Mrs is looking at new car, and in true STW style we visited BMW. Chatting to the stealer/dealer we got on to the subject of depreciation.
He advised that on average a BMW will lose £250 per month over 3 years in depreciation. 😯 😯
Are there any brands out there that go against this trend?

Not as a new car, you will always suffer depreciation. Some of the best holding value at the moment are Land Rovers and Jaguars. You don’t tend to see appreciation in a modern car unless it is exotic and short production numbers.

That average is somewhat misleading as a large chunk of the loss will be the initial rolling off the forecourt and some more than average will occur around plate changes.

sports cars generally hold value better than others – so porsche, lotus etc will hold a lot of value, but might not be practical enough. Otherwise, the less you spend, the less you will lose – you can’t lose £9k over 3 years on a car that only cost £8k to start with 🙂

250pcm actually seems quite low for the “average” BMW.
Most cars will lose 40-50% of their value over the first 3 years

Are there any brands out there that go against this trend?

A handful of very sought after high end cars will often appreciate before they’re even in their owners hands. Depends if you’re in the market for a top end Porsche Cayman.

If you want to own a car (new or s/h), you will always pay for the depreciation. Buy if for £X and sell it for £X minus depreciation.

The only way to avoid this is to buy cars at the bottom of their depreciation curve. Luckily, the recent asset boom means that classic cars (as nice tax free investment, er, vehicles) have dragged all sorts of more recent metal upwards perhaps earlier than they might. But it’s still pretty rare in itself and it’s extremely rare that a new car will appreciate.

If you do find the egg laid by the golden goose, do share..!

Look at lease examples. Generally finance cost quite low so its easy to strip out the interest. That will give you a good idea about what the dealer/manufacturer thinks the depreciation is.

My car has probably lost 70% of its value over 10 years and as above biggest hit is in years 1-3. At the same time a new replacement would cost 40-50% more than I paid.

how is this news to you?

Bought a new Defender, ran it for over 2 years and 16,000 miles. Sold it last week for a grand more than I paid.

Probably the only time I will ever experience this!

Lease?

You’re on a bike forum and you’re worried about losing 10-15% a year? Ha! You must know that you lose 50%+ on a new bike in the first year. Makes cars much better value.

Cokie, yeah but bikes are bikes right… 😀
Any pitfalls with lease? The wife does about 10k per year and we have my old civic for dog/bike duties so her car would be kept pristine. 🙂

“on average” dangerous territory there.

There was a time when the 2 worse depreciating cars in the UK were the SL Mercedes and 6 Series BMW. 60% or more in 3 years, the higher the spec, the worse they were, the SL65 was a great way to lose money.

The 1 and 3 series were towards the other end of the spectrum, broader market and that badge will always sell.

The slowest depreciating vehicle is actually the VW California, they hardly lose anything.

If you are looking for a cheap new car then look at the best new leasing deals on pistonheads.

There are some new cars which can be leased for 2 years for less than the depreciation you would suffer as a private individual (this is because manufacturers sometimes heavily discount to leasing companies – this means when they add on their profit margin the payments are attractive to the end user)

You never own the car – but you never have much risk either.

For instance you could lease a 3 series for around £300 per month – not looked for a few months but even the 330d / 335d can be leased cheaply

DSG / Freedom / coast2coast are all leasing companies that seem to have good deals on , again pistonheads will share if this is foot in the door pricing or cars are actually available!

Great stuff. Just need to convince the wife she “needs” a VW Van 😀

Bought a new Defender, ran it for over 2 years and 16,000 miles. Sold it last week for a grand more than I paid.

Yep, one of the very few new cars where that would ever happen. Obviously helps that they stopped making them and there will never be anything like it again.

Any pitfalls with lease? The wife does about 10k per year and we have my old civic for dog/bike duties so her car would be kept pristine.

The only pitfall is not being flexible enough on what’s avaibale – manufacturers use leasing to punt on old stock before a new model etc.

So, if you’re prepared to be flexible on what you drive and don;t spec it with loads of options, then you can often drive a lot of car of the money.

The rule of thumb is that over 2 years the cost of the lease should be no more than 25% of the retail price of that model.

