Deciphering Depreciation

[nsxt2000]

We have replaced my wife's 2001 MDX with another MDX because it is such a well made SUV. It has 116,000 miles and it been a stellar performer during our ownership with only a few minor situations. It is in excellent mechanical condition and cosmetically the interior almost like new and the body only the expected nicks and scratches. A private buyer has offered us $12,000. In checking the usual sources for automobile values - Edmunds, Kelly, etc. the range for a private party sale in "good" condition is approximately $13,300. We are ready to move on since we have a replacement and it looks like we are going to sell it for that figure.

This got me to thinking about how much depreciation we experienced over the say six years. We paid right at $39,000 for it as it is the Toruing version with some extra upgrades. It has navi, third seat, wood trim, running boards, etc.

So if we sell it for the $12,000 it depreciated something like $27,000 or about 23 cents per mile. I realize that when you factor in the true cost of ownership - maintance, insurance, finance cost, opportunity cost, fuel, taxes and the multitude of other items the cost per mile increases quite a bit. But if you look at just the dollar depreciation from original cost, 23 cents per mile seems right cheap.

Does anyone have a feeling if this is high, low, average or what? Thanks for any input.
-Mike S.

P.S. - A few years ago I "had a wild hare" as they say and bought a Lotus Elise...without telling my wife I was doing so. BIG MISTAKE! Needless to say that impulse did not lead to marital bliss. I sold it very soon after acquiring it and I believe the cost for depreciation ran around $8.00 per mile!

[Jack FFR1846]

I've done the analysis many times as I need to replace vehicles for my work to keep paying me a car allowance. The costs that matter are depreciation, insurance and gas. All the other costs are minimal in comparison.

As a result, my daily driver is a cheap Mazda 6i sedan. Mid 30's mpg, relatively cheap insurance and in 5 years, the car will still be worth 1/3 of it's original price.

I don't think about the % payback on a car over a period of time, I think about the actual $. Edmunds.com has a chart of depreciation that can open your eyes. Initially, I would have thought that a TL or is250 or G35 would retain more value than a lowly Mazda 6. They do retain more % but since they all cost twice as much, their total cost to own is much higher.

Of course, the way to save the most is to drive a vehicle into the ground. We were recently going to replace my wife's Subaru Outback with another one because of a mystery noise that I thought might be the AWD system going. I spent a week cleaning and working on the car. I finally found that the noise was rust built up on the rear rotors. I fixed that and gave my wife her "new" car. We saved over $10k by not turning the car over for a new one. Our replacement would have also been a downgrade....going from the present Outback Limited to an Outback base. I figure the car can easily go a couple more years if not more before becoming unreliable. Heck....my tow vehicle....a 2000 Yukon XL has 100k miles on it and is coming up on 8 years old and works fine. As the vehicles get older, we pull comprehensive insurance off of them, making them cheaper still and of course, the yearly taxes are insignificant on an old car. I think we pay $25 on the Yukon while the Subaru and my Mazda are still in the hundreds.

jack

[nsxt2000]

I did not realize that Edmunds had a "True Cost To drive" comparison chart, but located it on their site. There are many interesting anomalies. For example with 2005 vehicles as a base, the Kia Sorento cost more per mile than the Acura MDX and the MDX cost more than the NSX!

Although many other factors come into play, some quantative and others very subjective, the comparison chart is worth taking a look at. thanks for the heads up on it.
-Mike S.