car value versus what we put in it.
 

Hello everyone,
in the continued effort to keep the 260E on the road, I now have to get the differential bushings and rear end taken care of.
i have also looked up the trade in value, and for what the car is worth on KBB, i am not sure if spending another 1500 would be worth it. however, on that note i also thought of everyone owning the similiar mode w124's on this forum. by now i am sure that almost everyone has far exceeded the money they have spend than the car's worth if it were to be traded in.
question is, is it worth it at the end as the w124's arent really collectible models etc....

It's called "getting upside down" when expeditures exceed value. Mercedes people do it all the time, as do Porsche and British sports car owners. Why would a smart guy like Stephan Wilkinson, former Car & Driver editor, spend two years and $70K to refurbish a Porsche 911 that will never be worth more than $20K . . . read "The Gold-Plated Porsche" to find out. ;)

dare i say that it was a porche and i'm referring to a 260e :D

Heh, the Porsche he restored was nothing spectacular (at least in the realm of Porsches). It was a 911SC I believe (produced from '77-'83), which would be worth maybe $20-25K tops. But he, like so many others here, got bitten by the old European car bug. I don't think you can place a monetary value on things such as character, style, and individuality that come with a good condition, older MB, BMW, Audi, Porsche, etc. Rationally speaking, it makes no sense to continue putting money into these cars, but when measured in terms of overall satisfaction, I think the situation becomes more complicated. If you are not particularly intruiged by anything else on the market, or feel that no other car can give you the satisfaction of a W124, then the maintenance/repair money can be seen as an alternative to spending more money on a newer (but perhaps less 'satisfying') car, or a cheaper car with no personality.

The way to look at it is, add the cost of repairs to the value of the car. Take this amount and see what you could buy to replace it. Deside which car you would rather have. People buy new (or newer) car because they want them, but try to justify them with needed repairs to their old car. I am completly "upside down" on my 84 500 SEL and have no regrets. It is a wonderful car that I enjoy every mile I drive it. My 91 300D is not "upside down" yet, but I am sure it will be some day.
Just think of the repairs I could do on either of these cars with the $50K or $60K it would cost me to buy a new (or newer) car in the same class.
The only down side to the above is if the car is totaled in an accident, the insurance companies wouldn't give me squat for either one, but that is a chance I will take.

With few exceptions, cars are a depreciating investment, so you never can come out on top!

Even if you bought a brand new one, paid cash, and just trailered it into a garage and did nothing, initial depreciation once driven off the lot puts you behind!

Bottom line is, you can't justify whether or not to spend money on a particular maintenance item simply by the car's worth.

It's what drives the economy, and it's why the majority of folks wind up replacing one or more vehicles every three to four years.

The threshold is generally, how problematic can a vehicle become before you just get fed up and decide to opt for something with fewer to no problems.

A sensible approach is weighing the cost of the repair versus the cost of replacement (i.e. a new or used vehicle).

But for some of us afficiandos, the love of a marque or particular model throws all sensibility out the window. So we pour all we have into keeping that love alive.

My VW in my sig has about six times it's worth invested over the years, and it doesn't even run! It would take another $5-8K to get it back to its former glory!

I am pretty far upside down with my SDL. But ehh it is only money I can make more. :D

If you like the car then fix it, if the newer car bug has bitten then it is time to move on.

If you like W124's their are some really good bargins on the 94-95's now. You could pick up a mint 1995 E420 for $10k or less.

Here's my way to look at it.

The Fed's allow $0.375 per mile allowance for autombile expenses.

my 1986 300SDL works out thus:

20,000 miles driven (so far)

$0.105 / mile $2,000 purchase
$0.175 / mile $3,500 maintenance
$0.100 / mile $2.50/gallon @ 25 miles/gallon
$0.030 / mile $600 insurance per year, owned 10 months

$0.405 / mile Total

Not too bad, and it seems to be getting better now that the bigger items, like new radiator, etc. have been taken care of.

