda dealer on my RX-8 was getting them to just get me out of the Santa Fe even up; they initially offered a value that was four thousand dollars less than my remaining payoff. The cooler and more interesting your car is when you buy it, the cooler and more interesting it will be when you go to trade it in. But even if you have a lame car…

4) Dealers need to take in trades for their business model to work. Auction prices are out of control. Dealers both want and need trades-in fact, they are keeping stuff now that they never, ever would have before. It’s no longer crazy to go in asking for retail price for your car. You might not necessarily get it, but you might not be that far off, especially if the used car manager has a prospective customer for your car. I had a used car manager stalk me on my G8 for weeks, even after I traded it in elsewhere-he asked if I had any other friends with G8s.

5) Buy cars when the OEM/Dealer needs to sell it to you. Dealers have OEM new car targets that they have to hit. In fact, it’s one of the few ways that they can make money on new car sales anymore. And for some marques, the very existence of the franchise can be at stake if they don’t make targets. The whole thing about buying cars at the end of the year/quarter? It’s totally true. I have always bought cars on the last weekend of the month, and always when there is additional cash on the hood (again, with the exception of the Boss 302). Buy from struggling dealers. That guy that advertises that he’s the number one franchise dealer in town? Avoid his store like the plague. Buy from the desperate dealer. It matters.
But let’s say you take all of my advice-you’re still going to lose SOME money. After all, unless you bought a 993, you DID buy a depreciating asset. And even if you buy used, you’re STILL going to lose money.

Here’s my advice. Accept that buying a car, virtually any car, is a money loser. Don’t lose sleep over it. Enjoy it. Remember that if you’re reading TTAC, you’re probably an enthusiast. You’re buying a car because, on some level, you enjoy driving. You enjoy car ownership. Every day that I’ve owned my Boss 302 is a day that I’ve been able to enjoy it. The guy who’s waiting two years for it to depreciate forty percent? I’m enjoying my car for two years longer than he will. Maybe that’s worth forty percent to me. If this sort of thing matters to you, I got it when it was new and hot. He’ll get it when there’s a newer, hotter model of Mustang being sold at Ford stores. Maybe that means I’ll enjoy it more.
When you buy your dream car brand new, and then when you have the incredible nerve to finance it, rest assured; the Internet will call you an idiot. Who cares. You’ve got your dream car. In my experience, there have been few better days than the days I drove my new cars into my driveway for the first time. I sincerely hope you have the chance to share that same experience.

And tell the Internet to go to Hell. After all, it’s your money.

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Piston Slap: Bad Vibes from The “Value” Timeline http://www.thetruthaboutcars.com/2013/09/piston-slap-bad-vibes-from-the-value-timeline/ http://www.thetruthaboutcars.com/2013/09/piston-slap-bad-vibes-from-the-value-timeline/#comments Wed, 25 Sep 2013 12:40:15 +0000 http://www.thetruthaboutcars.com/?p=525785 James writes: Sajeev, My question is – when should I sell my current car? Our family runs a 2004 Pontiac Vibe with 109k miles. It is our only car and it seems to run better since it broke the 100k mark. It has been exceptionally reliable, cheap to own, and gets excellent mileage – I […]

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James writes:

Sajeev,

My question is – when should I sell my current car? Our family runs a 2004 Pontiac Vibe with 109k miles. It is our only car and it seems to run better since it broke the 100k mark. It has been exceptionally reliable, cheap to own, and gets excellent mileage – I get 29mpg average! We like being a one car family and intent to keep it that way unless we suddenly become independently wealthy.

I gave up my ’06 civic coupe for the Vibe in a purely pragmatic move to accommodate our newborn child and high energy dog in the back. I didn’t expect to like it, but it has turned out to be a really good car and I seem to like it incrementally a little more each day. Although we’ve grown to really like the car (to our surprise), it is basically an appliance to us. We use it to commute, get groceries and the occasional road trip.

I read in the Fiesta ST Review that engines are often engineered to last 150k miles, and I’m often pondering when is the typical right moment, miles-wise to let go of the Vibe and replace it with some other reliable used car.

