Do you think of Depreciation?

coil1985 · 18-08-2023 8:32pm #1

When buying a car, do you factor in depreciation as part of your decision? And if you have in the past, has it worked out the way you planned?

Jim_Hodge · 18-08-2023 8:36pm

Its never something I consciously consider. Trade ins have often faired better than I anticipated though.

Allinall · 18-08-2023 8:37pm

Yes.

I tend to buy cars about 2-4 years old, and keep them for 8-10 years.

I have a figure of €2- 2.5 k allowed for depreciation in my overall cost of running a car.

With my next car, I will probably have to up that to €3k, given the prices now.

coil1985 · 18-08-2023 8:41pm

https://www.boards.ie/discussion/comment/120998016#Comment_120998016

€2- 2.5 k depreciation over 8-10 years? Or am I reading that wrong?

Allinall · 18-08-2023 8:57pm

https://www.boards.ie/discussion/comment/120998039#Comment_120998039

Yes.

Last car I bought before my current one- Paid €21.5k in 2010 for a four year old car. Sold it for €1k after 11 years.

Paid €27k for my current car. 3 years old. Plan is to keep it for up to ten years.

Jim_Hodge · 18-08-2023 9:01pm

https://www.boards.ie/discussion/comment/120998109#Comment_120998109

You're taking per annum then?

Allinall · 18-08-2023 9:03pm

https://www.boards.ie/discussion/comment/120998130#Comment_120998130

Yeah. Sorry. I think in yearly costs.

Edit:- just re-read my first post and can see the confusion.

bazz26 · 18-08-2023 10:35pm

Depreciation is a fact of life. Thinking about it or trying to spend your way out of it won't change it.

Psychedelic Hedgehog · 18-08-2023 10:56pm

Normally yes, with my most recent purchase, nah, fcuk it. Probably my last fossil-engined car and prepared to run it for as long as it takes for EV practicality to exceed it in every way.

GSBellew · 18-08-2023 11:49pm

No, I do not think about depreciation when buying a car.

Youngest car I ever bought was 6 years old, that was is 2000, still have that one, cost me IR £ 3,500 back then so if it is worth nothing now so be it.

Other cars, bought cheap, run for a few years & sold on, most of them for as much as they cost (some including running costs) that's why I love bangernomics.

I'd say there is one car I have here that is borderline with being worth less than it cost me, cost me € 1,400 maybe 4 years ago, not really worried to be honest.

Jim_Hodge · 19-08-2023 6:58am

Thinking about it now, as I always buy new and change every 3 years, it's just as well I don't consider depreciation.

Akrasia · 19-08-2023 9:20am

Some used car asking prices are nuts. People looking for 18-20k for a 2018 Leaf when 2017 models with all 12 bars of battery are on sale for 12k.

Who wants to pay 6-8k depreciation in 1 year on a 6 year old small family car

There needs to be a big fall in used car values at the top end of the market and this will feed into used prices all the way down. Lots of people will get burned on depreciation but they should be able to trade up as newer cars will fall faster than older cars

blade1 · 19-08-2023 9:30am

Nope, or don't think of cheap tax or trying to get as much mileage as cheap as possible either.

User1998 · 19-08-2023 11:43am

I buy private and negotiate hard. Keep the car for 6 months or so and usually sell for a profit or break even. So zero depreciation over the last 6 years or so driving relatively new cars. Obviously this isn’t practical for everyone tho

CR 7 · 19-08-2023 11:59am

Thinking about it is making me hang on to my current car longer than I had planned. I had usually bought something for €2-3k and kept them for about 3 years. Getting anything back after the 3 years was a success then.

I bought my current Fiesta ST for about €15k in January 2020 and current values are back to around there and staying fairly steady now. I'm going to keep it until I find something interesting and ok value, which is basically impossible nowadays.

Wishbone Ash · 19-08-2023 5:03pm

No, never consider it. I always presume my car will be of zero value when I'm finished with it. Anything more is a bonus.

BrianD3 · 19-08-2023 6:26pm

I keep cars for a long time and don't really think about it, I probably think about it indirectly and in general terms - if I spend more than a grand or two on a car, I accept it will depreciate. The higher the purchase price, the worse the depreciation will likely be. I do not think about the "equity" I have in my car (or other possessions) or bank on them being worth x when I dispose of them, I assume that they will be worth very little .

There's been a lot of stuff posted in this forum over the years regarding depreciation. E.g. during the Renault scrappage scheme circa 2010, posters here were convinced that buying a new Clio for 8.9k euro or a new Megane for 14.8k was a bad decision because "it'll depreciate like a stone and Renaults are sh*te". My opioion at the time has proven to be correct - these scrappage Renaults were very good buys, reliable and long lasting. I know someone who recently sold her 2010 Clio for 3k, that car cost 8.9k new.

_Kaiser_ · 19-08-2023 8:10pm

https://www.boards.ie/discussion/comment/121000870#Comment_121000870

Same.. my current and last 2 cars are all "big" (3L - massive by Irish standards) diesels that did a lot of miles and given the markets fear of anything over 10 years old, over 2L and 100k km/miles I knew I wouldn't get very much for them when the time came.

My current one is a 2012 3L diesel with only 165k km on it, but it won't be long again before the insurers start telling me it's "too old" for many of them etc which will force me to get rid of it before its time.

reubenreuben · 21-08-2023 3:59pm

https://www.boards.ie/discussion/comment/121001853#Comment_121001853

The 3 litre would probably last longer due to being less stressed. Can't understand why insurance have issues with 10 year cars or even 15 year cars.

