New Car Angst
 Photo courtesy of Curtis Perry |
Our minivan is dying. We need at least one car in order to survive here in Orange County. So now I must buy a new car. It makes me sick to think that I'm about to drop $25,000 - $35,000 on a new minivan just so that I can survive around here. Given that I could buy an entire South African orphanage that would sustain 12-25 orphans indefinitely for $75,000. It literally makes my stomach get tied up in knots. On the one hand how can I possibly justify spending this amount of money, but on the other hand what choice do I have? I spent about $4,000 last year in maintenance on the current car. Depreciation on a new Honda minivan runs about $2750 a year and total value of the car falls off linearly over time. So there isn't any point in even buying a cheaper used minivan. In the long run it will be cheaper for me to buy this hypothetical new car. How can this be okay? This is horribly wrong. I am trapped in a situation I hate and I can get out of it. It makes me crazy and I have no choice. I have to participate in this mind-numbing march of consumption or I can't get my kids to the doctor, I can't get to church, I can't get to a grocery store that sells gel-free diapers. There is a great bumper sticker that says, "If you aren't outraged you aren't paying attention". I'm feeling that today. |
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The value doesn't depreciate exponentially. That's why it's actually better to buy one new. Here is the amount of value that a Honda Odyssey LX loses every year. (This assumes that all Hondas in the last 7 years are equivalent because the numbers all come from Kelly Blue Book a few days ago):
- 2007 : starting price: $25452
- 2006: -$2539 (average over two years)
- 2005: -$2539 (average over two years)
- 2004: -$2435
- 2003: -$2125
- 2002: -$2230
- 2001: -$1550
- 2000: -$1865
- 2000: ending price: $10170
Posted by: DJP3 at January 25, 2007 9:23 AM
I'm thinking more resell value. The instant it leaves the lot, it becomes worth $22913. I would still argue that the best buy is a 1-2 year old.
Posted by: Nate at January 25, 2007 10:38 AM
But by buying a new car you get a year that is covered by warranty and you know exactly what you are buying. Less risk than buying a used car with uncertain wear and repair history. The loss that you see driving it off the lot is spread over that entire first year though, presuming you keep it a year.
Posted by: DJP3 at January 25, 2007 11:31 AM
I'm still unconvinced. We've put less than $1000 in both our cars combined over the last 2 years. And the Jetta in particular is crap. Even my 12 year old Bonneville (RIP) was less expensive than your depreciation.
Posted by: Nate at January 29, 2007 4:15 AM
The car situation here is just a mess. I can't find a mechanic who can convince me they know how to fix a car even though there are a million mechanics around. The service station that replaced my transmission botched it. The place I took the current car to to check the "Check Engine" light had never seen that code before and were looking it up in a book. Then they started guessing on how you would go about fixing it. They hardly inspired confidence. Then I've got the family-reliability-thing going on. I'm sick of wondering what is dripping out of the bottom of my car and having S. tell me about the new noises she heard today. If I keep bleeding money at the current rate in ten years the used car market is going to cost me between $25,000 and $60,000. Why deal with that rather than a new car for the same price?
Posted by: DJP3 at January 29, 2007 2:44 PM
The value doesn't depreciate exponentially. That's why it's actually better to buy one new. Here is the amount of value that a Honda Odyssey LX loses every year. (This assumes that all Hondas in the last 7 years are equivalent because the numbers all come from Kelly Blue Book a few days ago):
- 2007 : starting price: $25452
- 2006: -$2539 (average over two years)
- 2005: -$2539 (average over two years)
- 2004: -$2435
- 2003: -$2125
- 2002: -$2230
- 2001: -$1550
- 2000: -$1865
- 2000: ending price: $10170
I'm thinking more resell value. The instant it leaves the lot, it becomes worth $22913. I would still argue that the best buy is a 1-2 year old.
Posted by: Nate at January 25, 2007 10:38 AMBut by buying a new car you get a year that is covered by warranty and you know exactly what you are buying. Less risk than buying a used car with uncertain wear and repair history. The loss that you see driving it off the lot is spread over that entire first year though, presuming you keep it a year.
Posted by: DJP3 at January 25, 2007 11:31 AMI'm still unconvinced. We've put less than $1000 in both our cars combined over the last 2 years. And the Jetta in particular is crap. Even my 12 year old Bonneville (RIP) was less expensive than your depreciation.
Posted by: Nate at January 29, 2007 4:15 AMThe car situation here is just a mess. I can't find a mechanic who can convince me they know how to fix a car even though there are a million mechanics around. The service station that replaced my transmission botched it. The place I took the current car to to check the "Check Engine" light had never seen that code before and were looking it up in a book. Then they started guessing on how you would go about fixing it. They hardly inspired confidence. Then I've got the family-reliability-thing going on. I'm sick of wondering what is dripping out of the bottom of my car and having S. tell me about the new noises she heard today. If I keep bleeding money at the current rate in ten years the used car market is going to cost me between $25,000 and $60,000. Why deal with that rather than a new car for the same price?
Posted by: DJP3 at January 29, 2007 2:44 PM
2 things:
- I'd be shocked if the value of the new car DOESN'T depreciate exponentially.
- Every 1 American automaker-employee, is supporting 3 retirees. Yeah unions! So why does that make foreign autos so flippin' expensive? I know a relative of mine who purchased a new minivan in Mississippi, and then drove it home to Norther VA. It turned out to be a lot cheaper. Try here: http://www.carmax.com/dyn/companyinfo/locations/maplocation.aspx?location=7173
Posted by: Nate at January 25, 2007 4:14 AM