The way I see it, there are the first three years or so of car ownership where the cash expended in depreciation is way higher than the utility returned. Then there is a sweet spot of value which lasts about 10 years where the car is actually giving back the most for the money spent. After that, there is a mystery period I have yet to experience where, while the car is cheap as dirt to run, a great deal of time is spent with it out of service getting growing maintenance repairs.

Is this an accurate evaluation of the car value timeline? And if so, can you give some insight into when (in miles) is a good time to let go of the car in a one-vehicle house hold.

Sajeev answers:

Your general timeline (second to last paragraph) is fair, can’t say the same for the 150k miles reference: there is far too much variance in engine design, driving conditions and ownership maintenance schedules to draw that line in the sand. So to speak.

A car’s “value timeline” is a good resource for accountants planning a company/government vehicle depreciation schedule. For everyone else, I think it’s a crock. A pot-hole beaten suspension may cost $3000 to restore in 10-15 years, but will the owner even notice enough to care?  Will one vehicle need the same repairs as another?  An extreme example is comparing an AMG Benz driven on brutal NYC roads versus a Honda Accord in a far tamer rural/suburban setting. One size fits all is simply a notion that cannot exist.

Another issue: some body/trim levels need less repair than others. Compare your heavier Vibe to the light Corolla from whence it came. Or take my 2011 Ranger regular cab to any other truck:  with the same brakes (4-whl discs) and suspension as an Explorer from the Clinton Era but with about 800lbs less weight on its shoulders, my need for brake/tire/suspension reconditioning shall be far less frequent.  In two years and almost 20,000 miles, my truck’s tires and brakes look new: they are completely overbuilt for the tiny truck in which they reside. I don’t expect my truck to need repairs like an Explorer, or even a super cab Ranger with a big V6, longer wheelbase and rear drum brakes.

But will the anomaly of an Overbuilt Economy Variant of a common platform be represented on someone’s spreadsheet? Not likely.

Back to the point: there is no “one size fits all” timeline.  The schedule is different for everyone, and everything they may choose to drive.  And where they drive it. And, most importantly, one’s irrational/unexpected need to want something new for reasons yet to be explained. You ain’t never gonna find that on a timeline, but it happens all the time: marinate on that.

 

Send your queries to sajeev@thetruthaboutcars.com. Spare no details and ask for a speedy resolution if you’re in a hurry…but be realistic, and use your make/model specific forums instead of TTAC for more timely advice.

 

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Piston Slap: Self Worth vs. The $8000 Flagship http://www.thetruthaboutcars.com/2013/09/piston-slap-self-worth-vs-the-8000-flagship/ http://www.thetruthaboutcars.com/2013/09/piston-slap-self-worth-vs-the-8000-flagship/#comments Mon, 02 Sep 2013 12:08:01 +0000 http://www.thetruthaboutcars.com/?p=505009 TTAC commentator zamoti writes: Sajeev, I have successfully nursed along my aging Maxima without replacing the transmission, but now sans muffler, balding tires and growing rust, I feel it may finally be time to part ways.  Though it is fun to offer my fellow motorists a dose of the sound and the fury of the […]

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TTAC commentator zamoti writes:

Sajeev,

I have successfully nursed along my aging Maxima without replacing the transmission, but now sans muffler, balding tires and growing rust, I feel it may finally be time to part ways.  Though it is fun to offer my fellow motorists a dose of the sound and the fury of the delightful 3.0 VQ, I have decided that it is time to grow up and select a more dignified form of transportation.  Plus my wife calls me a hillbilly.

In the quest for dignified wheels, I am a bit hamstrung by the fact that I’ve just purchased a (second) house and probably not looking very good on paper.  As such, my task is to seek a gentleman’s car on a cash basis maybe even at a BHPH lot.  I have about $9k to spend and the Maxima to sell.  Long ago when Murilee was seeking out a 1st gen Q45, I though that a hyper-depreciated luxury barge would be a great idea if I ever needed something of the sort.  Well, that time is now; I occasionally need room for five, three of those are car seats. I have been nosing around and narrowed the choices to a 2001 BMW 740il and maybe a 2003 Infiniti Q45.  I don’t think it’s going to be much of a choice since there aren’t many Q45s available, so I’m leaning toward the ample supply of e38s.

