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Car Economics.
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dullard
Elite Member
Of course. Look back at my first post on depreciation in this thread. I simply stated that not all cars depreciate most in the first 1-2 years. Some cars don't depreciate much at all in that time frame.
I never claimed that all cars depreciate most in other years. In fact, most vehicles depreciate most in the first 1-2 years.
I just don't want people making general rules that are not always true, and I pointed out examples to show that their general rule isn't always true.
iversonyin
Diamond Member
Dullard is the official finance wizard of the board. We should also believe his number. I always do anyway
redgtxdi
Diamond Member
Yes, I believe Dullard, I just think that the first year number will change significantly very soon since we're stuck right between the '05/'06 model year.
Now, if Dullard would please explain to me how to justify a 3rd vehicle, I'd much appreciate it......😀
OH, btw.........what's the numeric value for that "new car smell"..........Ahhhhhhh!!!
He//.....who can put a price tag on that!!! (Me likes!) 😎
Now, if Dullard would please explain to me how to justify a 3rd vehicle, I'd much appreciate it......😀
OH, btw.........what's the numeric value for that "new car smell"..........Ahhhhhhh!!!
He//.....who can put a price tag on that!!! (Me likes!) 😎
HumblePie
Lifer
You said that not all cars don't depreciate in the first 2 years the most but instead after 3 years or more is where the biggest depreciation gap was. People asked prove it. You pointed to the Honda Civic LX with some numbers. I pointed out you can't use what is listed because you are not going by MSRP, which is what even USED CAR SALES PRICES for NADA, KBB, and Edmunds go off of.
Also, then you say you don't use decpreciation values to back up your claim of some cars depreciating more after 3 years. HUH?!?!?
Look, 2005 Honda Civic LX depreciation values over the next 5 years if you bought one new today as reported by Edmunds.com Total Cost To Own.
Those depreciation values are show based off the depreciation rate of that car plotted from previous cars. New cars with revised models won't have a depreciation value list.
I'm sorry but you are wrong. EVERY CAR depreciates the most during the first 2 years. Period. It's not that hard a concept to understand.
Dullard usually takes into account *real world* numbers and actual going figures and rates. The depreciation you link to on Edmunds is nothing more than a shotgun approach at guessing at how much value it will loose. What somebody says a car is worth, and what somebody is willing to buy a car for are two very different numbers.
I don't want to put words into his mouth, but I think he is approaching it from a much more real world, real number stance. Not what a guesstimated statistic shows.
dullard
Elite Member
Correct me if I'm wrong. Is this what you are saying?
Humblepie's version: Some website estimates the value may drop ~$3000 the first year. Thus take MSRP of $16,400, subtract ~$3000, and then the cost of a one year old car is ~$13,400.
I think that is what you are doing. Here is my version:
Dullard's version: Look at the average price of the actual one year old vehicles actually being sold. Result: ~$15,400.
Hmm, use an estimate or use real world data. Your choice.
There are subtle reasons to think about. The Civic for example has a 3 year warranty. Civic owners tend to hold on to their cars for longer than other vehicle buyers. Few people ever sell a 1 year old car (Civic included). Many people sell a 2 year old car, but not many Civic owners (for various reasons). After the 3rd year, the warranty is gone and a bunch of people dump their Civic. Thus supply of 1 and 2 year old Civics is low while the demand is high. When it comes to the 3rd year, the supply is high. So there is a dramatic price drop just after the 3rd year. It is supply/demand ruling the day. No depreciation formulas. Just real world supply/demand.
I can keep posting real data with real proof that your generalization is not always true. But I'm done dealing with you on this topic.
Humblepie's version: Some website estimates the value may drop ~$3000 the first year. Thus take MSRP of $16,400, subtract ~$3000, and then the cost of a one year old car is ~$13,400.
I think that is what you are doing. Here is my version:
Dullard's version: Look at the average price of the actual one year old vehicles actually being sold. Result: ~$15,400.
Hmm, use an estimate or use real world data. Your choice.
That is not a hard concept to understand. It is a concept that is often true. But it is also false in specific cases. CNN article "Demand for the gas-electric hybrid Prius is so great that some used Priuses are selling for more than the list price for a new one...The paper reported that George Wu, 35, of Redondo Beach, Calif., listed his 2005 Prius with 180 miles on the odometer for sale at $31,495, which is about $1,000 more than he paid for it."
