Following on from my thread where I found out that the value of my dad's Z4 has continued falling like a rock over the last 6 months despite it hitting it's 5th birthday:-
www.honestjohn.co.uk/forum/post/index.htm?t=73357
I was wondering, will this trend continue? Surely there must be some slow down in it's rate of depreciation by now?
If I drepciated the car to nothing over the next 5 years then it would be about £150 depreciation a month and I doubt very much that this car will drop to scrap value only in 5 years.
So, can someone in the know give me a clue as to what the depreciation will carry on doing over the next 12 - 24 months? Let's say hypotheticaly that I paid £150 towards depreciation on the car for 24 months (£3,600) would I likely find that I'm in negative equity in 2 years?
I'm after a new motor and if I can persuade my dad (who seems pretty much on board with the idea) and then get my mam won around then it looks like a little family lease deal will be possible. The same questions are hanging around the possibility of leasing his CLK (2005 CLK 270 CDI Avantgarde) but I think that I would be looking at at least £200 per month depreciation on that?
For anyone who's curious, the reason that he's on board with this very favourable (to me) idea is that he wants a new car but having lost a total of about £35K depreciation on the cars in the last 5 years he has no desire to sell them on for a dealership to make a profit and would rather see them stay in the family. Naturally I'm all in favour of this. :-)
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Those types of cars will continue to drop steadily in value in this country IMO.
I as a buyer interested in the larger car am extremely wary of the impending VED situation, as usual with the govt of the day no one except their mates knows exactly whats coming.....will the backdated rises that should have come into effect this year actually come in next, and will they progressively increase them to please tree huggers for a few votes more, who knows?
When a car reaches 6 or more years and the VED bills come in a £400+ that can only increase the depreciation rate as the cars value plumetts.
My own thoughts about the backdating of the VED (those cars regd between 2001 and 2006) is that the rises will only be implemented after the next election...that gives 4 years for those that lose out to be talked around, maybe given £2K towards a puddle jumper as a softener.
I thought very hard about going for one of those Cadillac CTS we recently discussed here, too late now the bargains have gone and the prices have risen, i'm probably glad i didn't in a way but still.
There were £29K (new) cars at 3 years with less than 15K miles going for less than a quarter of their new price (one at Bedford 55 reg so VED band ok at the mo, was 15K miles at £4700..unbelievable)
I expected to run one of these cars for 3 years minimum to get my money's worth, if it lasted longer then i'd have been happy, in reality a complicated failure of engine/transmission would probably have written the thing off.
If it lasted 3 years that would have been less than £2K per year depreciation and any longer a profit so to speak not counting any value the thing may have parts wise when uneconomical to run any more whether VED or other costs, if it lasted 5 or more i'd have been laughing, Lexus motoring at Almera money.
I'm not comparing a Caddy to a Z4 other than the ownership costs, especially depreciation would be fairly similar.
There may come a point when cars like the Z4 would have plumetting worth and potential huge VED costs in relation to its value.
At that point they will probably be exported to other countries that don't have punitive tax regimes, quite where that point occurs is the real question, but i don't think the Z4 will reach zero value because of that.
The VED costs in future may mean little overall to you as an owner if you enjoy your car, but selling on will be interesting in this country.
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Anyone who bought a Jag XJ 2.7 diesel and paid top dollar may be feeling quite sick at the moment. A colleague was offered a fully loaded one - end of the line as the 2.7 is discontinued - for just over £30,000. List price with extras was almost £60k.
If he had a garage he would have had one - at almost 65 it would have been his retirement present, but he had to decline the offer.
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I've been keeping a close eye on the value of my S80 since I bought it in Oct 2007 at 2.5 years old.
In the first 12 months it lost about 6% a month, but that seems to have slowed down to about 4-5% a month now.
At 4 and a bit years old, the car is now worth less than 19% of its original list value.
I'm only glad I didn't buy it new!
So, I reckon things are improving slightly, but the way the wind is blowing, the demand for any kind of large expensive car is bound to drop.
For myself for instance, I am unlikely to buy such a large thirsty car again, but never say never.
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Oil burner...
"
In the first 12 months it lost about 6% a month"... that is 72% gone...
"now 4-5% a month "..
"At 4 and a bit years old".. say 50 months.
First 12 months -72%.
Next 38 months at 4% - 152%...!
May I suggest your sums are wrong :-)
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First 12 months -72%. Next 38 months at 4% - 152%...! May I suggest your sums are wrong :-)
Oh madf, please! May I suggest you mis-read my post... :)
I didn't say "losing 6% of *original value* per month" I said losing "6% a month".
e.g.
Start at 14,000 - 6% = 13160. 13160 - 6% = 12370.4. 12370.4 - 6% = 11628. etc.
Month 1 lost 840, month 2 lost 789.60, month 3 = 742.4.
You get the picture...
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Sorry Oilburner.
Did I win "pedant of the day" award?