I’m willing to spin my own wrenches on whatever I get, but this does need to be my sole DD so it can’t be a flatbed queen.  Is this a horrible idea to seek out an $8000 used luxury flagship?  A sampling of BMW forums state that the later variants of e38 were fairly reliable, but that’s a fairly narrow band of people to expect an unbiased opinion from.  I’m aware that any premium brand is going to require a bit of money socked away for maintenance and willing to live with that as the downside.  I’ve looked at the common issues and feel that I can handle most of them on my own.

I am not against other choices, but I do like the idea of that 7-series.  It has room for all, looks good, and above all else, it is a gentleman’s car.

Your thoughts?

Sajeev answers:

*headdesk*

Murilee drives a Honda Civic on a daily basis, and he bought a Lexus LS for a luxurious play toy!  You, however, completely lost your mind!

Wise up and get something better than an $8000 flagship.

BMW E38s–while unbelievably pleasant to drive with styling that gets better with age–are fragile and expensive “flatbed queens” as you so eloquently put it. Take it from someone who worked on his father’s 750iL, which had more problems from the E38 underpinnings than the unique bits associated with the V-12 engine.

But I still miss that eggplant-hued, unquestioned “King of the Road” from 1996…yet I still want to burn it to the ground!

zamoti replies:

So the lesson is that you cannot buy dignity for $8000.  Q45?

Sajeev answers:

A little (lot?) better, ditto a Lexus LS a la Murilee. But not good enough, since you have a wife, kids and no spare vehicle!  Find dignity and self-worth elsewhere…force your kids into sports even if they hate it, and absolutely do not buy an $8000 flagship!

Drive a normal, boring or even shitty car and get motivated to become the next self-made bazillionaire who ignores the folly of wealth and drives a Ford truck. Or some hyper-motivated, soul sucking Gordon Gekko type.

Either way, whatever works for you.

Send your queries to sajeev@thetruthaboutcars.com. Spare no details and ask for a speedy resolution if you’re in a hurry…but be realistic, and use your make/model specific forums instead of TTAC for more timely advice.

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Tales From The Cooler: Instant Karma Depreciation http://www.thetruthaboutcars.com/2013/05/tales-from-the-cooler-instant-karma-depreciation/ http://www.thetruthaboutcars.com/2013/05/tales-from-the-cooler-instant-karma-depreciation/#comments Tue, 28 May 2013 16:02:05 +0000 http://www.thetruthaboutcars.com/?p=489797 During all the turmoil facing hybrid automaker Fisker Automotive recently, from closing its doors to a possible resuscitation led by Bob Lutz, one thing has remained constant: the rapidly collapsing values of the Fisker Karma cars themselves. It appears that Fisker dealers are starting to dump their new $102,000-plus MSRP Karmas through the auction network. According […]

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Fisker Karma Courtesy tumblr.com


During all the turmoil facing hybrid automaker Fisker Automotive recently, from closing its doors to a possible resuscitation led by Bob Lutz, one thing has remained constant: the rapidly collapsing values of the Fisker Karma cars themselves.

It appears that Fisker dealers are starting to dump their new $102,000-plus MSRP Karmas through the auction network. According to auction giant Manheim, 23 Karmas were peddled on their blocks during the week ending May 22. The 15 that were brand new on MSOs sold for an average of $61,200 while 8 extremely low mileage pre-owned examples commanded an average of $57,600. Prior to Fisker’s announced closure, used Karmas were bringing an average of $79,000.

The independent dealers and wholesalers who purchased the vehicles thinking that a 40% discount off MSRP means they can turn them for a profit better hurry: Manheim projects Fisker wholesale values will drop to $28,400 by next May.

I have never considered buying a Karma but at that price, and if I have confidence in whatever dealer body or service arrangements are available next year, I might think about it. How about you?

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New or Used? : The Blasphemy Of Accountancy Edition http://www.thetruthaboutcars.com/2013/04/new-or-used-the-blasphemy-of-accountancy-edition/ http://www.thetruthaboutcars.com/2013/04/new-or-used-the-blasphemy-of-accountancy-edition/#comments Tue, 30 Apr 2013 10:00:16 +0000 http://www.thetruthaboutcars.com/?p=486607 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 […]

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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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QOTD: How Can You Minimize The Cost Of Keeping A Car? http://www.thetruthaboutcars.com/2012/08/qotd-how-can-you-minimize-the-cost-of-keeping-a-car/ http://www.thetruthaboutcars.com/2012/08/qotd-how-can-you-minimize-the-cost-of-keeping-a-car/#comments Tue, 28 Aug 2012 14:20:16 +0000 http://www.thetruthaboutcars.com/?p=457201 Whether you drive a $30,000 or a $1,500 a car, one variable in life stays constant. You want to minimize your costs. The average owner in North America now spends well over $8,000 a year covering all the costs of their car. Gas, insurance, maintenance, repair, depreciation, taxes, financing… and even the occasional upgrade. When […]

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Whether you drive a $30,000 or a $1,500 a car, one variable in life stays constant.