There are subtle reasons to think about. The Civic for example has a 3 year warranty. Civic owners tend to hold on to their cars for longer than other vehicle buyers. Few people ever sell a 1 year old car (Civic included). Many people sell a 2 year old car, but not many Civic owners (for various reasons). After the 3rd year, the warranty is gone and a bunch of people dump their Civic. Thus supply of 1 and 2 year old Civics is low while the demand is high. When it comes to the 3rd year, the supply is high. So there is a dramatic price drop just after the 3rd year. It is supply/demand ruling the day. No depreciation formulas. Just real world supply/demand.
I can keep posting real data with real proof that your generalization is not always true. But I'm done dealing with you on this topic.
Uh. You're getting RAPED. $3500 got me:
Massively upgraded turbo and related components
Starter
Labor for the starter
New tires (4 points)
New brakes (4 points)
New audio system
Radiator
A boatload of suspension parts + labor
A whole new engine because I took it upon myself to blow the first one up (No labor here, a few friends and I did that)
AND THE BASE VEHICLE ITSELF!
$3500 for tires, wiper motor (which is a $5 part that takes 5 minutes to replace and exactly 2 minutes to diagnose), and brake PADS is complete and utter rape. I suggest you learn something about cars and you'll find out exactly how bad you're getting screwed and how terrible an idea it is to trade in every 2 years.
Massively upgraded turbo and related components
Starter
Labor for the starter
New tires (4 points)
New brakes (4 points)
New audio system
Radiator
A boatload of suspension parts + labor
A whole new engine because I took it upon myself to blow the first one up (No labor here, a few friends and I did that)
AND THE BASE VEHICLE ITSELF!
$3500 for tires, wiper motor (which is a $5 part that takes 5 minutes to replace and exactly 2 minutes to diagnose), and brake PADS is complete and utter rape. I suggest you learn something about cars and you'll find out exactly how bad you're getting screwed and how terrible an idea it is to trade in every 2 years.
redgtxdi
Diamond Member
Ya, that's been established about 3 pages ago & several times over.......no offense, but we all know that $3,500 is a little too steep!!!
Nevertheless, we do have a good bout going on between HumblePie and Dullard, so we really need to get back to that........Howard Cosell is picking up the 3rd round now as the fighters come out of their corners......
ding........ding.......... 😉 (smart-ass instigator.....I know!) 😀
DT4K
Diamond Member
The fact that there is a $1375 difference between the value of a 2000 and 2001 civic does NOT mean that there was or will be a drop of $1375 in value in the 6th year.
There is a difference between looking at the price of a particular model year over the course of time vs looking at the current prices of a number of different model years.
I'm not saying you are wrong, just that the data you provided has very little relation to the claim you are making and certainly doesn't qualify as "proof" in any way.
To "prove" your point, you would need to provide something like the historic resale value of a 2000 civic in 2001, 2002, 2003, 2004, 2005.
dullard
Elite Member
I do understand what you are saying. However, that was the only link data that I have. I can say that I've been watching Civic data for the last 4-5 years and it matches nearly identical to the trend that I posted here. Maybe $100 here or $100 there.
There was a major Civic model change between the 2001 and 2002 years. Thus the biggest probability of an inaccuracy in the numbers would occur there. That would be between the 4th year and 5th year in my list. 4th year: $1300, 5th year: $1275. So even the fact that there was a major change that year had little to no impact on the resale price.
Yes, ideally I'd have a link to the data you request. But sadly, I don't. All I can say is to trust me. Or watch the data yourself over the next few years.
HumblePie
Lifer
Real world numbers are on a person by person basis. When you do math for car costs, you go off of MSRP. why? because every can get it. Sure, there are cases of people getting paying more then MSRP and people paying less. Paying less is a GOOD THING as in the depriciation value isn't as bad.
If a car has an MSRP of $15K and depriciates by $4000 after the first year, but you paid $11K for it... guess what? you didn't lose anything of your money to depriciation.
That's how the car industry works. Same for selling used cars. Ask yourself this. What do most people do when they are looking to buy or sell a used car? They go right to NADA, or KBB, or edmunds and look up the prices for that vehicle in the area. Then they hit up the classifieds and the dealers, and lo and behold. The majority of cars listed are going to be around the price listed from those sources. So how do the sources come up with that magical number? Depriciation values based off the MSRP and average selling costs.
As for the hybrids.. that reminds me of the miatas when they were first introduced in the 80s and the new 05 mustangs. People were buying miatas back in the 80's for double or triple sticker prices from dealers just to try and resell them for even MORE! 99% of the time that didn't work. There was an old article, in forbes if I remember correctly, about a lady that had bought two miata's which were stickered at $20K each and paid $40K each with the express intention of selling them both off for more but never could find a buyer.
