Depreciation - what do you consider fair?...
Discussion
Hey, Its not my first post - I failed to recover my old account so had to start again :-(
I recently sold all my toys to buy a house last year and bought a very sensible 525D Touring M sport. I love the car, and its been amazing, drives faultless and is super reliable, but being a petrol head i'm itching to get back into something with a little more power.
I sold my V8 Westfield towards my deposit, and always fancied another. I didn't lose any money after owning the car for 3 years and it was a beauty. It did however, destroy my feet with the awkward driving position which took a long time to recover.
Previously i've had Porsches, M3's, Cosworths etc and a fair few bikes. I'm leaning away from bikes now as the roads are just awful and im getting older.
I was tempted to get another kit car as a weekend "toy", but the driving position, along with cost of extra insurance, extra tax, extra storage and fuel etc etc are against it. But tbh, they are better than bikes, by a mile!
So I was thinking of getting a decent car that can also be used as a daily driver. I only travel around 5 miles a day to work and do roughly 5k miles per year in my daily.
I have looked at M4, M3, RS4 and C63 - the latter i had literally had my heart set on ('12 plate at £24k) but the depreciation on all of these is harsh at around £3k per year.
My beemer has lost £1k per year since I bought it (£6k), its an older 06 plate, and I would say £1-£1.5k is "acceptable" for the convenience of owning your own car. Same story with the Mrs TT, that has lost around £1.5k per year on an 09 plate.
I appreciate that performance cars a limited market, and with the economic instability there are many other factors to determine residual values. You could argue that if you discount the "reasonable" rate of depreciation then the additional loss is the cost of owning such a vehicle. Plust of course maintenance, servicing etc, fuel, tyres and fuel.
I never used to worry too much about depreciation but as you get older you start to pay more attention to such things.
The only cars that seem to hold their money better are the Porsche Cayman's, which are a little impractical but great cars in their own right.
The Mrs is not keen on me spending over £20k on a new car since the house purchase, but I literally feel like I have lost a limb not having something that really puts a smile on your face.
We dont have kids and both have decent jobs (which helps my argument) but I also see her point.
So my question mostly is:
What do you think is a reasonable financial cost for the sake of smiles for miles?.....
Thanks,
Stu
I recently sold all my toys to buy a house last year and bought a very sensible 525D Touring M sport. I love the car, and its been amazing, drives faultless and is super reliable, but being a petrol head i'm itching to get back into something with a little more power.
I sold my V8 Westfield towards my deposit, and always fancied another. I didn't lose any money after owning the car for 3 years and it was a beauty. It did however, destroy my feet with the awkward driving position which took a long time to recover.
Previously i've had Porsches, M3's, Cosworths etc and a fair few bikes. I'm leaning away from bikes now as the roads are just awful and im getting older.
I was tempted to get another kit car as a weekend "toy", but the driving position, along with cost of extra insurance, extra tax, extra storage and fuel etc etc are against it. But tbh, they are better than bikes, by a mile!
So I was thinking of getting a decent car that can also be used as a daily driver. I only travel around 5 miles a day to work and do roughly 5k miles per year in my daily.
I have looked at M4, M3, RS4 and C63 - the latter i had literally had my heart set on ('12 plate at £24k) but the depreciation on all of these is harsh at around £3k per year.
My beemer has lost £1k per year since I bought it (£6k), its an older 06 plate, and I would say £1-£1.5k is "acceptable" for the convenience of owning your own car. Same story with the Mrs TT, that has lost around £1.5k per year on an 09 plate.
I appreciate that performance cars a limited market, and with the economic instability there are many other factors to determine residual values. You could argue that if you discount the "reasonable" rate of depreciation then the additional loss is the cost of owning such a vehicle. Plust of course maintenance, servicing etc, fuel, tyres and fuel.
I never used to worry too much about depreciation but as you get older you start to pay more attention to such things.
The only cars that seem to hold their money better are the Porsche Cayman's, which are a little impractical but great cars in their own right.
The Mrs is not keen on me spending over £20k on a new car since the house purchase, but I literally feel like I have lost a limb not having something that really puts a smile on your face.
We dont have kids and both have decent jobs (which helps my argument) but I also see her point.
So my question mostly is:
What do you think is a reasonable financial cost for the sake of smiles for miles?.....
Thanks,
Stu
Depends on the car, but I'd say 10-30% a year.
So a new £50k car could lose £5k just by being registered and £15k after a year/10,000 miles (especially if it's a barge).
Old car worth £5k would still lose 10-30%, but that would only be £500-£1500 due to the lower original price.
If you're clever you may even find one that's either stopped depreciating, or has started appreciating.
For example, I bought my Z4MC in 2008 for £25k at 2 years and less than 10,000 miles old. It had a list price (with options) of £48k. It's now worth about half of that purchase price after 10 years and 100,000+ miles.
