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X5 E70 (2007 - 2013)
E70 BMW X5 produced between 2007 and 2013. Discuss the E70 X5 with other BMW owners here.

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Old 03-04-2016, 01:51 PM
FredoinSF FredoinSF is offline
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2012 X5d running costs

There have been quite a few posts about E70 unhappiness lately. Not too surprising given the latest airbag stop sale / trade in fiasco, steep depreciation curve, and some folks who are experiencing some inexcusable reliability issues.

Mine just hit the 50k mile milestone a couple of days ago. It is now out of warranty so I am entering a new phase of E70 ownership. I thought I would reflect on the warranty era, as well as share my running costs since I log everything I spend on all the cars in a spreadsheet (a little OCD...)


I bought it in May 2013. It was BMW owned (supposedly exec car) with 11,151 miles. I traded a 2012 MINI Countryman All4S which I had ordered new but was a disastrous experience due to reliability issues as well as being the wrong fit for my needs. Before the X5, I had a long list of older BMW's (2002tii, E24, 2 E30's, E36, E46, R53, E63, E90), several of which went past 250k miles. The X5 was my first automatic transmission BMW, the heaviest, the least sporty, and I had some anxiety about dropping that much cash on a used car, particularly on the heels of the bad experience with the Countryman. I really wanted a Jeep GC diesel but the launch kept being delayed so when this X5 came up with miles / engine / interior color / equipment that met all my requirements plus more, I bought it.





Fast forward 34 months and 39k miles later and I love the X5. Despite being purchased primarily to drive up to Reno / Tahoe in the snow it quickly became the hauling and towing beast of burden out of our five cars. I tend to form a questionable emotional relationship with cars I appreciate and I am there with the X5, having built many memories since acquiring it. Of note:

- It was the last car my partner's father rode in (while breathing and being seated if you really want to get technical). He was a big 3 union worker (Chrysler) and proponent of "buy American", hence not a fan of my string of BMW's. He actually complimented it the X5 saying was the most comfortable nicest car he'd ever been in. RIP Ted.

- It helped empty my partner's parents' house who were borderline hoarders. As part of that process it towed many trailerfuls of accumulated stuff to the dump (it was the only X5 I ever saw there), as well as loads of furniture / clothing / household items / medical equipment to various charities for donation.


- It has hauled a complete bedroom set from our house in Oakland to the new wine country weekend place with room leftover for two humans and two dogs, plus a bike on the hitch mounted rack.

- It carried trees and shrubs with tailgate open when the gardener flaked out just before one of our rentals was ready to show.



- It has taken me and several friends to running events and triathlons, not to mention the training rides and open water swims along with the gear that goes with it.



Those are the best memories and yes, I am that guy - the one who plasters those stickers on the back of the car.


So how has it been? Absolutely fantastic. Zero complaints. It has been to the dealer for a couple of warranty repairs recently because I had my independent shop do an "end of warranty" inspection which yielded a leaky power steering pump and a leak for a line around the turbo. An East Bay BMW dealer (but not East Bay BMW) fixed without question and also replaced the front brakes and rotors as part of the 4/50 maintenance plan. I had a loaner car while the work was being performed.

Now for running costs. I track all maintenance, repairs, wear parts, consumables, fuel, insurance, registration, body work. I subtract money that I receive for miles expensed for business (driving to and from the airport primarily). I am not including car washes / detail since I always do it myself, nor purchase cost.

Total cost per mile over 38,849 miles is $0.270. How that breaks down:
- Fuel $0.139 per mile
- Insurance + registration + yearly NV smog $0.103 per mile
- Winter wheels and tires (used) $.025 per mile
- Maintenance (extra motor, diff, TC oil changes) $0.017 per mile
- Repairs $0 (warranty only)
- Rear bumper repair and PDR door dings $0.016 per mile
- Credit for business expensed miles -$0.032

Your mileage may vary, but that makes the X5 cheaper to run compared to the daily drivers that preceded it (2012 CM $0.375, 06 330i $0.295, 02 Jeep GC $0.506 - the Jeep had several out of warranty repairs and guzzled fuel...)

The reasons for this thread are twofold:
1. For anyone considering an X5, despite many Bimmerfest members experiencing problems not every one of them is a bad car. I am entirely satisfied with mine to date.
2. I look forward to keeping the X5 for several more years. I will revisit the cost per mile aspect as the miles pile on and see if my gamble of not purchasing a warranty pays off.

