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Depreciation Curve Of Japanese Cars vs American Cars

There is another thread about new Lexus and Toyota models that has just run too long. Accordingly, I wanted to spin off that conversation with a new thread. There was discussion about buying Lexus versus Lincoln. One of the things that I realized is that, more or less, Toyota/Honda vehicles are priced by the market, both new and used, as if the car will last 150,000 miles while American vehicles are generally priced as if the vehicles will last 100,000 miles. Meaning that at 50,000MI, a Honda/Toyota will still be worth about 2/3 of the original price while an American vehicle will be worth about half. This is merely a very rough rule of thumb, but something I've noticed. Even new, the US vehicles can't be sold unless Detroit rebates it's way to a sale, so the "out the door" price is much less than the "out the door" price of a Toy/Hon. Even though the sticker prices are similar. Again, this seems to reflect that the market assumes the Toy/Hon will go

150,000 miles before major trouble vs merely 100,000 for the US vehicle. My point is that buying similar sized-categorized vehicles from Toy/Hon vs US is no longer an apples to apples comparison. (I realize that many vehicles go 200,000 to 300,000 miles...maybe more....of both American and Japanese build. But my point is that THE MARKET prices Toy/Hon vehicles to last about 50% longer).
Reply to
D.D. Palmer
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You're discussion seems to be based on the premise that buyers of Lexus's and Lincoln's are primarily affected by price; the amount of time a car lasts being, to a large degree, about price.

I would contend that resale value/price is not a MAJOR factor to buyers of these cars. In my case the reasons I went with an LS430 were about how the car feels while driving, power, quiet, luxury features, and reliability. Good resale value was a plus, but not a deciding factor.

One could argue that reliability is also a price issue, but it's more about feeling safe and knowing that you're not going be stranded or have to schlep to the dealer a lot.

HBH

Reply to
BenAndMarsha

There are MANY reasons people choose Lexus over Lincoln or Bentley over Lexus or Ford over Chevy. My point was that at any level, the American car depreciates at a rate as if it will last about 100,000 miles while the residual value/resale price of most Toyota/Honda products depreciates at a rate as if there are 150,000 miles.

Reply to
D.D. Palmer

I think you are being WAAAY too conservative. Even a Honda Civic is expected to go 200K miles without serious problems. For the last 15 years or so Toyota and Honda products have been perceived as 200K mile type of cars because they ARE 200K mile cars. Everybody I've talked to ( including mechanics ) feel that way.

Right or wrong , American cars are *perceived* to be completely shot at 100K or 10 years old. Note: In the Bay Area people can and do keep cars of all types for as long as 15 years because there are no weather factors to corrode metal and rubber. Still , American cars are perceived as 100K mile cars and the major Japanese as 200K mile cars.

A 10 year old Lexus LS400 with 150K in clean condition still has resale value around here. An American luxury car with the same age , condition and miles is worth little more than salvage value.

Reply to
X

You are generally right! That being said, the market premium for Japanese cars over similar US vehicles is not double. So you could argue that the Japanese car is the better value, as you are getting double the mileage-per-car as an American vehicle while paying only about 20% more (give or take) for similar vehicles. Hey, maybe that's why Toyota is gushing in profits while GM and Ford are on deathwatch!

Reply to
D.D. Palmer

I made the decision to buy my GS430 based on:

1) Driving the car and comparing it to the Lincoln LS, the Audi's (A6 and A8) The BMW's (M3, 525, 540 and 740's) and the MB E320. Eliminated the LS early on, drove three of them finding the noise level unacceptable. The comparison between the German cars was harder but I still kept coming back to the Lexus. 2) Reliability ratings. I am a network admin in a law firm. A lot of the Lawyers drive the big three German cars. Quizzing them about how often their cars are in for, and what the service bills are, again, the Lexus was far superior in this regard. 3) Resale value. This wasn't really a factor, as I tend to keep cars a long time.

I have owned Fords for the past 30 years. My son talked me into at least considering other brands. I am really glad I listened.

I also test drove a Ford 500. What an absolute POS.

Reply to
Me

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