Anyhow, don't point to some article about a guy trying to resell his prius for more then what he paid for because he's looking to find a bigger sucker then he was. He might get lucky, but chances are he won't.
I said it once, and I'll say it again. The biggest depriciation for ANY vehicle comes during the first 2 years, usually the first. Purchasing a vehicle for invoice or less on a new car pushes that big depriciation hit back to the second, third, or fourth year. That's why you always need to haggle for the best price and know what you are doing when you are buying a car, or even shopping for maintanence on a car.
If a car has an MSRP of $15K and depriciates by $4000 after the first year, but you paid $11K for it... guess what? you didn't lose anything of your money to depriciation.
That's how the car industry works. Same for selling used cars. Ask yourself this. What do most people do when they are looking to buy or sell a used car? They go right to NADA, or KBB, or edmunds and look up the prices for that vehicle in the area. Then they hit up the classifieds and the dealers, and lo and behold. The majority of cars listed are going to be around the price listed from those sources. So how do the sources come up with that magical number? Depriciation values based off the MSRP and average selling costs.
As for the hybrids.. that reminds me of the miatas when they were first introduced in the 80s and the new 05 mustangs. People were buying miatas back in the 80's for double or triple sticker prices from dealers just to try and resell them for even MORE! 99% of the time that didn't work. There was an old article, in forbes if I remember correctly, about a lady that had bought two miata's which were stickered at $20K each and paid $40K each with the express intention of selling them both off for more but never could find a buyer.
Anyhow, don't point to some article about a guy trying to resell his prius for more then what he paid for because he's looking to find a bigger sucker then he was. He might get lucky, but chances are he won't.
I said it once, and I'll say it again. The biggest depriciation for ANY vehicle comes during the first 2 years, usually the first. Purchasing a vehicle for invoice or less on a new car pushes that big depriciation hit back to the second, third, or fourth year. That's why you always need to haggle for the best price and know what you are doing when you are buying a car, or even shopping for maintanence on a car.
redgtxdi
Diamond Member
OK, so here's more to babble about........(don'tcha' just loooooove babblin' 'bout cars?).........especially now w/ gas prices so freakin' high.........
So if a $20K car tanks to about $5K after 8 years......(I'm waaaaay generalizing here)........is it better to get rid of it then?? Or since it'll probably only drop very small amounts over the next few years, is it better to keep it 'til 12 years. Or 10 years?? Or 15 years maybe??
And I know folks always say "SELL, DON'T TRADE", but what's a good rule of thumb on trading in??
(Last year when the 2004 F150's came out, I was droooooolin'! Well they offered me $8,300 on my UBER--CLEAN / LOW-MILEAGE '98 Supercab. Sad part is.....I actually thought about it for a sec, but then figured.......NO FREAKIN' WAY! I drove away in my full-paid for '98 F150 supercab and was able to hold off 'til this latest gas price frenzy! Must reeeeessist!! Must resist!!!!!!)
😀
So if a $20K car tanks to about $5K after 8 years......(I'm waaaaay generalizing here)........is it better to get rid of it then?? Or since it'll probably only drop very small amounts over the next few years, is it better to keep it 'til 12 years. Or 10 years?? Or 15 years maybe??
And I know folks always say "SELL, DON'T TRADE", but what's a good rule of thumb on trading in??
(Last year when the 2004 F150's came out, I was droooooolin'! Well they offered me $8,300 on my UBER--CLEAN / LOW-MILEAGE '98 Supercab. Sad part is.....I actually thought about it for a sec, but then figured.......NO FREAKIN' WAY! I drove away in my full-paid for '98 F150 supercab and was able to hold off 'til this latest gas price frenzy! Must reeeeessist!! Must resist!!!!!!)
😀
sciencewhiz
Diamond Member
Until it's cheaper to buy a new car then it is to keep (repairs, extra gas, etc) the old one. See Dullard's post on page 2 where he answered the question the first time you asked it.
redgtxdi
Diamond Member
See my reply in the form of a question to *his* reply.
Think in terms of *reasonable* or *desirable*......not Spock sittin' aboard the Enterprise, *logical*.
FYI........there's never a time that it will be cheaper to buy a new car than to keep an old car running, ATBE!! 😉
Think in terms of *reasonable* or *desirable*......not Spock sittin' aboard the Enterprise, *logical*.
FYI........there's never a time that it will be cheaper to buy a new car than to keep an old car running, ATBE!! 😉
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