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When to sell your old car
These are a few thoughts from the point of view of a hobby economist and friend of old cars. (I have a 1970 Jaguar E V12. :-)
I hear people say that one should sell an older car "before the expensive repairs begin". I've always found this logic questionable. I'd rather say that one should sell an old car when its technological disadvantage becomes too big, compared to a modern car (unless you, like me, like old cars).
Unless you're buying a particularly fuel-efficient car, forget about fuel efficiencyold cars often need less fuel than newer ones, perhaps because they are lighter. The more interesting aspects of new car technology are security, electronics, convenience.
There is no clearcut point in time, when "the expensive repairs begin". A car engine can run for up to 200,000 miles before it needs to be overhauled or replaced. Clutch, transmission, etc. may live even longer if they aren't abused. Other parts like wheel bearings are not that expensive to replace. A car can live for 10, 11, 12, or more years before its body shows significant decay. I still use a Mercedes 190 that is now (in 2013) 23 years old and still has not needed any major repair, though minor things fail from time to time. It has always taken me to my destination and never failed me, apart from two incidents that were at least partly my own fault.
From an economic point of view the problem is that, when the need for an expensive repair is already obvious, it is too late to think about advantageous selling. Unless you cheat the buyer by making him believe that the car is perfectly allright, it does not matter much whether you repair the car first or sell it in need of repair. Under the line it should come to about the same. Effectively you have lost the cost of the repair as soon as its need becomes obvious.
Equally flawed is the notion that after the first big repair you should expect more big repairs soon. That is simply not so, provided the body of the car is still allright. Fortunately body corrosion can be checked and ascertained, and you should do this before it is too late. But even local body corrosion can often be repaired without costing you an arm and a leg.
Even if you have experienced an unlucky chain of repairs, it is still questionable to treat that as a reason to sell the car. If anything, it should be a reason to keep the car, because every repair that has been done increases the utility value of the car (though not necessarily its market price, or not by much). But every repair that has been done also decreases the likelihood of another repair, because after each repair you have one component less that is likely to cause trouble.
I think without detailed knowledge the probability distribution of the possible major repairs of a car are roughly Poisson-distributed, and one isn't much correlated with the other. In other words, an early engine repair doesn't mean that the transmission will also have to be overhauled or replaced soon.
What I could understand is that somebody should sell a car that has done its 200,000 miles without needing any big repair, because the advantage of selling it without having to lose any big repair costs could be considerable. However,
In short, the inclination to swap an older car for a newer one is often exaggerated.
Add to this that the making of a new car is not particularly environment-friendly, a fact that is conveniently ignored by politicians pretending to want to "help" the car industry.