:-)
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No, you lost on a technicality! ;)
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From new many 'luxury' cars suffer from heavy depreciation. This is bad news for the owners but good news for people who buy further down the line. I got a car which was somewhere around the 40k mark new for 10k a little while down the line. If I amlucky with the repair bills and keep it for a while it won't cost much more in capital depreciation than if I'd bought new.
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Percentage depreciation is a slippery old eel.
As far as I know it is calculated from the list price to buy a new vehicle, compared with the trade in value at, say, 3 years. Discounts on the new price do not enter the equation.
Now, nothing to do with the luxury car market, out of interest I've been looking at Whatcar costs to run city cars over their first 3 years.
I looked at the Fiat Panda with, at best, 33% value after 3 years compared with the Citroen C1, 48% value after 3 years. Both have almost identical 3 year running costs. Why? Because the Fiat is heavily discounted from new whereas the Citroen is not.
Of course, in terms of real money, percentage depreciation on a cheap city car is a fraction of the same percentage on a luxury car.
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... Discounts on the new price do not enter the equation.....
Doc,
I'm sure that's correct.
So when the residual value at 3yrs/36,000 miles is given as, say, 34 per cent, it means 34 per cent of list price.
A third is not a bad guide for a lot of mainstream cars, so a three-year-old Focus is worth about £6/7k against a list price of about £20k, the first owner having probably paid about £13/14k.
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Just had a look around and for the same retail price that my 2003 Charade would sell for, you could also buy a 2003 Laguna V6 with the same miles.
New price for the Laguna was about £22,000 list, my Charade was £6495 and yet less than 6 years on, values have equalised.
I was offered £1900 for it in px recently so it has lost only £4600 since it was new and only £1300 since I bought it.
A good example of the depreciation factor and scary if you have a Laguna!
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I can sell my 2003 diesel Yaris (cost new £10k) for more than a 2002 Lexus GS430 costs. (£50k new).
Go figure...
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See today's news that in many cases secondhand prices were now higher than (discounted) new. A Glasses spokesman said this morning it had never happened before.
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Rolls-Royce Phantoms and Maybachs will dominate the banger racing scene before long!
My view is that the recession is going to get much worse and last a long time. The 'fossil fuel crunch' will kick in too. The future of motoring will be very different within a fairly short space of time.
Edited by Sofa Spud on 09/04/2009 at 11:36
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Well, it's probably good news for us 'bottom feeder' bangernomics types :-)
Two years ago I bought a 1993-vintage Mercedes W124 280E for the princely sum of £600. That's about 2% of its list price when new. Today, it would probably sell for...... about £600!
In that time, repair costs have amounted to: rear dampers (£10), parking brake shoes (£6.50), driver's door window (£10), and a lambda probe (£15). Easy to work on at this age.
It's still quiet, smooth and reasonably quick - and I don't get into a panic when leaving it in the supermarket car park!
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Evidence from Cuba suggests that a motoring economy can last indefinitely on that basis. There is no need for a continuing supply of new cars - a wealth of specialist repair and remanufacturers will spring up to keep the old cars going 50 years.
We need an anti-scrappage scheme to encourage people to stockpile the good ones.
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All about Cuba's cars:
tinyurl.com/dyres6
That suggests that in 50 years the attrition rate is around 90,000 cars from the original 150,000 yank tanks stranded in Cuba during the revolution. i.e. 60,000 (or the shells of those cars) are still going.
Not bad, but you still need to replace about 1-2% a year to maintain the same number of cars on the road. And that's with simple to maintain cars where road salt is not an issue.
The old yanks tanks are also increasingly a minority on Cuba's roads, with lots of second hand European and Japanese cars finding there way there, much like any other 2nd world country.
This article counts a higher number of American cars, but also mentions consistent imports during the 60s and 70s from the USSR and more recent stuff from elsewhere:
tinyurl.com/deyum9
The idea that Cuba has survived on the same set of cars since 1959 is just untrue, a fallacy perpetuated by the tourist industry. With a supply of new engines (very few still have their original US engines from 1959) and local engineering skill, some very simple old cars are able to continue indefinitely, but even there new cars are being fed into the stock all the time and always have been.
In reality, some of their pool of cars is being replaced all the time (and engines more so), and that is only possible thanks to mass consumerism elsewhere in the world creating a handy supply of cheap second hand cars and engines.
Cuba is also a society where (thanks to poverty) people are able to live without a car if needs be. Only around 1 in 40 Cubans owns a car. However, that still means the number of cars has doubled since 1959 to about 300,000.
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With careful choice of a well designed and built car - no built in rust traps/no major design faults/no disintegrating wiring - it is possible for a well maintained modern car to do 250,000 miles and last 20 years - easily.
When a 10 year old Lexus LS400 with 100k miles (list price £50k) and fsh is available under £3k - taxed and tested- you realise what a money destroying machine the car industry is...
(not that 23mpg is affordable but at least VED is not £400)..
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