Tag Archive for 'kbb'

Do cars stop depreciating after 200K miles?

As I examine my options about replacing my 10 year old Honda Accord with a more fuel efficient alternative, I stumbled upon an interesting fact. I was playing with Kelley Blue Book estimate of my car value by changing the number of odometer miles and observing the changes. What turned out is that after 200,000 miles the car value stops decreasing. Which implies that if I wanted to sell the car now, it wouldn’t have made a difference if I had driven it more than 20K miles a year.

Is it just a bug in the KBB algorithm that calculates the value, or does the value really stops going down? I think what really happen is that at this age the car condition becomes the prevailing factor and the miles don’t mean that much any more since the modern engines are designed to go well past 200K miles and it is often rust or problems with interior (power windows not working?) that lower the car value, and these usually come with age, not miles.

This brings me to an interesting conclusion. If you own a car and put up around 20,000 miles on it, from the financial point of view there is no reason to try to save miles by renting a replacement for those long trips. You are not really gaining much except for the headache in having to deal with the rental. This of course is not the case if you don’t plan to hold on to the car for very long, or don’t put enough miles to reach the threshold.

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