Last post on Nov 10, 2009 at 7:48 PM
You are in the Mercedes-Benz C-Class
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Mercedes-Benz C-Class, Car Safety, Sedan
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#6668 of 7297 Why buy a new Mercedes?
Nov 07, 2003 (8:18 am)
There is lots of discussion of W202 owners that are trading or selling their cars to buy a new MB, sometimes a C-Class, or whatever. The main reason seems to be to have a car that is under warranty.
I have a 1998 C230 with just shy of 160,000 km's (100K-miles)on the odo. If I were to trade the car in, I would probably be at a trade value of about $18,000. I paid $42,000cdn for the car six years ago. So, my depreciation expense for the six years I've owned the car is $24,000. With 1994 examples selling for $14-15K it seems that my depreciation curve is levelling out. Does it make financial sense to sell it? What about out-of-warranty repairs? Hhhmmm.
Suppose I buy a new 2004 C240. I'm looking at $45K again, and in five or six years the car will be worth $20K. It's going to cost me (in REAL money) $25,000 over the next five years for depreciation on the new car, plus the costs of operating. New or old, they need fluids, filters, etc. Plus, the new car will be more expensive to insure.
What is I take that $25,000 depreciation expense and put half of it in a fund for repairing the C230? Think I'll spend $12,500 over the next five years in non-maintenance repairs? Not a chance. This is my sixth MB, and I've driven several to over 300K. Not even the worst one required more $2000 a year. $1500 a year was a pretty good budget. For five years that's $7500.
What about the cost of money? Even if you're paying cash, you have the opportunity cost of tying up your dollars in the car. The cost of carrying that $45K for 5 years at 7.5% is ~$9000. The cost of carrying the $18,000 "investment" in my existing car is $3,600.
The total cost for buying the new car is $25,000+$9,060=$34,060
The total cost for keeping my existing car is
$7,500 (repairs) + $3,000 (deprciation) + $3,600 (interest charge) = $14,100.
That leaves me $20K in the bank in case something really goes wrong with the car. It NEVER makes finaincial sense to buy a new car. Warranty coverage is not a money saver. So, why on earth, in December of 1997 did I buy a new Mercedes? Not to save money! Just because I wanted a brand new car. I knew it was going to cost buckets of money, but went ahead anyway. Not every decision in your lives has to be the "right" one.
But, don't try to justify a new car with the 'ol "warranty coverage will save me money" argument.
Nov 07, 2003 (6:44 pm)
I am probably one of the folks you are referring to in your post #6668 . (but, maybe not???) I do not question your calculations and reasoning.
Clearly, you have given this a great deal of thought. I don't know about others but, I thought very carefully about what you have said BEFORE my wife and I decided to buy the new car. As stingy as I consider myself, I am now seeing this whole thing in a totally different light.
We realize that we are getting old. Our kids were all for it - that made it so easy. Besides, we will have a warranty for 7 more years - the thought does ease our minds.
However, thanks for your well considered and excellent reasoning and calculations as well as your very wise comments. I feel that you are absolutey correct. We like our new car a lot however.
#6671 of 7297 Cost per mile
Nov 09, 2003 (10:06 am)
Is the lowest cost the biggest factor for most auto enthusiasts? If so, you could try to pick a pre-classic and watch it appreciate over the years.
But, none of the older cars would offer the safety features. Not even a well-maintained 4-5 year old MB will have side head air bag protection.
I think everyone knows that better than keeping a new car longer to keep the cost per mile down, you'll save even more buying used.
You could base decisions only on the money if the mfg's would cooperate and not build in so many improvements and attractive features into successive models. One of the reasons older cars are worth less is because newer cars of the same model are so much nicer to drive.
Rather than simply cost per mile, I think you would also have to compare the value that is offered. Buying bicycles is an example: a $1K bike probably is twice as good as a five hundred dollar bike, but a $2K bike may only be 50% better than $1K bike, and a $5K bike might be only 5% better. But, the more expensive (or the newer) bike is still the "better" bike, right? And, "better" has value!
Of course, many of the above factors are subjective--in the minds of buyers, e.g., factors like "better" and "value"--and, to mfgs, only the opinions of potential buyers are relevant. In most instances, not even the opinions of professional reviewers mean much. The reviews of the latest "Matrix" for instance were not too bad but it was one of the worst ever movies I've seen. And, I've seen many movies that were roundly panned by expert reviewers but to me were great.
I think that sometimes, the cost is the least relevant factor. For instance, based on cost alone, who would ever "go the movies" if simply waiting a year and renting the DVD saves more than half?
Nov 09, 2003 (12:43 pm)
by keeping your VCR (don't buy a DVD player!) and rent the VHS tape..! And save yet more when you realize that your old TV doesn't match the capabilities of the DVD player and you run out to spend another $1000 or more on a high end flat screen TV..
#6673 of 7297 Save even more
Nov 10, 2003 (2:35 am)
VCR SchVCR. Don't you guys have neighbors?
Just pretend to drop by when you know they're going to rent movies.
Don't keep up with the Joneses, spunge off the Joneses. Hey jrct, where exactly did you say you lived in Vancouver?
Nov 10, 2003 (6:48 pm)
Hey Henry. Good point on keeping up with the Jones' The trouble is that when you catch up to them, they refinance. (corny old joke.)
Nov 11, 2003 (5:15 pm)
I really want to learn how to drive stick... yet I dont' know of any one who owns one in which I could learn... any idea as to where I could go to learn.. perhaps rent a car for a week and learn that way.. do dealors do that ... I really want to learn befor I go out and purchase my new car, I would like to be able to make a schoice as to which one I prefer... any idears
#6677 of 7297 Learn to drive a stick?
Nov 11, 2003 (6:34 pm)
If you look hard you can find a stick to rent. Mazda Miatas are rented that are stick. I doubt you'll get good enough at in a short period of time to make an informed decision though. It takes time and practice for it to become second nature. But why? What do you think you're missing? I stopped buying sticks a while ago and I find driving more enjoyable with an automatic transmission. Especially with the autos that are available today.