When does it stop being cost effective to keep an old car running?

I have a 1998 Honda Odyssey Minivan with 165,000 miles. This is a great car. Built on the Accord chasse it drives like a car and gets great mileage for a minivan, but it is getting on in years and requires costly maintenance ? nothing out of the ordinary but it adds up. How do you calculate when it is more expensive to keep an old car running than to purchase a new one? Is there a formula?

Everyone has their own methods but regardless of what anyone says, there is no good formula. The first issue is service-ability or obsolescense. If you still like it and its not obsolete like get 10 MPG on your 100 mile commute, and reasonably dependable for your use, no problem. Step two is if it costs you 10 cents a mile in general (non-fuel costs) and you need to put $1000 into repairs, just make sure you will drive it at least another 10,000 miles to get your money out of it.

Its fairly easy to calculate a new car cost and will generally cost you little or nothing in repairs for the first 100,000. You will just pay a lot for the car part. On an older car, you will be paying little for the car part and more for the repair part of it. I’ve got a car with 5,000 and one with close to 500,000. The old one is so far cheaper per mile. There will come a time though when I put it out of its misery.

With the advice of your mechanic, make a list everything your old minivan is likely to cost you in the next few years. Also include the cost of gas (at current prices), registration and insurance.

Make up a second list for a new vehicle. The big item here will be car loan payments. (If you pay cash, divide the price, less trade in, by the years you expect to keep it.) Include sales tax divided by the years you expect to keep it. Although there won’t be any repair costs, because of the warranty, remember to include routine maintenance, fuel, registration and insurance.

The time to get rid of the old one is when begins to cost at least as much as a new one. By the way, I hope to hang on to a 1998 Subaru Legacy with 180k miles for at least another three years.

The wildcard here is reliability - what’s it worth to avoid breakdowns? Are you driving kids around in remote areas? Yourself late at night? These difficult to quantify items often tip the balance long before straight $$ would.

There are as many formulas as there are car owners. Everyone has his or her own idea about this.

What is the “costly maintenance” this vehicle requires?

My guess is timing belt and water pump replacement

requires costly maintenance Think about that one. Any car required maintenance, even new ones. Now compare the cost of maintenance on a new car plus monthly payments compared to the cost of maintenance.

A new one is about $24k-$40k. That buys a lot of repairs AND still requires occasional maintenance and repairs once warranty passes.

This is a question that each individual must answer again and again. Usually when the car needs several hundred dollars in repairs.

From my point of view, I’d say you have many more miles and years of life left in your Odyssey. I currently drive a 92 Accord with 243,000 miles and my wife drives a 98 Accord with 203,000 miles. We bought both cars new, so know the history of both. Rust is evident on the 92, but the 98 is clean. I expect 300,000 miles minimum from each of them.

Your 1998 Honda has relatively low mileage in view of its durability. If it was a Volkswagen, I’d say you should sell it, since very expensive repairs would be on the horizon. US built cars, like your Honda, generally have affordable repair costs and good spares availability.

The average US driver spends $1200 or so per year on maintenance, repairs and tires.

If a new car is $24000, and you expect 15 years of service out of it, allocate $1600 of extra depreciation plus the interest that $24000 would bring if deposited, at 4%, so add $960 as well as the extra insurance cost for a new car.

If we add the $1200 to $1600 plus $960, we get $3760 PER YEAR for maintenance, repairs and tires to break even with a new car. I’m conservative here by depreciating the new car over 15 years. In my own case I use 10 years.

Clic and Clac always advise reeaders and listeners to compare the repair costs to new car payments, like $500 per month, or $6000 per year. That quickly works in favor of repairs.

In industry they use such concepts and Discounted Cash Flow, and Equivalent Annual Cost to deterine the exact best age and mileage to trade the vehicle. Heavy trucks easily go a million miles or more before the companies downgrade them to less demanding service or sell them.

A good book that has many techniques on this is called Contemporary Engineering Economics, by C S Park, an Addison Wesley publication. Your library will have a copy. In spite of the title, it is not technical, and all you need is apocket calculator to get the answers.

