Mum's 1989 Volvo 440 1.7 GLi, owned from new, has just reached the end of its road sixteen years and two months on. Maintenance costs have been buttons, and reliability - save a coolant hose popping off when almost brand new - absolute. The car is now worth nothing but it has given exemplary, cost effective, service. In fact, a couple of hundred quid would see it back on the road but it is no longer needed, so "thanks and bye bye". The 440 follows a 1972 144S that was owned from new for 17 years and only sold because of posting abroad, and the 1979 244DL that I learned to drive in and which was owned from new and sold after ten years to make way for the 440. For the spotters amongst you, yes, there is an overlap with 144 and 244.
What do Mum & Dad drive now? The S80 2.4 that they purchased new in 1998 and which puts not a foot wrong.
Yes, people have different priorities and some change cars every five minutes simply because they get bored with whatever they have, but there's probably a lot of truth in the cheapest car to run being the one that you already own.
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I have thought about this, and come up with a simple mathematical model. (You can change the figures if you like according to your circumstances.)
Let us assume that an average car will be worth 45% of purchase price after 3 years, and will be fully depreciated after 10 years, and that the car you plan to buy costs £10,000.
Now, suppose that you have had your car for 12 years. It is now worth nothing. You have £10,000. If you buy a new car, in 3 years that £10,000 has turned into £4500, so you have lost £5500. If you keep the old car and it costs, say £1500, per annum in repairs and MOT that would not have to be paid out on a new car, and invest the money at 4%, then after 3 years your £10,000 would have turned into £6379 - you are £1879 better off, albeit driving a car that is not so nice. Even if you paid out a whopping £2000 per annum on repairs and MOT, your £10,000 would still be worth £4755 - and you would be as well off as if you had bought a new car.
Most people would think that paying out £6000 over 3 years on a worthless car is absolutely stupid, but it makes as much financial sense as buying new. The sensible option of course, is that when your car needs over £2000 worth of work, you buy another old banger and go in for bangernomics. But if you insist on buying new cars, it seems to me that financially, the most sensible thing, is to keep your car for several decades.
If anyone sees any flaws in my argument, please let me know. I?d also be curious to know what the actual expected annual cost of keeping a 15 year car in good shape would be (assuming one uses a garage rather doing it yourself.)
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If anyone sees any flaws in my argument, please let me know. I?d also be curious to know what the actual expected annual cost of keeping a 15 year car in good shape would be (assuming one uses a garage rather doing it yourself.)
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Dunno. My 15 year old Nissan Bluebird has cost me 200 pounds over the last two years to keep running (on top of tax,insurance and petrol, obviously).
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Aside from MoT, petrol, tax and insurace, my Escort '89 has cost me around £200 to keep going over three years, this basically being oil/filter changes every 6 months and 3 new tyres.
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Mike Farrow
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Tyro, to make your model work, you would need some way to include other factors, such as:
- costs of having car off road while repairs are done. That might be an oportunity cost (say £100 if you can't do a family outing, a lot more if you miss a crucial business trip) or a direct cost (e.g. hiring replacement car). Difft folks will value those things differently, but any individual needs to price those in making a decision.
- value of having a newer car, with car-nu-smell and latest toys and comforts, versus an older one (may be rattly etc, not cast required image etc). How much is it worth to have one which which offers all those benefits?
Another problem is that you won't neccessarily know upfront all the annual costs of fixing the older car. Say you've spent £1000 on servicing pus MoT, but then face an unexpected £700 bill. Pay it, and you're still under the £2000pa budgeted ... but if the next big bill comes too soon, you are in trouble.
A friend did all those calculations, but under-estimated the risks to her in choosing bangernomics. Travelling on business, her 8-yo car collapsed (despite having had a lot of work done earlier) and needed major repairs at t'other end of the country. Emergency work costs a lot more than at a local garage, plus cost of hire car, plus direct loss from cancelled business, plus much higher cost of damage to reputation. In the end she decided that the most cost-effective way of getting wheels for business was to hire as needed on a frequent-user plan, with a guarantee of replacement car if hired one dies.
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Thanks for comments from Mike and Pyruse, & esp to NW. In answer to latter:
Cost of having of having car off road while repairs done: useful point. Of course, that is a risk that people with newer cars have to face as well, but I appreciate that with an older car, it's a bigger issue. Because I live in a rather remote spot, I have invested in a second vehicle basically to have a back-up.
Value of new car comforts: well, I did say "albeit driving a car that is not so nice". My point was that on purely financial considerations, running older cars made more sense.
Knowing beforehand what bills are coming up: Well, none of us do! Basically it's about statistics, probablity and expectation - and how it averages out over a few years.
As you say, hiring a car on an as-needed basis makes a lot of sense. Even with running a very modest vehicle, car ownership is going to work out at £200 a month or more.
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Also, what value do you put on the significantly enhanced safety of a new car compared to 15 years old?
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Also, what value do you put on the significantly enhanced safety of a new car compared to 15 years old?
It makes you drive more carefully! :-)
Seriously though I personally would not factor that into a calculation, as until I need it, I'm driving the car on economics rather than its safety features.
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Mike Farrow
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Also, what value do you put on the significantly enhanced safety of a new car compared to 15 years old?
There is probably enough data available to calculate the relative risks, if you had the time. And the DfT is notorious for using monetary values in its calculations, so there is probabbly a set of standard costs for various sorts of injury.
So by combining the two, you could probably come up with some sort of estimate of the cost of not having the safety features.
But that's not how I'd make this sort of assessment -- I'd just look at how much safety I can reasonably afford.
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Mum's 1989 Volvo 440 1.7 GLi, owned from new, has just reached the end of its road sixteen years and two months on.>>
I had a friend, now sadly no longer with us, who bought used Volvos that were at least 15-20 years old for buttons and ran them for a year or so or until running costs became too high.
All were generally in pretty good shape and most were high specification, so he had all the luxury he wanted whilst experiencing cheap motoring. But they were the Swedish built cars.
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What\'s for you won\'t pass you by
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