Depreciation - Should I be worried?

rossk26 · 2 Aug 2012 at 09:52

I've been having thoughts recently about selling up and buying a cheaper car, or a car which is unlikely to depreciate greatly over the next year or so.

Reason:
New Focus ST is out, and I can see the prices of the current ST plummeting.

This is similar to my car, albeit I have 6k more miles on the clock. So I'm thinking £9k would be the top end of what I could see selling privately.
Ford Focus ST3

So, am I just worrying about something that has no relevance in the grand scheme of thing? After all, we don't see depreciation coming out of our bank accounts every month...

rodenal · 2 Aug 2012 at 11:03

It's only worth worrying about if you need to access whatever cash there is in the car at the moment. If not and you're not currently in negative equity with it I wouldn't even give it a second thought

Tesla · 2 Aug 2012 at 11:12

Not sure if it will suddenly plummet. It'll be a few years before the latest ST is sub-£10k?

What do you think yours will be worth in 12 and 24 months time?

rossk26 · 2 Aug 2012 at 11:45

Tesla said:
Not sure if it will suddenly plummet. It'll be a few years before the latest ST is sub-£10k?

What do you think yours will be worth in 12 and 24 months time?

That last ST170 had a dramatic decrease in value when the current (05-12) ST came out. Fair enough the 170 was a poor car, with faults and poor power to fuel ratio.

But the same could be said for the existing ST now. The newer one is 30bhp more powerful, cheaper on tax, and better at the pump...

I fear I could see a hit of £2-3k more than normal in the next year. Which isn't ideal as I'd probably be looking to sell in about 12-18 months time when I am hoping to buy a house. Running costs are fine, I just thought about the potential loss in depreciation.

[TW]Fox · 2 Aug 2012 at 12:19

Depreciation matters less the more the car depreciates, if that makes sense.

If it loses half its value when you buy it new for £22k, thats a big pile of money. If it loses half its value when its worth £9k well thats a rather smaller sum of money.

Rybo89 · 2 Aug 2012 at 12:58

Same with the vxr... I say you have 2 years yet before you need to worry about silly price drops on these cars.

rossk26 · 2 Aug 2012 at 21:09

Well it's lost £3k in the 2 years I've owned it. Which is acceptable. But if it were to depreciate by half in a year or 2. I would find that quite a big hit. £4.5k is a fair sum of money to some people.

Kenai · 2 Aug 2012 at 21:12

That would be one hell of an odd depreciation curve to lose 1.5k, 1.5k then 4.5k

Rybo89 · 2 Aug 2012 at 21:18

It wont happen unless the petrol runs out and the government decide to add more silly tax on are cars to put even more people off.

When the new hot hatches come down to 10k start to worry then.

Look at the old cupra they hold there price still and the civics, some clio's to.

rossk26 · 2 Aug 2012 at 21:19

Certainly would. I just have anxieties over the new ST being out that I could take an extra £2-3k unexpected hit.

rossk26 · 2 Aug 2012 at 21:22

Rybo89 said:
It wont happen unless the petrol runs out and the government decide to add more silly tax on are cars to put even more people off.

When the new hot hatches come down to 10k start to worry then.

Look at the old cupra they hold there price still and the civics, some clio's to.

The civics hold value because the FN2 was a flop in my eyes. I also personally think the Cupra R is a fantastic car.

The ST170 lost out to a great ST with the 2.5T lump. The newer ST seems like an even better improvement again

Syla5 · 2 Aug 2012 at 21:30

Might be a bit brave of me to say but I think the engine of the ST is what sets it apart, the new st goes in the same direction as the other hot hatches on the market, and I feel that this could help the old ST's retain there value reasonably. I would be suprised if you saw higher then normal depreciation over the next couple of years.

Peter450 · 2 Aug 2012 at 21:54

If you want low depreciation, you need a classic car, anything new or nearly new will depreciate a lot, unless your lucky enough to buy the must have thing, and even then, it will after a while start to fall unless it was built in tiny numbers like a Zonda

Obviously this is off less importance if your new/nearly car is not worth much, but worth is all relative to what you earn

triggerthat · 3 Aug 2012 at 18:11

If you're worried about depreciation, then maybe go for something slightly older?

Sin_Chase · 3 Aug 2012 at 18:21

Did you buy the car expecting to get X value out of it when you sold it?

If not, why do you care about depreciation when you happily paid the initial amount for the car? Unless you could only afford the car based on it not depreciating past a certain amount in Y number of years, which seems pretty silly to me.

Yes, we all expect to get the best price possible when selling on/trading in but I doubt many people actually factor that into their buying decision unless they know they are looking to shift it at a certain point.

Selling up now because of the assumed depreciation due to a new model seems a little bizzare to me. Sell it and change if you fancy a change, if you need to unlock some money in the car etc etc but not because of anticipated depreciation.

zegna · 3 Aug 2012 at 19:07

Depends how much disposable income you have.

If you have net £10k disposable income per year, and your car depreciates by £5k, then its a hell of a lot.

[TW]Fox · 3 Aug 2012 at 20:23

zegna said:
Depends how much disposable income you have.

If you have net £10k disposable income per year, and your car depreciates by £5k, then its a hell of a lot.

What a bizarre post. It has infact absolutely nothing to do with your disposable income per year because a depreciation per year figure is not taken from nor does it impact on your disposable income.

zegna · 3 Aug 2012 at 22:13

[TW]Fox;22487995 said:
What a bizarre post. It has infact absolutely nothing to do with your disposable income per year because a depreciation per year figure is not taken from nor does it impact on your disposable income.

Lets not get into accounting son (Youre talking to a ACA qualified professional).

I'm talking purely in a general way. You keep a car for 3 years, and sell it. If I earn net £20k and have £10k disposable income, but Ive bought a car for £15k which depreciates £4k a year, in my mind (purely subjective) the opportunity cost would be too high.

Understand?

monkey_boy · 3 Aug 2012 at 22:42

zegna said:
Lets not get into accounting son (Youre talking to a ACA qualified professional).

I'm talking purely in a general way. You keep a car for 3 years, and sell it. If I earn net £20k and have £10k disposable income, but Ive bought a car for £15k which depreciates £4k a year, in my mind (purely subjective) the opportunity cost would be too high.

Understand?

This is going to be great.... :cool:

[TW]Fox · 3 Aug 2012 at 22:47

zegna said:
Understand?

No, not really.

Given that its possible to buy a car with heavy depreciation despite having zero disposable income per month, I do not see the strict link between depreciation and disposable income. You don't pay a depreciation invoice. The Depreciation Man doesnt ask for money every month that eats into your monthly disposable.