Luxury Vehicle Purchase Timing - What's Best?

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kcattorney
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Luxury Vehicle Purchase Timing - What's Best?

Post by kcattorney » Thu Jun 14, 2018 8:31 am

Somewhat related to my A8L saga, but really related to a broad range of vehicles - let's say "luxury" vehicles. If you've read my A8L thread, you know that I've nearly gotten it sorted out, definitely to the point where it is very driveable and I could sell it to a private party (with full disclosures) or run it through the dealer auction. It isn't an expensive car - it had ~150,000 miles on it when I bought it about 10 months ago and I paid ~$8,000 for it at the dealer auction. Decision on my plate is to love it or list it, which leads to this thread topic.

We are all well aware of the tremendous depreciation hit you take with a new vehicle, plus the sales tax, property tax and insurance costs of a new vehicle. But, you (supposedly) save $$ and hassles due to a factory warranty. If you're a cheap bastard like me and buy cars with over 100,000 miles on them, you get them for about 10% to 15% of the cost of the car when new, but you end up starting threads on forums bitching about the nightmare of the car and you'd better be able to diagnose and DIY at least some of the repairs. To me, the middle ground is even worse - buy a car just out of warranty (say 50,000 miles), and you are still paying 50% of cost of the car new, plus stuff is still going to break and wear out starting at about that time. Plus, the aftermarket hasn't had much time to develop cheaper replacement parts (e.g. - rebuilt air struts) and there aren't that many DIY articles to guide you through repairs. Plus, maybe you need to take out a loan to buy that car, so you've got car payments on top of repair bills.

Let's assume the price for a theoretical car is $80,000 new (so, sorry Kalash, but we're not talking Mitsus here). So, at 4 years and 50,000 miles, purchase price about $40,000. At the point where I buy them (8 or 9 years old and 100k+ miles), purchase price is $8,000 to $12,000. What are your thoughts? I'm interested in strategies you all may have. Is there any particular car maker who's products are better suited to ownership in the "DIY realm"?
www.kansascityautomuseum.com
Current:
2002 996TT X50, Guards Red
1987 928S4 Guards Red
1987 951 Guards Red

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2006 955S Lapis Blue
Gone but not forgotten: 1999 996 C4 Aerokit Black; 1990 964 C2 Guards Red

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b3freak
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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by b3freak » Thu Jun 14, 2018 11:17 am

kcattorney wrote:
Thu Jun 14, 2018 8:31 am
Somewhat related to my A8L saga, but really related to a broad range of vehicles - let's say "luxury" vehicles. If you've read my A8L thread, you know that I've nearly gotten it sorted out, definitely to the point where it is very driveable and I could sell it to a private party (with full disclosures) or run it through the dealer auction. It isn't an expensive car - it had ~150,000 miles on it when I bought it about 10 months ago and I paid ~$8,000 for it at the dealer auction. Decision on my plate is to love it or list it, which leads to this thread topic.

We are all well aware of the tremendous depreciation hit you take with a new vehicle, plus the sales tax, property tax and insurance costs of a new vehicle. But, you (supposedly) save $$ and hassles due to a factory warranty. If you're a cheap bastard like me and buy cars with over 100,000 miles on them, you get them for about 10% to 15% of the cost of the car when new, but you end up starting threads on forums bitching about the nightmare of the car and you'd better be able to diagnose and DIY at least some of the repairs. To me, the middle ground is even worse - buy a car just out of warranty (say 50,000 miles), and you are still paying 50% of cost of the car new, plus stuff is still going to break and wear out starting at about that time. Plus, the aftermarket hasn't had much time to develop cheaper replacement parts (e.g. - rebuilt air struts) and there aren't that many DIY articles to guide you through repairs. Plus, maybe you need to take out a loan to buy that car, so you've got car payments on top of repair bills.

Let's assume the price for a theoretical car is $80,000 new (so, sorry Kalash, but we're not talking Mitsus here). So, at 4 years and 50,000 miles, purchase price about $40,000. At the point where I buy them (8 or 9 years old and 100k+ miles), purchase price is $8,000 to $12,000. What are your thoughts? I'm interested in strategies you all may have. Is there any particular car maker who's products are better suited to ownership in the "DIY realm"?
Bought three modern *used* Volvos and no complaints whatsoever. The amenities are top notch and the seats will make your endorphins do a happy dance!
2002 Porsche 996 Carrera - bare bones basic, but still a blast to drive! Heck, I don't even have PSM on it. Ha!

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by Kalashnikov » Thu Jun 14, 2018 11:26 am

KC, I've went through this phase in my college years and through 996 ownership.

With modern cars, this is no longer a viable ownership strategy. Period. They have gotten so complicated and non-diy friendly that any major repair means you have a lawn ornament.