Cheers!
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Last edited by FredoinSF; 03-04-2016 at 04:36 PM.
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  #2  
Old 03-04-2016, 02:13 PM
edycol edycol is offline
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Nice round up! I am glad it served you well.
I am of opinion that BMW's do best when you ask from them a lot!
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Old 03-04-2016, 04:34 PM
FredoinSF FredoinSF is offline
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Thanks for the feedback. Kind of a corny post, but I think it's good to share the good experiences to balance some of the bad.
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Old 03-04-2016, 04:52 PM
DefSport DefSport is offline
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Good info. That cost per mile data doesn't look like it includes depreciation though, right? That'd be the biggest cost by far on a fairly new X5. E70s have depreciated about 15-19% YoY pretty steadily throughout their lifespan with "normal" miles put on them. So early on you're shedding $6-8k per year on just depreciation.
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Old 03-04-2016, 05:39 PM
FredoinSF FredoinSF is offline
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Thanks. I wanted to focus strictly on running costs, the reason being they are tangible, documented, non arguable costs plus I think it will be interesting to see how they evolve in regards to repair and maintenance as the car ages.

I purposely kept depreciation out of the equation because it's not a factor for me until I decide to sell a car. I do calculate it for the cars that are no longer around. FWIW the Countryman came it at a high $0.87 total CPM inc depreciation after 18 months and 22,680 miles. Bought new, took a bath on the trade, ouch... The least costly car to run we've had of late by far was the 06 MINI Cooper S at $0.43 per mile inc depreciation. That was a car we bought new, kept 9.5 years and put 109k miles on. I don't think we'll ever come that low again. Was hard to let it go but ran out of garage space.
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2007 650i - 6 speed
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2012 X5 Diesel
2012 Countryman S All4 - 6 speed
2006 Cooper S - 6 speed
2006 330i - 6 speed
1997 328is - 5 speed
1991 318is - 5 speed
1988 635csi - 5 speed
1988 325i convertible - 5 speed
1969 2002 with tii and 5 speed conversions
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Old 03-05-2016, 05:18 AM
pshovest pshovest is offline
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Oh, the inhumanity!!

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Last edited by pshovest; 03-05-2016 at 05:19 AM.
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Old 03-05-2016, 05:37 AM
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Doug Huffman Doug Huffman is offline
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Oh, the inhumanity!!
Oh, the dope, detritus from a $Million$ worth.
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Old 03-05-2016, 05:42 AM
Autoputzer Autoputzer is offline
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Quote:
Originally Posted by DefSport View Post
Good info. That cost per mile data doesn't look like it includes depreciation though, right? That'd be the biggest cost by far on a fairly new X5. E70s have depreciated about 15-19% YoY pretty steadily throughout their lifespan with "normal" miles put on them. So early on you're shedding $6-8k per year on just depreciation.
Yeah, depreciation is the "silent killer." People tend to ignore it because it's an abstract concept to most people unless they're accountants or bookkeepers. People plan for car payments in their budgets. But, car repairs are always "unexpected," and get under their skin more. I make a point of quantifying my cars' depreciation when I do a budget for the year. Doing so motivates me to keep cars to 100k miles, and to take care of my cars.


It's been my experience that the first year's depreciation is about 25%. The years the car goes out of warranty, the model year they turn seven years old, and the year they go over 100k miles are about 20%. The remaining years are around 15%. But, that steady 15% is a exponential decay.

My 12 year old BMW had $7k in repairs and maintenance the last year I owned it. There was also about $3.5k in depreciation, since the car was well past its prime at 115k miles. But, those costs were about half of the first year's deprecation on my new BMW, $19k.

Last edited by Autoputzer; 03-05-2016 at 05:53 AM.
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Old 03-05-2016, 08:54 AM
DefSport DefSport is offline
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Quote:
Originally Posted by FredoinSF View Post
Thanks. I wanted to focus strictly on running costs, the reason being they are tangible, documented, non arguable costs plus I think it will be interesting to see how they evolve in regards to repair and maintenance as the car ages.

I purposely kept depreciation out of the equation because it's not a factor for me until I decide to sell a car. I do calculate it for the cars that are no longer around. FWIW the Countryman came it at a high $0.87 total CPM inc depreciation after 18 months and 22,680 miles. Bought new, took a bath on the trade, ouch... The least costly car to run we've had of late by far was the 06 MINI Cooper S at $0.43 per mile inc depreciation. That was a car we bought new, kept 9.5 years and put 109k miles on. I don't think we'll ever come that low again. Was hard to let it go but ran out of garage space.
True, depreciation isn't realized until the vehicle is sold, but the value pretty much falls over time so it's easy to estimate.

