Thread: Costs of Car Ownership ? The Tale of 2 Cars.

Originally Posted by Rok_Dr

My son recently purchased a nice Subaru, which along with him giving me a good ragging about the cost of some recent maintenance for the Alfa, got me indulging in another numbers exercise, to look at the cost of new vs second hand car ownership.

The headline summary first.

1. The depreciation of a new car will buy you awful lot of repairs on an older car.
2. At 10 years or so, any car regardless how well maintained, will require non routine repairs which will require some $. This pattern will repeat itself periodically the longer you own it.
3. As time goes on the car will no longer depreciate and condition/originality, rather than age or Kms will dictate its value. You may be lucky and find it appreciates, but don't plan on it.

So firstly my son's new Subaru. It's a one owner, 2005 mid-range, Liberty sedan with just over 80K. The car came with a rather complete set of service invoices including the original sales contract. An honest car, which has only required 2 tyres and a routine service to get up to scratch.

The original owner paid $37500 for the car in mid 2005 and sold it for $6500 in January, which equates at just under $3,000/year in depreciation. The invoices that came with the car documented just under $6,000 in service costs which approximates $550/yr. I suspect that actual figure would have been a tad higher, but not by much. All up excluding rego, insurance etc that is $3,500-600 per year.

Now the Alfa. I bought this second hand in 1994 at 8 years old. Paid $22K which was approximately half the new price and it was my regular car till about 7 years ago. Over the 22 years of ownership, I've spent almost $42k on repairs, which equates to just under $2k per year. This has included a lot of major work to the extent that only the gearbox/transaxle remain untouched. Mechanics have done most of the work on the car. As you'll see from the graph below there have been a few high cost years and I'm just coming off a period of major rebuilding.



In isolation $2k a year sounds a lot of coin, but when compared to the Subaru's depreciation it looks pretty reasonable.

A recent valuation puts its value in the low-mid $20k range, so effectively there is no depreciation. I don't expect its value to change much in the future, provided I keep it in good nick, despite there being few good ones left.

Finally if you are really sleep deprived and are interested in what a typical 12 year old disco 2 requires to keep on the road, have a look at my annual posts. The link to last year's follows and year 4 will appear in May.

http://www.aulro.com/afvb/discovery-...ownership.html

Cheers

Steve

Wow some serious $$$$ ... My cars have always been run on a shoe string. Your $2000 cost would likely keep me going for a decade It's called driving a ****ter and wasting countless hours of your life tinkering and fixing cars

The last Rangie I bought was $800bucks ... It's an awesome heap of ****. Gimme another few months of spending the spare 1/2hour a week I have on it and it'll be set for quite a few years use with little upkeep I imagine.

seeya,
shane L.

I guess it comes down to the brand and how they hold their value. I was looking at getting a D4 and ended up getting one of the last Ford FPVs instead and a second hand D3. My D3 came with a lot of extras. It is an SE V8. A new SE with all the gear I have would cost over $100000. Mine cost $24000. The only downside so far is the fuel economy. I have spent a bit of time on it. I am up for some new tyres after 30000km and I want to replace a few bushes underneath. I might replace the rear air springs at tax time. It is currently up on blocks in the garage whilst I service the handbrake. My biggest issue with maintenance is finding the time. I have a 2 and a three year old and they do get in the way. I would have had free maintenance for three years with a new D4 but I do enjoy a bit of work on the car. I find it very satisfying researching stuff and getting advice on here. The Nanocom helps to. The lease payments on a D4 would be over $20000 a year alone. I still want a D4 but I will wait and try and get a good second hand one that I can swap over a lot of parts.
If you think the depreciation on the Subaru is bad, think of the people who bought a new P38 RR for $130000 that is now worth $10000. I had a Subaru Liberty RS turbo. Paid $21000 on what was a $45000 car. I sold it 5 years later for $20000. It needed new tyres, windscreen and the zircon regassing. Great car.
I think it come down to spare time and how handy you are at maintenance. My D3 would have broke me already if I had of paid a dealership to do what I have done.

