Honda Accord depr & trade ?

This weekend the local dealers have the 4 cylinder LX, MSRP $20575 + freight $515 = $21090 total sticker price on sale for $19034. http://automobiles.honda.com/models/specifications_descriptions.asp?ModelName cord+Sedan&Category=LX
The car comes with a 36,000 mile 36 month factory warranty. I haven't studied the depreciation or inflation on these cars and at what the extended warranty cost but today I started to wonder about this scenario. Assume I buy the car and keep if for two years and drive 25,000 miles and then sell it with one year and 11,000 miles of warranty remaining. Now here comes the unknown part, how much can I sell it for. If I assume it drops $1500/yr for the first two years I might get $16000 for it. If this is close then my ownership & maintenance (zero on warranty) cost would be $3000/25000 $0.12/mile. If drops at $2000/yr my cost is 16 cents/mile. But if I keep the car five years and assume the extended warranty costs $1200 and I can sell the car for $9000 my ownership cost is 14.4 cents/mi. If I've made no big errors it seems like it might make sense to sell the car every 2 years and get a new one with the latest in safety. Any facts and thoughts appreciated. Hank
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The chart below shows what Edmunds.com assumes a 2005 Honda Accord Lx automatic 4 door vehicle will cost over 5 years. As you can see it is assumed that it will depreciate $4000 the first year, $2000 the second and so forth. On the flip side my girlfriends 2004 Accord, Auto, LX, 4 door was bought at $18,850 plus tax and license in July/August of 2004. If I go to Kelleys blue book the private party selling price is still $18,300. So for example if this car was totalled the insurance company would be giving about $18,300 to my girlfriend if not more in my experience. That is a depreciation of only $500 the first year. That is why I tell people it really isn't worth it to buy a 2-3 year old Honda since the price of a new one is not that much more. If it were a Chevy, Ford, GM, Chrysler, etc then the vehicle would really depreciate the first couple years and buying a used one would be more worth it than buying new.
So depreciation is a relative thing I guess. There are dealers out there asking more for a 2003/2004 Accord than what a new one can be bought for. The problem with buying every two years is that you are paying for the depreciation continually and for sales tax for the full amount every two years.
If you buy the car outright and pay the sales tax once with a 5 year loan then at the end of five years you have a relatively new car, in today's standards, and it is worth about $8000k. I guess then you could sell it and put the 8k down on a new 20k Honda and have a loan for about $12k which could be paid off in 2-3 years. At the end of 2-3 years you could sell it for about $13k and put that down on a new Honda....just a thought.
The latest in safety has been here for a while..the next few years isn't going to produce any fabulous safety devices for the base Honda Accord. These new laser guided collision avoidance systems will most likely only be available on the high end models which if you are buying you are not that concerned about money or cost per mile.
Year 1 Year 2 Year 3 Year 4 Year 5 5-yr Total Depreciation $4,072 $2,023 $1,780 $1,578 $1,416 $10,869 Financing $1,190 $958 $710 $445 $161 $3,464 Insurance $883 $914 $946 $979 $1,013 $4,735 Taxes & Fees $1,670 $50 $50 $50 $50 $1,870 Fuel $1,230 $1,267 $1,305 $1,344 $1,384 $6,530 Maintenance $282 $553 $384 $867 $1,131 $3,217 Repairs $0 $0 $108 $257 $375 $740
Yearly Totals $9,327 $5,765 $5,283 $5,520 $5,530 $31,425

http://automobiles.honda.com/models/specifications_descriptions.asp?ModelName cord+Sedan&Category=LX
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Waiving the right to remain silent, "Henry Kolesnik"

You need to determine the *real* depreciation on the vehicle. Otherwise, all the rest of your calculations are based on guesswork, and are essentially meaningless.
A good starting point might be to get the values on the 2003, which is now a two-year-old car. kbb.com could be a place to go for the info.
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Henry Kolesnik wrote:

you want "new every two"?
lease. easy enough to negotiate a higher mileage (if needed) beforehand. to me, its stupid as all hell, since i like NOT having a car payment, but some people have nothing better to do with their money.
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You're overanalyzing it and not using facts, just assumptions. The best thing to know is that the Honda Accord retains the highest value of any car in it's class. In other words, it has the lowest depreciation. Ask around and you'll find that to be true. That is also why an Accord can be leased for very reasonable rates. In a lease you pay for what you've used, ie: time and mileage. If over time your car has a higher value than the next, then you will pay less while leasing, providing you keep the miles to within the ageed upon lease terms. If what I've said is true, and I think you will find it to be, if you buy a car based on the economics of your best deal over the life of the car then you can't go wrong with an Accord. Howard

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