No buddy..
For the sake of simplicity, we should take the purchase price of the brand new cars and minus out the final respective total loss values. The difference will tell you which is supposedly a more 'pocket friendly' (for lack of a better word) car.

P/S - provided that everything else remains constant (a.k.a. ceteris paribus)

Edit: That's to my understanding-lah..if TS meant something else, then perhaps he could shed some light and correct me.

No buddy..
For the sake of simplicity, we should take the purchase price of the brand new cars and minus out the final respective total loss values. The difference will tell you which is supposedly a more 'pocket friendly' (for lack of a better word) car.

P/S - provided that everything else remains constant (a.k.a. ceteris paribus)

Edit: That's to my understanding-lah..if TS meant something else, then perhaps he could shed some light and correct me.

This calculation was shared by a LYN forumer some time back which ive tweaked to suit.

Very often, we always focus on the resale value of a particular model while ignoring the start up costs and monthly loan repayment costs. This tabulation will show you why cars with lower resale value may actually be a cheaper. This is of course assuming maintenance costs are similar.

Peugeot 407 Premium 2.0L

Purchase price (2008) = $136,888
Downpayment = $13,688 (10%)
Interest rate = 3%
Tenure = 60 months (5 years)
Monthly loan payment = $2,361
Total loan paid = $2361 x 60 = $141679
Total paid for car = $141679 (loan) + $13688 (dp)= $155,367
Resell car 2013 (after 5 years) for $70k (49% loss)
Total loss (after 5 years) = $155,367 (what you paid for) - $70,000 (what you get) = $85,367
Toyota Camry 2.0L

Purchase price (2008) = $154,990
Downpayment = $15,499
Interest rate = 3%
Tenure = 60 months (5 years)
Monthly payment = $2,673
Total loan paid = $2,673 x 60 = $160,414
Total paid for car = $160,414 + $15,499 = $175,913
Resell car 2013 (after 5 years) for $100k (35% loss)
Total loss (after 5 years) = $175913 (what you paid for) - $100,000 (what you get) = $75,913

For simplicity, let's assume service/maintenance costs are equal. Thus, after 5 years, a Peugeot 407 vs Toyota Camry:

407 has HIGHER total loss
$85,367 (407) - $75,913 (Camry) = $9,454

407 has LOWER start-up cost
$15,499 (camry) - $13,688 (407) = $1,811

407 has HIGHER monthly positive cash flow through lower installments
$2,673 (camry) - $2,361 (407) x 60 months = $ 18,720
SUMMARY

This clearly shows that although the Peugeot 407 has RM 9,454 lower trade in value after 5 years but it gains a total of RM 20,531 from lower start up costs and lower monthly loan installments.

Thus, buying cars with lower resale value isnt actually a poor financial decision. So i think with this, we should not allow resale values to govern our choice of vehicles. Safety, value for money, specifications and maintenance costs should take precedence.

What do you think?

You are missing out an important element in your analysis, the repair and maintenance cost.

Pugs are well known to incur higher maintenance cost than Toyota. Thats obvious.

And what about fuel consumption and efficiency?

Without these important elements, your analysis is inconclusive.

I don't really understand... In total u pay RM85K for 407 but you only pay RM76K for Camry... What myth u try to bust? I cannot brain this simple calculation...

This calculation has 3 parts. U are only refering to 1 part which is the resale value. Yes the resale value of the Camry is higher thus lower loss. BUt in terms of start up costs (downpayment) and savings from the monthly loan repayments, the 407 is better. So when u take all 3 together and calculate the difference, the 407 gives you more savings although the resale value is lower.

This is just refering to the myth about resale values not the total ownership costs.

You may save more on monthly installments & start-up cost with 407. But, isn't that Camry get 30k more after 5 years? Hence, the total of RM85k (407) & RM76k (Camry) actually represent your total cash outflows for the 5 years of ownership. 

Didnt i already qualify that? This is just a simple calculation to show that resale values in itself may not be high when compared to the start up costs the the monthly loan repayments. IM not talking about the cost of ownership here. Im solely talking about the resale value. This is specially directed to many of us who blindly say resale value for a make is higher without considering the downpayment and savings from monthly repayments.

Yes if we talk about TOTAL OWNERSHIP COSTS then Japanese brands will be cheaper to maintain for sure. But right now we're solely on the myth of resale values.

You may save more on monthly installments & start-up cost with 407. But, isn't that Camry get 30k more after 5 years? Hence, the total of RM85k (407) & RM76k (Camry) actually represent your total cash outflows for the 5 years of ownership. 

So you put maintenance cost and fuel efficiency at constant and just compare the resale values apple to apple?

Those two are major elements of the resale value because they determine savings from wear and tear of the car.

No wonder there's little difference between the two.

I don't really understand... In total u pay RM85K for 407 but you only pay RM76K for Camry... What myth u try to bust? I cannot brain this simple calculation...

Person doing the calculation is double dipping because he essentially takes the difference in monthly installments twice (lower loss as what you paid for is lowered, and the lowered again because he adds this same difference back as a positive cash flow when calculating his 'gain').

If you're going purely by cash flows then only the first part of his calculation holds true and will suffice. You are paying 76k to drive a Camry for 5 years, and 85k to drive a 407 for the same period. So the extra bling bling and driving pleasure here will cost you around 1.8k annually, provided that maintenance costs, fuel consumption etc are similar.

TS debunked himself really. 

Didnt u take out 20K more to buy the Camry in the first place just to get back 10K more in resale value after 5 years?

In my opinion I will not buy a second hand Toyota/Honda simply because the resale value is high.

I don't see why I should pay a high price for a used car that lacks features found in another similar car.

Therefore if I were to buy a used car, I'll choose a European car.
It has more features and costs less.
I also won't suffer that much depreciation anymore because the first owner has already absorbed it.

If more people buy second hand European car instead of second hand Toyota. The resale values of these cars will reverse.

Well said here.
Car values drop, but due to silly demands, they are jacked higher by used-car dealers.