You want to minimize your costs.

The average owner in North America now spends well over $8,000 a year covering all the costs of their car. Gas, insurance, maintenance, repair, depreciation, taxes, financing… and even the occasional upgrade.

When they can afford it.

That’s one issue that I see as the crux of autos ownership for most folks. The means of ownership. Can they afford what they drive.

The struggling family that goes to a dealership and zeros in on the nearest Cadillac or Mercedes these days is just as culpable for their behavior as the fellow who considers cigarettes to be vegetables, and vegetables to be weeds.

They have an unhealthy destructive habit that is a reflection of a marketplace where the bad choices are just as easily available as the good ones.

Forget about big brother. This is overwhelmingly a matter of personal decisions. We can make it out to be as fair or unjust as we like. But in the end, there is a bluntness to all of it that can’t be denied.

On one side of the fence, we realize the Darwinian aspects of it all. People who make bad decisions face consequences. This is an outcome that is healthy for an economy because it extinguishes the unhealthy activities, and encourages the good ones… in due time.

But sometimes you also see the elements of a rigged game. The manipulative capitalize on the weaker elements of human nature. While the ones victimized often don’t know any better and continue to do worse.

After decades of looking at this learned victimization, you can’t help but wonder whether millions of people have been brought up to not live beyond a certain level of struggle and mediocrity. Even if they tried to get ahead, the scourges of debt and dependency would lead them to poverty because they simply don’t know what they need to know.

That’s the issue I have at this point. A lot of folks believe that ignorance and an arrogant attitude go hand in hand. In extreme cases they do. But when it comes to cars, ignorance is born more out of fear and apathy than anything else.

So how do you minimize the cost of owning a car? $8,000+ represents an awful lot of waste and opportunity. A lot of incremental improvements in the ownership experience could yield a better standard of living for an awful lot of folks.

Where should be the focus?

Should education and hands on experience be the primary drivers? Or should engineering and design be the driving forces that minimize cost?

I believe that the common person is simply taught to be ignorant when it comes to automobiles. They have other things to do with their lives. That’s not a big deal when you think about it, because the same level of apathy is true with most other tools and appliances.

A school teacher may get a better financial boost from learning how to repair cars, dishwashers, cell phones, and roofs. But society gets a far greater benefit from letting them teach instead of changing a timing belt.

We need teachers. Not timing belts.

So how can the market forces highlighted in that drawing above better serve the financial needs of an overwhelmingly apathetic public?

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Piston Slap: Starting the Game All Over Again? http://www.thetruthaboutcars.com/2012/06/piston-slap-starting-the-game-all-over-again/ http://www.thetruthaboutcars.com/2012/06/piston-slap-starting-the-game-all-over-again/#comments Wed, 13 Jun 2012 11:08:57 +0000 http://www.thetruthaboutcars.com/?p=448488 Dave writes: Sajeev, I’m a sales rep for a corporate auto supplier in the Detroit area. I currently drive a 2008 Dodge Magnum SXT that I put around 5000 kms per month and currently has 165000kms. Bought it as a lease back with 30000kms in 2009 and it’s completely paid off. My question is – Do […]

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Dave writes:

Sajeev,
I’m a sales rep for a corporate auto supplier in the Detroit area. I currently drive a 2008 Dodge Magnum SXT that I put around 5000 kms per month and currently has 165000kms. Bought it as a lease back with 30000kms in 2009 and it’s completely paid off.

My question is – Do I drive the Magnum for another year, putting the mileage up over 200000 and far reduce the residual value or do I trade it in on a low mileage Explorer, Flex, or Durango and start the process over again getting more cash value for the Mag. There’s no real reason to dump the Magnum – It’s in fantastic shape and aside from regular maintenance and some front end suspension work, hasn’t emptied my pockets.

