Why Depreciation is less in the US?

AMurphy

Someone asked me why USED cars in the US appear to cost more than in ROI.

I wondered the same thing.

eg, a $25K Camry is about €50K in ROI.
yet 5 years later the same car (used) is cheaper in ROI.

Again, it depends on the car, some hold their value better than others, don't try comparing a BMW or SAAB with a Kia or Hyundai. Or a Honda van against a Chrysler Voyager.

eg, last weekend I thought I might upgrade my Toy truck from the current bottom of the line basic vinyl '88 Toy 2wd to a more driveable 2000~2001 truck , 4 seater, split front, with A/C, P/S, CD, power this and that, etc.
Wow! did get a shock... $10K and up for anything worth having and some with 70Kmls and up, while at the same time dealers were advertizing somewhat similar items new for $17K.

Yet, you look at the same style, years in a Chrysler Dakota or a Nissan and the story is quiet different, maybe $7K. either way I was looking for a $5K item, older but lower miles would be fine. I'd have to go back to close to the age of the truck I already have.....

One major reason, trucks are popular and Toyota trucks have an amazing reliability history, they just go and go and go......
EU and Japanese cars tend to command a premium overall in urban areas.

However, that is not the whole story. The other half is roads and wear and tare. The asre is not driven out of a car in 100k. (The wifes van just turned 100k and looks like new, might need some suspension parts, brake job... that's about it).
Rust is not a problem in states that do not use salt on the roads.
The roads are good and smooth, so suspensions/tyres/drivers do not suffer as much. Engines tend to be larger, so are loaded lighter and thus last forever, if any good at all.
They become cheaper to insure and tax as they get older. eg ~$65 each to tax the truck & Camry for the year. So great for students, low income, etc.
No NCT in many states, so if it is insurable, it's drivable. Every student expects wheels on their 16th birthday, so Golfs, Corollas, Hyundais and Civics are very popular.
Spares are available for any age car, the aftermarket for older models is vibrant, you can get anything on the web, shipping is cheap, so cheap spares keep these old birds alive.
Other aspects are, becuase vehicles are relatively affordable, one can have a reasonably cheap vehicle for every purpose. So instead of tearing the guts out of the family Corolla towing with a heavy horse box with the family on board, one can afford to have a family car + a "beater truck" for pulling & hauling. Thus, keeping the family car in good nick for a long time.

So older, but still very reliable/repairable and driveable cars have a market, hence remain relatively expensive, not treated as trash for the recycler.

One other aspect, which I find difficult to explain. Camrys in ROI appear to have very few models. ie they are treated and equipped as "luxury" cars, hence only come with all the expensive trimmings, leather, woodgrain, A/T, etc. The Camry here is treated the same as the Avensis with you, ie the ultimate "family car".
I noticed the same with the 3.3L-V6 Chrysler Van. The only model available was the top of the line version.
A van to me is a utility vehicle, subject to being puked all over by the children and pets. So give me a nice reliable engine, with acceleration suitable for the highways about here and Vinyl, maybe ABS, but forget the leather and expensive carp, unless I ask for it.

Another difference I notice, is EU has lots of engine variations, eg 1300, 1300T, 1300TDI, 1600, 2000, 2.2L, etc, Here you may have only 2 engines in the whole fleet, 4cy or 6cyl, that's it. The fittings and body may vary a lot or just as much as in ROI.
eg Nissan/Infinity have 2 engines, 2.5 and 3.5L. That's it.

In addition, paying €1000 to tax a €2000 car appears nuts and having to pay €3000 to repair it to pass the NCT is even more nuts, so it gets discarded.

That's my take on it anyway....not 100% accurate I'm sure.

lomb

yeah as in my pm, the brothers looking for a car in texas. but there are no cheap cars at all there. hes been forced to rent for the last several months. if it was ireland id pick some wheels up for 500euro. crazy world, but thanks for the explanation.
oh i think u forgot to add badge snobbery in ireland plays a hugh role in depressing prices. agree with your take on high road tax here. personally im in favour of high road tax on luxury cars as the prices of serious automobiles here is virtually zero, eg the revenue reakon a 96 jaguar xjsport is worth 4000euro. also petrol is cheaper by 25% over the uk so its horses for courses on the road tax end of things with the uk. also say 1300 euro road tax is not alot to the 5000 euro per year for running costs even the aa says it costs to run a car.

BrianD3

It's a similar situation in Australia. There are large numbers of rust free 15-20 year old cars on the road and they still have monetary value. You see stuff like 1985 Corollas on used car forecourts being sold with warranties - a practice that is unheard of in this country.

I think all your points about US cars and why they seem to depreciate less are valid. Also, remember that Americans are renowned for being very meticulous and almost going overboard when it comes to certain maintenance eg religously changing their (fully synthetic) oil every 3000 miles. Compare that with Ireland where many cars are lucky to get one or two oil changes in their lifetime.

