€20 Per Mile New Car Depreciation
I am often asked what is the best used car to buy. I always give the same answer: the one with the most depreciation. Every manufacturer is in competition with the other so the differences between quality, ride and performance is negligible and major differences are only in the minds of the buyers.
Some people think VW’s are better than Fords and other people think Fords are better than VW and so on. This idea can go to crazy lengths. It’s €2000 for a Gucci handbag and €50 for a knock off. As they look the same the difference is in the mind of a genuine Gucci buyer. It’s the same with the car buyer. Toss a coin to find which is best VW or Ford. Which ever side turns up is correct because they are all in competition with each other. If one make was better than another it would dominate the market and the others would fail. The exception to this is the Korean crap which is not really comparable to its European competition. The Koreans out source to India and now it’s Korean and Indian crap. I suppose this is ok because Mercedes out source to South Africa and VW to Poland and Nissans are made in France by Renault.
The best car is the one with the most depreciation when used and this has to be the French cars. You know the makes. The makes that supply BMW, Ford, Nissan, Suzuki, Volvo with engines and gearboxes for the cars that are the “best” in the minds of buyers.
For example, on our website there is a three year old Renault 1.5 diesel with 20,000 miles that cost over €30,000 new for sale at €10,000. This means that the depreciation is €20 per mile.
The VW costs €12,000 new and three years later at €7,000 and 34,000 miles the depreciation is €1.47 per mile. The only comparison with the cars is a wheel in each corner.
I drive a car that cost over €50,000 new. I bought it seven years old for €1750. That’s over €7,000 a year depreciation. If my 100% perfect car was totally destroyed the most I could lose was €1750 and, you guessed it, it’s made in France and used by the French president as a Limo.
You can make up your own mind which is best – a German made “roller skate” for twice the price or a French made Limo. Fuel costs are the same and the depreciation was 35 cents per mile.
Now let’s take a German made car at €50,000 new, say an E-Class Mercedes (not a Limo, as a Merc Limo would cost over €100,000). 20,000 miles per year for seven years is 140,000 miles. The value for a 2010 is €10,000 plus crazy maintenance costs not needed on French cars: €5000. The depreciation is €40,000 + €5,000 = €45,000. Divide that by the 140,000 miles and you get 32 cents per mile depreciation.