Old cars, friends and family

[danzo]

the average American pays an average of $9200 a year per car in maintenance costs!!!

Peter where did you get this?!?

[Petros]

I heard it on the radio, it was based on the AAA annual survey of car owners, it had jumped up again this last year so it was "news" worthy. Not sure what it includes, might be total cost including depreciation (which we do not really have in the Tercel). the number shocked me so much I was grateful to be driving and maintaining cheap and reliable cars.

from the consumer reports website "Over the first five years of ownership, the median car costs more than $9,100 a year to own"

from the AAA website from last year "ORLANDO,Fla., (April 27, 2012) – AAA released the results of its annual ‘Your Driving Costs’ study today revealing a 1.9 percent rise in the yearly costs to own and operate a sedan in the U.S. The average costs rose 1.1 cents per mile to 59.6 cents per mile, or $8,946 per year, based upon 15,000 miles of annual driving."

[splatterdog]

Those 9k a year people would crap their pants at our costs. I doubt all of my T4's costs add up to that figure over 10 years.

Lets keep this quiet, there's only so many T4's to go around!

[Jarf]

It's hard to know exactly what numbers they have included to get to that $9k figure, but I suspect it includes depreciation.
No one notices that part of the equation until they go to sell, so they "forget" about it during the first few years when it is at it's highest.
Depreciation is usually considered to be 30-40% in the first year and about 25-30% for the next 5 years, after that it's considered to have no value.

On any new car, one can expect out of pockets (maintenance) costs to be $500-1000 in the first year, after that it can easily double every year.
This assumes normal usage with no abuse and a car that has no inherent problems.
Things break or get worn out, warranty only covers defects, not wear and tear.
Best of all, on most new cars, things come as assemblies, not components.

There is no profit in having a tech spend 4hrs to replace a $10 bearing, better to spend 1hr to replace a $300 assembly.
It can also reduce the number of comebacks as bolting on an assembly requires less human input than tearing something fully down to replace one component.
The other factor not understood by "Joe" is that a dealers profitabilty is often measured by how much the bay generates per hour.
So with the above example, assuming a labour rate of say $100, the "repair" is $410/4= 102.50/hr.
The assembly replacement generates ($300p + $100l) $400/hr.
When the work runs out, you send the tech home and the bay isn't being utilized and therefore no longer impacts the profitability chart.
At the end of the day, it looks really good on paper but if the work runs out at noon it really doesn't help the bottom line.
The worst part of the above scenario is it really pisses off the customer and as soon as the warranty is done, they usually stop coming for service, so it becomes even more important to engineer a car to have major repairs start to escalate during the 3rd year and snowball once the warranty is expires.
Not that they would really do such a thing, remember this is ALL "hypothetical".

The cheapest car in the world, is one that is easy to access, made with quality components designed to last, suffers no depreciation and gets decent fuel mileage.
(this scenario describes most of the Japanese imports of the mid-to late '80's, after that regulation really starts to impact reality)
I am forever thankful that there are stupid people out there willing to buy new cars, else there would be no supply of used cars for me to revel in.
That said, most people are totally unaware of the true reality of car ownership, just like buying a house or a boat, the entry price is only the first hurdle.
Ownership comes at a steep price.
While some people might think that this is why LEASING is the cheapest form of ownership (after all, they have been told this repeatedly but the "experts") it is in fact the MOST expensive method of transportation.
Manufacturers aren't stupid, they know how to milk the cow from both ends all at the same time.

I have found that by having an older car that I maintain myself, I usually am well aware of the repairs coming up because I have crawled over and inspected every square inch. I know what is coming up both very soon and longer range, I plan for regular periods of repairs and deal with all that I can when I am there.
I wouldn't replace one ball joint, I replace them all at the same time.
If i am doing a timing belt, I look at ALL the parts while I am in that region, replace anything that is suspect, then forget about it for another 100K.
This "method" is the recipe for the cheapest form of ownership, just don't tell anyone, it's my little secret.
When someone tells me that my ride is out of date, I just smile and say, "ya, I know".

[Jarf]

The wife drives the NEW car - '04 RAV 4cyl std.
Just replaced the serpentine belt and tensioner (bearing was bad) all done with dealer parts
belt - $80, tensioner - $280. Time to repair - took me 4 hrs as the stupid frame rail is in the way which means you have to remove one motor mount and loosen the rest, jack the engine and still fight with it. If all the fasteners had come out easily, it would have been done in 2 hrs.
(dealer charges 1.5hrs, more if anything is seized...)

On the t4, with dealer parts, the belts (2) are a whopping $25, there is no tensioner and the engine is oriented in the correct way (north/south) so there's no stupid frame rail in the way, takes about 10 mins to replace if you count the time to open and close the hood.

