Running into the ground together...

Recession or not, the economy is limping, many folks are feeling the pinch. So what can we do with what is usually the second largest purchase in most people’s lives -- that wonderful, useful money pit known as the car? Internet surfers who have recently clicked on to The Motley Fool (the website that dispenses nuggets of useful financial info) might have noticed one article recommending that, instead of swapping our vehicles every three years, we should run them into the ground.

The logic behind this is sound. As soon as a new car is driven off the lot, it loses a large chunk of its value. And according to Kelley Blue Book, 65% of an average car’s worth is lost in its first five years. Even cars with the strongest resale performances, like the Honda Civic and the Toyota Corolla, are likely to shed half their value. But, with proper maintenance, modern cars can run to over 100,000 miles, or about 10 years of duty. Some will last much, much longer. So if the owner has already taken the biggest financial hit, why get a new car and do it all over again?

Yes, older cars break down more often, spending more time on the lift than on the road. The Motley Fool argues that, over a driving lifetime, cash spent on repairs and extra maintenance will add up to less than money lost in depreciation. What it doesn’t go into, however, is the inconvenience of having increasingly unreliable transport. And most of us are willing to pay extra to avoid being at the mercy of unscrupulous shops -- the ones that say the engine needs replacing when all that’s required are four new spark plugs. Still, it’s food for thought. And with less potential buyers walking into showrooms, the deals could be sweeter.

-- Colin Ryan

Photo: Mercedes-Benz

Comments

[Ed C.]

There is really nothing wrong waiting out to buy a new or late-model used car (probably 3 years old or younger). But if you plan to drive your car until it breaks down, be ready to spend on repairs and be wary of bad repair shops. However, if the repairs cost more than the actual car itself...it's time to head to the showroom.

[Rogern1967]

Not sure if it is just me, but the annual mileage assumption of 10,000/yr seems paltry for those of us in SoCal.

Additionally, my experience with current generation autos (especially the Asian models) is that the drivetrains seldom wear out when properly serviced. A 200,000 mile engine is very achievable...even without the excessive 3000 mile interval oil changes advocated by the oil change industry. A wise driver/owner need simply follow the manufacturers recommendations for service.

While many folks complain that their three year old cars aren't "worth" putting money into for repairs (like a set of tires)...what they are rationalizing to themselves is "I am tired of this car, I want a newer, more exciting model."

Nothing wrong with that I suppose, but it certainly is not the wise move if you care about money.