Oh, if I sold it today for the $2,000 I paid for it, the cost would be $0.300 per mile, so I could say I'm ahead of the game. Not bad for a 19-year old 'hobby' car I really didn't need!

The final, end-of-life value will be more like $0.00, as it is hauled away for parts...


Best Regards,
Jim

The way I look at is I ignore the value of the actual car and see how much its valuable to me!

Yeah, me too. Or I look at the replacement value of what I would want, which is usually something in the $20k range to replace my 300E. $20k can buy a lot of brakes and oil changes. :)

I routinely spend up to, or more than, my car's value on maintenance every year, but the thing's paid off, it drives pretty well, is roomy and comfortable, and I don't care if it gets dinged or scratched anymore. I'm hoping to nurse it along until some real high dollar set of repairs is needed, and then replace it with another long-term keeper.

Nothing has actual value until you sell it. Sure you could stop putting money into your car and go and spend that and more money on another car, but then you are starting all over again. Cars have never been investments, so why people get caught up in the repair cost to value thing, I don't know. The way I look at it, if your car is "worth" $3,000 and you spend $3,500 to bring it back up to speed and be as reliable as a new car, then it's worth what a new Benz would cost. I know this goes against the grain of conventional thinking, but really, when it comes down to it we are talking about transportation. ABS, ESP, GPS, Nav. Sys. Statelite radio, etc. are not needed to get from point A to B.
Take what you paid for the car plus the maintenance/repairs, divide that be the number of months you have owned it, and you'll see what on average you have spent for that car. It will certainly be less than a car payment, especially one on a new Benz.
It's the industry that wants to to toss aside the "old beater" and get a new one. Not that I am an enviromentalist, but you could think of it this way, you are keeping one less car out of some junk yard/land fill

Value is as a transportation device, modified by safety of same, enjoyment of driving same, cost of operation of same, etc. Resale value is of little consequence. Please understand that depreciation is a cost of operation. Used cars are the most economical, but we all thank those that just psychologically "need" new cars.

I got into a bit of an arguement with my brother, but in the end he may be right...

He wants to buy a new Volvo S40 for about $30K with all the options, he gets a plane ride to Sweden, a free hotel room, and a limo ride to the Volvo factory. He gets to see his brand new car roll off the finish line, and a tour of the facility.

Then he gets to drive on the Autobahn for 1500 miles until he gets to Frankfurt airport, where he drops off his new car at the Volvo office there for shipment...

He flys home, and 4 to 6 weeks later, he takes delivery at his local dealership.

That is very cool to me!

He beat me down by stating that yeah, he pays $30k now (he is going to buy the car outright, so no stupid finance charges apply...) and he gets 4 years/40K free service for the car, (includes oil changes, brake pads/rotors, all the wear and tear parts.)

So he plans to keep the car for 10 years, he told me that in the end it will cost him about $3200 a year average... 3500 x 10 $35000 for 10 years worth of car...

He told me my 89 300E cost at least $3000 a year has 188,000, 16 years of age and could fail at anytime.... he really got me there....

So maybe he is right, my car has a rougher idle, the door panels shake a bit, and it swallows premium gas.......

But, I told him that when I become a mechanical engineer, I will be making about $40K a year and could never afford a nice S40 Volvo like he can, unless I finance it for like 20 years, and that the only way to get a nice car is to get an older one and progressively make it close to perfect....

He told me that I would not need a Mercedes, and that it is just a luxury, and that a Honda Civic would fit the budget well...

So I guess I am going to get a Honda Civic.....???

O well, I am still enjoying my car, and until it does crap out on me, I will wash it well, repair what I can, and maintain it the best I can......

Then I will see about the Honda....

Raluhio,
Your brother left out a little in his argument. He failed to take into account the repair and maintaince cost for years 5 - 10. Volvos are not what they used to be. A friend of mine has a S60 with about 80K miles and has spent a lot more on it than I have spent on my old 84 500 SEL with about 250K miles in the last 2 or so years. And I had rather have my 84. It drives better, is quieter, has more power, and gets almost as good mileage on the road.
Let your brother have his Volvo, you keep your Benz and 10 years from now see who has the best car.
Like I said earler, people buy new cars because they want a new car.

