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

The idea is that you always trade in or sell the old one to get some value to get a new one. This is because people treat vehicles as a form to keep wealth. Since the assumption is, that at some time you will want a *better car*.

However… in reality housing and vehicles should be treated as consumables. Stuff that is meant to be used and that will over time break down and need to be replaced. And this is why we still have a “housing crisis” even though we know what kind of fucking massive social and economic burden it is – but people want to own homes that go up in value. Then people want a thing they can use, which won’t drop in value.

I personally think of a car like a tool. It has a function, and I use it to that function. And I use it till it no longer fills that function for me.

Which is why I drive a 22 year old Opel Corsa that is showing no fucking signs of giving up. Filling the tank adds 10% of value to it by my estimate.

Depreciation only matters if you have an intention of selling the car to get a better one. If you don’t then you can ignore it completely in the value assessment.