depreciation

ryr8828 · November 10, 2001

Had a 98 Expedition, Kelley Blue Book showed trade-in at 18,500 when I traded it, it is now down to $17,240. $39000 sticker. I traded it in for the Avalanche a month ago. That's $21500 for 4 years on a vehicle that's hardly been driven. Dealer gave me 21,000 after much negotiation. So ithat makes it 18000 depreciation. Still think I could have done better, just had to have the Avalanche. To the point, my wife drives a 2001 Supercrew, $26,000 sticker, 30,000 miles. She loves the Supercrew, and with 0% interest I thought it might be time for a new one. So I punched it all in to Kelley Blue Book. Trade-in on the supercrew was 18755. An identical, new 2002 Supercrew is 28000. Difference of 9415. For one year and 30,000 miles! I may never buy another Ford. Checked out the depreciation on a 2001 Expedition just for kicks, 42000 sticker with 30000 miles, trade in value is 22430. Almost 20000 depreciation in ONE YEAR!

Greg · November 10, 2001

Yep, depreciation plus high mileage in the first year is the ol' one-two. I drive about 33,000 miles per year and I know what you mean. I've found that pickups generally depreciate more slowly than cars and vans. I was initially surprised at the Expedition numbers you quoted, but given the problems Ford is having coupled with the pricing and financing incentives on new vehicles, I guess I shouldn't be surprised.

pacodiablo · November 10, 2001

the first year is always the worst for depreciation (the vehicle goes from new to used), after that it slows down conisderably

November 10, 2001

On ANY vehicle, you can count on about a 30% loss just by signing the paper work. You don't even have to drive it. I bought my truck at nearly 1/2 price when it was two years old.

You think autos are bad, check the used prices on boats and campers!

MyZ71 offroad · November 11, 2001

That's definitely the best deal, 2 years old, 1/2 price!

I bought the wife a Grand Cherokee Ltd V8 that was 2.5 years old for 15,500. the sticker in the glove box says it list price when new was 36,900! Man I just can't justify paying that kind of blue sky, for a odometer that reads .0003. I'd rather my 401k have the money.

Brian

Stepside Z · November 11, 2001

The cost of our trucks is just out of control. $35,000 is alot of money and I don't care what tax bracket your in. Based an the cost verses depreciation my trucks will have 2 owners, me and the junk yard. I want every penny I can get out of them.

DigUout · November 11, 2001

This is why in the book, "Secrets of Millionares", the one thing they all mention is buying a 2 year old vehicle with low miles. New just loses too much value too quick, but you can find many vehicles that will sell at trade in value after 2 years. $20K in 2 years?! OUCH!!

chevy4x4trucks · November 12, 2001

I know on kbb.com you can check out the value a dealer would give you and what they would sell it for. Just out of curiosity, what would the dealer sell one of those vehicles for that has lost 1/2 it's value in a year?

CapnDean · November 12, 2001

Rule #1: Kbb, Edmunds & Carpoint guides are just that....GUIDES. They are not the oracle on auto value.

Example: I bought my truck..tax, title and tag "out the door" for a little more than $1000 off of the kbb 'invoice' price.

Now we all know that the dealer did not sell me the truck for less than he paid for it don't we? (I had no trade in or anything else to confuse the numbers...I DID use every rebate/incentive known to man though).

Rule #2: Never compare Sticker price to: a) bank loan price b) wholesale price & c) trade in price. Why? Again.....KBB NADA etc...are not the Oracle. Their numbers are just close.

I do believe that insurance companies rely heavily on NADA when they total a vehicle though!

Rule #3: Barring some other mitigating factor (bad credit, trade-in that is worth less than payoff, damaged or high miler vehicle etc..) You can ALWAYS buy for less than sticker. You can USUALLY trade in for more than 'blue book trade value'.

Automobiles are a bad investment. They do depreciate WAY TOO FAST. = Translation: We pay TOO much for them. Solution to the problem? Quit buying new cars period. Likelihood of that happening? 0% chance. We are AMERICAN! Consumerism is king!

I doubt that the residual value issue is as related to the manufacturer (E.G. ford vs chevy vs dodge) as it is the "DEAL" you got 1) when you bought it new & 2) when you sold or traded it. In this example you get 2 chances of being screwed by a car dealer. Dealers are notorious for being able to screw you with a smile.

Exceptions to the residual value rule: Lincoln vs Yugo/ Caddy vs KIA/ Lexus vs Hyundai/ Rolls vs Daiwoo