So a new £50k car could lose £5k just by being registered and £15k after a year/10,000 miles (especially if it's a barge).
Old car worth £5k would still lose 10-30%, but that would only be £500-£1500 due to the lower original price.
If you're clever you may even find one that's either stopped depreciating, or has started appreciating.
For example, I bought my Z4MC in 2008 for £25k at 2 years and less than 10,000 miles old. It had a list price (with options) of £48k. It's now worth about half of that purchase price after 10 years and 100,000+ miles.
I personally wouldn't say £3k per year for any of the cars you mention is bad! I'd have thought that was around the figure for the spread between trade and retail price, unless you're planning to buy and sell privately?
Case in point - I bought my F type 2.5 yrs old from a Jag dealer, as it had taken a big hit from new and had loads of options. It's the V6S, which have depreciated less than the V8's. At the time it was well priced and I believe I got a fair deal.
18 months later and I've been looking at swapping...WBAC quoted me £18k less than I paid for it. Now I could probably privately punt it for a fair bit more but that's pretty scary, and perhaps not far off what the first owner ended up losing!
Unless it's on finance with a guaranteed future value it's all crystal ball stuff...there's nothing to stop the arse dropping out of the performance car market and you losing more, or this brexit nonsense to go away, fuel to get cheaper again and suddenly prices firming up!
Case in point - I bought my F type 2.5 yrs old from a Jag dealer, as it had taken a big hit from new and had loads of options. It's the V6S, which have depreciated less than the V8's. At the time it was well priced and I believe I got a fair deal.
18 months later and I've been looking at swapping...WBAC quoted me £18k less than I paid for it. Now I could probably privately punt it for a fair bit more but that's pretty scary, and perhaps not far off what the first owner ended up losing!
Unless it's on finance with a guaranteed future value it's all crystal ball stuff...there's nothing to stop the arse dropping out of the performance car market and you losing more, or this brexit nonsense to go away, fuel to get cheaper again and suddenly prices firming up!
R8FUN said:
If you think 3k a year is harsh, stick with old cars & none of those you have listed.
Last year I bought a 9 month old F-Type which I thought was a decent buy as it lost 20k in that time but it still lost another 9k in the year that I had it!!
Just saw this as I posted mine - think the advice here is don't buy an F type! (mine had lost over £30k vs list when I bought it!)Last year I bought a 9 month old F-Type which I thought was a decent buy as it lost 20k in that time but it still lost another 9k in the year that I had it!!
I should mention that I actually sold my previous Vantage for about £1k more than I paid for it after 6 months. However, in that time it cost me approx £5k in repairs and servicing and needed multiple trips to different dealers/specialists. Having now done both I'd take the Jag depreciation route any day. That car has been absolutely faultless and fully warrantied during my ownership, so zero hassle or worries about anything breaking which means I've used and enjoyed it far more.
You mention an older porsche, I too thought about these but reading about the IMS and bore scoring put me right off. Older sports/supercars bought outside the dealer network and warranty can be a real nightmare...and remember an engine failure in anything like this could easily get to 5 figures, sometimes dwarfing any depreciation saving.
£1k a year in depreciation and repairs combined (not maintenance) is about the limit I am happy with, any more than that and I start thinking what more interesting things the money could be used for. At the end of the day a car is just a car and having a newer more expensive one has never made me any happier, things like boats, bikes, tools, workshop, pets etc bring far more joy.
What is fair? Whatever the market says. What is a fair price to pay. Again, whatever the market says. That is why new cars at, say, 44k list, can be had for 34k and so on.
In general terms, I used 25% on fixed assets in the past, and 33% on computers, at a time when computer technology was rapidly developing.
So 25% is fair. On a premium car, perhaps 25-30% in the first year and 20% thereafter. It just depends on the market at the time.
Let’s imagine (no real stretch required), that city levels for particulates and NOx levels decrease, and Euro6 is found to be a major contributor to that reduction. What then for second hand Euro6 values?
In general terms, I used 25% on fixed assets in the past, and 33% on computers, at a time when computer technology was rapidly developing.
So 25% is fair. On a premium car, perhaps 25-30% in the first year and 20% thereafter. It just depends on the market at the time.
Let’s imagine (no real stretch required), that city levels for particulates and NOx levels decrease, and Euro6 is found to be a major contributor to that reduction. What then for second hand Euro6 values?
Yeah I hear what you are saying.
There are some shocking figures you guys have experienced. I do love the F-Type, such beautiful cars. I drove the V8 last year and loved it.
My pal has just sold is 3 Door cosworth to a trader for £30,000 which is a 60% mark UP on what he paid for it. Wish I had kept mine longer now.
It would be awesome to have a Crystal Ball, like you say.
I'm blaming buying a house, they seem to suck more money than a V8, without half as much fun!
There are some shocking figures you guys have experienced. I do love the F-Type, such beautiful cars. I drove the V8 last year and loved it.
