Auto Depreciation Musings

Well, it turns out what I *should* have done was buy a 17 year old car. Says who? Says University of Michigan, that's who.

I was googling mathematical models of auto depreciation and ran across this blog post which cites a 2004 study entitled "Automotive Life Cycle Economics and Replacement Intervals". Among their conclusions :

Overall, this analysis provides substantial evidence for the importance of fixed costs, and depreciation specifically, in total life cycle vehicle economics. Dynamic replacement modeling for both the Ford Escort and generic sedan suggested long replacement intervals (of 15 years or more) were economically ideal despite varying repair, and finance costs. In the generic vehicle study, additional variations in finance methods, gasoline price, powertrain availability, and external societal costs made little change to the ideal replacement intervals.

So I really should have kept my Tercel for at least 1 more year...

Why I chose Hyundai over Honda/Toyota

No doubt about it : Toyota & Honda make great cars. I've owned both. But it seems their reputation has gone to their heads a bit, and their prices reflect it.

Both the 2008 Civic LX and 2008 Elantra GLS are nice cars with good fuel economy. But the Elantra feels like one trim level higher than the Civic : rear armrest with cup holders, TWO electrical sockets in front, 60/40 fold down back seats, 6 speakers (vs 4), fog lights, put-on-your-makeup-at-night-lights, sunglasses storage, XM radio, more storage nooks, and the amazing Hyundai warranty. Why Honda doesn't match the Hyundai warranty, I don't understand. Honda cars are amazingly reliable, so it seems like it wouldn't cost them much, and it would take away one of Hyundai's best selling points....

On the other side of the balance sheet Honda is a champ in reliability and, for some, "style". I personally prefer the interior of the Hyundai with the more traditional dash, but I respect that others prefer the Civic. To each his own.

And then there was the $4,000. Yes, $4,000 difference in price. Plus the Hyundai has accoutrements galore so the effective price difference is even more.

So who wins? Here are my categories:

Price: Elantra
Style : Elantra for me. YMMV.
Warranty : Elantra
Creature Comforts : Elantra, hands down.
Resale value : Civic
Reliability : Civic???

Resale value is not a big deal to me. The probability that I'll total my car is low, and I drive my cars until they are worthless. Certainly the difference in resale value at 10+ years will be less than $4,000 + 10 years of interest = $8,000. With some luck, I'll come out ahead financially.

A wise friend once said "I don't need a car that attracts women; I just need a car that does not repel women. Well put.