Evitzee

There have been a few posts recently about owners getting whacked when trading in their 2006 IS's, or when checking values on kbb.com, or other pricing sites. The perception is Lexus vehicles depreciate more than most and therefore may be a poor choice, relatively speaking. This didn't gel with my impression of Lexus vehicles.

I spent some time tonight playing around over at Intellichoice.com and looked at the 2006 IS 350 and the 2006 BMW 330i sedan (2007 values aren't out yet). Intellichoice looks at total cost of ownership over a five year period, and this cost is far different than just the depreciation often quoted. It includes things like maintenance, finance, insurance, etc. The data is shown below, and although you can argue about one number or another, the data would show the Lexus to be just a tiny bit more expensive to own than the BMW. The Lexus does depreciate more than the BMW, but makes up for it in other areas.

One of the interesting numbers is Repairs, the BMW is slightly more expensive than the Lexus. From what I know the repair on a BMW once it goes out of warranty will be far greater than the Lexus, which would indicate the Lexus will be the cheaper vehicle to own if you keep your vehicles more than five years (as I do).

Food for thought.

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Info from Intellichoice.com:

INTELLICHOICE INFO FOR 2006 AUTOS: Ownership costs are the costs to purchase and operate a vehicle over a period of time. Understanding these costs can save you money and help you make a wiser financial decision when it comes time to select a vehicle.
Regardless of the "value" claims that you may read in car reviews or hear in ads, a vehicle's economic value is based on how much it will cost to own and operate compared to its purchase price. In a sense, purchase price is "what you pay" and the ownership costs are "what you get." The less you pay for what you get the better off you are.
Ownership costs can differ greatly. The cost to own and operate two different vehicles with equal purchase prices can differ by thousands. Of course when evaluating ownership cost for used cars and trucks, a vehicle's condition and mileage will greatly impact ownership costs, therefore it's important to compare similar vehicles in similar condition for an accurate picture.
IntelliChoice releases its final analysis for the current model year, annually each January. For additional comparative information you may wish to review the other Near Luxury category vehicles for this year.


2006 LEXUS IS 350
COST OF 5 YEAR OWNERSHIP
Depreciation
$18,405
Financing
$5,334
Insurance
$8,649
State Fees
$624
Fuel
$7,959
Maintenance
$2,259
Repairs
$347
Total 5-Year Ownership Costs
$43,579


BMW 330I SEDAN
COST OF 5 YEAR OWNERSHIP
Depreciation
$16,848
Financing
$5,412
Insurance
$9,229
State Fees
$636
Fuel
$7,865
Maintenance
$1,862
Repairs
$1,048
Total 5-Year Ownership Costs
$42,902

Zephyr

iTrader: (1)

I think these figures are one of those things you never want to look at. Just like modding your car, you never count the reciepts...

I think it's more important enjoying the car, rather then thinking "How much will I get when I resale it."

Ignorance is bliss hehehe

kensteele

total cost for 5-years $43,5 lol. i think i paid more than $44k for my car on the first day and that wasn't even out the door (ttl).

seriously i'm just hoping my is350 will [greatly] help with my is500 purchase sometime next year.

Bichon

Yes, but your $44k car could have been resold to a second owner for around $42k after you drove it off the lot, so your TCO at that point was only about $2k.

cspec

Couldn't agree more.

ES3

I don't start worrying about depreciating until I'm ready to sell. The way this thing handles, I may never do so!

That said, if ONLY I could have waited a year to buy mine. A dealer offered my sister his '06 equipped like mine at dealer invoice!

LexFather

Actually IS resale has been very high. EVERY CAR gets low-balled at the dealership.

And this thread title is mis-leading. That is not a problem. You want decreciation problems, look at the re-sale of a VW Phaeton, a BMW 745 or INfiniti M45 (first gen)/Q45. That is a problem.

Dabigman

Here is your answer:

IS350 is better.

Buds

Agreed. Out of curiosity, a few weeks ago I did a search on Cars.com for any used IS350's in the DFW area. While there were only three that came up, none of them were less than $35,000. There was one listed for $35,900 that already had 25k miles on it! On a side note, not sure why anyone would buy a used IS350 with 25k miles on it for $35,900 (no nav, no premium package) when they could get a brand new one base like this one for $35,705.

