hskrdu
Top Post Dawg
Depreciation is significant, especially for new cars, but age is only one aspect of depreciation- and one which is seen most keenly with brand new cars. Mileage, condition, and desirability as determined by the market impact depreciation after the initial (and largest) depreciation loss of "driving it off the lot." A new owner of a 2015 may see an initial spike in depreciation as a factor of TCO if they sell the car soon after buying it, but depreciation doesn't accelerate because a previously untitled car is titled two years after production.
Depreciation is typically the largest factor in TCO of new cars, unless the longevity of the car reaches a point at which maintenance or fuel costs finally surpass depreciation. This is more of a knock against all new cars, not especially a new TDI. Fuel efficient cars typically see depreciation “outlast” other factors as the highest portion of TCO precisely because of their low fuel costs- but that's a good thing, since new cars with low fuel efficiency impact TCO with both depreciation and fuel costs. Even with a TDI, as Peter said above, keeping it long enough will result in fuel costs surpassing depreciation- which indicates how significant the fuel costs of a less efficient car can be. Again, the smart money is to buy a car with the least depreciation (low initial cost, no interest, and high resale value), all of which generally favor buying used. The somewhat unique situation with the new 2015 TDI's (where no previous title has been issued) creates a context where even frugal car buyers might bend their fiscal rules.
The current prospective TDI buyer is offered a new (untitled) 2015 TDI with discounts and/or a low/no interest rate. These address two of the issues that raise the TCO of buying a new car- how much so will depend on the specifics of each sale. There is no way around the depreciation hit on a new car, but TDIs generally compare favorably based on market resale value. The concern over paying "new car prices" on a 2015 vehicle, which may immediately have lower market value than a comparable 2017 vehicle, and result in a more immediate cost in depreciation, is valid- especially for those that will sell the vehicle in a time frame where the biggest depreciation "hit" will take place- which will be determined by the market place. Keeping the car longer (and using it more) will lower the cost of ownership per mile, and depreciation as a factor of TCO (after 10-15 years, for example) will likely not be impacted by the age difference of 2015 vs 2017. Of course, this evaluation is based on the history we have seen of resale values of TDIs over the last 20 years, and things could certainly change for owners who don’t keep their cars for the long term.
One suggestion is that a market change might apply to the 2015 TDIs in a positive way: Resale value might be improved by a lack of newer TDIs, by the advantages of the new engine, by the warranty, etc. etc. This is obviously speculation, but not unreasonable. It's important to note that "resale" value here has little to do with the owner's intention of selling the vehicle, I'm just using the term to evaluate depreciation cost (based on initial purchase costs minus remaining market value).
So, the 2015 TDIs present the same TCO concerns that any new car holds, with the exceptions noted above: A higher immediate depreciation cost due to the 2015 MY, and concerns over some unanticipated drop in resale value based on issues connected to the new engine or emissions. Why buy new then? Or more to the point, why buy one of these new 2015s? I think it all comes down to comparisons and buyer intent. Here I think the 2015 TDI offers some unique advantages:
If you want a new TDI, knowing that TCO for a new car is higher, and are willing to pay the higher costs for whatever reason, this may be the buyer's last chance to have a new TDI for some time. And, as said, the discounts and low/no financing costs offset some of the TCO connected to buying a new car, and history favors a higher resale value for the TDI, further offsetting depreciation. High fuel efficiency further lowers TCO, and high mileage use lowers cost per mile.
In terms of comparison, it's all about asking "compared to what?" As an example, where else can you get a small wagon with a 6 speed stick that holds a ton of stuff, gets outstanding fuel economy, and is a blast to drive? This is why TCO often does not serve as the bottom line in car buying decisions- some buyers will pay more for an untitled (new) TDI and take a small risk on the initial depreciation of a 2015 in order to drive a car they truly enjoy. And, as an aside, if they keep and maintain the car for the long term, their TCO is likely to be far under the national average- or under what they might have paid for other cars they were considering.[FONT="]
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Depreciation is typically the largest factor in TCO of new cars, unless the longevity of the car reaches a point at which maintenance or fuel costs finally surpass depreciation. This is more of a knock against all new cars, not especially a new TDI. Fuel efficient cars typically see depreciation “outlast” other factors as the highest portion of TCO precisely because of their low fuel costs- but that's a good thing, since new cars with low fuel efficiency impact TCO with both depreciation and fuel costs. Even with a TDI, as Peter said above, keeping it long enough will result in fuel costs surpassing depreciation- which indicates how significant the fuel costs of a less efficient car can be. Again, the smart money is to buy a car with the least depreciation (low initial cost, no interest, and high resale value), all of which generally favor buying used. The somewhat unique situation with the new 2015 TDI's (where no previous title has been issued) creates a context where even frugal car buyers might bend their fiscal rules.
The current prospective TDI buyer is offered a new (untitled) 2015 TDI with discounts and/or a low/no interest rate. These address two of the issues that raise the TCO of buying a new car- how much so will depend on the specifics of each sale. There is no way around the depreciation hit on a new car, but TDIs generally compare favorably based on market resale value. The concern over paying "new car prices" on a 2015 vehicle, which may immediately have lower market value than a comparable 2017 vehicle, and result in a more immediate cost in depreciation, is valid- especially for those that will sell the vehicle in a time frame where the biggest depreciation "hit" will take place- which will be determined by the market place. Keeping the car longer (and using it more) will lower the cost of ownership per mile, and depreciation as a factor of TCO (after 10-15 years, for example) will likely not be impacted by the age difference of 2015 vs 2017. Of course, this evaluation is based on the history we have seen of resale values of TDIs over the last 20 years, and things could certainly change for owners who don’t keep their cars for the long term.
One suggestion is that a market change might apply to the 2015 TDIs in a positive way: Resale value might be improved by a lack of newer TDIs, by the advantages of the new engine, by the warranty, etc. etc. This is obviously speculation, but not unreasonable. It's important to note that "resale" value here has little to do with the owner's intention of selling the vehicle, I'm just using the term to evaluate depreciation cost (based on initial purchase costs minus remaining market value).
So, the 2015 TDIs present the same TCO concerns that any new car holds, with the exceptions noted above: A higher immediate depreciation cost due to the 2015 MY, and concerns over some unanticipated drop in resale value based on issues connected to the new engine or emissions. Why buy new then? Or more to the point, why buy one of these new 2015s? I think it all comes down to comparisons and buyer intent. Here I think the 2015 TDI offers some unique advantages:
If you want a new TDI, knowing that TCO for a new car is higher, and are willing to pay the higher costs for whatever reason, this may be the buyer's last chance to have a new TDI for some time. And, as said, the discounts and low/no financing costs offset some of the TCO connected to buying a new car, and history favors a higher resale value for the TDI, further offsetting depreciation. High fuel efficiency further lowers TCO, and high mileage use lowers cost per mile.
In terms of comparison, it's all about asking "compared to what?" As an example, where else can you get a small wagon with a 6 speed stick that holds a ton of stuff, gets outstanding fuel economy, and is a blast to drive? This is why TCO often does not serve as the bottom line in car buying decisions- some buyers will pay more for an untitled (new) TDI and take a small risk on the initial depreciation of a 2015 in order to drive a car they truly enjoy. And, as an aside, if they keep and maintain the car for the long term, their TCO is likely to be far under the national average- or under what they might have paid for other cars they were considering.[FONT="]
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