Wow. I LOVE this thread data and presentation. Just wonderful
I should keep such accurate records. What dedication
I think I tend to buy used and let someone else take the lion's share of depreciation expenses. I just bought a 2008 Aprilia Shiver with 21,500 miles on the clock. Other vehicles are a 1997 Mercedes 430 for the wife and a 1998 BMW 318ti. All bought used. Between me and my wife, we've bought 3 new cars and 23ish (me) + 5 (her) used vehicles.
I made money on my first Tdi and broke even on the second one, in my estimation at least. Been shopping for a 335d, but in no hurry--has to be the right one.
How did you figure depreciation costs by year? Some standardized formula or a formula you devised? Your thread really makes for a good read and thinking.
Thanks Nick!
You might have noticed (above) that your graphs and charts from long ago actually were my (long delayed) inspiration to learn how to graph my data and present it here. I know, not hard for some, but it was my first time. There was also the thread about weighted consideration of fuel economy.
I'm the same on buying used: This is the first (and possibly only) new car purchase for me. The depreciation hit is so large, it just doesn't often make financial sense. In my case, I knew exactly what I wanted, and the Golf GLS ALHs were almost all gone. I also wanted to be the only "caretaker" of my car, so that I would know 100% of its history. Our '03 Jetta TDI was purchased used, but is otherwise comparable to mine, and at some point I'll do a TCO for that car to better illustrate how two very similar cars can be so different in TCO just by getting out from under depreciation.
Depreciation: I found some standard equations but I didn't pay too much attention to them. Under my TCO "factors," (and I call them
mine only because they didn't match any of the articles or research I did ahead of this thread), depreciation equals total cost associated with
purchase, minus true market value, calculated on Nov 1 each year. When I say costs "associated with purchase,
" I mean the cost to buy the car, which includes any costs of financing the purchase, but not costs associated with driving the car- as if the two are independent items. To this end, registration fees, plate fees, inspection fees, insurance fees, etc. are set aside as different TCO factors. I set these aside for a variety of reasons: I wanted to be able to evaluate the cost of
buying the car (as if I was going to tow it home and not drive it) independently of the costs of driving the car. This allows me to see and compare state fees and such, which vary greatly from one location to the next, just as I can compare insurance, which varies also. Financing was included, even though it varies, since it nicely fits into the evaluation of "cost to purchase."
So, my initial cost to purchase was what I paid the dealer. I then add in the cost of financing (if any) the purchase for the evaluated period of ownership, which gets rolled into initial cost. One year later, on the anniversary date (Nov 1), I used Edmunds True Market Value calculator, adjusted for location, condition, mileage, etc., to establish a baseline of the car's
private sale value. I then compare Edmund's TMV with a variety of sources of private party sales. This results in a decent (but not perfect) private party resale value. Initial purchase cost and financing (for that period) minus private party resale value, gives me my depreciation cost, in dollars (not %), for that first year- which is also the biggest hit. The following years follow a similar formula, and the total depreciation cost in dollars grows, even as it goes down as a total percentage. Since mileage and condition play such a large factor in depreciation, the actual depreciation cost per year can fluctuate quite a bit. This flux also takes place since financing is a cost over an initial period, say the first 3, 4, or 5 years of ownership. Financing during these years adds to the total initial cost to purchase, but after these years the total cost to purchase levels out, and private party sale value (hopefully) does too.
Now, I calculate these costs every year, on or near Nov 1, by looking back at my TDI logbook and doing all the math. You'll notice that graphing of the depreciation, although accurate in total, does not reflect yearly flux after the first year. That's only because I figured what it was for the first anniversary year, but when graphing it, (one of my early graphs), took the remaining years and entered it as an average. The graph should really reflect slightly lower cost per-year, each year, with a bump downward after year 5, and then a little more stability. The total depreciation numbers are good, but the graph needs to be adjusted. I'll try to fix it before I hit year 12!
Summer, 2005: GTI heated High Bolster Sport Cloth seats from Texas installed.