It is just an estimate though, so I can understand how you want to have hard costs only in such a detailed log.

Thanks for sharing it.

What would be interesting is an analysis of approximate depreciation up to this point vs. your actual repair costs going forward.

Quote:
Originally Posted by Autoputzer View Post
Yeah, depreciation is the "silent killer." People tend to ignore it because it's an abstract concept to most people unless they're accountants or bookkeepers. People plan for car payments in their budgets. But, car repairs are always "unexpected," and get under their skin more. I make a point of quantifying my cars' depreciation when I do a budget for the year. Doing so motivates me to keep cars to 100k miles, and to take care of my cars.


It's been my experience that the first year's depreciation is about 25%. The years the car goes out of warranty, the model year they turn seven years old, and the year they go over 100k miles are about 20%. The remaining years are around 15%. But, that steady 15% is a exponential decay.

My 12 year old BMW had $7k in repairs and maintenance the last year I owned it. There was also about $3.5k in depreciation, since the car was well past its prime at 115k miles. But, those costs were about half of the first year's deprecation on my new BMW, $19k.
Cargurus has some really detailed information from scraping FS ads. I would bias these prices down about $1-2k to adjust for actual selling price, as I believe they use list price, but I'd say it's pretty accurate given the large data pool.

http://www.cargurus.com/Cars/price-trends/BMW-X5-d393

Not sure how to show specific years, but if you do '07-'13 X5s over a reasonable time span like '10 to present, it's pretty enlightening. The most striking thing is that the depreciation is pretty much a set percentage over time, with things only leveling out in dollar terms once they get in the teens due to geometric decay. But there's limited data on the E70 at those price levels.

But even looking at later model E53s, the trend continues, with a timespan of 5.5 years yielding about 55% depreciation (the early E70s during this same timespan had a depreciation of 60%! But there's still a large gap between '06 and '07 X5 values due to the newer body style and possibly feature set).


What does that mean in dollar terms?

In just 10 months, '08 and '09 E70s went from $40k to $30k. Ouch. It took 14 months for an '09 (less volatile in that timespan than '08s) to go from $30k to $20k.

But it took 4.5 years for an '05 E53 to go from $20k to $10k (Aug '11 to Feb '16)!

That said, I don't expect an E70 to experience that long of a run between $20k and $10k. The E53 was subject to large macro marketplace forces that kept used car values increasing during that timespan. But I think ~3-4 years is a reasonable run for most E70s from $20k to $10k.

After that point, depreciation costs are largely negligible compared to the running costs of an old BMW. So it's not really worth much effort to track it other than to say you're on the order of ~$1k/year give or take.

Another interesting point, it seems the lowest ~6 month period of depreciation is at the roughly 3-3.5 year old mark. There's a "hump" in each curve which must reflect cars coming off a 3 yr lease and getting CPO'd at dealers. You'd think that large supply increase would cause values to drop, but instead, it makes prices rise! The advertisement of the value of CPO warranties is definitely working in the manufacturer's/dealer's favor these days!



Sorry to OP if I derailed the thread a bit (a lot? ) to talk about depreciation, but I feel it's the final piece of the puzzle. It's also a bit interesting, and I did quite a bit of research on it when I was picking my E70 out. There are ways to estimate the cost before you've incurred the expense via selling the vehicle, and the Carguru tool is too cool to not chat up when depreciation is brought up.
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Old 03-05-2016, 10:55 AM
Autoputzer Autoputzer is offline
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Originally Posted by DefSport View Post

True, depreciation isn't realized until the vehicle is sold, but the value pretty much falls over time so it's easy to estimate.
That's only if you're treating a car as a consumable item, not a durable asset. Even then, what your seeing as a cost is the cost of a new car less the proceeds of selling the old one.

I pondered this issue a lot when I started rigorously tracking and planning my personal finances decades ago. I decided the best method was to consider a vehicle as a durable asset, but one that depreciates. This method more accurately tells me how much the annual cost was to own a specific car of a specific age (and mileage). It also more accurately quantifies how much it really costs me to live in a particular year. I call the sum of our household spending and car depreciation "consumption." When we were working, my goal was to have "consumption" equal no more that 80% of our after-tax earned income. I didn't count unearned income, since a lot of that is just keeping up with inflation, if that. This rigorous accounting causes me to ask questions like "Vacations, and a lot of restaurant meals, new furniture, or a new car this year?"

