Which will have a better residual value - 996 or 997?
09-29-2009, 10:01 PM
#16
Three Wheelin'
The cars have at least to date depreciated similarly in terms of black book (although early 997s seemed to drop a little harder than early 996s since the early 996s were resold into a buoyant credit market and the early 997s were resold into a severe credit crunch)
That having been said, assuming this continues, the 996, solely due to age therefore dependent on model year, should cost less in absolute dollars to purchase than the 997, so the loss to depreciation should be lower in absolute terms.
I will compare CPO C2 cars so that warranty repair costs will be apples to apples comparable between the two and the premium potentially associated with C4S can be removed from the equation, but say you bought an 03 or 04 996 for 35K (CPO) vs an 05 997 for 40K (CPO)
Assume both cars will depreciate a minimum of 20% each in the purchase year (due to sales tax, dealer profit, CPO cost, etc inflating the buy price above the most efficient market price at auction)
For each subsequent year, you will lose a declining percentage, so if one were to assume that credit and general economic factors affecting purchasing power and demand do not decline precipitously from their current position, let's assume that:
- the 997 depreciates 20% 10% 9% 8% 7% over the next 5 years
- the 996 depreciates 25% 8% 7% 6% 5% over the same period (because the CPO premium is higher as % value here)
Why do I make this assumption? because the older car has a higher percentage margin over auction price in its purchase price so it has more to lose initially, however it also already has 2 years of additional depreciation priced in so its ongoing depreciation is later in the overall depreciation curve for the model year.
The 997 at the end of this exercise will be worth ~22K, low side maybe 18-19 (so you lose ~18K to maybe 22)
The 996 at the end of this exercise is worth ~20K maybe a touch high, perhaps $16-17 on the low (you'll lose ~15K to maybe 19K worst case)
That in my book is pretty close to a wash.
How close is that to reality? MY2000 cars are often advertised @ ~22K at 90-100K . Auction much lower particularly in CA, but they are at a disadvantage currently in terms of credit on both ends, along with some major supply/demand inequities
How close is my crazy depreciation model to those of the big prognosticators'? Here's Edmunds TCO for a 2004 C4S vs a 2005 C2
True Cost to Own®
2005 Porsche 911
Carrera Rwd 2dr Coupe (3.6L 6cyl 6M)
True Market Value Price $35,297
Sales Tax & Fees for Your State $3,426
Total Cash Price $38,723
Year 1 Year 2 Year 3 Year 4 Year 5 5-yr Total
Depreciation $3,586 $3,139 $2,803 $2,546 $2,336 $14,410
True Cost to Own®
2004 Porsche 911
Carrera 4S AWD 2dr Coupe (3.6L 6cyl 6M)
True Market Value Price $34,423
Sales Tax & Fees for Your State $3,343
Total Cash Price $37,766
Year 1 Year 2 Year 3 Year 4 Year 5 5-yr Total
Depreciation $3,542 $3,097 $2,767 $2,514 $2,309 $14,229
Notice they smooth the curve, whereas I use more of a cliff and slope
Remember if buying a car without a warranty, the same way that the depreciation is marginally lower on an older car, the maintenance and repair budgets are marginally higher. I would estimate that the deal would scrub in that case and therefore would be heavily in favor of the 997 unless AWD was desired. If you were to ask me, I'd say if looking at 03-05 996 C4S or even C2 vs 05 997, cpo to cpo or no warranty to no warranty, buy the 997.
Final words of advice, buy the very newest 911 you can comfortably afford if you plan on driving it frequently, and don't forget to get the one that you want deep down inside!
That having been said, assuming this continues, the 996, solely due to age therefore dependent on model year, should cost less in absolute dollars to purchase than the 997, so the loss to depreciation should be lower in absolute terms.
I will compare CPO C2 cars so that warranty repair costs will be apples to apples comparable between the two and the premium potentially associated with C4S can be removed from the equation, but say you bought an 03 or 04 996 for 35K (CPO) vs an 05 997 for 40K (CPO)
Assume both cars will depreciate a minimum of 20% each in the purchase year (due to sales tax, dealer profit, CPO cost, etc inflating the buy price above the most efficient market price at auction)
For each subsequent year, you will lose a declining percentage, so if one were to assume that credit and general economic factors affecting purchasing power and demand do not decline precipitously from their current position, let's assume that:
- the 997 depreciates 20% 10% 9% 8% 7% over the next 5 years
- the 996 depreciates 25% 8% 7% 6% 5% over the same period (because the CPO premium is higher as % value here)
Why do I make this assumption? because the older car has a higher percentage margin over auction price in its purchase price so it has more to lose initially, however it also already has 2 years of additional depreciation priced in so its ongoing depreciation is later in the overall depreciation curve for the model year.