I have less trouble with the T4 as to seized fasteners than on the RAV, AND it gets WAY better mileage.
Now the RAV does have 3x the rated horsepower and more ground clearance but even still, the T4 is WAY better in the snow.
Replacement parts (T4) are a LOT cheaper but then again, not too much wears out.

[danzo]

Depreciation is usually considered to be 30-40% in the first year and about 25-30% for the next 5 years, after that it's considered to have no value.

On any new car, one can expect out of pockets (maintenance) costs to be $500-1000 in the first year, after that it can easily double every year.

Huh?? Show me that one year old $20k car I can buy for $12k and I'll be on that like flies on shiznit!! Depreciation averages about 10-15% per year for most cars. Please don't show me the VW Toureg that busts that figure; pointing out the exception to the rule does not prove the rule.

Who in Blue Blazes spends $1000 on maintenance in the first year of owning a new car? Do tires on new cars last 12,000 miles?!? Then it doubles, so I suppose tires last 6,000 every year thereafter? Come on, Jarf, be realistic.

The $9200 figure I'm sure includes EVERYTHING: gas, insurance, repairs/maintenance, depreciation, etc. Maybe it even includes repairs covered under warranty (which is the majority of repairs on a car under warranty). Then again, new cars don't need many repairs. Some peeps know someone who's had a costly repair on a car slightly out of warranty, but this is rare. The exception to the rule does not prove the rule.

Don't get me wrong - I fully understand that owning older cars are cheaper even if one pays to have the work done by their mechanic. I've never owned a car newer than about 8 years old. But don't inflate the costs of new car ownership and kid yourself into thinking our T4 requires 1/100th the money a new car does. Talk amongst yourselves.

[Petros]

both consumer reports and AAA have nothing to gain by inflating those numbers, in fact AAA would gain if it costs less so more people could afford to own and drive cars. I both of these figures come from owner surveys, I have filled out one of the Consumer Reports surveys, they are quite detailed and compressive. they have some calculations that go in the mix as well, based on sales price of used cars, average fuel costs, etc. but they try to be as objective as possible.

Danzo, I think you have been spoiled by owning good cars, the "average" belies that it can vary quite a bit (in the full article they go over the range). Many American and European import cars are a very costly nightmare to keep running, within warranty or not. Most warranties have so many exclusions you end up pay for most of the repairs, typical of big car companies they see the warranty as a marketing tool and a profit center, and it is designed to be just that. I have worked in the auto industry at every level, engineering, mechanic, and even did car sales for a new car dealer. It is rip-off time at EVERY LEVEL.

With cars like ours, where almost all the parts are from aftermarket suppliers and we do our own repairs (and almost all of us bought them from private parties), we do not participate in that giant ponzy scheme known as car sales and service. So we do not really know what the average person goes through to buy and maintain a typical American car. which is why I will never own one.

[Jarf]

Danzo - My numbers may be out of whack for you lucky americans, please remember that everything in Canada costs more, a lot more.

As to the rest of the numbers, I worked in the industry for 25 yrs, the first half as a mechanic, the second half mostly as parts and service manager, though I did do a stint in sales a few times too.
Most of my experience is in higher end cars - Jag, Audi,porsche and throw in a little suzuki,nissan and Ford just to round things out.
The German experience was so bad I had to leave. Ford wasn't much better.
Jag, while at the time I thought was horrendous, was almost a good deal by comparison, at least till they were out of warranty.

You wont find a $20K car going for $12K after 1 yr, BUT just try trading in that 1 yr old car and you'll be lucky to get $12K.
The dealer will be more than happy to re-sell it to you as a low mileage local trade for about $17K though, after all, it's only a year old!

The tires on the XK8's wore out like snow tires on a hot summer day and no, the 2nd set would last just as long as the first, it's the service dollars SPENT that doubles every year.
And yes, a new car will be $500- $1000 (cdn) in the first year, that is based on 20k/yr and a 5000Km/3mos service interval.
No, not all cars cost that, but as Petros said, we are talking averages here.
Having a good car that doesn't break will change that, as do driving habits.
As to your point of warranty repairs, warranty only covers defects, period, not wear and tear items, if you think that warranty covers everything then I invite you to go and buy a NEW car, you too will learn how little is covered by them, big ticket items, yes, usually, bit even that isn't a given.

Seeing as your experience has been with cars "about 8 years old" when you get them, a dealer would consider that car to have "no value" and is out of the frame work of the above examples. I actually consider an 8yr old car to be "new". Usually mine are double that age when I meet them.

Petros has it right, one GIANT ponzy scheme.