Quote:
Originally Posted by DefSport View Post

Another interesting point, it seems the lowest ~6 month period of depreciation is at the roughly 3-3.5 year old mark. There's a "hump" in each curve which must reflect cars coming off a 3 yr lease and getting CPO'd at dealers. You'd think that large supply increase would cause values to drop, but instead, it makes prices rise! The advertisement of the value of CPO warranties is definitely working in the manufacturer's/dealer's favor these days!


Sorry to OP if I derailed the thread a bit (a lot? ) to talk about depreciation, but I feel it's the final piece of the puzzle.
Depreciation is by far the largest piece of the puzzle if you're buying a new or near new car.

That 3 - 3.5 year lull in depreciation is because the car's still under warranty. There's an abrupt drop in value when the car goes out of warranty. Cars with three-year warranties would see that lull at the 2 - 2.5 year period.

Car values experience more abrupt drops in value when the cars get seven model years old (the pricing data assumes all cars were purchased at the start of their model years), and when the car goes over 100k miles. These abrupt drops are because most banks and credit unions will not finance used cars of this age or mileage. So, the market for these cars are private cash buyers and trade-in's, with the trade-in's mostly going to auctions and then on to independent used car lots.

Trucks, SUV's, and low-end "appliance" cars tend to hold their value better than high-end passenger cars. That's because the utilitarian value of the car is proportionally more, and that value is more durable than the "new and shiny" value which is proportionally less. Although, BMW M's tend to hold their value better than non-M BMW passenger cars (as a percentage of MSRP).

As part of managing my personal finances, I look up the value of my vehicles on KBB.com at the anniversaries of their purchases and at the end of the calendar years. I also keep good records of maintenance and the cost of maintenance.

I've posted this several times before on various boards, but here's my maintenance, depreciation, and mileage data for a 2002 M3. There are some flukes in the data. I was at the front of a two-year waiting list, so the first year's deprecation was mostly the 6% Florida sales tax. By the end of Year #2, M3 supply had caught up with demand. So, the Year #2 deprecation was unusually large.

Another fluke is how well the car held its value in Year #10 (2012). This was caused by the economic recovery and a shortage of used cars. My 2007 Cobalt (the anti-BMW) actually appreciated a few hundred dollars that year.

A good metric is "average annual maintenance and depreciation since new." It makes sense to keep a car as long at that metric is going down, i.e. the current year's maintenance and depreciation are less than the running average. Capitalization costs should be added to the equation, too. This is the cost of interest on a car loan, and the lost earned interest that you would have earned in the equity in your car was money in the bank instead. But, with the low interest rates for the last ten years, this cost is small. To be totally accurate, you should also adjust each years cost for inflation, making a dollar in those later years less valuable.

Anyway, here's my data. It shows that I should have sold the car after Year #11. The end of Years #1, #4, #6, and #10 would have also be reasonably good times to sell the car. But, I liked the car and I was over 50 and still working. So, my wife and I were slamming our 401(k)'s and IRA's as hard as we could (about $60k/year) before we retired in our mid-50's.

Based on this car's and other car's data, we keep cars to over 100k miles. Tracking the depreciation cost makes those $2k/year repair bills easier to swallow.
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Old 03-05-2016, 12:29 PM
DefSport DefSport is offline
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I don't think the bump in value is because the car is nearing the twilight period of its factory warranty, but reflects the cost of dealership backed warranties being put on lease return cars. That cost is baked into the vehicle's purchase price (out of sight, out of mind to some degree). Because otherwise why would a vehicle sudden gain value over months as it's rapidly chewing through the remaining bit of factory warranty it has?

I like your spreadsheet, and do agree that BMW M cars depreciate much slower. I've purchased two used M3s, and the depreciation was really low (<10% on average per year).
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Old 03-05-2016, 03:22 PM
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Nice write up. We had similar experiences both owning 2011 Mini Countrymans and I took a bath on that deal too but ended up with a fairly reliable x5. You hit 50k on yours around the time I hit 100k on mine. The only issues I've had were with the complex diesel emissions. But now I've taken care of that, and plan on another 100k. I like the Bianchi, btw. I'm not a big fan of carbon bikes.
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Old 03-06-2016, 12:05 PM
FredoinSF FredoinSF is offline
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The talk about depreciation is no skin off my back but I don't want to get into it here. Significant other is actually a fixed assets guru, been doing nothing but fixed assets consulting and financial software development focusing on fixed assets / depreciation / tax implication for the 22 years we've been together. He rolls his eyes about how I account for depreciation and it could be why I'm not getting into the depreciation discussion here, but you can all feel free to discuss.

