Doesn’t factoring depreciation into the cost of car ownership rely on the assumption that you will eventually sell that car? If so, why is that a reasonable assumption?

Question

Recently watched [this video](https://www.youtube.com/watch?v=ztHZj6QNlkM) which puts a significant chunk of the cost of owning the vehicle into depreciation. Wouldn’t the loss in value of the vehicle only matter to me if I bought this car with the intent to sell it in the future? I *could* drive the car until the engine block falls apart and it becomes basically unsellable.

In: 2782

Answer 1

Not really. At its most basic depreciation is just picking a lifespan for a thing and then breaking the cost of buying that thing into chunks spread over that lifespan as opposed to all at once. If you are trying to come up with average cost per year of owning a car depreciation is just spreading the purchase price over the expected years that the average person will own it or its useable lifespan. Another thing to consider is that the repair expenses for a car for this kind of calculation should be expected and ordinary, in other words not the cost of replacing the transmission etc.