+1 Pistonheads leasing deals thread(s).

Cheers. Will look over on pistonheads.

The idea with the lease is that it equals (or betters) the cars depreciation value. Lease should roughly equate to 25% (or less) of the cars value over 2 years to be worthwhile, that way its less than depreciation. As you pay the fixed sum every month, over 2 years it starts becoming worse value as you start to pay more than the depreciation equivalent as depreciation slows (hope that makes sense).

Pitfalls include mileage.. watch that one as some manufacturers have hideous excess mileage charges, however sometimes it’s cheaper to go for a lower than expect mileage allowance and top up with excess mileage costs, as this can be cheaper. Other thing is servicing- probably not worth going maintained on your estimated mileage, however those 18-19” tyes are expensive if you get a puncture (which some of the maintenance prices include) so could be worthwhile. Also, you may end up having to do a service just before handing it back- might be worth handing it back a month early to ‘beat the system’. Plus, ‘fair wear and tear’- this varies between manufacturer, but some will charge you for that kerbed alloy or dented door (thought sometimes below market rate to get it remediation).

As above, be flexible on your requirements and badge. The beast deals can be odd and marvelous. Often the best deals are on the cars that depreciate the least, so those with a nice badge (win/win).

For “normal” new cars that you actually buy, the greatest depreciation is within the first moments that you leave the dealer’s forecourt – typically 20-30%. Over time, the gradient becomes more gentle.

Finance deals bundle this up into monthly payments (take your pick of the various types), but don’t make the mistake of assuming that this depreciation occurs at a uniform rate.

Certainly with most cars under 5 years old, depreciation is the single greatest cost of ownership. I’ve never understood why people get so worked-up about fuel cost and VED, when they’re often paying many times over in depreciation.

this is also why PCP deals can vary so much, as the ‘guaranteed future value’ is very depreciation based. I have just got a new Audi on a PCP for around £40 a month less than the equivalent Skoda with same engine and gearbox 🙂 ….same deposit, same annual mileage…

^^^^
Any chance to talk about your new Audi 😉

Having done the man maths on leasing a few times its pretty much a false economy on most cars unless you really must have a new car.

Buying a car at 3 years old seems about the best balance of avoiding a big chunk of depreciation while still having an up to date car

Crikey

I am looking at a new car and if it depreciated at £250 a month it would be worth negative £400 in three years :-O

(Bog standard Seat Ibiza for £8,600 via Carwow)

Having done the man maths on leasing a few times its pretty much a false economy on most cars unless you really must have a new car.

Buying a car at 3 years old seems about the best balance of avoiding a big chunk of depreciation while still having an up to date car

it all depends how you look at it and what you want. This post from another thread the other days sums it up very well

P-Jay – Member
This always turns into a bun fight between very in trenched sides who won’t listen to anyone else or accept that any viewpoint other than their own could possibly have any merit as there is only one right answer – theirs.

The truth is, anything as large, complex and taxed as a vehicle will ALWAYS cost money.

Another truth is nicer vehicles, are nicer.

Newer vehicles are usually nicer – partly because we still strive as a human race to build the next thing a little bit better than the last thing, and partly because it’s nice to know that your farts, and your farts alone have besmirched the drivers seats.

It’s also true most people are working with a finite budget and older, better quality vehicle are the same price as new lower quality ones.

PCP offers a ‘smart’ solution. You pay a deposit (not that big these days) and rent the vehicle – you basically pay for the depreciation between when you bought it and when you give it back plus interest. That’s it. It’s never “yours” but that’s a two sided coin, it breaks, it’s someone else’s problem, that’s why PCP deals are restricted to newer cars with warranties. (usually)

Cash is always a lovely thing, you can take your cash (which you borrow or work hard to accumulate) and you go off and buy a vehicle. You can spend a lot or a little – what does it cost you, really. Well You buy for X and at some point in the future you sell for Y, be that in 2 years time or 15 years time when you give it to the scrappy. The Difference between X & Y is the true cost of the vehicle, the depreciation, so the same at PCP really. Half the people in the world will disagree with me because blah blah blah, but that’s the true cost.