If you are dilligent with maintenance and have a good mechanic, a Honda can be reliable for 400,000 miles. My brother owns a 1987 Accord with 300,000 miles on it, and although he can easily afford a new one, he keeps driving it because he has a paid-for and fully depreciated car that costs a lot less to insure, and is still reliable.

Using payments as a cost for a new car are a terrible way to look at it and not the true cost. I agree that payments are your current expenses but not your cost. Payments accellerates the cost in the first few years, and unrealistacally decellerates the costs in the later years.

Instead you need to look at the vehicle cost per mile (just the car part, not service etc.). What you paid for the car ($25K plus interest) minus the reasonable value of the car, divided by the total number of miles driven. That will give you an average cost per mile for the car in any year of service from first to the last. Add that to your average cost of repairs per mile and if you want, fuel costs per mile, and you will have a total cost per mile to compare it to.

That’s the simple and most accurate way to compare costs. Comparing payments is just a cash flow thing and not a cost comparison.

Here’s a variation on the formula…

When my insurance company advised me that my insurance was going to skyrocket unless I got my daughter off the policy. The only way to get her off completely was to give her my old pickup, which I’d given her as a daily driver anyway while still maintaining ownership. Since my son was at the time looking for an old beater to get around Boston, I couldn’t very well give my daughter my old truck without giving my son my old Camry. I came up with the solution of giving both one of my old vehicles and getting myself a new car.

It varies for everyone. That’s my own story.

Bing; I agree that car payments are not a good way to compare actual costs. That’s why depreciating the value of a new car over 10-15 years is much better.

I build up the ownwership costs of my current car and what a new car would be, and compare the 2. My sister is a retired cost accountant and she almost always concludes that basically wearing a car out completely is the least expensive, provided it’s safe.

My criteria for getting rid of a car are:

  1. It has become unsafe because of corrosion or other factors.
  2. It cannot meet emssion tests without very expensive engine repars.
  3. The body is unsightly because of corrosion and repainting/reapring it costs more than the car is worth.
  4. The annual repairs EXCEED the industry average ($1200) to the point that a new car is less expensive to own and operate.

The latter is what you refer to as the cost per mile. This is what trucking and taxi cxompanies use to determine replacement.

In previous posts we stated that as long as you can get inexpensive parts, and don’t have to go to the dealer for repairs, a good car can be made to run economically for a very long distance, as much as 400,000 miles. If the car is basically not reliable, and parts have to come from the dealer the economic life will be a great deal shorter.

I agree that this decision can only be a personal decision, based on your needs; wants; and personality.

For me, the first issue is reliability. If I had a Rolls Royce, all expenses paid, totally free, and it started stranding me, it would be gone.

After that, I have my own way of calculating the cost issue. My 2002 Sienna has 145,000 miles. A new one will cost me most of $30,000.

I passed the CPA exam in 1980 when I was 38 years old. I can do all the math some of you do to make such decisions. However, over my 66 years I have learned not everyone enjoys a life controlled by numbers. Note also our current economic problems were caused by men and women who were great with numbers, and they are still stupid.

So, I choose to make simple decisions. If I can keep this car running another ten years, I will avoid that $30,000 purchase. Anything dramatically less is a better deal if it doesn’t strand me a lot.

So, engine blows; I install another. Transmission fails; I rebuild. CV joints, ditto. Exhaust, ditto. Upholstery, probably in Mexico where the car is driven, ditto. Etc. It is not likely all this will cost anywhere near a new one.

Now, if it gets to where I have to use rebuilt parts, other than engine or transmission and they re-fail soon, I may change my mind. I have not had especially good luck with rebuilt parts in my life of driving, and want no part of them.

Note I have, at my age, another parameter, which is how long I will be driving. At age 66, I may be driving another ten years, or maybe more. My wife’s best friend is 93 next week, and she drives herself to the store for groceries.

To summarize, I look at the cost of a new one, not the ratio of repairs to the current market value of the car. And, if it gets wrecked, well, I may not get my full value out of the repairs, such is life.

Irlandes; your decision process makes a lot of sense, especially in your circumstances. When I was driving a lot on my job, comfort and reliability were the 2 most important factors.

