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?

Repairs, spare parts and maintenance?

If you plan to sell it after 2-4 years then maybe resale value can consider.

but if use 5+ years resale value doesnt matter anymore

talking about resale value of a car is like talking about how beautiful your wife was when you married her

could u put also inspira 2.0P & kia k5? i'm interested to know oso la... but, maintenance cost is also the biggest headache..

U gotta choose cars which have been on the road for some time in order to make a logical comparision. Pointless comparing cars which are new. I think 3 years would be the minimum period in which to compare which is why the Peugeot 407 was chosen i guess. But feel free to make other similar comparisons.

inspira is near to 3 years iinm

k5 is new... so cant compare la? ok noted.

Yup i guess so. Maybe compare against the previous gen Civic?

civic 2.0
inspira 2.0
* merc c200

nice bro, especially they way you present your calculation.

Peugeot 407 Premium 2.0L
Purchase price (2008) = $136,888
Resell car 2013 (after 5 years) for $70k (49% loss)
Total loss (after 5 years) = $136,888 (what you paid for) - $70,000 (what you get) = $66,888


Toyota Camry 2.0L
Purchase price (2008) = $154,990
Resell car 2013 (after 5 years) for $100k (35% loss)
Total loss (after 5 years) = $154,800 (what you paid for) - $100,000 (what you get) = $54,800

If you bought both the car by "cash", it obviously show which car has good resale value.

Off course you may argue that no one buying car by cash but to the matter of fact it does happened.

You may have comparing the wrong segment or value, you should have compare the 407 with Altis not camry and then you will have totally different answer.

We can't have a scenario for every circumstance. So we'll go with the norm or general scenario. There are ppl who buy cars cash but those are rare and few. Its not always based on affordability. Car interest rates are low so it makes sense to take a loan but ensure the extra funds are earning a better return elsewhere. Sadly, many ppl take car loans to increase their affordability.

An accountant or any one from finanical discipline will argue it will be a bit more greater diffrence in having the Pug407 over the camry because of present value of the same dollar over the future value over the following 5 years. Hence the cost of fund/interest rate will need to be factored in

using your argument,

407 's higher total lost of $9,454 can actually be smaller due to 9.5k 5 years later is actually not worth the 9.5k of TODAY, in real calculation, it 'll be may be 9k only or even lesser depends on inflation rate

407 has LOWER start-up cost
$15,499 (camry) - $13,688 (407) = $1,811 since this is calculated in present day value, so this part is ok

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

again this need to factor in the yearly cost of fund, so the value of 18.7 k could be higher slightly and may well be over RM20k (of Today cash )

So conclusion is taking Pug 407 is better since

20+1.8 -9 = 12.8k

Money wise it looks right (as long as the maintenance cost is the same, but if they are not and IF Pug costing more than Toyota tallo maintain and repair, than the difference will be smaller, nevetheless 12.8k is a very good buffer.

Overall, nice piece of work there

Isnt the 407 a D segment? Well, why dont u provide the calculations then?

508 is what segment if 407 is D segment?

I'm a bit bias to woengx2 statement that if buying the car by cash the calculation is going to be different. For me, personally I'm choose to buy car by cash as well if my cashflow is not so tight.

407 is D segment then 508 is E segment lar !

I agreed with the calculation, from my experience:
CRV cost around 150k at 2009, now around 100k or lower
Sportage around 100k at 2009, now around 50k or lower

CRV lose value by around 33 percent,
Sportage lose by around 50 percent

but both lose 50k, but the interest bites you more for CRV

http://en.wikipedia.org/wiki/Peugeot_407
some how they put 508 fall in both categories

i would rather buy house in cash... car loan interest is very low...

however if i collect money now, the house price will increase each year oso... f***

y when ppl question the statement and u end up calling ppl calculate then? y cant u accept something even when u know it's wrong? some ppl just don have the knowledge like u to come out with those graph...

back to the topic, it's just a myth...i choose camry even if it's more expensive....coz chinamen mentality mar.....

