The U.S. Consumer Reports magazine says consumers who trade in vehicles early to avoid repair costs are actually spending more.
With proper care, many of today’s cars can last 200,000 miles or more, and owners seeking to limit repair costs by trading in their vehicle every three to five years may lose out on thousands of savings, says Consumer Reports October issue. Consumer Reports 2007 Annual Auto Online Survey identified 6,769 readers with 200,000 miles or more on their vehicles’ odometers. The report featured accounts that ran the gamut of make and model, including a 95 Honda Civic with 227,000 miles, a 90 Lexus LS400 with 332,000 miles and a West Virginia family’s 1994 Ford Ranger pickup with an impressive 488,000 miles.
When comparing the costs of buying and keeping a car for 225,000 miles over 15 years to buying and financing an identical model every five years, Consumer Reports found the savings could be more than the original purchase price of the vehicle — and even greater if the savings were invested.
For example, Consumer Reports estimated the popular Honda Civic EX, with an automatic transmission, could potentially save its owner as much as US$20,500 if properly maintained over 15 years — US$1,500 more than its purchase price.
In its analysis, CR calculated the costs of purchase price including destination fees, depreciation, maintenance and repairs, finance and interest, fees and taxes, and insurance for 15 years against the same factors for purchasing a new model every five years.
Factoring in three percent inflation and an annual five per cent interest rate, Consumer Reports estimated an additional $10,300 in investment savings.
As a result, maintaining the Civic EX over 15 years would be approximately US$30,800 less than the cost of buying a new Civic EX every five years. Consumer Reports found similar savings with other models.