Buying a car

Buying a car

Oct 2, 2016. | By: Ionut Cenac

We all know that buying a car is never an easy task. As I love to optimize everything in my life, I was thinking about a way to find a car that offers the best value/money ratio. Let’s see how I did it.

Choosing the cars you are interested in

Let’s start by choosing some cars we want to compare. In my specific case, let’s say I’m interested in buying one of the following cars (I’ll limit my picks to only 5 for the sake of simplicity):

  • Volkswagen Passat
  • Volkswagen Golf
  • Audi A3
  • Renault Megane
  • Opel Astra

Find the price evolution over time

Having a list of cars we want, let’s find what is the price evolution over time (in euros) for each one.

But before we can plot a price history, for a better accuracy, we will consider the average of 5 samples for each car-age pair as follows:

VW Passat

Age Sample1 Sample2 Sample3 Sample4 Sample5 Average
1 34 500 29 999 26 030 31 746 32 000 30 855
2 15 800 22 700 17 500 22 700 19 990 19 738
3 14 500 10 400 13 325 16 590 10 599 13 082
4 6 999 11 850 12 650 9 200 10 600 10 259
5 10 450 8 699 10 799 8 900 10 300 9 829
10 5 550 4 250 6 350 5 600 6 100 5 570
20 405 1 237 1 500 2 100 900 1 228

We can see a high variation in the initial price of a Passat, mainly because of the many available customisations

VW Golf

Age Sample1 Sample2 Sample3 Sample4 Sample5 Average
1 29 700 18 990 19 170 20 870 16 800 21 214
2 11 390 9 950 15 400 17 000 11 390 13 026
3 9 800 10 950 12 000 10 680 9 990 10 684
4 8 400 9 780 7 700 9 300 11 990 9 434
5 7 999 10 000 8 750 8 000 7 590 8 467
10 2 450 3 900 5 360 4 390 3 490 3 918
20 1 400 652 900 1 100 950 1 000

The main variation in price is due to the available sport options.

Audi A3

Age Sample1 Sample2 Sample3 Sample4 Sample5 Average
1 35 130 26 470 32 200 30 140 28 231 30 434
2 18 500 19 800 26 950 16 650 18 490 20 078
3 18 000 16 490 20 500 18 499 14 900 17 677
4 16 000 9 890 12 000 11 499 15 999 13 077
5 9 700 9 950 12 100 9 700 10 800 10 450
10 4 200 5 950 5 100 6 700 7 500 5 890
20 1 250 500 2 500 1 200 1 500 1 390

Like the Passat, the A3 has lots of options to choose from, which leads to a higher variation in the initial price.

Renault Megane

Age Sample1 Sample2 Sample3 Sample4 Sample5 Average
1 19 799 18 500 14 680 15 500 19 950 17 685
2 9 990 15 500 11 000 10 700 10 950 11 628
3 7 850 8 670 12 000 5 999 8 199 8 543
4 7 150 5 990 6 000 7 150 7 350 6 728
5 8 700 6 400 5 750 5 900 5 333 6 416
10 2 890 1 909 3 300 2 350 2 590 2 607
20 600 900 1 200 750 1 200 930

Having lesser options, the initial price of the Megane is pretty stable.

Opel Astra

Age Sample1 Sample2 Sample3 Sample4 Sample5 Average
1 12 398 17 287 11 990 19 300 13 448 14 884
2 15 950 13 500 18 590 9 600 10 500 13 028
3 8 150 6 580 7 415 11 500 9 750 8 679
4 7 300 7 400 8 500 6 699 9 350 7 849
5 6 250 8 499 6 250 7 500 5 590 6 817
10 3 499 4 390 2 600 3 499 2 500 3 297
20 850 1 000 850 900 550 830

Like the Renaul Megane, The Opel Astra has a smaller initial price range.

Price Histogram for all 5 cars

Taking the averages for each car-age pair and putting them all together, we end up with the following table:

Age 1 2 3 4 5 10 20
VW Passat 30 855 19 738 13 082 10 259 9 829 5 570 1 228
VW Golf 21 214 13 026 10 684 9 434 8 467 3 918 1 000
Audi A3 30 434 20 078 17 677 13 077 10 450 5 890 1 390
Megane 17 685 11 628 8 543 6 728 6 416 2 607 930
Astra 14 884 13 028 8 679 7 849 6 817 3 297 830

Now, let’s plot this histogram in excel img

Conclusions

Looking at the graph above, a few conclusions can be extracted:

  1. The price for luxury cars starts pretty high, but it drops significantly after the first year, so buying a new car is not recommended.
  2. The Volkswagen Golf depriciates at a slower rate than the Passat and Audi.
  3. The Audi’s price drops significantly after the first year, but then it manages to do a better job at maintaining its value, unlike the Passat. Maybe because of the more premium quality of the components. But I think the main reason is that the number of Passats is higher, so a bigger offer in the market leads to a lower price.
  4. All 5 cars depreciate quickly after the first year, but if you want to buy a new car (and plan to sell it after a few years), then Opel Astra is a good choice, as you will get a better resell price. It also has the best initial price of all.
  5. If you plan to buy a used car, then the best moment is after 3-4 years, because after this period the price starts to decrease at a slower rate than the reliability does.

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