I bet if he bought an S40 that was say 2 years old he would save $10k+ and still get 10 years out of it.

Cars are not an investment unless you are buying new Ferrari's. If you want to make money buy real estate not cars.

It doesn't matter if you put $3k into a $3k car because the value isn't the monye but the miles you will get out of it.

You guys have a very good point...

Time to attack him with a rebuttal!

Yeah, since Ford or (GM?) bought Volvo, I kind of lost my faith in them since many of the companies like SAAB for example have lost their own uniqueness and sometimes quality...

But Volvo was failing since their reputation was bad... people had this sterotype in their head that all Volvos and boxy monstrosities. Nobody wants a box to drive right? (I do! :D ) So Ford "saved" them... The 850 was the last boxy car, the S70/V70 got better.... but I guess it was too late.

I don't know much about how bad SAAB was before Ford bought them, but I always heard this phrase: "In the morning, you have to put your head on the steering wheel and SAAB (sob) to get it to start..."

I don't understand why Oldsmobile crashed and burned, I think maybe they suffered the same fate that Cadilliac would have it... (All the grandpas were passing away, so nobody wanted a "classic" designed car...)

We own a Volvo S90, I drove it for a while before I traded cars with my dad, I enjoyed the airplane like steering and the power... (188HP/201TQ)

I got to sit in an S40 today, the interior felt solid, I really liked some of it features too, but I wonder how this car will be in about 50K miles.

I can now understand why somebody would like a new car, all the problems are gone, all the bushings are tight, the engine is in peak performance, everything is just all new, clean, and perfectly functional.

I wonder how somebody who has been driving used cars for years would react to a new car.... Woud they convert, or would they take it back to the dealership and open the newspaper? I guess it depends, like you guys said, if they want a new car, they will like it.

But I am 17 (with a perfect driving record! :) ), and if I drove a new car, the insurance would kill my dad, I give him my Best Buy work checks, but still, $1000 a month is really hard to handle. With me drivng a $3000/16 year old car, he only pays $200. So that is one advantage, but only if you are young.

The reason I fell in love with the 300E is since it was so remarkable, I drive a car that was worth $45K back in the day, it has features that were ahead of its time, I guess you just have to really have a love for older cars to appreciate them.

My brother also pointed out that his Volvo has better safety features and better fuel economy, He is surely right, my only airbag is expired (expired on 9/1999). He is going to have like 8 airbags, my car takes premium and gets decent MPG, his car takes unleaded and gets great MPG... I can't beat him there....

Old car values ...
 

I agree that people buy new cars because they want them ... or "want something with a warranty". The warranty on everything but Hundai (sp) is relatively short, and I'm sure that there's plenty that the Hundai warr doesn't cover. The deal with the Volvo is that 2.5 yrs after you get it, you're on your own --- that's when the real quality or lack of it starts to show.

Another way to look at whether or not you're doing OK is to amortize your car on paper ---- I use $.15/mile ---- little enough at today's prices --- and see how that squares up with with money spent on purchase and maintenance. I would buy fuel and insurance for any car (though an old car with no collision is a lot cheaper than a financed new ride), so they are not in the equation. In the end, the amount I beat $.375 by, counting fuel & insurance, is how well I've beat the system. Actually, $37.5 is not nearly enough ---- maybe 15 yrs ago Hertz stated (I'm sure they do these figures every year) that buying a new car and driving it perhaps 50,000 miles cost $.50/mile --THEN. Savvy businessmen therefore buy a nice car just for business, and deduct every cent spent, incl washes & waxes. If you're in a higher bracket (than I am), you can do better that way than buying an old Mercedes , doing all you own work, and using WVO (and deducting $.375).