GreyHound

iTrader: (1)

I'll revisit this topic in 9 years. You almost never make money trading cars. (maybe you can trading exotics)I don't know. Cars usually go down in value, dealers always try to lowball you value. nothing new. You should enter into purchasing a new car with your eyes wide open. If there was electronic issues with my IS, I would trade when I decided it cannot be fixed or trusted. I would know at that point I would take a hit on value, but my goal at that time would be to get out of 'unreliable', whatever the cost.

CRB

I don't think "Ignorance is bliss", but most people know that financially buying a well-maintained two to three year old car, with a good record for reliability and then proceding to drive it for twelve years thereafter is the the best way to keep your money in your pocket.

The depreciation is only the beginning, registration and insurance on new cars is very high vis-a-vis a three year old car and that is money straight out the window. New car buyers ignore this, not out of ignorance, but because they want a new car.

Now, after the purchase, to go back and micro-analyze the financial losses that you are taking on a deal that you knew going in was a money sink hole is not about ignorance but more likely a latent streak of masochism or, perhaps, a small fit of self pity taking hold.

When buying a new car, buy what you love. Don't "dollar and sense" the deal because the dollars spent clearly make no sense. And a lot of people still love and keep unreliable cars because they knew going in that they wouldn't be reliable and accept it.

javyLSU

iTrader: (21)

Very well said, CRB... Coming from one of the "ignorant" ones that likes to buy new cars

fly2low

It is only the sum of several means. They are very near to each other. To really understand the distribution, we need to know the standard deviation. This is to the very minimum. In addition, we don't know how large is the sample size and whether they represent the same population. There is no evidence about the significance level, either. So, to say that one is better than the other with about 2% difference in mean, without knowing anything else, is very dubious.


There are also more variables that we need to account for. Lexus doesn't cover maintenance, but they don't force us to pay for higher premium upfront. We can think of it as a force contract planted to the car's price in which we are taxed fully (instead of just taxed on the parts and not taxed on the labor rate). In addition, "repairs" section also indicate a difference although we can't confirm anything without the evidence that I mentioned in the previous paragraph. There are more sections uncovered in this reply, such as insurance, etc.

However, the most important thing is the subjective factor of the enjoyment in driving the car. These 2 cars belong to premium level class. Hence, there are many subjective preferences taken into the equations. If economy is the highest priority, Toyota and Honda will surely love our business.

dajwilson

A big portion of the depreciation issue depends on what your goals are for a vehicle. We all know that a car is not an investment and you're never going to make any money off of it. For my purposes, I know I'm going to drive this car for 5 years and then give it to my daughter because she will be old enough to drive at that time. I never had thoughts of depreciation when buying it. I do look at how much folks are selling their IS300s for (in the case that my plans to give the car to my daughter changes) and it adds some comfort because they are still being sold at decent prices.
What I'm more concerned about is reliability of the vehicle and when compared to a BMW, I think Lexus tops that. Also I like that if I'm a little short on money and need an oil change or some kind of service, I can go to a Toyota dealership and save some cash. BMW owners typically have to get all their maintenance done at a BMW dealer and there's no savings there.
This is just my personal opinion and view in accordance with my future plans for my vehicle.

Zephyr

iTrader: (1)

Ignorant \Ig"no*rant\, a. [F., fr. L. ignorans, -antis, p. pr. of ignorare to be ignorant. See Ignore.]

1. Destitute of knowledge; uninstructed or uninformed; untaught; unenlightened.

What I meant by "ignorance is bliss" is that I rather not know all of this and be in my happy little bubble. I want to be ignorant about the subject so it doesn't ruin my fun of enjoying the car.

It's kinda dumb to buy a car and suddenly go "oh man, I'm losing so much money later on." Might as well just not buy a car period. Cars are the worst investment period, so we shouldn't let monetary values destroy our enjoyment, and yea you gotta pay to play, or for the general majority, you gotta pay to get from point A to point B.