Sir bikes, about the Bianchi, great bike for me. Steele frame but very comfy on long rides. Looks like an antique compared to the tri bikes, but I'm not winning any races so I couldn't care less and will keep riding it.
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2006 330i - 6 speed
1997 328is - 5 speed
1991 318is - 5 speed
1988 635csi - 5 speed
1988 325i convertible - 5 speed
1969 2002 with tii and 5 speed conversions
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Old 03-06-2016, 02:13 PM
davidmaria1 davidmaria1 is offline
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2001 330 has left the building

X5 fun includes: Battery. Trans fluid change. Nav update. Idler pulley replacement. Steering fluid flush. Tension struts. Pressure lip seal. TCS fluid flush.
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Old 03-09-2016, 01:39 PM
chris1184 chris1184 is offline
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one thing to take into account while reading issues on message boards is that most times if people do NOT have issues they will not write about it on a forum...like u sir! glad your car has been good to you
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Old 03-09-2016, 01:58 PM
Quatro40 Quatro40 is offline
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I owned mine for the last 6000 miles and my cost has been $1.18 per mile not counting depreciation or the new engine that BMW put in as good will.

New water pump and thermostat, new battery, new airfilter, new engine labor.
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Old 03-09-2016, 02:22 PM
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Nulevel Nulevel is offline
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To me the depreciation argument is below the belt. Just about any vehicle is gonna depreciate. It's inevitable.

At the end of the day, I'll take more depreciation for a Beemer versus a Ford or a Kia or even a Lexus.

Great post by OP and I've also enjoyed the responses and photos to this thread. The X5D is by far the best vehicle I've ever owned. The only vehicle I'd rather have is a X6 or a new X5--preferably a M.
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Old 03-14-2016, 12:20 AM
mefferso mefferso is offline
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Originally Posted by FredoinSF View Post
Kind of a corny post, but I think it's good to share the good experiences to balance some of the bad.
I don't think so at all. A great post that shows your true enthusiast's passion coming out. Thanks for the post and data.
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Old 03-14-2016, 11:28 AM
Flying Ace Flying Ace is offline
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Quote:
Originally Posted by FredoinSF View Post
Thanks. I wanted to focus strictly on running costs, the reason being they are tangible, documented, non arguable costs plus I think it will be interesting to see how they evolve in regards to repair and maintenance as the car ages.

I purposely kept depreciation out of the equation because it's not a factor for me until I decide to sell a car. I do calculate it for the cars that are no longer around. FWIW the Countryman came it at a high $0.87 total CPM inc depreciation after 18 months and 22,680 miles. Bought new, took a bath on the trade, ouch... The least costly car to run we've had of late by far was the 06 MINI Cooper S at $0.43 per mile inc depreciation. That was a car we bought new, kept 9.5 years and put 109k miles on. I don't think we'll ever come that low again. Was hard to let it go but ran out of garage space.


IMO, you should accrual for depreciation annually b/c that's what your true costs are at any given year/month for the car. At least the accountant side of me always accural for depreciation annually, so you know exactly the financial impact in case you need to liquidate. You don't have to debate on the actual accounting method for depreciation b/c your'e not filling out a corporate 10-k with liabity here, just use current listing values from autotrader as a gauge, or KBB, or as I prefer, Manheim auction prices as places like CarMax is your ultimate source of "liquidity as a last resort".

Depreciation is the biggest cost of new/newer car ownership. But for financial planning purposes, I always advise my friends/family to compute depreciation annually to acquire true cost of owning a car. I think a lot of financially unsavy people are blind to depreciation costs, which is significant for new purchases and leases.

When I look at cost of ownership, I always account for depreciation. My preowned 2012 certainly cost me a lot less than someone who bought a similar 2012 new and had substantially similar costs of maintenance. Our two costs are simply not the same each year. My extended maintenance plan is expiring and this year my out of pocket expenses would be just an oil change and fuel costs ($100 and $50 per fillup), making my annual operating costs to be about $3100. But my depreciation this CY would be on the order of about $3500, no chump change, and that's a real cost any way you cut it.
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2014 F06 M6 (oil rig fire)
2012 E70 X5 diesel (oil burner)
2008 E90 M3 (oil distillates guzzler- Retired)
2013 bicycle (oily chain)

Last edited by Flying Ace; 03-14-2016 at 11:42 AM.
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Old 03-14-2016, 12:36 PM
Autoputzer Autoputzer is offline
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I used to drive a lot for work. They'd usually pay me the standard IRS mileage allowance. To calculate the actual deprecation on the car due to a particular business trip, I'd look up the value of the car on KBB.com with and without the additional mileage of the trip. Back when my M3 was newer, and the accumulated mileage was less than 12k/year, the additional depreciation from the business trips was minimal. I ended up putting 7k miles on M3 for work over the time I had the car, mostly when the car was newer. But, even accounting for deprecation and maintenance, I was money ahead.

