Smart Consumer: Looking for a smart car? An older model makes real cents
Mmore and more of us are driving around in our shiny new cars with their super-duper year-10 plate. It's apparently just about safe again to feel smug about spending some money.
Indeed, new car sales so far this year have already overtaken the dismal total sold during the whole of 2009, helped by the Government's scrappage scheme.
Yet right now it is possible to feel just as smug driving a 10-year old banger, according to the author of a new book, entitled The Bangernomics Bible.
It's full of tips about how to buy and run a 'good' banger for next to nothing, and was written by motoring journalist and former used car salesman James Ruppert. He says that there has been "a growing trend for car buyers to convince themselves that it is a matter of urgency to replace their cars every three years or sometimes less with another new car".
What is bangernomics?
Bangernomics, by contrast, is about choosing to buy and run an older car, even if you can feasibly raise the money for a new one. Or keeping the car you have for as long as possible.
A large part of the logic is that once a car is five years or older, it has already lost most of its value and is therefore close to the bottom of its depreciation 'curve'. This means you won't lose anywhere near as much in depreciation as you would with a new or even nearly new car, argues Ruppert.
This point is not lost on Shane Teskey, managing director of car fleet provider Benchmark Fleet Services.
Being in the fleet business, Teskey has access to trade discounts and company cars. "But for my last three cars I've tried to buy it new and turn it around every year, which cost about €2,000 each time," he says.
"However, the last new car I bought, in 2007, was a Range Rover Sport and it absolutely nose-dived [in value]."
He decided to finance it over a longer period of time, so as to try and spread the depreciation out.
"I'm three years in now. I've got about 45k outstanding on it and it's now worth about 35k in the market. Not nice."
Teskey has heard of bangernomics. "It's an interesting concept but it assumes that the motivation behind buying a car is purely financial," he says.
"There's a lot of other emotional stuff that goes with buying a new car. For many, it's a luxury that's only afforded once every three or so years, and worth the pain in depreciation."
A way of life
Ruppert takes a broader view. "Bangernomics is a way of life. Some people do just want a car as A to B and back again and don't care what it is but don't want to spend a fortune on it. They'd rather save up to go on holiday or buy a house or a new kitchen instead.
"Others may think, well I'd rather spend that money I save on a lovely old classic, or maybe to have a couple of characterful cars rather than some depreciating asset."
Ruppert's new book is an update of one he wrote in 1993 called Bangernomics.
Things have certainly changed since then. In the early '90s a banger often meant driving a rough-running, battered shed, but the explosion in new car sales since then has done much to enrich the quality and choice of older cars.
And the prices of used cars have fallen so much that a banger today can now mean a car just out of manufacturer's warranty, says Ruppert.
James Beecher from Cork is a bangernomics fan. He started buying bangers four years ago after leaving a job in which he had a company car.
"I like cars but losing a few thousand a year in depreciation doesn't appeal," he says. "Old cars do the job well and in some cases are nicer to drive and own than more modern ones."
He currently drives a 1993 BMW 5 Series estate that cost just shy of €2,000, but also has a 1997 Rover 216 Coupe, which he bought for €800.
Beecher has managed to keep his losses to a minimum by selling his cars on after just a few months and getting something else. "Something interesting always comes along, a change is nice too and I enjoy having a small project on the go."
In the last four years, he has bought seven cars that together cost him €10,000. Among the cheapest was a 1992 Mercedes E250 diesel for €430 and a 1993 Honda Prelude coupe for €850.
"If I bought one car today for €10,000, how much would I get back after four years?" he asks. "It wouldn't be close to €10,000 anyway, more like €2,000 or €3,000, I'd imagine."
Bring a tyre-kicker friend
Tomas Curley from Co Kildare is another long-time bangernomics fan but also an expert amateur mechanic.
"I think the raw bangernomics owner is actually a bit of a car enthusiast because they tend to know a bit about motors," says Curley, who has recently picked up a 2001 VW Passat diesel for €500. "The vast majority, those without a bit of knowledge, have the potential to get stung."
It's no surprise to learn Tomas's skills as a tyre kicker are in demand by his many friends and colleagues at the Intel plant in Leixlip, where he works. He has helped his co-workers to pick out good, reliable older cars while still getting change out of €3,000, or much less.
For most people, he advocates what he calls a "bangernomics-lite" approach, whereby you keep your current (say five- year-old) car and hold on to it for as long as possible.
Keep on running
Michelle Shanahan from Portlaoise runs a 1996 Nissan Micra she bought for €3,500 in 2002 with about 40,000 miles on the clock. She says it is still running sweetly eight years later at 134,000 miles.
The car is serviced once a year, and any minor problems she fixes herself with the help of her dad. It has only broken down once, and the fault was cheaply fixed with a replacement part from a scrapyard. She estimates it costs less than €600 a year to run in servicing, tax and insurance.
She has no plans to trade in, even with some of the attractive scrappage deals on offer.
"The way I look at it, it runs perfectly, does what it needs to and is worth very little to anyone else," says Shanahan. "That whole concept of 'why fix it if it's not broken', kind of fits the situation."
Ruppert says running a banger for as long as possible is as green -- if not greener -- than buying a fuel-efficient new car because of the huge amounts of energy and resources required to build them. But what happens if you own a car that may be reaching the end of its life?
"Deciding when to change is the most difficult thing to get right, and anticipating when the big bills come is certainly down to luck half the time," admits Ruppert.
"But too often I hear from people who say my car is five years old, has done 70,000 miles and is worn out."