Applying the $.15 amortization to my 240D:
purchase -- ---------$2000
tires & 1 ball joint ---- 760
parts to date (incl most 600
of the parts to rebuild
the front end, which I
haven't done yet)
Total $3360
My miles to date - 15,000
15,000x$.15= $2250
Real cost of the car = $1110
Miles to break-even ---7400 --- about 6 months' worth.
Amount I can spend on maint after that with a clear conscience ---- about $2250/year. I can replace a lot of engine mounts for that -- even put in a new clutch -- and still be 'way ahead of the new car rat race of financing, trading. All they have is better seats (I'm getting on that soon) & better acceleration (so does a Peterbuilt). Let's see the brother amortize the Volvo this way - $30,000 @$.15/ mile = 200,000 miles .....with no other maintenance? Even with oil changes & fan belts his break even -- best case -- will be probably 250,000. Ours will be much sooner -- mine is a tenth of that ...

Just to clarify:

The term "Upside down" more commonly refers to the phenominon that is experienced with EVERY new car as soon as you drive it off the lot -- that you owe more for it than you could get if you sold it.

It usually takes a couple of years before an owner is "out from under" the payments on a vehicle. That is to say that at that point, they could sell it and either break even, or walk away with a small amount of cash.

People who trade-in every few years (or lease) are paying the highest cost/mile. But for whatever reason, having that new car is important to them.

Also: Ford owns Volvo, GM owns Saab.

Jeff Pierce

Hence why GAP insurance has become so popular

One cannot value the satisfaction and pride of ownership. I speak of pride for my mb's. They aren't perfect, but nothing is...

It seems that Modern America male is conditioned to buy that Ram, Z71 or the best selling F150. Once they purchase said example of modern american advertising, they begin to modify it so it is seperate from all the other Rams, '71s and 150's.

There is nothing so scary to see how advertising tells us collectively to buy this, covet that, yada yada yada.

Easy there... I make my living on advertising. ;)

You're right though. It is truely amazing what people will pay good money for... and with a smile on their faces!

Jeff

I have been debating this very issue internally since I bought my 89 560SEL.

Paid 3k for it, put in brakes, major tune up, now it looks like it needs a valve job. Lets say for year one I'm at $5000.

Year two, body work and interior upgrade - $5000. After that, normal maintenance. Transmission seems to be fine, but you never know. Possible $2500 rebuild down the road.

But assuming I don't need a tranny soon, if I keep the car for 5 years, that's $166 a month, plus the cost of routine maintenance, which I would have anyway.

My 560 was the top-of-the-line luxury sedan when it came out - it is built and engineered like no other car I have ever owned, and certainly like no car that has come after it. Its look is classic and timeless, I get all kinds of compliments on it, and it drives like the great car it is.

I travel a lot, and rent all kinds of different cars to get a feel for them. I rented a new Volvo Cross Country wagon - it was nice, but the visability was crap do to the rake of the roof and the pillars. The new Jags? You can keep 'em - glorified Tauruses now. SUVs - never liked any of them (more of a style issue - I don't like climbing up into them and they all feel "wrong" to me as I'm driving them).

I love my Benz and taking care of it has become a hobby to me, so the money spent is no different than golf, or racing, or gardening/landscaping, etc. I know people who go to Atlantic City, Connecticut and Vegas to gamble, lose thousands of dollars, yet come home happy saying - "what price do you put on having a good time?"

I'm having a great time in my 126 MB, the cost of ownership is justifiable.

The power of advertising is simply amazing! They made the average Joe think they need big 4wd trucks loaded with tons of luxury gear. The SUV is a creation of marketing.

Well said, gilwave! I too faced a similar decision recently with my '90 300E. Although I decided to trade it in for a somewhat newer '98 E320 I didn't seriously consider other cars. When folks asked me why I would buy a 7 year old car with 80K+ miles on it my reasons were similar to yours. I would rather by a somewhat mature Mercedes that was top of the line when it came out than a newer but lesser car. To me, it still seems like a steal to get a $45,000 Mercedes for half the price of a new Honda just because it's got a few miles on it.

Yeah, it's a hobby, but where to stop?
 

