The Law of Depreciation

The law of deprecation is a car enthusiast's best friend. Cars that were $50, $60, even $100 grand ten years ago can be had for pennies on the dollar today.

I was reminded of this fact recently while browsing car ads online and realized there are a number of 1997-2000 Porsche Boxsters for sale below $10,000. Ironically, one of my favorite affordable Porsches, the 944, is appreciating towards that amount. So today you can have your pick--Boxster or 944 for the same money.

I know I'd take the Boxster. As much as I love the 944 for its mix of performance, handling, practicality and reliability, the Boxster includes all those traits and has Porsche's iconic flat-6 engine mounted mid-ship.

But it's not just Porsches that experience the phenomenon of depreciation. Just about any car hits its low value when it reaches 10-15 years old. In the 1970s, you could pick up a V12 Ferrari or Jaguar E-Type for the cost of a new Ford Pinto. In the 1980s and early 1990s, muscle cars and 1960s Corvettes were cheap. Now all of these cars are approaching the price of a three bedroom house, or far more in some cases.

Today you can find all kinds of bargains as well. The Porsche 928 and BMW 8 series are in the same price range as the Boxster, as are the Jaguar XJ and XK8. Or if you like American iron, you can pick up a C4 or C5 Corvette, Mustang Cobra, or Camaro Z28 for the same money.

The downside is as the Romans said, "caveat emptor"--buyer beware. All of these cars are at least ten years old and have close to 100,000 miles on them. They may have been lovingly cared for like someone's pet or abused like a Taliban donkey. And you won't know which without taking it to a good mechanic and spending several hundred dollars on a thorough inspection.

We also don't know if these cars will ever appreciate in value, becoming valuable collectors items. Certainly they have the potential, but for now, they should just be cared for and enjoyed.

Beater Challenge Update

So far I've saved about $2,000 since I started driving my 1997 Olds Cutlass Supreme back in August. The Cutlass has been reliable transportation in that time, even if it's not exactly stylish. When this model first came out, Oldsmobile was marketing cars with the slogan, "This is not your father's Oldsmobile." And it's not... It's your grandfather's.

For a while, I entertained myself with the notion that the Cutlass is so uncool, that it's cool. Sort of like the Oldsmobile Silhouette minivan driven by John Travolta's character in "Get Shorty". He thought of his car as "the Cadillac of minivans" but at the time Cadillac wasn't very cool either. It was as if GM were trying to convince Armani clad BMW drivers that powder blue leisure suits and accordions were fashionable, and they were using Lawrence Welk to do it.

To it's credit, the Cutlass does everything fairly well. It's got a quiet, smooth ride. The stereo and A/C and cruise control all work. It routinely gets 22-25 miles per gallon of gas and again, it's been very reliable. On paper, the fictional Honda Accord I'm using as a benchmark for the Beater Challenge would be hard pressed to do any better.

The real world however, does not just exist on paper. There are subjective ratings for how well a car does all the things it's supposed to. And if we were to assign grades to both cars, the Honda would be an A student, while the Cutlass would get solid Cs. It's crude where the Honda is refined. It's controls are clunky, where the Honda's feel like they were assembled by a Swiss watchmaker.

But there are advantages to crude, simplistic engineering when it comes to maintenance and repairs. The Cutlass is much easier to work on. To replace something like a water pump or alternator on a Honda, you have to practically remove one of the front wheels and go in through the side of the car. On the Cutlass, they're both near the top of the engine, in plain sight and held on by three bolts. On a new car this is no advantage. But on a older car that's closing in on 90K miles, it's huge. Cost of maintenance becomes a great equalizer. And when a car starts routinely gouging you with $1500 repair bills it makes sense to trade it in.

I'm not at the point where it's time to trade the Cutlass in or look for something else. The only things wrong with it are some minor body damage, a sticky lock on the driver's door, and now possibly a waterpump that's starting to leak. None of these things are terminal.

But I have developed a wandering eye and have started browsing car ads again. Car nuts like me are like serial monogamists, always looking for something else. Last week I stumbled across a maroon 1995 Jaguar XJ6. It was in good condition and only $3500. But a $3500 Jag quickly becomes a $10,000 Jag once the repair bills start adding up.

What I need is another car besides the Cutlass. A toy I could tinker with. Maybe an old convertible to make top down runs with the kids to get ice cream. Or weekend road trips. Or perhaps an old V12 grand tourer like a Jaguar XJS or BMW 850. Or an old Alfa or MG or another Porsche. Perhaps a Corvette or mid-80s Camaro IROC. The possibilities are endless when you're not making regular car payments.