Middle Class Struggle

[an]

You might want to double check your figures here.. a $40k car that is 10 years old with 100,000 miles on it will command less than $14k.. try using KBB.com (Kelly Blue Book).

Here is an example.. a 1996 BMW 750il with 90,000 miles on it, in excellent condition, will go for about $14,230 from private party. A 1996 BMW 750il did not cost $40K new.. try closer to $80k to $90K.

http://www.kbb.com/KBB/UsedCars/PricingReport.aspx?ManufacturerId=5&Year…

I also tried a vehicle (in demand here in California)
A 1996 BMW 328i Convertible… same year, same mileage..
Result was $11,450. New, the convertibles were closer to $50K
http://www.kbb.com/KBB/UsedCars/PricingReport.aspx?ManufacturerId=5&Year…

Now for a less in demand vehicle.. (in demand vehicles have higher resale value).
1996 Infinity J30 Sedan = $6,095
http://www.kbb.com/KBB/UsedCars/PricingReport.aspx?ManufacturerId=21&Yea…
We both can make cases for our own point of view.

Here’s a 2000 328i with 70000 miles, 10k miles/year: Price is $15k for good condition and $16k for excellent condition.
2000 328i

Here’s a 1999 328i with 80k miles, 10k miles/year: Price is $13k for good condition and $14k for excellent condition.
1999 328i

There’s a major price drop of $4k when you get a 1998 with 90k miles because it’s a different generation. So my example still stand, a 328i was around $40k in 1999, is now $14k after 80k miles. It’s still just an example, don’t take the number so literally. The point is that if you plan to keep a car for a long time, the cost of ownership is not that much difference between a new car and a used car. There’s also other benefits of getting newer cars, such as better safety, better power, better gas mileage, etc.

Even with your 328Ci Convertible example, the used one would cost you about $95/month over 10 years instead of the initial $116/month I mentioned. Would you rather spend another $20/month to drive that newer car? I would assume a car in the first 100k miles would have much less trouble than the car in the 2nd 100k miles. That’s when the major repair cost tend to rack up, like timing belts and etc. So if you own a new car for 200k miles, you would only pay for those big fixes once every 20 years while if you buy a used car w/ 100k miles, you have have to do it twice every 20 years. That would also factor into the price difference.

[mixxalot]

You make some good valid points about cars. BMW offers free maintenance for 4 years on new cars. This makes buying a new BMW not as risk as a new Mercedes or Lexus. I plan to buy a new one next time. Maintenance is not cheap in the long run in spite of low used car price. For me, the interest and insurance is a lot cheaper on a used BMW than a new one. Registration is much cheaper as well on a used BMW. So its a wash but a new BMW would be great.

[ucodegen]

Here’s a 2000 328i with 70000 miles, 10k miles/year: Price is $15k for good condition and $16k for excellent condition.
2000 328i

Here’s a 1999 328i with 80k miles, 10k miles/year: Price is $13k for good condition and $14k for excellent condition.
1999 328i

Yes, but your usable years figure changes too.. its no longer 10 years, but 13 years in the first case (+30%) and 12 years in the second case (+20%). Which then also alters the long term cost by the reciprocal.(1/1.3, 1/1.2)

In terms of better safety, power, gas mileage, that is not always true. What changes these items are changes in technology. ABS, Sequential Port Fuel Injection, individual ignition, variable valve timing.. look for those changes.. not model year. In fact, some changes in newer models have been considered a step backward (I-drive) by a few people.

As for when trouble occurs (in particular with BMWs), you have to look at models. The V8s and V12s use an aluminum block, non-sleaved with nikasil plating on the inside of the bore. nikasil is a very hard material (nickel-silicon), but the early BMW applications suffered pitting and deterioration from sulfer in some gasoline(low quality). The straight 6(s) are fairly bulletproof to 200k miles, but expect brake rotor, strut replacement as well as a trans overhaul.

I can not speak to the newer V8s etc.. I have heard that the technique has been abandoned on BMW’s commercial line now.

[an]

Yes, but your usable years figure changes too.. its no longer 10 years, but 13 years in the first case (+30%) and 12 years in the second case (+20%). Which then also alters the long term cost by the reciprocal.(1/1.3, 1/1.2)

After calculating it for 12 and 13 years respectively, you get price per month of $97/month and $102/month respectively. My point still stand that over the long term, if you don’t plan to change your car often, the monthly price difference is quite small. The “latte factor” can compensate for that.

In terms of better safety, power, gas mileage, that is not always true. What changes these items are changes in technology. ABS, Sequential Port Fuel Injection, individual ignition, variable valve timing.. look for those changes.. not model year. In fact, some changes in newer models have been considered a step backward (I-drive) by a few people.
If you compare between cars from 7-10 years apart, a lot of newer technologies have changed. Example is car now vs the 1997-1999 entry level luxury, i.e. BMW. The newer 40k car have 300HP vs the 215 of the used one. The interior is much better designed. Not only that, you have much more option than just BMW, Benz, and Audi. Now you have Infiniti, Lexus, and Acura which are cheaper, more standard features, and more reliable.

