TCO for more than 5 years?

slantsixer

I just started playing around with TCO. Has anyone taken their car bought with Edmunds TCO in mind, and kept it well beyond the five years? What have you found, except the divergence factor?

I'm not really a new or late-model-used sort, but for my next purchase I may break my habit and buy something with less than 100k miles. TCO differentiating's of the numbers is eye-opening (a la, "big engine and options projects to cost Model X $3000 more, vs. base, amortized over five years").

I have the habit of hanging on to a vehicle to where when I get rid of it, it knows its days are very few. Just curious if anyone's done anything with a "10 year anecdotal cost to own" after the Edmunds 5-years are up, and what they've found out.

(Yeah, this would be a small sample size. Just want to geek out over some numbers and stories of people like me while I plan for my purchase in two years.)

stever

My last minivan was a '99 Quest purchased new. I kept it for 15 years. And I played with True Cost to Own over the years and kept pretty good track of my real costs, including insurance and registration, repairs and oil changes, and gas.

For the first five years, other than depreciation, I "beat" TCO by a small percentage (maybe ten to twenty cents a mile). Some of that was deferred maintenance, some of that was doing my own oil changes and I consistently beat the MPG estimates by a couple of mpgs. The next five years was probably closer to what TCO would be if you tried to extrapolate it out. The last five years, I got hammered on breakdowns and the depreciation hit for 200,000 miles is significant. My cost per mile the last year was way over what the cost per mile the first year was - kept the van about 5 years too long.

I never really compared my "base" van the other two styles that had more options (leather, heated seats, etc.). It's a pretty broad generalization but most options and upgrades will help your car sell faster, but the amount of "extra" money you'll get at resell or trade-in isn't much higher. For example, $2,000 leather seats may bump the car value up $300 in ~5 years, maybe less.

The big takeaway from TCO is that cars are expensive to buy and to operate.

steine13

I've never really subscribed to the TCO model. It *is* instructive to see when all the costs are added up, including insurance and other incidentals...

I'd rather share what a friend of mine has been advocating for years in determining whether a car is going to be a good value: The 10-cents-a-mile rule. IOW, is the car you're considering likely to keep your depreciation & repair costs below a $1 for every ten miles? He just bought, for his son, a 2007 Scion tC, 70k miles, for $6. And the answer to the question -- will it go 60k miles without significant repairs? -- is in all likelihood a YES.

By the same token, a new Corolla for $16k needs to go 160k miles -- which seems likely. Of course, it'll need "stuff" -- but a 2,000 maintenance budget on a car like that will get you pretty far, and 180k should not be a stretch.

This ignores tires and oil -- which is fine, since those costs are very nearly the same for any reasaonable car one buys -- and insurance, which at least here in MI is not too dependent on the car either, and with our glorious no-fault system, collision coverage is mandatory on anything beyond a real clunker.

When the question is "cheap car?", the answer is almost always a bread-and-butter vehicle from a mass manufacturer, usually Japanese, never German , and in the last few years as often as not, "buy new." That may be about to change, as more cars are coming into the used pipeline thanks to healthy sales the last few years.

If there are desires beyond capable, cheap transportation, it gets more interesting and more difficult to say. The more leathered-up and tricked-out the car becomes, the more the value equation leans towards used. The more German or Italian or British (!!) the car becomes, the more one might wish to lease...

When money becomes expensive again -- any day now, interest rates will go up! -- the equation will change a little. But in the present environment, pick a good car, buy it new, and keep it unitl it gets troublesome, then sell it on craigslist. Stever said it himself: he kept his Quest too long and it cost him to push it to 200k.

My own driveway has, at the moment, two cars I bought new: A 2003 Sienna CE with 160k miles that has never let us down and cost $3k or so to maintain over the last 12 years. It stickered for $24k or thereabouts and I paid a hair over $20 for it as a leftover with 0% financing. The cost per mile to take it to 200k will NOT be 10cents, but it won't be 20 cents, either.

The other is a 2014 Outback, $25 sticker, which cost me $20,400 after serious rebates with the Subaru Credit Card from Chase... there are all sorts of deals out there if you are patient and are willing to pay stupid bank games. I'd be shocked if I could not keep the cost per mile to the same as the minivan. And I don't know how to do it cheaper.

