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Smart Shopper Smart Shopper-Archives Depreciation: Foreign vs Domestic Vehicles 
70 messages, Last post on Jul 24, 2007 at 9:30 AM
You are in the Smart Shopper-Archives Forum. Your Hosts are kirstie_h & tidester
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My original point is that American makers (GM in particular) appear to inflate the prices on their vehicles so they can offer deep discounts and generous rebates. It gives the customer the impression he's getting a heck of deal, the bank the kind of ratio they need to make the loan, and the buyer enough cash in the form of a rebate to make the down payment. What an idea! The only loser in the win/win/win situation is the perceived depreciation tumble the American cars take (on paper). I agree the Japanese seem able to make vehicles that run a long time with fewer problems than anyone else. From personal experience, I never found that Mercedes, BMW, or Volvo was any more trouble-free than American makes. I'm just saying the creative financing practiced by American car makers distort the depreciation picture. In a perfect world it would be more accurate to compare average price paid instead of MSRP to resale x years down the road. |
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Sometimes in this argument it really seems like people do compare apples to oranges. It's rather simplistic to take the value of two vehicles in the same segment with the same MSRP, one import, one domestic, and form an opinion on depriciation based their value after a few years without taking into account what they actually sell for new in certain market conditions. On alot of import vehicles you're lucky if you're not being charged MSRP plus an additional dealer markup. So the import may be worth more after 2 years but you also paid MSRP or more at the onset. So how far ahead are you really getting? On the other hand, many domestic vehicles with all the rebates and incentives sell for thousands below sticker and in some cases way below invoice cost. Perfect example... I bought my 04 Dodge Dakota Quad for 24K plus tax, tags, and title after 4800 dollars in discounts. The average asking price for 1-2 year old versions of the same model seemed to be in the neighborhood of 20-22K. If I looked back 3 years or more I could get into the high 19s. So I was only looking at at best a 3-4 thousand dollar discount to accept less of a warranty and 20 thousand miles of wear and tear. The first year depriciation hit is huge if you use MSRP in your calculations, but not so bad if you base it on what I actually paid. |
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| Were you planning on just walking in and paying the asking price for a used Dodge truck? If not, your analysis is just as flawed as the MSRP vs selling price argument. | |
| Which goes to show... the waters can be very muddied here because there are too many variables to make a definitive general statement about depriciation in domestics vs. imports. Are we talking below sticker, or above it on the new vehicles? Are we talking asking price or out the door on the used? | |
With all the talk about Toyota recalls, I thought it might be time to resurrect this discussion. Any change in the outlook for depreciation on domestic vs imported vehicles?
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Replying to: kirstie_h (Sep 01, 2006 7:00 am) Any concerns about quality will likely be offset by the increase caused by the demand for fuel efficient vehicles. |
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Replying to: kirstie_h (Sep 01, 2006 7:00 am) I think a big gap today is the quality of the vehicle at ~7-8 yrs and 100K. Put a '99 Lumina ot Taurus with 100K against the same Camry or Accord. It's a no-brainer since you know the next 100K will likely have less problems on the import, hence the difference in value. So with quality as a whole on par today I wonder what that means 5-7 years from now?
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Replying to: krony (Sep 08, 2006 5:38 pm) 1. Reliable - owner feedback from J.D. Power, Consumer Reports, auto mags, newspapers, and word-of-mouth. 2. Good gas milage for the segment. Doesn't have to be the top. 3. Solid engineering/construction - crash testing and dependable/reliable. Strong power train in performance and durability. Parts fit inside and out. Decent materials used. 4. Desirable when NEW and USED. Basic Supply/Damand law. Style, performance, interior quality, and safety all effect this. 5. Affordable - good value for the $ - doesn't have to be the cheapest, but usually isn't the most expensive. |
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Part of this discussion should include cost of ownership..Remember, nobody knows what a car cost them until the day they sell it.... Domestics often have significant rebates/incentives which lower the overall transaction cost of the car.... example: a new Lincoln town car appears to drops a ton in value the day you drive it off the lot...but on the other side you probably got a $10K-$15K discount (which is unheard of on many imports) off the $45K window sticker. Some folks will brag that they purchased a $45,000 car and whine that its only worth $27K a year later but they fail to consider that they paid $33K not $45K.... based on the transaction price the depreciation isnt bad but based on MSRP the depreciation is outrageous. |
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