"Depreciation is the single largest cost of car ownership"
Discussion
Inspired by the fact that it's Monday morning, I'm working at home, and our dump/dog/station Mondeo estate is approaching 90,000 miles in our ownership (168k in total) I've been wondering how much it has cost us over its lifetime.
Now, let's be clear- this was bought as a workhourse and has been maintained in accordance with strict banger principles (i.e. sufficient to keep it roadworthy and running but no more). As such I don't know exactly how much has been spent on it over the years in terms of wheels/brakes/servicing etc but it won't be a huge amount, certainly less than the car cost seven years ago (£4k). Similarly, I reckon it has cost about £1600 in VED and about £1300 in insurance.
What's quite depressing is the fuel cost. Using this website ( https://www.gov.uk/government/statistical-data-set... ) I reckon my average petrol cost has been about £1.20 per litre and thus, factoring in what I know about the mpg we achieve, total fuel cost is about £13k.
What's most depressing, however, is that I can use the data from that website to estimate that the tax take from that was about £8250. Add on the VED, insurance tax and VAT on maintenance and I'm well over £10k. This is in the very definition of an average car. Doing about average miles. Being driven, well averagely. And it has cost me two and half times the purchase cost just in tax over its lifetime.
So when someone says that "Depreciation is the single largest cost of car ownership" again I'm going to tell them to bugger off- it's the thieving taxman and probably always has been. Certainly for Mr Average.
(I'm a Chartered Accountant working in the Oil industry so I suppose none of this should really surprise me).
Now, let's be clear- this was bought as a workhourse and has been maintained in accordance with strict banger principles (i.e. sufficient to keep it roadworthy and running but no more). As such I don't know exactly how much has been spent on it over the years in terms of wheels/brakes/servicing etc but it won't be a huge amount, certainly less than the car cost seven years ago (£4k). Similarly, I reckon it has cost about £1600 in VED and about £1300 in insurance.
What's quite depressing is the fuel cost. Using this website ( https://www.gov.uk/government/statistical-data-set... ) I reckon my average petrol cost has been about £1.20 per litre and thus, factoring in what I know about the mpg we achieve, total fuel cost is about £13k.
What's most depressing, however, is that I can use the data from that website to estimate that the tax take from that was about £8250. Add on the VED, insurance tax and VAT on maintenance and I'm well over £10k. This is in the very definition of an average car. Doing about average miles. Being driven, well averagely. And it has cost me two and half times the purchase cost just in tax over its lifetime.
So when someone says that "Depreciation is the single largest cost of car ownership" again I'm going to tell them to bugger off- it's the thieving taxman and probably always has been. Certainly for Mr Average.
(I'm a Chartered Accountant working in the Oil industry so I suppose none of this should really surprise me).
It seems to be making you increasingly depressed the more you put the numbers into a spreadsheet.
Your alternative options are to walk to work, or get a bike, you can also walk the dog around the block near your house. It should help a lot with your mental health if its really bothering you.
what about public transport, a lot of people cope very well with this.
But if a car is a necessity like it is for most of us, you just have to accept the cost of motoring.
Your alternative options are to walk to work, or get a bike, you can also walk the dog around the block near your house. It should help a lot with your mental health if its really bothering you.
what about public transport, a lot of people cope very well with this.
But if a car is a necessity like it is for most of us, you just have to accept the cost of motoring.
Depreciation is just the difference between the buy price and sell price.
It's not a cost in addition to buying the car.
If anything it's a way to try and show you paid less for that car by factoring in the sale price.
Frankly, if you plan to keep a car more than three years it's silly to even consider depreciation - even more so if you don't have any future sales plan.
Just consider the purchase price to be spent money; then if you get anything back when the car is sold it's a bonus.
It's not a cost in addition to buying the car.
If anything it's a way to try and show you paid less for that car by factoring in the sale price.
