You might be thinking this is a click bait title because we've been touting Honda as one of the most reliable automakers and for building high mileage cars you should buy. Here's the thing, some people don't really care about long term reliability because they don't plan on keeping their car until it dies. Perhaps they care more about getting the best possible price on a used car.
Buying a new car is not the way to go if you're looking for that "sweet spot." New cars depreciate faster than you can drop a hot potato. Take the brand new 2015 BMW 3 Series, for example, which has an average MSRP of about $40,000. Our study found it will lose over half its value just a few years later. The same thing happens to the Honda Civic. The average MSRP of a new Civic is just under $23,000, but a handful of years later, its value drops nearly 50 percent. We're thinking Tavarish will definitely be on the same page with us here.
So how did we figure this out? We looked at the average price of a new 2015 BMW 3 Series and Honda Civic and then compared to their respective 2010 model. The change in price over those years showed us depreciation per year. Assuming a used car had an average of 12,000 miles driven per year, we were also able to determine depreciation per mile.
If you want to buy a used luxury car and keep it for a few years, the optimal time to buy is around 60,000 miles. You lose the ability to buy most certified pre owned luxury cars over 60,000 miles, but you won't be overpaying for the first few years of ownership. This logic also applies to the Honda Civic. It is at about 60,000 miles when you see the incredible resale value of Civic on display. A used Civic is only a few thousand dollars less than a used 3 Series!
At the five year mark, you're still able to purchase a high quality car, but you're not paying for the high depreciation during the early years of new-car ownership. However, this is where a vehicle history report or knowing about the previous owner(s) is critical. Sure, no vehicle history report is perfect, but you'll know if it's been serviced regularly, been in an accident or has any problem-areas. When looking at this data, two buying options really jump out.
Used 3 Series with 60,000 miles
- Costs less than a new Civic
- Already lost more than half its initial value
- More "car" than a Civic
Used Honda Civic with 60,000 miles
- Less than a used 3 Series with the same miles
- Already lost about half its initial value
- Will be worth more than the 3 Series at 120,000 miles
Another option to consider is buying a "more used" car with over 100,000 miles. This is perfect if you're the kind of person that wants to drive a car until it dies. The average car on the road is over ten years old and if the average miles driven per year is 12,000, then there are a lot of cars with over 100,000 miles. Using the same math as the first graph, we looked at the average price of the 2010 model year Civic and 3 Series and then compared with their respective 2005 models.
A used Civic with over 100,000 miles can likely go another hundred thousand or so with the proper maintenance. If your cash strapped, go with a high mileage Civic. It won't depreciate as much as a BMW and it will get better gas mileage, too. Double the savings!
Mojo Motors is a website where shoppers Follow cars to get alerts when dealers drop prices.