In Canada and the US, aftermarket parts are used extensively, and are very reliable; I have not found any difference beween OEM and good aftermarket remanufactured parts.

In your experience, using new OEM parts makes the most sense; I lived in Asia and Africa, and locally made parts had dismal life and reliability. But, as stated before in this thread, a basically good, US manufacured car (Big Three or Foreign) maintained with aftermarket parts can be run reliably for up to 400,000 miles given sufficient care.

GM (Saturn) is selling the Opel Astra here as a stop gap car until a specifically designed North American version is built here in 2010. I steer buyers away from that vehicle, since it will become an orphan with very expensive imported European parts, disinterested mechanics, and at 150,000 miles it will cost more to maintain and repair than buying a new one.

On the other hand you can get affordable parts and service for a 20 year old Honda Civic or Corolla here, enabling these cars to live out their complete design life.

Thanks everyone for all your responses.

We have certainly been well over the “industry average” $1200 per year in repairs for the last few years, but that is probably not unexpected for a 10 year old vehicle. $2700 so far this year (F/B brakes, calipers, CV joint, front sway bar links/bushings), $2200 last year (rear bushings, tires, rear shocks), and $5500 the year before (transmission, F/R brakes, AC). So our total expenses on this vehicle over the past three years have been over $10,000.

Reliability hasn?t been a problem, most of these repairs we?ve been able to schedule at our convenience, and the body still has no rust. But with each additional repair I just keep wondering if we?re coming out ahead and what kind of expenses we can anticipate in the future.

Your comments about what to take into account when calculating the real cost of an old vehicle vs a new one will be very useful in helping me get a better handle on when it is time to let this car go. Thanks.

If you have put that much money into it in the last few years, and it is still in good condition overall with no serious rust, I would keep it for at least two more years. It’s paid for too…as already mentioned I too have found maintaining old stuff is always cheaper than buying new.

One modification I would make to your comments:

If you’re paying cash, don’t forget to count the lost interest on the cash you spend to buy the car.

For example - if you were going to spend $25,000 for a new car (ttl included)… Then a good safe interest bearing account for that cash could get you 3.55% APY. If you’re in a 25% tax bracket (state AND federal together), that will yield you 2.6625% after tax. OR $665.63 for the first year. That’s a significant repair each and every year that could be paid for without touching a cent of the principal you have saved.

Naturally, this can’t go on forever and you’ll have to buy a new vehicle (or used vehicle new to you) at some point. And the price for that vehicle MAY go up (though prices for equivalent vehicles have stayed remarkably steady for the past 10 years).

I’ve found with a 11 year old Toyota and a 12 year old Ford that I’ve saved enough to cover most of the repairs and maintenance off the interest only. The cars only depreciate $60-500 per year anymore (the Ford depreciating less than the Toyota as it is already more heavily depreciated). Including all operating costs they run me ~$180 per month for each one. Taking out interest earnings means I’d have to find cars that cost less than ~$135 per month per car to operate just to break even.

I’d be hard pressed to find a new car where insurance + gas would be less than $135 per month, forget about depreciation…


I’d have to say your repairs are out of the ordinary in terms of cost, at the least. Many of the items you quote are definitely routine maintenance, but some aren’t.

Have you considered learning how to do some basic repairs on your own? Some of those items you quote are fairly easy for the DIYer. For example, I did front and back brakes on my Ford for ~$240 (all new except calipers). Calipers would have added another $70 to the bill. A CV joint would run $55, sway bar links are $20 a piece and the bushings $15 a set. All told, good quality parts would have run $420 for that much work. Throw in another $20 for supplies (cleaners, etc), and you still have $2260 difference.

Just a thought -

But if you live in an area where the road looks more like a lunar landscape than a road, like I do, it is well worth figuring out how to do some repairs yourself. Many parts have lifetime warranties, and you get good at replacing them quickly after the first time. I can now swap out brakes in 15 minutes flat and can whip off struts on my Toyota in about 45 minutes each easy.

Are you taking it to the dealer at those prices? I think you could save by finding a good independent non-chain shop.