Cost of ownership?
10-14-2002, 05:34 AM
#16
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[quote]Originally posted by J-McDonald:
<strong>Any used car that's more than 2 years old will look good compared to a new car, from a depreciation perspective. </strong><hr></blockquote>
J,
I think this is a difference in the Europe vs USA market. Cars here (especially in the UK) depreciate by a huge amount. For example, you can buy a 3 year old BMW 540 for as little as $15,000, I don't think that would be the case in the US?
Even worse, the average family Ford (for ex) which costs about $25,000 new can be bought after 6 years for about $2000 (or less).
<strong>Any used car that's more than 2 years old will look good compared to a new car, from a depreciation perspective. </strong><hr></blockquote>
J,
I think this is a difference in the Europe vs USA market. Cars here (especially in the UK) depreciate by a huge amount. For example, you can buy a 3 year old BMW 540 for as little as $15,000, I don't think that would be the case in the US?
Even worse, the average family Ford (for ex) which costs about $25,000 new can be bought after 6 years for about $2000 (or less).
10-14-2002, 02:34 PM
#17
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Riccardo - you're correct - depreciation isn't quite that extreme in the US, although all of the zero percent financing offers currently available from "Big Three" car manufacturers are allegedly killing the used car market, driving down prices.
Bob - despite the gloomy tone of my previous post, I really do believe that buying a 911 is a much smarter investment, from an economics perspective, than buying a comparable Ferrari, Lotus, BMW, etc. From what I've seen, after new-car depreciation has taken its toll, 911's seem to "bottom out" at certain price points (depending upon configuration - coupe, cab, targa - and model C2, C4, Turbo, etc.) that are still much higher than cars costing comparable amounts when new. For example, compare a 1991 C2 cab and a 1991 BMW 740, which both cost ~$75,000 new. Assuming the same mileage (~50,000), the 911 will be worth 2-3 times as much as the BMW (~$25k vs. ~8-10k). Also, because of their high build quality and resulting durability, higher mileage 911's (100k+ miles) command a sizeable percentage of the value of lower mileage examples. Compare what happens to the value of a Ferrari when it exceeds 30k miles.
Despite all of this, if you use a 911 as a daily driver and consequently rack up lots of mileage, it will depreciate. Since 911's are relatively expensive cars, the amount of that depreciation will be large, from an absolute dollars perspective. On the other hand, if you buy a 911 and drive it on weekends & nice days only, accumulating <5k miles per year, you'll do very well from a depreciation perspective, probably being able to sell it for very close to what you paid for it a couple of years down the line.
My own personal theory is that the relatively low depreciation rate of 911's contributes to serial 911 ownership - people buy their first 911, use it for a number of years, and are still able to sell for enough to put down a sizeable amount on their next 911.
Bob - despite the gloomy tone of my previous post, I really do believe that buying a 911 is a much smarter investment, from an economics perspective, than buying a comparable Ferrari, Lotus, BMW, etc. From what I've seen, after new-car depreciation has taken its toll, 911's seem to "bottom out" at certain price points (depending upon configuration - coupe, cab, targa - and model C2, C4, Turbo, etc.) that are still much higher than cars costing comparable amounts when new. For example, compare a 1991 C2 cab and a 1991 BMW 740, which both cost ~$75,000 new. Assuming the same mileage (~50,000), the 911 will be worth 2-3 times as much as the BMW (~$25k vs. ~8-10k). Also, because of their high build quality and resulting durability, higher mileage 911's (100k+ miles) command a sizeable percentage of the value of lower mileage examples. Compare what happens to the value of a Ferrari when it exceeds 30k miles.
Despite all of this, if you use a 911 as a daily driver and consequently rack up lots of mileage, it will depreciate. Since 911's are relatively expensive cars, the amount of that depreciation will be large, from an absolute dollars perspective. On the other hand, if you buy a 911 and drive it on weekends & nice days only, accumulating <5k miles per year, you'll do very well from a depreciation perspective, probably being able to sell it for very close to what you paid for it a couple of years down the line.
My own personal theory is that the relatively low depreciation rate of 911's contributes to serial 911 ownership - people buy their first 911, use it for a number of years, and are still able to sell for enough to put down a sizeable amount on their next 911.
10-14-2002, 04:10 PM
#18
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Not sure about US prices, but as an example of depreciation in the UK, before I bought my 964, I picked up a 1988 BMW 525 for £500 (about $700?). It was a fine car, too, if you like that sort of thing. Thankfully (or not depending on your point of view) Porsches hold their value rather better. 
Phil
Phil