As you’ve mentioned of those technologies, you’ve noticed that a lot of those tech are in the newer cars, such as direct injection, variable time on exhaust and intake, new turbo technologies are in the newer cars, not the older ones. Those technologies are what yield you either higher gas mileage if the HP stays the same or higher HP for the same gas mileage. I’ve never seen a car that has more technologies 10 years ago compare to the car now. I-drive is debatable and I’ll just leave it as that, because something it’s nice some don’t. That’s BMW’s decision.

Then there’s intangible things like having newer leather that you can maintain to keep newer longer. You don’t know how the previous owner used it, which really determine how long it can last. More sound deadening to make your ride quieter & smoother.

As for when trouble occurs (in particular with BMWs), you have to look at models. The V8s and V12s use an aluminum block, non-sleaved with nikasil plating on the inside of the bore. nikasil is a very hard material (nickel-silicon), but the early BMW applications suffered pitting and deterioration from sulfer in some gasoline(low quality). The straight 6(s) are fairly bulletproof to 200k miles, but expect brake rotor, strut replacement as well as a trans overhaul.

I can not speak to the newer V8s etc.. I have heard that the technique has been abandoned on BMW’s commercial line now.

The actual block might be bullet proof but the rest of the car is not. The costly maintenance I’m referring to are timing belts, tranny, clutch if you drive manual, electrical, suspension, braking system, cooling system. God forbid, if your cooling system fail and you didn’t notice it for 5-10 minute, then you’re talking about damage to your head, or even warped block. Those things can add up to 5-10k in repair easily if you have to do all those repair. Those expenses, I did not add to the price comparison. Even w/out it, the difference is around $60-$70/month. That’s a dinner at a nice restaurant for 2. You’re arguing about semantics but you’re missing the big picture.

[ibjames]

eh.. my wife drives a used toyota matrix (based off of the corolla) is it luxurious? Nah.. has a leather steering wheel though 😉 I drive a jetta, it’s been paid off for a while now as it’s 7 years old. Would I love to upgrade to a new used truck? Yep.. will I? Nope.. wife’s car is not paid off yet. I want to pay that off then maybe I’ll think about it. Though I probably still won’t because my jetta is a gas sipper.

My personal vices are eating out with my wife and celebrating with friends. I spend a lot there. The latte factor for me is large. We are now cutting down on that 🙁

[mixxalot]

The costly maintenance I’m referring to are timing belts, tranny, clutch if you drive manual, electrical, suspension, braking system, cooling system. God forbid, if your cooling system fail and you didn’t notice it for 5-10 minute, then you’re talking about damage to your head, or even warped block. Those things can add up to 5-10k in repair easily if you have to do all those repair. Those expenses, I did not add to the price comparison. Even w/out it, the difference is around $60-$70/month. That’s a dinner at a nice restaurant for 2. You’re arguing about semantics but you’re missing the big picture.

In the long run, there may not be much difference. But thats if you plan to keep the used BMW for like over 10 years or so.

However, insurance and vehicle registration costs are much higher on a brand new BMW than a used one. That and the interest that you will pay to finance a new BMW cost more than to maintain a used one that has been well maintained. Thats the key. Few people have 50 grand to pay cash outright on a new car!

Case in point:
I own a 1996 BMW 328is with 92k miles. Bought used with 55k miles for 13k.
Now it has 92k miles. I have done all maintenance. Costs me 3k a year on maintenance (belts, hoses, service, oil changes). Good points on maintenance- do it or the car will eat you alive. I take mine to Cunningham.

I have spent 5k over past 3 years to keep my car in shape. Suspension, coolant, brakes, etc. Yes, it is expensive but still cheaper than a new one.

Now if I paid 46k for a new BMW 3 series, that would cost me 60k over 4 years with finance and interest and additional insurance/registration costs.

My 13k BMW would cost me 13k plus 20k over 4 years for maintenance. So it really is WAY cheaper about 28k cheaper over 4 years to keep up the used BMW. And its paid for.

Yes- the new ones are very nice and much faster but I cannot deal with 1500 monthly payments just to have a brand new one. In fact, my next car may be a new Hyundai Sonata for 17k with a 10 year warranty. Thats a good deal for a new car!

[ibjames]

I agree mixx, the new hyundai’s look nice also 🙂

[PerryChase]

I agree on the Hyundai. Remember how the Japanese cars were perceived in the 1970s/1980s? I’ve rented plenty of Huyundais/Kias. They are good cars — better than the Americans in my opinion (for same size cars).

Daimler/Chrysler will soon be selling the Chery Chinese cars.

I’m lucky that I get to drive whatever my brothers, who change cars frequently, hand-down to me.

[Author]

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