I’ve heard the argument before: Why not buy a used car instead of a new Micra? I’ve already addressed this in a general sense here and here, but this time someone provided me with a specific car: A Lexus IS250. Here’s the challenge:
“For less than 10grand, you can get a roomier, more stylish, just as reliable, more fun to drive, V6 power, great efficiency for a V6, and a super luxurious interior with the IS250. Now I don’t like Lexus. I’m more of a German type of guy. I like my Dubs an Mercs. But you can get a 100% better car with the only sacrifice being fuel efficiency. And if you buy a car 2 gran less than the new one, fuel costs won’t be higher in the old one until 15 years of ownership! Who in today’s world will keep a car that long?”
To be fair, I paid more than $10,000 for my Micra. I got the SV trim with convenience package, which ups the price to $14,333, but also leaves me wanting for nothing, including roominess. I get all the goodies I want, as well as more headroom than I’d get in the Lexus IS250. We’ll just forget that he even mentioned roominess, and we’ll see how the numbers add up.
I checked the AutoTrader for an $8,000 IS250; for $8,888, I can get a 2006 with leather, automatic transmission, and sunroof. This is an eight year old car with 208,000km on the odometer. That is extremely well used, but meets the criteria. To make this comparison 100% fair, we must include Freight & PDI on my car, which puts the total price at $15,733. We will also assume this Lexus isn’t a previous wreck being sold by a curbsider. My car costs $6,845 more than this Lexus; we’ll work with that.
First up is fuel costs. According to Fuelly, the Lexus will yield around 9.8L/100km, versus the 6.4L/100km I’m currently attaining in my Micra. I drive around 45,000km per year. We’ll use today’s cheapest gas prices, which right now in my city is at Costco. The Lexus requires high octane fuel, which now costs $1.424 a liter, and will have an annual fuel cost of $6,279.84. The Micra takes regular octane, which currently costs $1.324 a liter, and will have an annual fuel cost of $3,813.12. The Lexus, at today’s gas prices, will cost $2,466.72 per year more to run than the Micra at today’s gas prices. In less than three years, the gas savings of the Micra alone will make up the difference. That’s not all.
A Lexus is a premium high end car. How good do you think the tires are going to be on car that’s eight years old? At $8,888, you could probably count on replacing the rubber within those three years. The Lexus requires fancy 225/45R17 tires. The cheapest I found at the local Canadian Tire is around $200 per tire for all-seasons, and close to $300 each for snow tires, resulting in a $2,000 expense. Meanwhile, all-seasons and snow tires for the Micra are less than $100 each. All I’d be needing for the Micra would be snow tires. The resulting tire savings is approximately $1,600.
This doesn’t tell the whole story, though. We’re making certain assumptions in favour of the Lexus. Even with these favourable assumptions, when a person buys an 8 year old car, they are buying a car that’s in maintenance mode, no matter what the brand or level of luxury. They’re replacing worn out parts and components, flushing and filling critical fluids, and dealing with deteriorating trim. Meanwhile, my Micra is in new car warranty mode. This means regular oil and filter changes, a top-up of the washer fluid, and that’s it for the next long while.
All things considered, in roughly two years, the savings of the Micra makes up for the additional cost of buying new. By then, the Micra is two years old with plenty of life ahead of it, while the Lexus hits the 10 year old mark. The Micra’s going to continue to save me money, and by the time it’s hit the 10 year mark, it will represent savings so significant, I would be able to buy another brand new Micra with those savings with money to spare. That’s what makes the Micra such an incredible value. Micra, FTW.