Its not the 70s or 80s when cars only lasted a few years before the rust got them.

galwaytt · 21-08-2023 3:59pm

https://www.boards.ie/discussion/comment/121000870#Comment_121000870

Ditto. Anything else is just you trying to talk yourself either in to, or out of, something. I assume 100% depreciation over the length of (the loan, say) used to buy it.

After that anything it gets is just gravy.

hoodie6029 · 21-08-2023 4:46pm

https://www.boards.ie/discussion/comment/121008275#Comment_121008275

Is that still an issue? I know it probably is for new drivers and first time insurance. I would have thought 20 plus would only be a problem if you have an existing policy.

_Kaiser_ · 21-08-2023 8:05pm

In my experience, the number of insurers that will quote for an older bigger-engine car will reduce steadily after it passes 11 or so. Those that will quote will be higher rates or less coverage, or higher excess etc.

That said, with my last car I was also doing massive mileage (over 60k annually) which I've now reduced to about a third of that since WFH became normalised, so we'll see if it's any different this time I suppose.

zg3409 · 22-08-2023 7:20am

My brother always says any car is a bad investment and your aim should be to reduce costs.

Annual.deprecuation is one of the highest costs and it can vary massively depending on vehicle type, when you sell an expensive to run cars are in less demand in used market.

Typical figures are 20% in first year and then 10% each following year, as a ball park. Certain cars are much higher.

Try to haggle for a bargain when buying and try sell at a high price with no discounts.

RayCon · 22-08-2023 7:32am

https://www.boards.ie/discussion/comment/121000870#Comment_121000870

Ditto. Bought my current car , 2007 Honda Accord, in 2015 for €4450. €4450 / 8 yrs = €556 per year depreciation assuming I binned it now (which I'm not , fresh NCT until next March).

User1998 · 22-08-2023 9:26am

https://www.boards.ie/discussion/comment/121010537#Comment_121010537

And if you were to buy another 8 year old Honda Accord today it would cost more than 3 times what you paid! Car prices are ridiculous now

Dr_Colossus · 22-08-2023 9:47am

+1, I bought my 2007 Volvo S60 2.0 petrol in 2014 for €3,000. Great car and has been super reliable over the years but tax at €710 and insurance ~€500 is a bit of a killer.

Very hard to find a 7-8 year old decent size petrol car now and the prices are stupid so the Volvo remains in possession.

kanuseeme · 22-08-2023 12:49pm

Sorry for the long post, summary is at the end.

I bought a 2008 SsangYong actyon sports in 2011 for 7000euro, sold it 4 years later for 4000 euro, my wife had a small yellow bird, I tried explaining to her that all cars depreciate, I liked it, 700e a year tax and 30-35 mpg.

Next car, a hybrid, I told her I bought it for 8000 euro when in fact it was a grand more, any way she was learning to drive and needed to look for what seemed like half a minute at an empty round about and some poor guy crashed into the back of us, obliviously the guy could see no one on the roundabout and kept his speed up and made the mistake of thinking my wife could do the same, that resulted in a cheque for 3000e and sold the car for 6000 after a year, my wife thinks its great, we are up 1000 euro. Around 50 mpg

So I'm up sh1t creek now, how do I keep this up, what do the dealers do, they buy from the UK, so thats what I done, another hybrid, cheap tax, a fill cost a half less and lasts 2 times longer than the SsangYong. On a winner, the car cost me 15000e(which my wife did not like spending that much), for a 2.5 year old Lexus ct , I started to think about electric and plug ins, as the next biggest expense is fuel, that car was the same 50 mpg

I wanted a phev as leafs have crap range and tesla's very expensive, no way would my wife go for it.

Imported a 2015 Mitsubishi phev in 2018 for 18000euro, at the same time sold the Lexus for 14500 euro, in fairness the wife was happy with that, but not happy with another 3000 euro spent on a car. The main reason for a 500 euro loss was the pound devaluing and the rise in new car prices in turn keeping 2nd hand prices up, had the pound kept value, it would be more.

Now I was very happy with the phev, excluding home charging, got free charging at work and for a while at Ecars, even when charging for charging came in it was still cheaper. Spent 1000 euro on fuel mostly on longer journeys, but I believe I saved about 2000 euro fuel wise considering the amount of km I done, but no idea on electricity. The phev was something ridiculous like 150 mpg.

I wanted one last car before Brexit, I could not sell the outlander and I was stuck with it, then I started to look at Japan, I purchased a Toyota Prius phev for about 5000, by the time tax etc it was 10000 and just before it landed sold the Mitsubishi for 15000euro, down 3000 but saved 2000 and 2.5 years of use.

Wife was happy, did not loose as much when I explained it and the new car cost less.

Imported a Japanese 2017 BMW 330e for 18000, sold the Toyota for 12750 euro, up 2750euro, fuel was only 300 euro or something for the year.

Imported a 2020 BMW 225xe for 20000, wife understood it was great value and did not mind 20k spent, and sold the 330e for 20000, up 2k, spent 250 euro on fuel.

Summary:

I do about 12000 km a year, ignoring fuel, as with the phevs so little is spent on fuel. I am down 1750 euro over 12 years, which I should be able to clear with the 225xe.

The short of it for me, is that its pure luck, lucky that I married the right woman, then currency movement and purchasing at good value and selling at good value for me and the purchaser.