I racked up 20k business trip miles on my Cobalt. In addition to pocketing a few grand, that 20k miles meant that I get a new car about two years earlier than I would otherwise. I'd also get to stop along the way and see friends and family.

I had a pscyho boss for a while. He was pissed when I bought the M3. He asked me how much the payments were. I told him nothing, I wrote a check for it. Then he was really pissed, saying I was paid to much. I told him that one of the reasons that I can afford an M3 is that I pretty much paid for my two Nissan Sentara's by driving them on business trips. He was so pissed that I could see the muscles in this forehead twitch. I moved on to another boss. But, after that he stopped letting his people drive their cars on business trips. They had to fly or take a rental car. The way the government pays for POV (personally owned vehicle) travel is that you get the IRS mileage rate, or what it would have cost the government if you'd flown, which ever is less. So, POV-ing doesn't cost the government anything, and usually saves the government money. For a lot of places I went, driving was also faster, counting connections, layovers, and having to backtrack from the destination airport to the destination. But, my boss was such a **** that he couldn't stand seeing anybody putting an extra few hundred bucks in their pocket.

My best experience with my M3 on a business trip was an impromptu drag race between me and about ten VW's from some VW club convoy coming out of a huge toll plaza on the New Jersey Turnpike. An E46 M3 sounds so awesome at high RPM's and full throttle that all those VW guys were cheering as I blasted past them.

Last edited by Autoputzer; 03-14-2016 at 02:34 PM.
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  #21  
Old 03-14-2016, 12:47 PM
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Nulevel Nulevel is offline
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In my mind depreciation has nothing whatsoever to do with practicality.

Most of accept the fact that cars depreciate. They're way overpriced to begin with, but consumers love cars, and they're willing to pay for them.
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Old 03-14-2016, 01:12 PM
Flying Ace Flying Ace is offline
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Originally Posted by Nulevel View Post
In my mind depreciation has nothing whatsoever to do with practicality.

Most of accept the fact that cars depreciate. They're way overpriced to begin with, but consumers love cars, and they're willing to pay for them.
practicality? not sure what your point is.

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Originally Posted by Nulevel View Post
To me the depreciation argument is below the belt. Just about any vehicle is gonna depreciate. It's inevitable.

At the end of the day, I'll take more depreciation for a Beemer versus a Ford or a Kia or even a Lexus.

Great post by OP and I've also enjoyed the responses and photos to this thread. The X5D is by far the best vehicle I've ever owned. The only vehicle I'd rather have is a X6 or a new X5--preferably a M.

But depreciation IS a real cost, which is the purposes of our discussion here. You don't write a check for depreciation monthly (unless you lease), but you realize the cash impact immediately after you sell your car. This year my out of pocket expenses would be just an oil change and fuel costs ($100 and $50 per fillup), making my annual operating costs about $3100. But my depreciation this CY would be on the order of about $3500, realized if I elect to sell, no chump change, and that's a real cost any way you cut it.


This thread is now debating when to recognize and the method to record depreciation cost, annually or monthly (accrual), or as a "writedown" at the end of ownership and whether you use secondary market pricing or an assumed schedule a-la some fixed asset we learned in accounting classes.

One way or another, you can't avoid this cost and shouldnt' turn a blind eye to it (if you actually care about usage of your own money).