I just ended a 2-year-lease on a Chevy Cruze, nicely equipped, four thousand and a few hundred dollars to drive 30k miles. I don't expect a bill from the General, but there may be some quibbling about tires. That car came to somewhere between 13 and 15 cents per mile, I forget the exact numbers. The GM Card helped make the lease a fantastic deal.... again, patience, and stupid bank tricks. This will continue at least as long as money's cheap.

I don't know if any of this helps, as it doesn't have much to do with TCO. All I know is my car budget is not horrendous, and I always have reliable transportation and usually one new-ish car for the family. It does help to pay attention to reliability, and above all to screaming bargains when available.

Cheers -Mathias

Mr_Shiftright

Anecdotal data will always be skewed because we never know the "standard" to which the owner's car is kept. He might say "oh, it's hardly cost me anything to run per year" and he may be right, but he may also be driving a dangerous, battered, nasty piece of junk.....whereas Owner B, with the same exact car, wants a car with nice cosmetics, the best possible tires, and everything working.

Case in point. I recently bought a used truck. It served the other owner quite well--he drove it around, to school, used it for work, hasn't spent all that much on it, etc.

And yet, after I went through it and made notes, I am up with about $2800 in deferred maintenance and repairs. Oil leaks, old belts and hoses, loose ball joints, one door lock not working, AC refrigerant levels low, ABS sensor, broken fog light, broken tailgate latch, loose tie rods, misalignment, rusted tail pipe, loose headliner, interior carpeting filthy, blah blah.

Sure a lot of this will be DIY and I won't spend anything like $2800, but still, the previous owner's TCO is going to be a lot lower than mine.

A chart of a 5-year TCO is going to look a lot different than a 10 year old chart, for obvious reasons.

slantsixer

Stever, I don't think 10-20 cents a mile saved over 5 years (starting with a new car, given running costs circa 15 years ago) is a small savings. When I think of TCO differences between trim lines, I was really trying to figure out what kind of mechanical changes there would to buy and repair for more expensive lines, especially drivetrain and electronic accessories.

Steine13, I had hardly ever considered "depreciation" before, simply "buying price", as when I sold a car it was for beater purposes, for almost nothing, or just donated it somewhere. I'm in a position where I can think of something more than "capable and cheap transportation", but don't want to take a bath, instead realize where that extra money is going. I want to hit the sweet spot after a lumpload of depreciation and before cropping up non-standard repairs.

Mr_Shiftright, I will tell my Dad that anecdote the next time my cousin wants to sell me his old car. I've bought two used cars from my Dad and he takes care of cars the way you do; the cousin, not so much.

My goal is to have that Mack Sennett Moment, where drive my new(er) car home, get my lugnut breaker bar and water bottle out of my old car, shut its door, and (a la the Keystone Kops) the entire car falls apart at the same time.

Thank you all for your input.

stever

It's not a small savings but even as cheap as I am, I have trouble getting the percentage down more that that. The old rule of thumb was the IRS payback, which I think is back down to fifty cents a mile. Some say the real number for an "average" car is more like sixty cents, but it's probably more like a buck a mile for many people.

I always aimed for half the IRS number but found it hard to shave more than ten cents a mile off. So maybe a 20% savings if the stars align depending on what numbers you pick.

Still, the saving would pay for half my car insurance for the year. Less for my four Michigan years - that place is awful for car insurance. Double what I paid in Idaho and now pay here in NM.

I haven't updated my spreadsheet since before I sold my Quest. It was running .38 cents a mile to operate but that didn't figure in depreciation. Using TMV, my deprecation and expensives would run .55 a mile.

The Quest had a couple of things going for it that helped out - I got the base trim so the tires were smaller. 15" tires are cheaper to replace than 16s (or, worse these days, 18s). We mostly carry junk instead of people so I tossed one bench seat right off the bat. Losing that 100 pounds saved a little gas over the years. There's nothing wrong with rear drum brakes and they rarely need maintenance, unlike discs. Getting harder to find them though. Some brands are going backward (Toyota) but the Quest had a 7,500 mile service interval. After warranty I often let that slide to 10,000 miles.

If more people knew it cost them a buck a mile to go get a gallon of milk, there'd be a lot less cruising around.