Just looking for another point of view and some insight into what the residual value over time and mileage looks like for the situation.

Thanks,
Dave

Sajeev answers:

When a man (or woman) loves a car, that car must be driven. Losing several hundred dollars in value is no biggie, this prolongs the need to restart that monthly payment game. Given the condition of your Magnum and the (lack of) wear associated with lots of (implied) highway commuting in your career, I suspect you have no need to get back on the Debt Train for years! Plural.  Enjoy it!

I couldn’t care less about residual value. The Magnum will always have a buyer: this ride has a loyal wagon following, even if the cargo area is compromised from that roof line. More importantly, it has already passed the rough part of the depreciation curve.  If this Mopar was a late-model Audi–and you hated it–my tune changes accordingly.

Not losing hundreds in value is no reason to start the game all over again.  We need more reason than that.

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Lose 185 Pounds A Day! http://www.thetruthaboutcars.com/2010/09/lose-185-pounds-a-day/ http://www.thetruthaboutcars.com/2010/09/lose-185-pounds-a-day/#comments Tue, 07 Sep 2010 10:36:26 +0000 http://www.thetruthaboutcars.com/?p=364870 When you buy a car new, depreciation is a risk you have to take. So like with any risk, one tries to minimize it. That’s why Toyota and Honda are such perennial favourites. low depreciation. But what cars should you avoid if you don’t want to suffer depreciation that could make you depressed? The Mirror […]

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When you buy a car new, depreciation is a risk you have to take. So like with any risk, one tries to minimize it. That’s why Toyota and Honda are such perennial favourites. low depreciation. But what cars should you avoid if you don’t want to suffer depreciation that could make you depressed?

The Mirror has the latest skinny on UK  depreciation figures. There were the usual suspects on the list. The Peugeot 407 2.0 HDi 140 Sport loses 55 percent of its value within six months and the Vauxhall Zafira 1.6i 16V Life loses 54 percent in the same time period. They were biggest depreciators by percentage, but the biggest depreciator by real-term price went to the Audi A8 4.2 TDi Quattro SE. Within six months, the Audi can lose an eye-popping £33,700. That’s $51,793 in today’s greenbacks,

So, if you bought a brand new Audi A8 4.2 TDi Quattro SE at MRS, every morning you wake up, you can kiss £185 ($284) goodbye. When this report was put to Audi, a spokesperson replied that the model used for this survey was an outgoing model to be replaced by a new one and was, therefore, less appealing to buyers. Even so, does that justify a loss of £33,700 for six months?

On the other end of the spectrum, the Mini 1.6 only lost £10 a day for the first six months. On average, new cars lost 36 percent of their value within six months. Which gives a lot of credence to buying used. Let someone else take the hit…

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EVs Are Great, Just Don’t Buy The Battery Part Two: 50 Percent Depreciation In Three Years http://www.thetruthaboutcars.com/2010/08/evs-are-great-just-dont-buy-the-battery-part-two/ http://www.thetruthaboutcars.com/2010/08/evs-are-great-just-dont-buy-the-battery-part-two/#comments Tue, 31 Aug 2010 19:08:42 +0000 http://www.thetruthaboutcars.com/?p=364326 With the Mitsubishi i-miev electric car about to hit the British market, the BBC decided to break down the Pounds and tuppence behind the EV hype. And though it found that the i-miev comes out looking quite well thanks to Britain’s EV consumer subsidy, its freedom from congestion charges and road tax, fuel price differences […]

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With the Mitsubishi i-miev electric car about to hit the British market, the BBC decided to break down the Pounds and tuppence behind the EV hype. And though it found that the i-miev comes out looking quite well thanks to Britain’s EV consumer subsidy, its freedom from congestion charges and road tax, fuel price differences and estimated servicing costs, it has one eye-popping cost associated with it: nearly 50 percent depreciation over the first three years. And that’s what Mitsubishi is willing to cop to. So not only will your new i-miev cost about twice as much as a little Fiat 500, it will lose about enough value after three years to have paid for that same Cinquecento. Needless to say, as American consumers begin their own first flirtations with the electric automobile, we will continue to keep a close eye on this issue.

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