My pal has just sold is 3 Door cosworth to a trader for £30,000 which is a 60% mark UP on what he paid for it. Wish I had kept mine longer now.
It would be awesome to have a Crystal Ball, like you say.
I'm blaming buying a house, they seem to suck more money than a V8, without half as much fun!
I guess to a point it depends how long you plan to keep the car.
If you find a low mileage example of a car you love, keep it 5 or more years then the depreciation will level out a bit. Of course it depends on the age of the car you bought. I'd be surprised if an older C63 (6.2) would lose that kind of value yearly though? I may be wrong but that surprises me.
If you find a low mileage example of a car you love, keep it 5 or more years then the depreciation will level out a bit. Of course it depends on the age of the car you bought. I'd be surprised if an older C63 (6.2) would lose that kind of value yearly though? I may be wrong but that surprises me.
There was a British Asian guy, a few years ago, who was writing about finance. Basically he said, never buy a car or a house, unless you keep it for at least 10 years. He had lots of other tips, but can’t remember them.
However, economics does not come into it where fun is concerned. If it over-ruled fun and convenience, none of us would buy cars. Also, in many other countries, most people rent houses rather than buy.
However, economics does not come into it where fun is concerned. If it over-ruled fun and convenience, none of us would buy cars. Also, in many other countries, most people rent houses rather than buy.
aaron_2000 said:
340i Touring, it was £48k OTR in Jan 2016, in April 2018 the GFV was £21k IIRC, later sold at BMW for £23k. Seems pretty poor IMO.
£12k a year just in depreciation on a BMW estate 
, madness. I would have to be Bill Gates level rich before I could ever consider that a valid use of that much money.Shrimpvende said:
I personally wouldn't say £3k per year for any of the cars you mention is bad! I'd have thought that was around the figure for the spread between trade and retail price, unless you're planning to buy and sell privately?
Case in point - I bought my F type 2.5 yrs old from a Jag dealer, as it had taken a big hit from new and had loads of options. It's the V6S, which have depreciated less than the V8's. At the time it was well priced and I believe I got a fair deal.
18 months later and I've been looking at swapping...WBAC quoted me £18k less than I paid for it. Now I could probably privately punt it for a fair bit more but that's pretty scary, and perhaps not far off what the first owner ended up losing!
Unless it's on finance with a guaranteed future value it's all crystal ball stuff...there's nothing to stop the arse dropping out of the performance car market and you losing more, or this brexit nonsense to go away, fuel to get cheaper again and suddenly prices firming up!
I bought a new V6S coupe in May 2014, kept it a year and lost £6k, just over 10%. I was happy with that, I’d have lost my shirt on a V8.Case in point - I bought my F type 2.5 yrs old from a Jag dealer, as it had taken a big hit from new and had loads of options. It's the V6S, which have depreciated less than the V8's. At the time it was well priced and I believe I got a fair deal.
18 months later and I've been looking at swapping...WBAC quoted me £18k less than I paid for it. Now I could probably privately punt it for a fair bit more but that's pretty scary, and perhaps not far off what the first owner ended up losing!
Unless it's on finance with a guaranteed future value it's all crystal ball stuff...there's nothing to stop the arse dropping out of the performance car market and you losing more, or this brexit nonsense to go away, fuel to get cheaper again and suddenly prices firming up!
I consider that if I lose £2k in deprecoation per year that is cheap motoring. But then I don't really like driving old sheds - which would be cheaper.
However my more recent purchases (640d Coupe lost £4k per year) and 640d GC (which has lost about £8k in the last year) have been considerably more expensive.
If you want to keep depreciation costy as low as £1.5k - £2k you need to be spending less than £10k - £12k on a car in the first place.
(THAT SEEMS PRETTY CONSISTENT WITH RFN'S VIEWS ABOVE)
However my more recent purchases (640d Coupe lost £4k per year) and 640d GC (which has lost about £8k in the last year) have been considerably more expensive.
If you want to keep depreciation costy as low as £1.5k - £2k you need to be spending less than £10k - £12k on a car in the first place.
(THAT SEEMS PRETTY CONSISTENT WITH RFN'S VIEWS ABOVE)
Never ceases to amaze what some people lose out of taxed income on even humdrum bread and butter cars.
Those talking about the heavily depreciating F Type have proved once again if a new car depreciates rapidly it is usually due to it being overpriced when new, excess supply or poor image.
A newish heavily depreciating car may appear to be a bargain at shedloads less than new price ££ but cars such as these continue to depreciate and the hit is often very painful even years down the line.
Those talking about the heavily depreciating F Type have proved once again if a new car depreciates rapidly it is usually due to it being overpriced when new, excess supply or poor image.
A newish heavily depreciating car may appear to be a bargain at shedloads less than new price ££ but cars such as these continue to depreciate and the hit is often very painful even years down the line.
Gassing Station | Car Buying | Top of Page | What's New | My Stuff