Hello People, 407 is older/former version D segment from Peugeot . 508 is the new & current D segment from Peugeot.

read all about it

http://www.livelifedrive.com/malaysia/news...hed-in-malaysia

This post has been edited by EnergyAnalyst: Mar 8 2013, 10:34 AM

u still live in stone age is it??
nowadays people will go for safety and also money worth

in this case, preve win lor... eventhough the resale value is lot lower, but the price already low at the first place

there is also another comparison even more hard card with inspira 2.0

By the way, I think the original post/calculation was made by me, in a Mazda6 thread. I was just trying make a simple illustration on how poor resale vale can be offset by lower purchase price, from a financial point of view. There were a few assumptions though e.g. comparison should be cars of the same segment (in the example, both are d-segments), should be of same age, no change in new price (e.g. change in tax structure, etc.) bla bla... I was doing it out of boredom as I like playing with numbers.

The REAL 407 was a D segment car, but IIRC the one sold here was a 307 (C segment) with boot.

@kadajawi: They are so many other domains that I did not factor in, like whether a car is true of its segment, rebate offers, free service offers, car reliability, spare parts costs, intangible costs (e.g. comfort, convenience, satisfaction, etc.)

Not to mention tire maintenance. . Some with up to 18 inch rims..

On a pure math equation it looks pretty nice however the big assumptions:
1. from the calculation is that the depreciation is only 49% within 5 years
2. maintenance cost is equal
3. total hours wasted in service center is zero

Whats the reason behind it?

1. Resale value is market force driven thus it is a benefit/factor from each individual buyer in the market that creates this value.

Why is a Vios J when new cost about RM70k and after 5 years its resale value is about RM50-65k, where else a better spec Ford Fiesta when new cost about RM90k and after 5 years its resale value is about RM55-70k which is quite near the Vios. Vios normally fetches a higher resale value because the man on the street gives Toyota cars a reputation for being frugal on fuel, maintenance is cheap, parts new/old/recon widely available, service network is huge plus also any workshop can also work with their cars so for a less hassle car they willing to pay the premium even for a used car. Where else the Fiesta although a better car the after sales support Malaysia is weaker compared to Toyota, also because there isn't significant numbers on the road not many stockist would have parts for it especially uncommon ones thus for those rare few that keep stock they want to make money from it because there isn't economics of scale, or getting from SC which is confirmed new and original but at a higher price.

You'll also notice the popular trading price for cars is around 45-75k, this I guess is considered an affordable price range for Malaysians and the used car wouldn't be too old at this point - around 3-5 years depending on brand. So the average Joe can finally buy an imported car after it being used 3-5 years at the price of lets say RM60k, deposit RM10k, 3.5% interest rate for 7 years it is at a manageable RM750 per month.

2. Continental cars service frequency is different from Asian cars, so that 10,000kms before service requires better quality parts and lubricants. That equates to higher cost already for the parts and lubricants. Of course a benefit would be less frequent visits to service centers which is also good since they are few and far apart.



Although from my experience resale value is only an issue if you're planning to change car every 5-7 years.
Once the car is above 9 years old most cars of the same segment would depreciate to similar levels unless that particular model is popular then it would retain its value for a long time.
Case in point the Honda Civic EG and EK they hold their value well for a very long time, they would probably become too old physically and technologically once Honda comes out with their next generation of Vtec engines, the current is the i-Vtec as opposed to the Vtec in the Honda's of the 90's.

Eh, no need to look at the issue with so much complexity by talking about inflation. Truth is, if you actually throw in cost of maintenance, the P407 will probably suffer another additional 1.5k conservatively in losses. We've already proven that Japanese cars tend to be cheaper to maintain compared to the continental equivalents as long as the service interval is set at every 10,000km.

But it still is an easier car to buy because the initial cost of purchase is lower.

IMHO if you need to calculate so much then you're not ready for it, just buy a cheap used car or new local car and be contented.