[Petros]

I often thought if I ran out of things to do, I could open a car repair shop and just be honest with people, I should do well. but the cost of new parts for new cars, and all the specialized equipment necessary, there is no way I can offer "good deals". and many customers, used to being ripped-off, will be skeptical of your claims for the amount of time it took and the cost of parts, no matter how honest you are with it. who needs that?

A back-yard "shade tree" cash operation working on keeping the older cars running, would be the way to go.

[dlb]

A back-yard "shade tree" cash operation working on keeping the older cars running, would be the way to go.

i totally agree. i have thought about this before and the only way i would do it would be to be picky and only work on older cars. i would be happier keeping old cars on the road, working on things that don't require expensive diagnostic equipment. of course i would probably get sick of it quickly since a lot of people driving old beaters would be cheap SOBs who could be hard to get payment out of. i'm happy just wrenching on my old crap for now, but it's something i could consider doing if i needed to.

[danzo]

I stand by my post. I have also worked at a shop, I've sold cars at a dealer, worked at parts stores, and have been a shadetree mechanic for 20+ years. But even though I've owned only older cars incredibly I know many, many people who have purchased new cars (go figure!). I am very familiar with the whole new car ownership experience. It doesn't take an industry insider.

You wont find a $20K car going for $12K after 1 yr, BUT just try trading in that 1 yr old car and you'll be lucky to get $12K.

We are not talking about trade in prices, only actual values (what a private party can sell a car for). You said a new car will lose up to 40% of it's value in the first year. This is simply not true.

And yes, a new car will be $500- $1000 (cdn) in the first year, that is based on 20k/yr and a 5000Km/3mos service interval.

Most people don't drive 20k miles/year, let alone take their new car back to the dealer for service every 3 months. What regular maintenance would a new car need so often? A meaningless $300 stamp in the owner's manual? Modern cars don't need tune-ups, chassis lubes, carb and valve adjustments every 6 months like they did back in the 70's. Does anyone even read their owner's manual now? It may tell the well-off owner to pay the dealer every so often, but most people don't bother. I fully understand that warrantees are mainly a marketing ploy, but they do come in handy when a car has a defect. Yes I know they do not cover wear items (which really don't need to be addressed until the car is older). Remember that as a dealership employee you saw the worst of new car ownership, but don't make the mistake of extrapolating that to every new car owner. Just like prison guards don't think everyone is a violent criminal.

Here's a more typical new car ownership experience: my parents bought a new Chevy van in 2006, an everyman's car. It has seen the inside of a dealership exactly one time in 86k miles - to replace a blown diff seal and bearing under warranty (cost $0). It's maintenance is courtesy of myself - oil changes, a battery, light bulbs. The damn thing still has the original brake pads with plenty of meat left. This last part is not typical, but you get the idea.

I think I've been representative, not lucky, as far as my car ownership history. I've had 30 some odd used cars - european, japanese, a few american. When cars get old there parts prices don't vary a whole lot. Brake rotors for my 84 bmw cost about the same as T4 rotors.

I do agree that dealers make serious deaux on the peeps who don't do their own maintenance, but it's not a ponzi scheme. This usually involves getting people to invest in something that doesn't exist (i.e. real estate), paying them outrageous dividends, then skipping town.

Like I said before, I think we're on the same page as far as owning an older car being the way to go. But it bugs me when I hear people badmouth new cars. They have their positives just like old cars do. Our duty as homo sapiens is to correctly perceive the world around us.

[rer233]

Worked for a MB dealer thru the '70s. In '72-'73 a 280se 4.5 sold for 10k. After30k miles and about 3 years it was due for it's first BIG service and if the customer left the shop with a bill of less than $1000, he turned down work! Keep in mind, that's 10% of the original purchase price. Filters alone (air, oil fuel and trans were over $100.) Could you imagine the public's reaction to that today?

As an old friend of mine said years ago, "they don't build 'em like they used to- they build 'em better now!)

[Petros]

usually warranties do not cover seals, your parents lucked out and someone at the dealership called it a bearing failure.

And by "ponzi scheme" I meant it as hyperbole, only slightly exagerting a system designed to extract more and more money out of their customer as they go along. More accurately, a con-game designed to suck the victim...or, er, the "customer" in and keep them paying and paying. That is real dishonest way to build a business, it is like we are the inheritors of the disreputable horse traders of by-gone times.

As far as depreciation, it depends on the car. 40 percent is a bit high for first year, but it can be that high for 2nd or 3rd year (depending on the car). I found these on the web, don't know how accurate, but it looks reasonable. the first one is off a Japanese site, the second is an investing website (telling its readers what a bad investment new cars are, but we already knew this, so we must all be financial geniuses).

[Jarf]

Okay - I hear what your saying and your points are well made but we seem to be arguing at cross purposes here.