Frankly, if you plan to keep a car more than three years it's silly to even consider depreciation - even more so if you don't have any future sales plan.
Just consider the purchase price to be spent money; then if you get anything back when the car is sold it's a bonus.
basherX said:
What's quite depressing is the fuel cost. Using this website ( https://www.gov.uk/government/statistical-data-set... ) I reckon my average petrol cost has been about £1.20 per litre and thus, factoring in what I know about the mpg we achieve, total fuel cost is about £13k.
What's most depressing, however, is that I can use the data from that website to estimate that the tax take from that was about £8250. Add on the VED, insurance tax and VAT on maintenance and I'm well over £10k. This is in the very definition of an average car. Doing about average miles. Being driven, well averagely. And it has cost me two and half times the purchase cost just in tax over its lifetime.
So when someone says that "Depreciation is the single largest cost of car ownership" again I'm going to tell them to bugger off- it's the thieving taxman and probably always has been. Certainly for Mr Average.
(I'm a Chartered Accountant working in the Oil industry so I suppose none of this should really surprise me).
An accountant complaining about the cost of living? There's a thing. Mind you, they do say accountants are tighter than most.What's most depressing, however, is that I can use the data from that website to estimate that the tax take from that was about £8250. Add on the VED, insurance tax and VAT on maintenance and I'm well over £10k. This is in the very definition of an average car. Doing about average miles. Being driven, well averagely. And it has cost me two and half times the purchase cost just in tax over its lifetime.
So when someone says that "Depreciation is the single largest cost of car ownership" again I'm going to tell them to bugger off- it's the thieving taxman and probably always has been. Certainly for Mr Average.
(I'm a Chartered Accountant working in the Oil industry so I suppose none of this should really surprise me).
Why don't you really depress yourself and tot up the costs of feeding yourself and your family / pets every day, the cost of insuring your home & it's contents, the cost of the clothes on your back etc etc...
Last two cars I've bought have been at the end of their depreciation curves an mx5 for £1000 sold 3 years later for £750 and a £2000 SEAT TDi. I can live with that depreciation. I see mates all be it with brand new cars struggling to pay off the finance quick enough to keep up with depreciation.
pork911 said:
Depreciation is the cost you have the most choice about.
I'm not sure its quite as simple as being able to afford it.I freaking hate losing money. Hate it.
I'm not a millionaire or rich but can afford some good stuff. I always consider depreciation when purchasing a new car.
Some people just accept it and forget about it and if thats how they roll then fine. I try and buy smart and minimise losses. As I run my own business it kind of makes you maximise profit and reduce loss.
So in summary I can 'afford' to lose money on depreciation but I don't want to and hate it happening and do everything I can to reduce it.
I factor in depreciation costs (or relative lack of them in some cases) as strong arguments for buying cars. Four of mine have been justified that way, in part.
But if we were concerned with running costs over all else, we'd be driving other cars in many cases.
And, to us, car / vehicle purchases are emotional and cost becomes secondary to the way they make you feel.
I suppose there's a sweet spot where purchase price, depreciation, running costs, enjoyment, emotional involvement, etc all meld wonderfully in perfect unison. The perfect car? Probably not.
But if we were concerned with running costs over all else, we'd be driving other cars in many cases.
And, to us, car / vehicle purchases are emotional and cost becomes secondary to the way they make you feel.
I suppose there's a sweet spot where purchase price, depreciation, running costs, enjoyment, emotional involvement, etc all meld wonderfully in perfect unison. The perfect car? Probably not.
braddo said:
It sounds like the car ownership costs have been commendably low and that the costs of use (the costs you're getting a bee in your bonnet about) are fair for the mileage travelled.
