Why Are New cars Essentially disposable?
Does it pay to fix up an old beater?
My 2004 Volkswagen Passat TDI has cost me a life-changing amount of money in repairs and maintenance. None of them have had to do with a recall (my car is too old to be a part of Dieselgate), accident damage, or acts of God. Every red cent that I've spent on the damn car would fall under the category of normal-wear expenses. This includes the timing belt, water pump, tires, and a CV joint that operated well-past its expected lifespan. When I got lazy and got an oil change done at my local VW stealership, my car apparently required somewhere worth $1,000 worth of repairs; one of which was to replace the CV joint after, get this, about 15,000 kilometres worth of service. For some people, that's an oil change interval. In fact, I have probably spent more money at the garage than what I've actually paid for the car in the first place.
This really begs the question: what the hell is going on here? I haven't even invested $1,000 (including some unnecessary mods) in fixing up my old Datsun 720D. It's not in tip-top shape, to say the least, it's unbelievably solid and reliable for a 35-year old truck with more miles on it than most airline pilots (take that any way you will), and yet it runs better than Kanye West's mouth. Why has my supreme piece of "German engineering" spent more time out of commission than my ancient minitruck/rustbucket?
Enter the concept of planned obsolescence.
The term "planned obsolescence" is a concept well-known to businessmen, mechanics and broke people. Simply put, it means that your car has been designed and built in such complicated and low-quality fashion that you're, economically speaking, better off to buy a new one than to replace replace the parts on your old one.
If you think this is a cynical perspective of the auto industry, you're absolutely correct. It's also a window into the dark side of our hypermaterialistic society. Think about flat-screen TVs. You buy one for a lot of money, use it for a few years, and then something on it breaks. Sure, you could call a TV repair specialist, but most people won't do that. Having said that, TVs aren't always impossibly difficult to fix by yourself.
DIY TV repair, unfortunately, is a pretty romantic ideal. By the time that stuff starts to go seriously wrong on it, parts are often already out of production and, therefore, expensive (if you can even find them). In addition, your state-of-the-art TV set will probably be a plebeian 5 years down the road, so you'll probably just take your cash, buy a new one, and throw the old one away. That is what planned obsolescence was designed to do.
Welcome, everyone, to the arms race of hyperconsumerism. Not surprisingly, it affects cars in nearly same way it affects TVs.
The fundamental difference between TVs and cars is that car dealers actually want you to come back to fix their cars. At least, for a few years anyway. At that point, they start digging through some of the oldest tricks in the book. "We don't have the part", "We can fix X, but you might as well fix Y and Z while we're at it" and, my personal favourite, "If you want, we'll take it in on trade!" Essentially, they're trying their best to keep the mechanics as busy as they can with your car until you give up and buy a new car from them. Repeat the cycle.
This is planned obsolescence in action. But it doesn't just stop there.
I don't want to sound like Scotty Kilmer, but the advances in vehicle technology have, by and large, made a lot of car owners slaves to their dealerships. I'm sure a lot of people want to save money by getting Joe the Euro guru to fix whatever's wrong with their BMW, but nobody wants to risk having their warranty voided because it was serviced by someone other than a Certified Technician (read: the underpaid and overworked dealer mechanics that may or may not know what they are doing). While I'm on the subject of warranties, have you ever known anybody complain how their never had so many problems with their car when it was under warranty? That's planned obsolescence in a nutshell.
Now, if you think this is greasy, we aren't done yet. Your car dealer's best friend is depreciation. If you're unfortunate enough to buy a car as soon as it comes out, you've pretty much destroyed any chance of your car being considered a valuable asset. This is particularly bad in the market for premium used trucks. It's not unreasonable for a King Ranch F-350 to lose $30,000.00 in one year.
That's right, 365 days.
The worst part is it'll lose most of that value even if you keep it in a climate-controlled garage, cleaned it every week, and never drove it. Dealers, especially domestic ones, don't even flinch at 10% year-end discounts anymore. They know full-well that they've supposedly released the newest, coolest and greatest thing since sliced bread, and you just couldn't help yourself. I like to call it the snob tax. And before we start calling car dealers a bunch of shills, just remember that you did, in fact, buy it.
I've seen people learn this lesson the hard way. I know someone who bought a 3rd-gen Chevrolet Malibu when it first came out for around $30,000. 5 years later, after the warranty ran out, it was worth around $5,000, tops. Also, because this person elected to finance it with no money down, they ended up paying an absurd amount of interest. What's more, if you took that $5,000 valuation and converted it in terms of 2008 dollars, it really ended up being worth about as much as Donald Trump's word.
Don't get me wrong: that car runs and drives perfectly well. In terms of nothing more than dollars and cents, you're probably better off driving the damn thing until it dies a mechanically horrible death like I intend to do with both of my cars. Even if you spent $1,500 a year for another five years to keep the Malibu running, you're likely going to lose more in inflation and depreciation by financing a new one. And God forbid you can't afford your car payments after a year, the repo man is going to eliminate any red cent of equity on what you thought was a good investment.
50 years of change summed up in one picture.
I'm not just saying this because I am a Luddite. I appreciate new technology. I appreciate the advances that the auto industry has made in efficiency, safety, and refinement. Daily driving a 1981 Datsun diesel truck will make sure you never forget how far we have come in the past 35 years. What I am tired of hearing, though, is the weak argument that turning and burning your ride for a new one is unequivocally rational.
To answer the title question: should you keep your old car running, or throw it out for a new one? My answer: it depends. There are way too many difference-making variables that can be discussed. I'll leave the math up to you. The unfortunate reality is that the race to the top of the sales charts is leading to a race to the bottom of the precipice of future value and build quality. This is a good system if you are a crapitalist or a credit lender, but it's feels more like grand larceny to the household. And it's unlikely to get any prettier.