You're right, every car depreciates, but we're talking about the RATE of depreciation. The RATE for a new car is wallet bustingly high. My 2008 M3 stickered at $67k. The previous owner bought it for $67k and drove it 8000 miles. I bought it for $46k in 2010. In 3 years, he ate $21k or about $7k/year. Today, my M3 is worth about $30k after 43k miles. So in the 6 years I owned it, my depreciation is $16,000 or $3200/year over 5 years. See how I only ate $3k per year and prior owner ate $7k per year? My rate is more than half of his.
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2014 F06 M6 (oil rig fire)
2012 E70 X5 diesel (oil burner)
2008 E90 M3 (oil distillates guzzler- Retired)
2013 bicycle (oily chain)

Last edited by Flying Ace; 03-14-2016 at 03:54 PM.
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  #23  
Old 03-14-2016, 02:57 PM
Autoputzer Autoputzer is offline
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Originally Posted by Flying Ace View Post
...we learned in accounting classes.
+1

My late mother used to say that bookkeeping classes should be mandatory to get a high school diploma. She had an associate's degree in accounting, and passed the NC CPA exam (in 1946). She never got her license though, following my dad around the U.S. and Canada in his military career. She made me take two years of bookkeeping in high school. I'm real glad she did.

Toward the end of her life, she changed her mind about bookkeeping being mandatory in high school. She said that if everybody understood how to manage their money, our economy would collapse.



Quote:
Originally Posted by Flying Ace View Post

One way or another, you can't avoid this cost ...
+1, again.

All of the Bimmerfest "Lease vs. Buy" threads always have somebody saying that they lease because they want to avoid paying deprecation. I bet they got that idea from their car salesman.

I have a friend, 60 years old, $95k/year salary. He's been leasing high-end cars (BMW's, Porsches, Corvettes, etc.) for the last 30 years. He usually gets a three year lease and "pulls ahead." He couldn't understand why I kept my M3 twelve years, and why I have a nine year old Cobalt as my daily driver. He currently has a M235i... scratched all to Hell by the automatic car wash he runs it though, but that's another thread. It's finally dawned on him why he has no money, and he's going to buy the M325i when the lease is up.

He's lucky though. His federal government pension (from the old pension system) will be about 80% of his salary. So, not accumulating wealth will not hurt him. He has to pay a percentage of his pension to one of his ex-wives for a few years. But, after that's over and his house is paid off, he'll have more discretionary income in retirement than he does now when working. Because of his being on the old pension system (squeaked in the last few months it was available), his lack of skill, and his work habits, his nickname in the office is "The Luckiest Man on Earth."

Last edited by Autoputzer; 03-14-2016 at 03:01 PM.
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  #24  
Old 03-14-2016, 03:21 PM
Flying Ace Flying Ace is offline
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Quote:
Originally Posted by Autoputzer View Post
+1

My late mother used to say that bookkeeping classes should be mandatory to get a high school diploma. She had an associate's degree in accounting, and passed the NC CPA exam (in 1946). She never got her license though, following my dad around the U.S. and Canada in his military career. She made me take two years of bookkeeping in high school. I'm real glad she did.

Toward the end of her life, she changed her mind about bookkeeping being mandatory in high school. She said that if everybody understood how to manage their money, our economy would collapse.





+1, again.

All of the Bimmerfest "Lease vs. Buy" threads always have somebody saying that they lease because they want to avoid paying deprecation. I bet they got that idea from their car salesman.

I have a friend, 60 years old, $95k/year salary. He's been leasing high-end cars (BMW's, Porsches, Corvettes, etc.) for the last 30 years. He usually gets a three year lease and "pulls ahead." He couldn't understand why I kept my M3 twelve years, and why I have a nine year old Cobalt as my daily driver. He currently has a M235i... scratched all to Hell by the automatic car wash he runs it though, but that's another thread. It's finally dawned on him why he has no money, and he's going to buy the M325i when the lease is up.

He's lucky though. His federal government pension (from the old pension system) will be about 80% of his salary. So, not accumulating wealth will not hurt him. He has to pay a percentage of his pension to one of his ex-wives for a few years. But, after that's over and his house is paid off, he'll have more discretionary income in retirement than he does now when working. Because of his being on the old pension system (squeaked in the last few months it was available), his lack of skill, and his work habits, his nickname in the office is "The Luckiest Man on Earth."
oh yes, the old CSRS I worked for a good 9 years for the federal government. Topped out around $100k, wish I had the old CSRS safety net! When I was still in diapers, in 1987, they switched to mandatory 401k type retirement, which is what I have/had.

Anyways, once I read $95k and "leases luxury cars last 30 years", my head blew up. I can tell you he seriously cannot afford this lifestyle.