Oh god, yeah- the beancounter in me makes me averse to cost and there's no doubt that this is why I get such great pleasure out of the old banger. Fortunately the other parts of my character have resulted in some other, more traditionally entertaining, stuff on the drive. It just struck me today that most of the cost of (my) motoring is tied up in fuel and, as a subset to that, in related tax. I'm not quite sure why the OP comes across as having a "bee in my bonnet" but hey, ho. Sadly it's not even close to being my biggest tax outlay. Still, I'm sure I'll need the NHS soon enough.
The previous and 1st owner of my Range rover sport lost nearly £50k in depreciation in the 9 years he had the car. That's somewhere in the region of 80p-90p per mile. Running costs are around 50p per mile so depreciation is far and above the biggest cost that he incurred.
I can't loose £50k in depreciation as that's far more than I paid for it but the running costs are still 50p a mile if not more as maintenance is more likely and fuel is more expensive now so depreciation is likely to be the lower cost for me.
I can't loose £50k in depreciation as that's far more than I paid for it but the running costs are still 50p a mile if not more as maintenance is more likely and fuel is more expensive now so depreciation is likely to be the lower cost for me.
I look at it as cost per mile.
SO roughly say £22/23K all in cost for purchase/servicing/insurance/tax/fuel?
You're around 25p, possibly less per mile all in. That is pretty cheap motoring in my book.
If I did the same workings out I'm around £1.60 per mile over 10K. yes it will go down the more mileage I achieve but 25p per mile is extremely small and you're getting hung up on the large figure you've worked out.
You can save that £23K ish you've spent over the years, but you will not have done or gone anywhere with particular ease.
SO roughly say £22/23K all in cost for purchase/servicing/insurance/tax/fuel?
You're around 25p, possibly less per mile all in. That is pretty cheap motoring in my book.
If I did the same workings out I'm around £1.60 per mile over 10K. yes it will go down the more mileage I achieve but 25p per mile is extremely small and you're getting hung up on the large figure you've worked out.
You can save that £23K ish you've spent over the years, but you will not have done or gone anywhere with particular ease.
basherX said:
Inspired by the fact that it's Monday morning, I'm working at home, and our dump/dog/station Mondeo estate is approaching 90,000 miles in our ownership (168k in total) I've been wondering how much it has cost us over its lifetime.
So when someone says that "Depreciation is the single largest cost of car ownership" again I'm going to tell them to bugger off
If you'd bought a new Mondeo and put 90k miles on it, I'd lay odds that depreciation was - or was very close to - the largest expense. For the average private buyer of a new car, who trades it in well before 90k miles - that's tipped even further. For those of us who buy cheap sheds, then it seems blatantly obvious that it isn't going to apply.So when someone says that "Depreciation is the single largest cost of car ownership" again I'm going to tell them to bugger off
basherX said:
it's the thieving taxman
Motoring-related taxation - VED and fuel duty, even excluding VAT on the fuel - contribute around one third the cost of the NHS to the exchequer each year. Which third of the NHS would you like to get rid of?basherX said:
(I'm a Chartered Accountant working in the Oil industry so I suppose none of this should really surprise me).
I s'pose basic innumeracy shouldn't really surprise me in an accountant...
J4CKO said:
So, What price do you put on being able to travel long distances, whenever you like, with four other people, plus luggage, in comfort and safety on a purpose built road network ?
None of which should have any bearing on the amount of fuel duty? Which, AFAIK, is supposed to cover the externalities of, well, burning fuel.TooMany2cvs said:
Motoring-related taxation - VED and fuel duty, even excluding VAT on the fuel - contribute around one third the cost of the NHS to the exchequer each year. Which third of the NHS would you like to get rid of?
Nice straw man. Is that the only way to possibly cut public expenditure in your view then? You didn't consider cutting the renewal of Trident, or the two new aircraft carriers? Not to pick on defence or start a political discussion about what should be cut, but you could have used less emotive examples. I assume you feel you get good value for the 50% of your income the government insists you hand over to them every month, and every time you see them piss away money that would cover the taxes you and every member of your family will pay for the next 10 generations you don't really mind?
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