You CAN buy a vehicle for a lot less, ‘Bangernomics’ or maybe you like something a bit nicer so you spend £5k £10k whatever on your chosen type of vehicle – everyone’s got a sweet spot to where they think the best value is. Okay you buy a Focus for £5k, you keep it 2 years and sell it for £2600 – it’s cost you £2400 over 2 years – £100 a month, can you lease a new Focus for that? No, but it’s had 2 MOTs since then, maybe you’re lucky, maybe you’re not.

If you think that £100 a month for a £5000 Focus for 2 years is better value than a new one for say £200 a month then, PCP isn’t for you. If you think a new car for £100 a month more than a 5 year old one is – then PCP is for you, it all boils down to how much you value ‘having a car’. Some people see them as just a tool to get to work because it’s too far to ride and you can’t take the train, some people see them as an extension of them, a status symbol, some people see them as something to enjoy, DAB radio instead of just FM, nice plush seats without the odd stain and worn bolster on them. Everything nice and new.

I don’t think there’s a right or wrong answer – I personally think those who get all ‘high and mighty’ about other people leasing cars “they can’t afford” should look at themselves. How many times do I hear people say “oh it’s only leased ha ha ha” when they’re talking about their neighbours new Car, how the hell do they know? British people won’t willingly tell you how much they spend a month on coffee, they certainly don’t go blabbing about how and why they buy their cars.

He advised that on average a BMW will lose £250 per month over 3 years in depreciation. [/I]

He was telling you that so you’d be impressed 🙂 But tbh if it’s only losing £9k over 3 years it’s a cheap BMW.

Have you never bought a new(ish) car before? In fact you’ll find compared to most consumer goods cars are quite good, what do you reckon a new TV depreciates by?

That p_Jay quote is quite interesting. We have a Mazda 3, bought exactly 10 years ago, new, for £16,000. Over the years it has cost us around another £2,600 in servicing, MOTs and a couple of slightly more expensive repair bills so I reckon a lifetime cost to us of around £18,600. We have just been offered £1,000 for it on trade-in so that makes £17,600 net cost. It currently has 50,000 on the clock.

So over ten years, that is £147 a month. I have just had a quick look and I could get a Ford Focus for £432 initial payment + £144 a month (based on 5k per year) so that’s £162 total per month and I would never be in a car more than two years old and have pretty much hassle free driving (apart from potential for damage charges on return).

There really isn’t a simple answer.

Cars probably a better bet on lease than dogs
https://www.msn.com/en-us/money/credit/the-next-frontier-in-credit-renting-a-dog/ar-AAnFyZO

Johndoh – that is interesting. I’ve only ever seen short term calcs on lease/own. Interesting to see how the ‘run it into the ground’ approach stacks up.

However, why are you selling it now – a car with 50k on the clock is barely run in. There’s a bargain for someone there.

A few advisories on the MOT including warnings on needing welding doing, it eats tyres (lucky to get 10k out of front tyres and it is rarely hammered), expensive road fund licence (£23.69 a month), relatively high fuel consumption, it’s beginning to look/feel it’s age (our two 7 year olds have grown up in it – you can imagine what that does to a car’s interior) and it is only a matter of time before something very expensive goes as we have been really very fortunate with it (never broken down apart from flat batteries).

So right now I am looking at a brand new basic Seat Ibiza for £1,000 deposit (the trade-in) and then £7,600 over a five year loan costing £137.41 a month (total amount payable £8,244.71).

However, why are you selling it now – a car with 50k on the clock is barely run in. There’s a bargain for someone there.

Or possible a totally knackered car that’s only ever done short journeys for 10 years, and is ready for the scrapper ?

You do realise that a salesman will tell you want you want to hear, £250 a month, keep going…

You just have to accept that you’re paying for a lot of depreciation loss with a new car, however on the flip side you have a car with no unexpected large bills before passing it on before its out of warranty.

We have my old style civic which is a belter and great for local stuff/dog/bike duties. The wife travels to North Wales 1 per month so the and the draw of having something reliable and not smelly/embarrassing is the draw.

Plus she does about 10k per year max so the car will be pristine after 2 years.