BrianD3

lomb

BrianD3 wrote:

Compare that with Ireland where many cars are lucky to get one or two oil changes in their lifetime.

BrianD3

lol

AMurphy

BrianD3 wrote:

.......
Also, remember that Americans are renowned for being very meticulous and almost going overboard when it comes to certain maintenance eg religously changing their (fully synthetic) oil every 3000 miles. ....
BrianD3

I think that is only a recent event. Remember when the petrol pump attendant (full service) woudl pop the hood and add a quart fo oil, whether you needed it or not....
Moders engines and diesels would not endure that abuse...

mike65

BrianD3 wrote:

It's a similar situation in Australia. There are large numbers of rust free 15-20 year old cars on the road and they still have monetary value. You see stuff like 1985 Corollas on used car forecourts being sold with warranties - a practice that is unheard of in this country.

BrianD3

Indeed the price of 15 years old Mercedes is eye popping. Saw a few 190s online at 13-15,000 oz dollars!

The engines point is interesting - I'd noticed the same thing. I guess the view in the states is a car is designed to travel on a freeway powered by cheap fuel - be it 10 miles or 400 miles in a day so you need only one ot two large low stressed engines and not everything from say 1.4 - 2.3 as in the Skoda Octavia range for example.

Mike.

lomb

australia must be a magnet for jap imports surely.

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^ I think since around 2002/03 they have some fairly harsh new laws and regulations over there as regards importing

AMurphy

mike65 wrote:

.....- be it 10 miles or 400 miles in a day so you need only one ot two large low stressed engines and not everything from say 1.4 - 2.3 as in the Skoda Octavia range for example.

Mike.

Other item is insurers (most anyway) do not differenciate much between engine sizes. Driver, value(cost) and type, yes. so the difference between insuring a 2.5L Maxima and a 3.5maxima is not much, whereas the difference between a 3.5 Maxima and a 3.5 Z would be a lot.
And as for the teen drivers. it does not matter much whether they get the hand-me-down 4cyl Golf, old 3L Camry or 70's V8 stationwagen, it's just age. Interestingly most offer teen discounts for attending school/college and getting A grades. I guess they figure, if you are studying, your are not driving.

lomb

AMurphy wrote:

Other item is insurers (most anyway) do not differenciate much between engine sizes. Driver, value(cost) and type, yes. so the difference between insuring a 2.5L Maxima and a 3.5maxima is not much, whereas the difference between a 3.5 Maxima and a 3.5 Z would be a lot.
And as for the teen drivers. it does not matter much whether they get the hand-me-down 4cyl Golf, old 3L Camry or 70's V8 stationwagen, it's just age. Interestingly most offer teen discounts for attending school/college and getting A grades. I guess they figure, if you are studying, your are not driving.

out of interest how much is that 89 camry u drive worth there? i cant say it would be worth very much here. can bring in and import a 96 bmw 750il here for 10000 euro. and cars like 95 jags are valued around 3500euro. these cars have basically shed 100grand in a few years and the better cared for ones should still have many years left in them.

Is the yank stuff reliable at all? i was talking to a guy there who had some chevy and said it spent its life in the garage. are older yank cars cheap?

AMurphy

Not much, probably $2K~$3K.
However, here's the bad part. To the grey market underground in stolen parts it's probably worth $10K.

Older Camry's/Maximax's in good condition are No1 on the hit list for being stolen for dissassembly.
eg, The 10cent plastic hubcaps for this car are $200 each from Toy. so $50 used is not impossible. How many $50 parts in a car..... quiet a lot.

American cars, including the US assembled Japanese cars tend to have softer suspensions than their EU and Japanese assembled counterparts.

I'd not buy a US car designed, styling mainly. Soft seats and suspensions being next.
However, their vans and trucks are good.
Honda has entered the mid-sized truck market, following Toyota and Nissan.

But just in case you thought the Japanese or EU had the corner on reliability, not so. BMW have had a lot of recalls and buy-backs on the 740 and others.
Honda have had their share of problems with the Oddessy van. However, if history repeats itself, they will address the problems, both short and long term, whereas I think US manufacturers often stick their heads in the sand and fail to respond, until the Safety Auth. gets on their sas.
And tehre is a bit of snob/probaganda involved. A broken A/T in a Honda is reported as "unusual" wheras the same even in a Dodge is reported as "expected".

I had a test drive in a friends Ford Expedition a few nights ago. It's a monster, but you'd not believe the low speed acceleration it has. (flattened a stop sign reversing it about corner, hee, hee). Just in case you thought otherwise, it's the Domestic Manager's new bus.

lomb

AMurphy wrote:

Older Camry's/Maximax's in good condition are No1 on the hit list for being stolen for dissassembly.
.

probably because they are the best selling cars there hence high parts demand. i did here that b4 actually about camrys being a big target. surprising there are that many thests there as the legal system/jails there are very tough. just highlights the rich/ poor divide there i suppose.