The way I look at it on a $12,000.00 vehicle over three years your repayments would be $4000 / year. That would be on a used vehicle and being few years old so you could be up for maintenance costs on top of that. So I do not mind spending up to $6000.00 a year on my old Disco.

Originally Posted by crash

The way I look at it on a $12,000.00 vehicle over three years your repayments would be $4000 / year. That would be on a used vehicle and being few years old so you could be up for maintenance costs on top of that. So I do not mind spending up to $6000.00 a year on my old Disco.

My disco owes me less than 5k. Total expense buying and upgrading AND replacing ****.
To spend 6k a year on it i would simply **** my own pants.
No chance i would spend that much on an old car!!!!!!!!!!!!!!!!!!!!!!!!
Early discos you put old stuff on them. To try rebuild one to new is simply insane.
Good cars perhaps. Flog them FOR SURE but rebuild to original lol.
Original was the whole damn problem if im not mistaken.

Love LR in a lot of ways i really do, but im moving on to bigger and better things....

I feel better about my D1 now, coming up to 10 years of ownership and apart from normal maintenance items has only cost me about 2K over that period in major mechanical items.

Thanks all!

There are some interesting perspectives there in your comments, which support the thesis that a good second hand car will save you money. So running from the top down.

You're dead right Shane that if you run on a shoe string and do a lot of work yourself the cost per year will be significantly less. With 4 cars I'm doing a lot more myself than I was 10 years ago and for the Pulsar, which is my blurter/banger its costs are insignificant, But it's never going to get the clearcoat fixed or be blessed with premium tyres.

As to premium vehicles and greater depreciation Carl I totally agree. My XJ12 Jaguar, Lady P was sold to her first owner as a demonstrator and comparing the list price (approx $180K) to what was on the sales invoice, the car had lost over $30k in the first year alone. When you look what I paid for her 20 years later the depreciation hit comes to almost $8k per year.

Ditto financing a car, Crash/Carl, which is another "hidden" cost we forget about. For giggles I put a $30k secured loan over 5 years with no balloon payment into the bank calculator today and came up with just over $6k in interest payments. So for the Subaru if you bought in under finance with a reasonable deposit, add another $1200/year hit on the back pocket over the period of the loan. Thankfully I've been able to pay cash for all my cars and believe it or not the Alfa at $22k is the most expensive car I've bought.

As for accessories and options, unless its a must have, like aircond they add little or no value to the car when it's sold and if the car has been highly modified may even reduce its value.

To take a long view perspective Damink, the Disco 1, in 20 years time will be like a Series 3 today and if kept in good nick will be holding its own in value. Maybe not as good as nice 2 door Rangies are doing now though. I'm amazed at some of the prices I see today for 70's aussie and jap cars which were nothing special when they were new.

Cheers

Steve

Extras are a sore point with me. My patrol was bought new for just under $50000. I sold it 9 years later for around $20000. I did over 300000kms in 9 years and maintained it well. I did consider a new engine as the vehicle was well maintained. Never had problems with the engine or anything, I was just thinking it was near the end. It seems unless you get the car set up exactly how you want it from new, which could easily cost $20000 more, you finally get everything you want and the car is getting on a bit. I spent about $15000 on bits on my Defender and then the ex made me sell it because it was too unsafe for the kids. You should never expect to get your money back on extras but it sure is nice to get a car well set up like my D3.

Interesting points here.


I think it depends on what your plans are for the vehicle. We have two vehicles for which we adopted totally opposing approaches.


On the Mazda 2 runabout we decided to treat it like renting a vehicle, so we did the budget, decided we could spend $100 p.w. and financed it over 5 years. With fixed price servicing and an extended warranty the aim is simply to treat it as yet another household expense and one day it will be replaced.


With the Defender we took the opposite approach. It is to be kept forever. Therefore we paid cash for a good 2009 model with low kilometres. It is not normally used for commuting and gets its maintenance by the schedule. In 20 years, if we look after it, I expect it to have held its value pretty well.


So, differing approaches for differing purposes.