Don’t spend the cash now – just wait…

Posted on August 2nd, 2007 in Opinion by Julian Edgar

750il.jpgOne of the weird things about cars is that they depreciate so incredibly fast. We’ve all heard how you lose 10 per cent (or more!) of the value of the new car the moment you drive out of the dealership. That’s bizarre enough, but the fact that sometimes the most expensive cars in the world are nearly worthless 20 years later is also quite amazing.  

I can remember the 1988 BMW 750iL being released; to me it represented a pinnacle of automotive excellence: a dream car of enormous expense. My priorities have changed, but even with my love of efficient hybrid cars, I’d still have a 750iL in my garage, if only just for cruising. But of course the sting in the tail is that, these days, pretty anyone can afford to buy the big BMW. (You’ll need about AUD$8000, probably nearer half that at wholesale auctions.)  

So in my memory of cars, I’ve seen cars drop 90 per cent or more in value: it’s what happens with nearly all cars. And it happens even more so with those cars fundamentally over-priced when they’re released. In Australia, that means the mid-sized and large Europeans. 

Time has a way of stripping away the bullshit and leaving just what is worthy; when a top of the line V6 Camry (Aurion today I guess, but I haven’t driven one) goes as well, stops as well and has similar equipment level to some expensive prestige Euros, well….. time will catch up with the value of the latter.  

But hey, look on the bright side. If you have your heart set on a car, you almost certainly will one day be able to afford it – except for those exotics made in very small numbers, that sentiment applies to any car.

One Response to 'Don’t spend the cash now – just wait…'

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  1. Ray K said,

    on August 3rd, 2007 at 1:47 am

    Hi Julian, This is why I never buy a NEW car. This year I’ve bought a Mazda SP23, 18 mths old and paid $8000 below new price, and a Honda Jazz 11 mths and 5000 km and saved $4500 on new price. Know what you want and be prepared to wait, good cars at good prices are out there. BTW the Jazz is the most interesting (and fun) car I’ve driven in a long time.

  2. Frugal-One said,

    on August 5th, 2007 at 11:47 am

    Pity it does not apply to AussieMuscle cars.

    GTHO is insane amount of $$



  3. Nick said,

    on August 8th, 2007 at 10:45 am

    I hear you loud and clear on the depreciation point, bought a MY04 Clubspec 7 WRX back in 04 for near on $50k now I’m lucky to get $15k trade for it…….

  4. Marty said,

    on August 8th, 2007 at 2:28 pm

    true, but in the case of old turbo cars you are pretty much garunteed a whooole heap of problems making them go like they should, i’m at the 10yo mark with my twin turbo beast and have spent the last year fixing so much stuff i can’t even remember it all..

  5. Howard Hartman said,

    on August 8th, 2007 at 10:53 pm

    The marvelous effect of finance companies not wanting anything to do with cars more than 10 years old helps this situation, too. Personally, I can’t understand the ego trip of new car ownership, but I’m glad others need it.

  6. Jon said,

    on August 11th, 2007 at 7:47 pm

    I’ve never bought a new car due to the depreciation. Usually we have run 10 or so year old large 6 or V8 Australian luxury cars as they are almost worthless by this age and cheap to run, as aftermarket parts are plentiful and we do all our own servicing.
    Lately we have moved to Rolls Royce Silver Spirits for both our daily drivers. Due to the huge fall in the value of these cars (we paid $25,000 each for ours which are very low kilometre “almost as new” examples) they are very good value for money, insurance is around $500.00 per year each (fully comprehensive 60% no claims bonus), fuel consumption is no worse than most modern high performance V8’s (driven normally), parts are no more expensive overall than most modern cars (but we do spend a lot of time on eBay getting the best deal), and as we do all our own maintenance we never pay out for servicing (unlike a late model owner with a warranty who needs to pay a dealer for servicing).
    There is of course a downside, and that is that I spend about half a day a month on servicing our cars, plus some parts might take a week to get to me (but as I am in an isolated area that is also true for many dealer genuine parts), and of course as these are pretty old cars by most standards the reliability is worse than most new vehicles. Never the less, in my experience as long as maintenance is strictly adhered to I have not had any major problems with reliability.