Shocking BMW Depreciation!

Table of Contents

1. Introduction
2. The Initial Cost of the Car
3. Calculating Depreciation
4. Cost per Year of Ownership
5. Cost per Mile of Ownership
6. Comparison to Leasing Options
7. Additional Factors to Consider
8. The Future of Car Depreciation
9. Car Bargains and Recommendations
10. Conclusion

Introduction

Welcome back to the BMW Car YouTube Channel! In today's video, we will be discussing the depreciation of a 2007 BMW 120d M Sport. We will break down the value this car has lost since it was purchased brand new in 2007. By analyzing the cost per year and cost per mile of ownership, we can gain insights into the financial implications of owning a car for an extended period of time. Stay tuned as we dive into the numbers and explore the world of car depreciation.

The Initial Cost of the Car

Let's start by taking a look at the initial cost of the car. In 2007, this BMW 120d M Sport had a price tag of £25,100. While it had a few additional features like bigger wheels and a full leather interior, it wasn't an excessively high-spec car. To accurately assess the Current value of the car, we need to adjust this price for inflation.

Calculating Depreciation

To understand how much value the car has lost, we need to calculate its depreciation. Using an inflation calculator, we find that the 2007 price of £25,100 is equivalent to £34,200 in 2018. This adjusted value will be our baseline for determining the depreciation of the car.

Cost per Year of Ownership

Next, let's break down the cost per year of ownership. After purchasing the car in June 2018 for £4,400, it is evident that the car has lost £29,800 in value over the course of 12 years. Dividing this depreciation amount by the number of years since the car was new, we find that the total yearly cost in depreciation alone amounts to £2,483.30. This figure highlights the substantial financial impact of owning a car for an extended period of time.

Cost per Mile of Ownership

In addition to determining the cost per year of ownership, it's essential to consider the cost per mile. With a mileage of 102,000, we can calculate that the car has depreciated at a rate of approximately £0.29 per mile. While this figure may initially seem significant, it is important to compare it to other costs associated with running the car, such as fuel and insurance.

When factoring in the fuel cost at 50 miles per gallon, the car costs approximately £0.10 per mile to run. Taking into account the depreciation cost, the total cost per mile amounts to approximately £0.40. While it's crucial to consider the associated costs, these figures demonstrate that despite the depreciation, the overall cost per mile is relatively reasonable.

Comparison to Leasing Options

Considering the substantial depreciation costs associated with owning a car, it's worthwhile to compare these expenses to leasing options. For instance, leasing a brand new BMW 1-series for £250 per month would amount to a yearly cost of nearly £3,000. This figure is only £300 more expensive than the yearly depreciation cost of the purchased car.

It becomes apparent why leasing has become an attractive option for many individuals. The relatively small price difference, coupled with the benefits of driving a brand new car, makes leasing a competitive alternative to purchasing a new vehicle.

Additional Factors to Consider

While depreciation plays a significant role in the expenses of car ownership, it is essential to acknowledge other factors that can impact overall costs. One crucial consideration is maintenance. The cost of maintenance and repairs can add up over time, contributing to the overall cost of owning a car.

Another factor to keep in mind is insurance. In this case, the insurance for the BMW 120d M Sport costs £500 per year. Suppose the car is driven for 25,000 miles in one year. Calculating the cost per mile for insurance would result in approximately £0.02 per mile, adding to the overall cost of running the car.

The Future of Car Depreciation

Based on the analysis of this BMW model, it is evident that car depreciation is a significant financial concern for vehicle owners. While certain models, such as M cars, may retain some residual value, the future looks bleak for new BMWs and hybrid cars. These vehicles are expected to experience substantial depreciation, and it may be wiser to consider alternative options or look for bargains in the used car market.

Car Bargains and Recommendations

Exploring the used car market can uncover Hidden Gems and bargains. In the realm of BMWs, the 1-series remains an attractive option. The 130i, in particular, is regarded as a top buy due to its potential to retain value and even become a modern classic. Considering this, it is worth keeping an eye out for future bargains and making informed decisions when purchasing a car to mitigate potential depreciation.

Conclusion

In conclusion, the depreciation of cars can have a significant impact on their overall value and cost of ownership. Analyzing the numbers behind car depreciation can provide valuable insights into the financial implications of owning a vehicle for an extended period. While depreciation is inevitable, exploring alternative options such as leasing or hunting for bargains in the used car market can help mitigate some of the financial burdens associated with car ownership.