Big Engine? Small Value!

Drive.com.au has posted a rather interesting article about the huge lumps of money people are flushing down the toilet in buying new Falcons and Commodores. Up to 35% of the purchase price of a family car could be lost within the first 12 months! (According to GlassGuide). I personally don’t have the biggest faith in Glass Guide, but I do hold lots of trust for Redbook.com.au. So I thought I would do a check. Here is what Redbook thinks:

Hmm doesn’t look good at all! There is a whopping 33% depreciation (at best) for the Commodore and an even more unbelievable depreciation of 37% (at best) for the Ford Falcon. It can run up to 46% if you KMs are high! That is truly unbelievable! So what is the big deal! Why the massive depreciation? Fuel of course! Who wants to buy a 6 cylinder car these days? Hardly anyone. I have been trying to sell my Falcon for the last 6 months. Not even the dealers want it anymore.

CarAdvice’s tip of the day: Don’t buy a 6 Cylinder Car!

What should you buy instead? Something that won’t nearly halve in value in a matter of 12 months? What about small cars? Drive.com.au’s article mentions that the 2005 Honda Civic Hybrid only lost 12% of its value in the same 12 months, and RedBook notes that the 2006 Toyota Prius lost 20% of its value, which is somewhat higher than what I can see people selling their Pruis’ for online.

Since fuel prices don’t seem to be going down at all; usually what seems to be the case is they go up dramatically in a matter of 2 to 3 weeks and then ease down just a little bit so we think its okay. You would think you would be safe in buying a car that runs on the smell of an oily rag. But lets be serious here, who wants to drive around in a 1.3L (or even 1.5L) engined car? Not me. Besides, those cars don’t exactly keep much of their value to begin with, and even more importantly, as I mentioned in the Holden Barina – Safe as a cardboard box article, the depreciation of safer cars is a write off against the value of your own life. However I am not trying to encourage you to go out and buy a Toyota Landcruiser (~20% depreciation in 12 months) but maybe instead of spending ~35g on a brand new Falcon and losing 15g in the first 12 months (that’s more than $1,000 a month in depreciation) try looking at cars that are one or two years old. Not only will you be the one saving $15,000 but the difference between the 06 and 05 model is hardly noticeable for the Falcon and Commodores.