The process of waiting for luxury car to depreciate worked on cars that were made pre early 2000s, because they were still relatively simple and reliable. You could fix them by yourself without buying loads of additional equipment and diagnostic tools.

On 2010+ luxury cars, this is no longer possible. The cars are so complicated and have so many electronic systems that even the factory technicians are now trained just to know ONE system. There is a guy who knows the transmission, one guy who knows engine, one guy who knows suspension. And most of the repairs on those systems are 100% cost prohibitive.

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by KoB » Thu Jun 14, 2018 11:33 am

Good post, KC, and great questions ... for which I don’t think I’ve got answers. I haven’t bought anything as far up the food chain as the A8L ... Mrs. KoB and I have generally stuck with Acuras and Infinitis, which I think of as “sort of” luxury brands. Both brands seem to have depreciation curves that drop quickly and then flatten out more than some of the German and American competitors. The sweet spots seem to be when they’re either a couple years old or when they’re in your 8-10 year range. I agree with your assessment that 50k miles and just out of warranty is no time to buy one of these.

I bought my current MDX when it was 16 months old and had 16,000 miles on it. I figured that I’d put 8,000 - 9,000 miles per year on it, so the warranty balances that mattered were probably going to be 32 months bumper-to-bumper and 56 months on the power train. I paid about $16,000 under the original sticker price, which seemed like an acceptable discount for letting someone else eat the initial depreciation. The Carfax showed regular dealer maintenance, so I wasn’t too concerned there; thus far (a couple months short of five years) it’s been trouble free. I expect to drive it for several more years, unless I get bored and do something stupid. Other than a timing belt, I really don’t anticipate pouring a lot of cash into it.

My wife’s Infiniti has been a similar story ... two years old and 22k miles when we bought it, Carfax showed dealer maintenance every 3k miles, going strong five years and 50k-odd miles later. The strength and weakness of both cars, I think, is a lot of parts overlap with other Honda and Nissan products. Parts aren’t absurdly expensive and there’s a lot available in the aftermarket. I sold an Infiniti M35x when I bought the Acura, and I wish I’d kept it ... it wasn’t quite the car that the A6 (or A8) is, but it was dead solid reliable, maintenance was no big deal, and I’m sure it’s still on the road someplace.
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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by 32wildbilly » Thu Jun 14, 2018 11:44 am

Kalashnikov wrote:
Thu Jun 14, 2018 11:26 am

On 2010+ luxury cars, this is no longer possible. The cars are so complicated and have so many electronic systems that even the factory technicians are now trained just to know ONE system. There is a guy who knows the transmission, one guy who knows engine, one guy who knows suspension. And most of the repairs on those systems are 100% cost prohibitive.
Kalash has a valid point. The modern car is a technical nightmare. Especially the high ends with all the unnecessary bells and whistles. See around the corner headlights!!! Really? I was amazed that my old 2005 996 has the self leveling headlights! If I would keep my foot out of the loud pedal or the center pedal I would not need headlights that move up and down. Just because something can be made doesn't mean it is needed...but I'm old!

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by b3freak » Thu Jun 14, 2018 12:20 pm

Kalash does make a very good point about the modern vehicle experience. They are so reliant on proprietary computer management, digital this or that, crazy amounts of modules monitoring everything that I'm willing to bet you that in 50 years they won't be rolling on the stage a Barrett Jackson exclusive auctions. The modern service center is at best a team specialized computer technicians. The age of the dealership engine mechanic is over. How many times have you heard Porsche saying you need a replacement engine when the problem turned out to be repairable internal part? And, the domestic brands are just as bad. My mom bought a used fancy Cadillac and after a couple of years started having transmission problems, the dealership said she'd needed a replacement transmission at the tune of $5,000+. My father took it to AAMCO and they opened it up and repaired the part for $1,400. So called "luxury" can be seen on all brands. Even the average pickup truck looks like a luxury car these days. I remember when they didn't even have headliners in most trucks! And, the radio was just AM! ha!

Cheers!
2002 Porsche 996 Carrera - bare bones basic, but still a blast to drive! Heck, I don't even have PSM on it. Ha!

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by 5chn3ll » Wed Jun 27, 2018 9:00 am

One of the attributes that differentiates luxury vehicles from other vehicles is, at least conceivably, reliability...right? Also, to varying degrees for all of us, appearances probably matter. If both are true for you, it seems like buying the car as early in its life cycle as possible would be most appropriate. A warranty - even if it's just a powertrain warranty or a limited warranty - trumps no warranty, and a 3-year-old luxury car still seems new-ish to folks, whereas a 9-year-old luxury car probably doesn't.

Here's a data point: My pop always wanted a Bentley. In '07, he bought a CPO Arnage just like the one below. He dropped a hundred grand on it. He sold it just a few months ago for $30K, which is apparently the going rate for that year/model/mileage, so he spent 70K over 11 years to own a Bentley. Toward the end of ownership, he drove it less and less (the fuel level sender quit sending, he developed electrical gremlins with the second (accessory) battery, and a few other bugs crept in that diminished the enjoyment he got from the car.