I bought a 1985 Euro 500SL in 1999. I have put 33,000 miles on it and itis at 128,000 miles. The car is fun but I paid $7000, in disrepair and have put another $5000 in parts and $1700 in professional service. It still needs lots of things to make it right. I do all my own service now and the next job is lifters. Three mechanics say to replace them all. The parts are $720 plus shims. Bottom line is that I could have made five years of payments on a new car. Not a Benz but something. It is an emotional issue. My SL has the AMG package and looks so cool that I had to have it. I am cheap and want to drive a nice car for cheap money. From a monitary standpoint it is a crap shoot. If you buy a used one and it does not have major problems you can drive it a long time for low dollars, then dump it when a big repair comes up. But if you buy a bad one and fix it all the time it coud cost rediculous money. Auto repair is my new hobby, since I bought this Benz. Now I work on all our cars but I practically gave up golf and martial arts because of the time (and money to a lesser degree). I love mine but a good financial decision, it is not.

Sorry to hear about all the problems you are having with your 500SL Steve :(

The repiar history on my car made it easier to decide to buy it - one owner, all paperwork intact, all major work done at the proper intervals.

I am looking now for a used diesel - 300SD, SDL, or newer 350 - so I have to be doubly careful I don't buy somebody elses headach/money pit.

-g

This sounds like the discussion we had before we fixed the AC in my daughter's 190DT. Even my machanic was initially reluctant to put that much into the old car.

It cost $3600 for basically a full rebuild plus two fans. What clinched it was asking my daughter if she would buy this car for $3600 with a working AC, the answer was yes.

Also since my father-in-law bought it we really did'nt have any money in it.

cars
 

Benz300 what you ought to consider is perhaps calculating the future life left in the car, its overall interior and exterior condition etc.

Calculate how much you may spend in keeping the major stuff going.
Find out what the same car can cost you if you find one in better condition with maint. papers.
Buy that one and keep the current one for a parts car. assuming you have space and DIY. Or just sell it and recoup some money. :)

Just a thought.

Book Review: "The Gold-Plated Porsche"
 

I'm reviving this thread to say that I just had a chance to read "The Gold-Plated Porsche" by Stephan Wilkinson, former Car & Driver editor, which is mentioned in this thread, and which is a real fun read.

The preface starts with the point that either you get it or don't - why someone would spend two years and $70K to refurbish a Porsche 911 that will never be worth more than $20K.

For me personally, I just don't value stuff I just spent money on, in the same way as I value stuff that I spend money, time, effort and spilled blood on.

That's just me.... Or maybe I'm just cheap. Anyhow, I too recommend this book.

this logic by your brother reminds me of the old steve martin saturday night live skit on how to make a million. it goes like this "first, you take a million dollars........................."

so do you have the $30k? if not why worry about what your brother thinks. is he trying to help you or just beat you down?

These old cars after about 10 or 12 years have depreciated all they will. if you buy one you can own it for the cost of the maintenance and sell it for what you paid for it. i personally wouldnt want to drive a civic, do you?

extensive restorations wont pan out but basic maintenance and repairs work fairly well especially if you do a lot of it yourself.

tom w

I plan on running mine to the death, and either way, you'll NEVER get what a cars worth from ins. companies if it is wrecked. When I'm replacing bushings, I'm thinking about a smoother ride, and not more $. I love my car. Why else would I spend thousands on a 23yo car, with almost a quarter mil on the odo, that I spent $600 on...

I guess the question is do you love the car or did you just buy it because it gets you from point A to point B.

Im rather attached to my cars emotionally as if they were my children. If they need repair they get repair regardless of the overall cost involved. Im sure Im in the hole already on my 300SD and will soon be in the hole with my S320 but they both are the exact cars I wanted with the exact options I wanted and I have grown fond of all their quirks. :)

I bought my Volvo 240 and got a good deal from a previous owner that had over 10K worth of upgrades and service into it. While he did not recover his 10K I was more motivated to purchase the car and paid a higher than market value for it.