Car Trouble

Over the weekend the exhaust on my car gave up after a huge 92,000 miles of service (the car is diesel). It is going to cost a disappointing £161 to put right, as I need 2 sections. A little investigation at www.parkers.co.uk tells me that my car is worth about £1,000. This got me thinking about just when is the point that it is not worth repairing.

How many times have we heard people say that they are changing their car because the old one is starting to need repairs and it’s just not worth it? I wonder how many of these people have done their maths and how many just fancy a new car and are just trying to justify the expense to themselves.

Again looking at the Parkers site shows that in another years time my car will be worth about £750, so that’s £250 depreciation in one year. Add to this my exhaust and say another couple of hundred pounds of repairs gives a total of £611. Now if I replace this car with a similar model that’s say 3 years old it will cost at an independent garage about £6,750. At 4 years old its trade in value would be about £4,455, that’s a whopping £2,295 in dealer’s profit and depreciation. The £611 doesn’t look so bad now. Even if we forget the dealers profit and assume we can buy and trade in for the same price the trade in value of the 3-year-old car is £5,570 so taking off £4,455 is £1,115 of pure depreciation.

If I were to buy a newer car the figures are even more scary. New cars lose on average half their value in 3 years so say I spent £16,000 on a new car that’s the best part of £2,700 per year in depreciation and it would be heaviest in the first year.

On purely financial terms, providing you get a reasonable car, I think maintaining an old one is nearly always going to be cheaper than buying a new one. I’ve been lucky I’ve had my car 5 years and apart from normal wear like tyres and brakes nothing has gone wrong (touch wood). Last year the clutch wore out but that had lasted 88,000 miles. The case for keeping it is even stronger now that it has a new clutch and it will have a new exhaust.

So if I do change it, I won’t try to kid anyone, including myself, that it is on financial grounds (unless it needs a huge repair) it will more than likely just be because I want a new one.