The 997 at the end of this exercise will be worth ~22K, low side maybe 18-19 (so you lose ~18K to maybe 22)
The 996 at the end of this exercise is worth ~20K maybe a touch high, perhaps $16-17 on the low (you'll lose ~15K to maybe 19K worst case)
That in my book is pretty close to a wash.
How close is that to reality? MY2000 cars are often advertised @ ~22K at 90-100K . Auction much lower particularly in CA, but they are at a disadvantage currently in terms of credit on both ends, along with some major supply/demand inequities
How close is my crazy depreciation model to those of the big prognosticators'? Here's Edmunds TCO for a 2004 C4S vs a 2005 C2
True Cost to Own®
2005 Porsche 911
Carrera Rwd 2dr Coupe (3.6L 6cyl 6M)
True Market Value Price $35,297
Sales Tax & Fees for Your State $3,426
Total Cash Price $38,723
Year 1 Year 2 Year 3 Year 4 Year 5 5-yr Total
Depreciation $3,586 $3,139 $2,803 $2,546 $2,336 $14,410
True Cost to Own®
2004 Porsche 911
Carrera 4S AWD 2dr Coupe (3.6L 6cyl 6M)
True Market Value Price $34,423
Sales Tax & Fees for Your State $3,343
Total Cash Price $37,766
Year 1 Year 2 Year 3 Year 4 Year 5 5-yr Total
Depreciation $3,542 $3,097 $2,767 $2,514 $2,309 $14,229
Notice they smooth the curve, whereas I use more of a cliff and slope
Remember if buying a car without a warranty, the same way that the depreciation is marginally lower on an older car, the maintenance and repair budgets are marginally higher. I would estimate that the deal would scrub in that case and therefore would be heavily in favor of the 997 unless AWD was desired. If you were to ask me, I'd say if looking at 03-05 996 C4S or even C2 vs 05 997, cpo to cpo or no warranty to no warranty, buy the 997.
Final words of advice, buy the very newest 911 you can comfortably afford if you plan on driving it frequently, and don't forget to get the one that you want deep down inside!
09-29-2009, 10:57 PM
#18
Parts Specialist
Rennlist Member
Rennlist Member
post #16 ended my night - DAYAM !thats a lot of real well thought out numbers....I had to read it twice and then had only one thought -
do you want to be my finacial advisor
do you want to be my finacial advisor
09-29-2009, 11:02 PM
#19
I'd guess 997.. The 996 is the "midyear" of the watercooled cars.. unloved by many. I also think total 997production numbers will be lower than the 996. I guess what I am saying it that in 4-5 years I'd pay more for a 997 than I would a 996.
09-29-2009, 11:05 PM
#20
Intermediate
Join Date: Aug 2009
Location: Atlanta, GA
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That is an awesome analysis. Down to the last word. So often we hear the mantra "buy the nicest you can afford," but so rarely the proper addional point of factoring in how much you will drive the car, and adjusting your cost window accordingly.
09-30-2009, 02:27 AM
#22
Three Wheelin'
yup don't think we can argue with htny's thorough analysis....mine is more intuitive.
People seem to like the 997 more, so apples to apples (say a 04 996 vs 05 997, both normals, same mileage and colour) I'd guess the 997 would be easier to sell in 4-5 years than the 996. Could you get more money....maybe a grand or two, but really how important is that. Buy the car *you* like best now.
I like the 996 but all else equal (I think) I'd rather have a 997. For me it was a no brainer because I couldn't touch a 997 for what I paid for my 2002 996.
People seem to like the 997 more, so apples to apples (say a 04 996 vs 05 997, both normals, same mileage and colour) I'd guess the 997 would be easier to sell in 4-5 years than the 996. Could you get more money....maybe a grand or two, but really how important is that. Buy the car *you* like best now.
I like the 996 but all else equal (I think) I'd rather have a 997. For me it was a no brainer because I couldn't touch a 997 for what I paid for my 2002 996.