If you're a take-it-out and show-it-off kinda guy, I'd think the newest you can swing would be preferable.

Disclaimer: I'd rather keep driving my 90's hair band motorcade than spend money on a newer car...any newer car also has to be more than incrementally better than the junk it replaces, and my current junk is pretty decent.

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by Kalashnikov » Wed Jun 27, 2018 10:14 am

The one thing that can be a game changer for this ....is the own/rent by a month with no commitment subscription services.

BMW and Mercedes are piloting their subscription models and Volvo engineer I spoke with 6 months ago said that Volvo's future is almost completely hedged on the scooter/bicycle type rental model.

So in theory, if you fancy driving a latest luxury toy for Spring time- you just put $5,000.00 for 3 months subscription and you have the latest luxury car and ZERO worries, maintenance, or additional costs outside of fuel. And of-course NO COMMITMENT to long term payments, no depreciation, no maintenance.

To me the rental model for uber fast/luxury cars would be a 100% fit. I would have one daily driver toy and when I fancied it, I would get a AMG/Viper/Ferrari/Porsche for a month of non-stop abuse; abuse that would be 100% guilt and consequence free. Three months later, I would grab a different car to mess around with.

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by 5chn3ll » Wed Jun 27, 2018 11:03 am

Agreed, Kalashnikov - that's the same way I feel about boats, and jet skis, and other things I occasionally get a wild hair about owning.

Renting a boat for a few days is just long enough to scratch the itch without the buyer's remorse that ALWAYS comes with a boat.

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Re: Luxury Vehicle Purchase Timing - What's Best?

Post by kcattorney » Wed Jun 27, 2018 12:03 pm

Back when I had more time to dick around at the auction and flip cars, I would buy a car and drive it for 3 or 4 months and sell it. That seemed to work pretty well. Most of the maintenance required was minor stuff. If I broke even on the sale, then I was happy that I got to drive a cool car for a while at $0 cost. If I made $500, then bonus. Since about 2011, though, I've been on a "buy it and drive it for 3 or 4 years" routine. I guess I've just outgrown the constant car swapping.

I'm still partial to big luxury cars, though. An S class Benz, a 7 series BMW, an A8L Audi, an XJL Jag are all very, very nice when running properly, even if they are 8 or 9 or 10 years old. As Kalash points out, though, the key is whether they are going to make their products, in essence, disposable once the warranty runs out.

At the point where I buy them, that's exactly how I view them - as disposable. I sold my S430 4Matic last fall to my computer contractor for $3,000. It was still a nice looking, riding and running car, but I went on a long diatribe about maintenance and repair costs. (Despite that, I still ended up paying for labor to replace rear air struts 3 months after the sale) Once a high-end luxury car gets over 150k miles, then my mindset shifts to "any major breakdown = sell the carcass and move on." But with all of the electronic gremlins, has that mileage moved up to "whenever the warranty runs out?"

I will say that I think there is a time where any given model is in "no man's land" - right after the warranty time period expires, but before the aftermarket has developed cheap replacement parts and before the forums have identified common issues and DIY repair threads and videos. So, let's say you buy a 2014 S-class Benz. The warranty (Bumper to Bumper and powertrain) are 4 years/50,000 miles. So far, practically everybody who owned that year/make/model has taken it to the dealership for repair and they don't care what the cost to fix it was nor enough to document the problem or how it was fixed. But, once the warranty runs out, the consumer is forced with bearing the costs of the repairs. That's when the aftermarket parts developers (like Arnott for air struts) step in because there is now a market for cheaper parts alternatives. Plus, the cars switch hands from new car buyers to enthusiasts (like us) who like to wrench on their own stuff, and DIY videos begin to pop up on YouTube. And independent mechanics begin servicing the cars, and they post YouTube videos on how to inexpensively repair the cars, hoping it drives customers to their shops. Additionally, you see more used parts available as more of them end up in salvage yards. So, another reason (on top of depreciation) to hold out until year 7 or 8 or 9 of a model's age is to allow the aftermarket to make the maintenance on the cars much more affordable. I suppose you could cheat the system a little by buying the last year of a given series of vehicle. For example, a 2005 model 996. Even when it was new, there were already 996s that were 6 model years old on the street. So, by the time that 2005 996 was 4 years old, there was probably a lot of aftermarket support. Although, if you think about it, the IMS bearing aftermarket really didn't get going until about 2013.
www.kansascityautomuseum.com
Current:
2002 996TT X50, Guards Red
1987 928S4 Guards Red
1987 951 Guards Red

2006 955S Arctic Silver
2006 955S Lapis Blue
Gone but not forgotten: 1999 996 C4 Aerokit Black; 1990 964 C2 Guards Red

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