Ru born stupid or just acting? I asked him to provide the calculations not because i dont believe but because i dont have the figures myself la. So if he has it then he's most welcome to share and enlighten us. Maybe there really is a difference. U think im gonna go do research for every damn car price ah? Anyway, that calculation was provided by another forumer (which ive clearly mentioned). Im sharing this with everybody to encourage a mature discussion. If u dont think u can offer mature comments then kindly stay out of this thread. And what is that i know which is wrong? I dont see anything wrong in that calculation.

Next time dont just make blind wild accusations. If ure not sure, then by all means ASK!

This post has been edited by cybermaster98: Mar 8 2013, 12:04 PM

Yes it is. We talked about this in the M6 thread.

Actually I'm rather interested in knowing how much resale value the 308THP/VTI can fetch. Any former owners can share how much they managed to sell the car for?

I bought my Corolla Altis 1.8G in 2008 for RM116,900 (OTR). I sold the car last year for RM81,000

On Mudah, the listing price for the 2009 Altis is around 76k on average. So 2nd hand dealers will probably give you around 72k give or take a few.

A full spec P308THP model 2009 is selling on mudah for RM64,000 on average. The 2010 model is only doing around 72k on average. So if you take off 5k on average when dealing with 2nd hand dealers, that number drops to about 62k ~ 67k.

Why is the difference so big? Back when it first launched in 2008, the 308 was one of the best equipped cars in the market. Is there any reason why the gap is so big?

Ladies and gentlemen. .. start your engines and ready for popcorn

Yes i didnt remember who said it first. But i thought it was a good sharing and calculation. Thats why i thought id share it for everyone to take note especially those who keep harping on resale value.

not remembering who mentioned but you able to come out such similar quotes

i wonder why typical malaysians always think of resale value when buying new car? not yet buy already think to sell it? haha

I guess it depends on a persons' wealth. I'm a poor person, so I always make calculations when making or considering major purchases that costs hundreds of thousands. Of course rich guys can just splurge, or pay other people to calculate for them.

normally people considering the RV meaning that they plan to sell in in a short period right?
if one is poor why need to change the car so often?
buy 1 decent 1 then use it for long time

sometime they talk only wanna sell in short period, when time passes they just aiya, still can drive ma, why change, end up driving the car for 7-10 years

coz they treat car as investment?

haha, car is never an investment

indeed a 'nice car' can last more than 10 years.
e.g. PROTON WIRA

This post has been edited by edison1437: Mar 8 2013, 12:31 PM

only 1 ppl here is good in investing,so, by his calculations tweaking by someone else,watever car versus toyota, watever car wins

When he posted this a few months back, i immediately saved the calculations on my computer for reference. I was going through my files this morning when i found this and decided to post it.

And your point is?

nth sifu

This post has been edited by edison1437: Mar 8 2013, 12:37 PM

Its ppl like you who ruin mature threads like this. Can we have some more constructive comments please?

is tat y u decided to buy tat K5? u gotta thank him.....

Bro, common la. Im sure u know that i didnt buy my ride in Jan this year rite?

Anyway, i was one of those who thought very highly about resale values too. But after reading many articles i began to understand there are more important factors to consider than just resale value. Hence my decision to leave Toyota after 9.5 years.

1,063 views in less than 4hrs. Not bad eh.

This post has been edited by cybermaster98: Mar 8 2013, 12:47 PM

Yes, you can say cars aren't investments. We can consider them as lialibilties/losses. But the point of making some rough calculation to find out if we can minimize loss. My earlier calculation is just to show how RV can be overrated i.e. not exactly superb financially speaking. I'm not Sam Loo lah bros, don't shoot me.

Haha! Sam Loo! That fellow gone silent now eh? Wonder what happened to him. Well personally i think that was a good calculation you made. Any other calculations you have done since?

Also a good indicator to know how much your car is worth at any particular time and the price you can expect to get.