In future I will try not to use shorthands so as to confuse things, up here, 20K is 20,000km roughly equivalent to 12,500miles.
Fortunately we still use the same calendar (12 months) and the same clocks - 24hrs in a day, everything else up here is metric, including the beer - 341ml of 5% alcohol by volume, on AVERAGE, there are beers that will have up to 7% and some of the monks brew 12%, some bottles hold 500ml, some 750ml (that's like 26oz)
Then again there is organic beer that comes in these TINY little 240ml bottles and other stuff that only has 4% alcohol...... can get confusing at times.

For what it's worth 1Km = .6 of a mile, or if you prefer, it takes 1.6Km's to cover one mile.
It gets worse, when we talk about fuel mileage, it is how many litres/100km driven, it takes 3.78Litres to make 1 US gallon (4.55L for 1 Imp gallon)

I never said ALL cars lose 40% in the first year, I said SOME cars CAN lose up to 40%, depending on use, condition and model.
If you want an average that is considered to be in the 25% range, depending.

Over the years I have known lots of people that bought cars and couldn't give them away, most recently, friends bought a Smart Car, $26,000 (Cdn) over the curb, they owned it for almost 3 years, spent over $10,000 in repairs and mntce, sold it just under the 3 yr mark with less than 60,000km and were ECSTATIC to get $8,000cdn for it, ecstatic cause there were similar cars selling for $6-7,000.
Granted this is likely the exception rather than the rule, the point is it CAN happen.
By the same token, I have known lots of people that bought well and sold well and didn't go broke doing service, I just wasn't talking about them.

Your van example is great, I am glad your parents have had a positive experience, but they aren't "joe average" either.
The fact they never paid a cent for labour is beside the point, what makes them different is the have owned it for 7 years and likely will continue to own it for more.
I mentioned the F word for a reason, I was there ( and in THIS century too!) and their maintenance schedule actually does call for service every 5000km or 3 months. There are just as many customers who abide by it as those that don't do any service, period, regardless of the schedule.

For that matter, when I was at the Suzuki dealer, their S/M was also every 5000Km, major service was 25,000Km and was considered to occur at the 12 months mark.
And the "major service" was indeed in the $500-800 range, I am not making this stuff up.
Our Jag S/M was 16,000km or 1 year for "normal" driving conditions, whichever occurs first.

Back when we had dinosaurs roaming around and I was a little younger, standard service intervals were 5,000 MILES, somehow when we switched to metric, some companies changed the measurement unit without altering the number ahead of said unit.
Personally I do my service about every 12,000Km (that'd be like 7500miles) never had an issue and been doing that for over 30 years.
I have had some great cars and some total POS's, I have known many with very similar experiences - some good , some bad.
All this started based on a quote of $9000/yr.
The only point is that if you look at the AVERAGE car and consider things like maintenance, depreciation and financing costs, that figure is very possible, no matter how shocking you find it to be. That said, it wont be everyone's experience, just the AVERAGE.

Perhaps Ponzi was a little stronger than needed (though I can think of a couple of places I worked that nearly met the clinical definition of one).
The point of that comment was that in some places, there is some serious money making going on, that is at the direct and excessive expense of the customer.
Sadly that behaviour is actually becoming more commonplace,not less. Especially so what with cars requiring less and less service (sealed joints and bearings....)
The point of the diatribe was that in retaliation of those improvements, we now have a situation where we do not replace parts, we change assemblies, those assemblies take less time to replace (sometimes, save for the poorly designed things, like say replacing the forward wiring harness on an S-type, where you actually have to cut the harness in HALF in order to route it through the frame rails, then solder it back together and reinstall the finders, but I digress)
and generate more profit dollars/hr/bay than the old method of take it apart, replace what is needed and get on with life.
The tech's get burned, the customer gets burned, the environment gets burned but someone, somewhere is making a killing.

Like I said, I like that there are people out there that are willing to buy new, if it weren't for them, there wouldn't be used cars available for me to buy.
And there are lots of great new cars to chose from, as long as one doesn't mind the electronic intrusions that are mandated into our lives now, but that is another rant that clearly doesn't need to be started.
Someday I will probably have to move on from the T4 and the TV, but given what I know, I am going to be putting that day off for as long as I can.
With luck, someday I'll have a tonne (that's like 204.62 lbs MORE than a US ton, just saying) of cash and it wont be as much of an issue.

So with that said, I am gonna go "perceive" my world around me and go fishing for a week in paradise, no internet, spotty cell service and lots of fish(hopefully),
well at least lots of "metric" beer anyway.
Peace

[Petros]

well, maybe that 40 percent depreciation was metric and it threw us all off.