AMurphy

I'd guesstimate the theft rate is lower. Petty theft and joyriding theft is close to nil. That could get you shot.
However, whole car theft for the purposes of either dis-assembly and re-sale or shipment abroad, Mexico/Asia is greater I would think. Probably a year in jail with time off for good behaviour.

And these guys are not opportunists, but well run organizations, just running an illegal trade.

unkel

You've answered pretty much all of your questions yourself, AMurphy

AMurphy wrote:

paying €1000 to tax a €2000 car appears nuts

That is one of the core reasons. Add insurance and 300% higher fuel costs over here and you get the picture. Then add the snob factor of the age of the car *for all to see in the license plate* and the story is pretty much complete

Ask the average 45 year old how long have they been claim free? I guestimate the answer might be 5 years in Ireland and 20 years in the rest of the (old) EU...

AMurphy wrote:

BMW have had a lot of recalls and buy-backs on the 740 and others

:eek: Care to substantiate that?

stratos

Just to help out amurphy here, bmw reckon the U.S. 740 il nearly bankrupted them, It had so many recalls and faults. The older version by the way. I have owned many different types of cars, and I have to say, maybe I was just unlucky, but bimmers have cost me the most trouble of all cars i have ever owned. Never anything too major but problems none the less. I had a mazda 626 for 7 yrs I didn't even know it had a bonnet! Then I fell in love with the Barvarian smile maker, I love them, I love the way they drive, but they are highly strung and fall ill very easily.

unkel

stratos wrote:

Just to help out amurphy here, bmw reckon the U.S. 740 il nearly bankrupted them

Specifics please? Hearsay doesn't help...

For one, I find it hard to comprehend why the 740iL in particular would be the culprit

stratos

Hey I just read an article about this in a magazine. The jist was the 740 il in the U.S. had major emission problems. Bimmer had tried to use a quick fix on the software, it didn't work. Some cars had to be bought back from owners and all cars had to be modified. I can't remember where i read this but I am sure if u googled it, it wouldn't exist!

AMurphy

One friend had her 318 bought back and traded up to a 330 cause it would suddenly loose traction (all gears) on teh highway. pull over to the side swithc off and back on again and presto, gears again.
BMW replaced the AT, the AT-ECU, the Wiring loom between the two and still no resolution, eventually the offered her money back.


Another friend was the service manager in the local BMW dealer and he relayed the problems of the 740. As I asked him. is it a case of it will not start if you have the door open and the left indicator on..... not as absurd, but software nonetheless.
Did not hear of the Emmissions problems, but it could be related as they are all ECU controlled, eventually.

I'll not speculate on these problems and it could be a case of exceptionally bad diagnostics.... I dont know. But does it really matter, if a car is so comples as it takes a PhD with a $5mill tester to check it out.

btw, Chrylse vans, just line the one I have, has a history of electrical Gremlins in the ECU/Dash. And I believe it, even my own develops them from time to time, expecially just before the battery fails.

lomb

stratos wrote:

Hey I just read an article about this in a magazine. The jist was the 740 il in the U.S. had major emission problems. Bimmer had tried to use a quick fix on the software, it didn't work. Some cars had to be bought back from owners and all cars had to be modified. I can't remember where i read this but I am sure if u googled it, it wouldn't exist!

what years 740il are we talking about. surely the 95/96 ers no?
on a seperate note there are many many software glitches with the new 68 7 series. i have to say the looks grow on you. they wanted a high tech interpretation of the car and the new 7 series is it. everything is computerised.its a car for the sucessful dot com millionaire. i expect when the oldest ones start coming off the waranty and in a couple of years when the niche market for used ones floods the used price is in for a severe drop.

unkel

Researched this and found it to be an issue applicable to US cars only. It involves all BMWs with the M60 engine. This engine was manufactured between '93 and '96 and sits in the 530/540/730/740/840 of those years. The problem was that the engine exceeds the US federal nitrogen oxide exhaust emission standard. 30000 cars in the US were recalled for a 2 hour job (including ECU change)

Believe me, this is NOTHING compared to the only serious issue with BMWs I have ever come across, the Nikasil issue. This effected a range of engines but was worst in above M60 engine. The problem doesn't appear until the car is well out of warranty. BMWUS was forced by consumer pressure to extend to 6 year / 100000 mile warranty and thousands of engines were replaced by same engine (but now Alusil) FOC. No such luck for the British owners...

Of any substantial BMW markets, this only really affected the UK and the US as some of the petrol used there is the high sulphur petrol derived from non-Arabic (non-middle eastern) oil

I had that engine in my last car

AMurphy

AMurphy wrote:

One friend had her 318 bought back and traded up to a 330 cause it would suddenly loose traction (all gears) on teh highway. pull over to the side swithc off and back on again and presto, gears again.
BMW replaced the AT, the AT-ECU, the Wiring loom between the two and still no resolution, eventually the offered her money back.

This was last year on a <1yo car.

No details/years on the 740 problems.