You never know when you may have reason to suddenly sell your car prematurely: migrating, suddenly strike jackpot so upgrading to the latest Beemer, liquidating your car for quick cash, etc etc.

Erm no, not since. The initial figures (brand new and resale car price of camry/407) that i used is from @Zenix IINM. The calculation can be easily replicated or modified, depending on what you want to calculate. Just to note, that I had no intention to buy either of the cars, it was just a very crude illustration, accountants will probably laugh at it.

accident total loss etc..where you might have to top up to settle to the bank because the market value dropped like a brick.

Yea especially if u need to buy KR2.

hehe.......I did go and take a look, but the units left over wasn't to my liking (low floor or bad layout).

Only one unit still pending loan approval on high floor so asked SA to notify me if loan rejected but didn't call till now.

Wish you all the best with that investment, I'm disposing my 1120 taking the cash and putting it in short term investments.

308thp 4speed is one most troublesome Peugeot to start with. Engine leaking, gearbox failure, etc etc. It was further rectified in the 6speed variants, and also the sedan sibilings 408.

Perhaps why 308thp fetch such mediocre resale value

LOL! i can see a discussion will soon turn to become T&H vs everyone else. Kthnxbye!

Because malaysia cars are way overpriced! If you are making 5K a month and the car is only about 25K, would you care about resale value?

it's more like properties and everyone else vs t&h

Got one at high floor. But the problem is many trying to get that unit.

Good point!

TCO

Is this calculation based on an assumption a high resale value car have higher selling price? Try comparing price to price, then you'll get the effect of resale value. My accounting background says so.

But then again, when buying car, buy what u want, buy what u need, buy what u love. Not resale value. Haven't buy car already consider how much you can sell it? Srsly?

How ru gonna get same prices? The cars with the higher prices are usually those from Toyota and Honda which is the source of the 'issue' since other similar makes are offering better equipped cars for cheaper prices.

u r right.

why RV is a consideration?

--------------------

imagine when after 1-2 years u lose your job, no monthly salary, bank lelong yr car and u need to top up A LOT OF MONEY to settle the loan.

just an example.

expert properties investment sifu wif 2.15mil prime area properties(and appriciating every minute) who test drive 99 times to buy k5, come in give tips on car resale value wo.sure alot ppl come in n learn a thing or two la.

u teaching someone wat the consequences? r u serious...

is this a thread genuinely discussing how important RV or, it just an excuse hiding behind the importance of RV just because somebody bought a good car with very bad history thus that car now value worthless?

if everyone is doing the first part, then good lah. because RV is not only matter here, but all of the world. so does the running cost. how importance, thats another matter lah. but if everyone here is doing the second part, then i am afraid they are just trying to devalue something of a value in the first place.

okay, i see many people just look at the price tags alone. of which just half truth. so how about after sales stuffs? servicing easiness? parts easy to find? and very widespread presence nationawide? how about those stuffs? they do contribute to high RV.

are they justify the high selling price? well it depends on the situation. now easy la type behind keybord and say nothing matter except price tags. say what if your branded korean make had to stay in workshop for weeks because the parts yet to arrive from korea? or ur german make come in come out service centres simply because they cannot figure whats wrong?

all i am trying to say is, RV is not a matter of just the price tag. u gotta see the whole thing. okay now some brands of course selling good value for money. nevermind, for anyone buying those so please do so and enjoy whatever the brands are throwing. but hiding behind this RV to level the field isnt that nice.

Im not really good at this.

Could you help me calculate between

Nissan gtr (08) - Rm 320,000 (d.p)- Rm 130k

And

320i - Rm 241,000 - (d.p) - Rm 24,100

Yes, that is one of the many assumptions. My summary was "low RV is offset by low purchase price". It's obvious that when both cars have the same purchase price but one have lower RV, then there's no need calculate anything. But note that the calculation is based on historical figures thus like all other financial estimates, does not predict future values. A safe disclaimer :)

Like I said, the point of considering RV is to manage/minimize your liabilities/losses. Financial prudence is about managing both the positives (assets/gains) and negatives (liabilities/losses). Like it or not, RV is a real issue. Middle income buyers in developed countries also look at RV as a factor. You'll see reviewers mentioning RV as as plus/minus points.