Easiest way to show him depreciation is the fine print on all leases. Here's one from the cheapo Posche Boxster:

2016 Boxster

Estimated payments based upon MSRP of $62,595 (includes destination charge) for a Model Year 2016 Boxster with the following options: Premium Package (Power 14-way Sport Seats), Metallic Paint and Infotainment Package with BOSEŽ Surround Sound System. Model pictured may have optional features and equipment. Price excludes title, taxes, registration, license fees, insurance, and maintenance. Lease payments of $599.41 for 36 months total $21,578.76 based on capitalized cost of $55,285 (requires dealer contribution which could affect price). Total due from customer at signing $5,299.41 (first month's payment, acquisition fee of $995, and capitalized cost reduction of $3,705). No security deposit required. At lease end, lessee pays excess wear, $.30/mile over 30,000 miles and $350 termination fee. Purchase option at lease end $39,434.85 plus taxes. Specific vehicles and options are subject to availability and your price may vary. For additional information see your participating authorized Porsche dealer or visit Porsche.com/usa.



See those 36 checks you wrote for $599.41 x 36 + $4700 (less the 1st months payment) = $26,278, and after 36 months, and you don't own the car afterwards? That's depreciation there buddy...Oh, that and you have mileage/dent restrictions you have to keep in line for the next guy. (akin to saving your super model g/f for the next dude)

BTW, I was looking into buying a newer Cayenne E-Hybrid. On leases of PEV and EV cars, the dealer gets 100% of the federal tax rebate, b/c you don't own the car. The lease buyout for a 2016 E-Hybrid is $60k. The monthly payments were $750 x 36 with $6050 due at signing. ($33050 in checks written in 3 years). I will never buy new anyways, but even in 3 years, I can't get myself to still pay around $60k for a 3-year old techonology hybrid that gets 20/26 mpgs. In this case, I image the CPO Cayenne E-Hybrid will continue to depreciate another $10k in year 4 and maybe ease up to $6k on year 5 due to the outdated technology.
__________________
2014 F06 M6 (oil rig fire)
2012 E70 X5 diesel (oil burner)
2008 E90 M3 (oil distillates guzzler- Retired)
2013 bicycle (oily chain)

Last edited by Flying Ace; 03-14-2016 at 05:00 PM.
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  #25  
Old 03-14-2016, 05:52 PM
Autoputzer Autoputzer is offline
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Originally Posted by Flying Ace View Post

Anyways, once I read $95k and "leases luxury cars last 30 years", my head blew up. I can tell you he seriously cannot afford this lifestyle.

Easiest way to show him depreciation is the fine print on all leases.
With a $75k+ rock solid pension from the federal government, he'll be fine. His house will be paid off before he retires. Being on CSRS, with only about four years of SS time (his active duty time), he's not going to get Social Security. It's not just the cars. He always has a high-end motorcycle, but he has to buy those. He's been riding BMW's for as long as I've known him, but he traded his last one in for a Harley-Davidson, sort of the opposite end of the motorcycle universe. Last year, he was riding and got whacked by a spring breaker. He wasn't hurt too bad, though. But, his new Harley got banged up pretty good.

He doesn't have the attention span to read the fine print. "Sign and drive" is his motto.

I dig your rap on buying slightly used. But, for me keeping the paint on a car looking good has gone from a task to a hobby and then to an obsession. There's no way an off-lease, repo', or rental car is going to have really good paint. A detailer can make it look good, but only for a while. Most of the UV blockers in modern clear coats are near the surface. So, the more of the clear coat polished off to remove scratches, the less UV blocker is left. Ten years in Floriduh sunlight will take its toll.

From my accounting skills, I know that new car depreciation the first year is about 25%. It's especially hard here in Florida because of all the rental cars hitting the used car market, and because there's a 6% state sales tax on cars. If you trade a car in you get a credit, only paying 6% on the difference between the new car and what you got in trade. If you do a private sale, you eat the 6%. But, you take a bath trading a car in, especially a newer one. I make up for that 25% new car hit by keeping my cars to an average of 105k miles, and up to twelve years.

For the last 15 years, my beaters have been new GM's, since I get a special deal on them. With my deal, it's cheaper to buy new than one-year old. I only kept my pick-up truck six years and 74k miles. But, I sold it for half of what I paid for it, and a lot of that depreciation was covered by my driving the truck on business trips. Although, I'm thinking about making my 535i my beater when it's six years old (in four years) and then grabbing a good deal on the end-of-platform 2020 M2. Buh-bye Cobalt!

A friend of mine's father and uncle are both retired Teamsters. There's a new law that industry-wide pension funds can re-nig on their benefit agreements if they're going broke. His father's pension got cut 35%. His uncle's pension got cut 65%.

Last edited by Autoputzer; 03-14-2016 at 06:18 PM.
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