By cruching some numbers, you can estimate if the loss is "substantial enough" to stop you from buying the car you're eyeing. The question is then, are you willing to take the financial loss considering what you gain (e.g. safer, better ride) from a lower RV car? I think having a rough figure is better than to brush of RV just like that. Unless you love the car so much, or too rich to care.

Maybe next time I'll try to calculate Merc vs. Volvo or Audi vs. Bimmer. In these cases, RV may even play a role even though buyers of the cars above are not exactly poor.

You need to provide the RV of both cars of the same age (e.g. resale price after 5 years or so).

Edit: This is to avoid bias. I don't want others to accuse me of being unfair in my calculation.

This post has been edited by azfamy: Mar 8 2013, 03:08 PM

how do u value satisfaction of ownership then?
the joy of driving?

i know my car might have shitty resale value IF i do want to sell it, but during the short time with the car, i have plenty of driving joy as compared to some boring boat...

how do u rate that value then?

scenario:
$10k saved but I lost 5 years of driving satisfaction?
nah... i will pass...
i rather have driving satisfaction then worrying about some figures that is going to hit me 5 years later...

I can't comment on Toyota much.

But don't think Honda cars are problem-free compared to the likes of Korean or German makes. VW does need to buck up on their service centres however.

Right now, I would say Honda cars are just coasting on brand appeal, hybrids and the sporty look of some of their rides, but the value for money is rather lacking.

JMHO.

facts please..

scenario..
means i pluck a figure out from the air and use it as an example...

else can u tell me how you rate value of driving satisfaction?

everyone started to ask facts now days?......ppl ady say example but somehow seems like now days need to prove it to the point n compare apple to apply..cannot just accept as an opinion meh?

+1

even if you are not a driving kaki, maybe safety is worth something?

Intangible costs (e.g. satisfaction, convenience, etc.) are very much harder to calculate or converted into dollars and cents. Need to ask economist colleague. However, you've managed to answer your own question. Hypothetically, you're willing to lose $10k for 5-years of driving satisfaction. This "satisfaction" is subjective. But let's say we convert it into an ordinal scale, say Likert's 5-point scale. Assuming you're satisfaction level is 5 (perfectly satisfied) as opposed to a better RV car which gives you satisfaction level of 3 (so-so). Thus, you gain 2 points of satisfaction for a 5 year period at a cost of $10k. The next question is, what's your limit/dealbreaker? $20k? $50k? How many ringgit per satisfaction points per year is good enough for you? Ok so now it becomes more complex and less fun.

RM154990 - RM 136888 = RM18102. The difference also almost 20k.

I think the big flaw in the calculation is the assumption that the service/maintenance costs are equal.
If they were really equal peugeout will never have such bad resale value in the first place.

Not just about driving satisfaction. How about peace of mind driving?
Driving a least-safe car equal waiting for disaster happen!

Resale value can be sacrificed but definitely not for your legs!




Here are the example car with premium price tag, high resale value but with poor safety rating:

The point of the discussion is not to justify why resale values are low or high. That calculation is an ilustration to show that although a particlar make may have a low resale value in future but when u take into account the initial start up costs and 'savings' on monthly installments, then the poor resale value is sorta evened out. Its not meant to be an all conclusive calculation which is why i put it on a thread to pick your brains. Everybody is free to agree or disagree but do explain why.

Cheers!

if like that all super bikes need to be thrown away as there is no protection but only satisfaction when riding it

This post has been edited by edison1437: Mar 8 2013, 05:38 PM

That "flaw" was intentional. The assumption was made purposefully (irrespective to whether it's true or not) for/due to:
1. Ease of calculation.
2. Lack of data for (maintainance/service) costs.