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Myth Busted: Cars Are NOT a Depreciating Asset

Your know-it-all brother-in-law is fond of correcting folks who call cars an investment. Turns out, he’s been proven wrong.

Have you ever casually let slip that you made an “investment” in a new car and had a know-it-all jump down your throat? The genius clarifies, that technically, cars cannot be an investment since they depreciate each year, thereby having a guaranteed lower value. Well, thanks to a pesky bug and a shortage of chips, it turns out that cars are actually an investment, and they do not always depreciate.

Proof By Single Example
This story was prompted by a member of a social media group (TC at the Prius Prime Owner’s Club on Facebook) who posted up a Carvana advert for a car that TC bought new a while back in 2018. That same model is now being sold used, three years later and with 44,000 miles, for more than it sold new originally. We did a bit of checking and TC’s narrative is accurate.

Image courtesy of iSeeCars.Proof By Data
I’m not a proof by single example person most of the time. I’m a recovering engineer, so I need reams of data before I believe there are a bunch of stars in the sky. Fortunately, the folks at iSeeCars employ a few of my neighbors in the search for said reams of data. I like to keep them working, so I create snarky overviews of the truths the data reveal. Like this story.

iSeeCars analyzed a bazillion new vehicle transactions from 1901 until present day (actually 1.9 million used car sales in August) and determined without a shadow of a doubt that used car values have risen by 26.2% on average since that same month the prior year.

Now Go Tell Everyone
If you have that know-it-all in your family, be certain to bring up that your car investment has been doing quite well when you all sit down to carve up the bird this Thanksgiving. When you are corrected, drop a printout of this story on the table like the mike at a poetry slam.

Certain cars have always appreciated in value. They tend to be special European cars made lovingly by hand in a factory that looks like a museum. Certain first-edition muscle cars and supercars also appreciate. Which is the dirty secret behind why well-heeled folks are so quick to plunk down stupid sums for them at charity events.

That’s not what’s happening now. Rather, with each American now possessing a millennium of toilet paper in their basement, they are panicking that their six-year-old Prius is suddenly in need of replacement by a battery-electric vehicle by Thursday or the world will catch fire. We’re exaggerating, but not by much.

Be sure to make the most of this moment. You’re only going to have this opportunity for a short spell. Before we know it, dealers are going to be giving away CHANEL bags filled with cash on the dash to move the iron off their bulging lots.

John Goreham is a long-time New England Motor Press Association member and recovering engineer. John's interest in EVs goes back to 1990 when he designed the thermal control system for an EV battery as part of an academic team. After earning his mechanical engineering degree, John completed a marketing program at Northeastern University and worked with automotive component manufacturers, in the semiconductor industry, and in biotech. In addition to Torque News, John's work has appeared in print in dozens of American news outlets and he provides reviews to many vehicle shopping sites. You can follow John on TikTok @ToknCars, on Twitter, and view his credentials at Linkedin

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tangible (not verified)    October 18, 2021 - 9:32PM

Once in a great, great while, conditions exist that allow pranksters on the web to claim that cars are an investment.
Good luck ever collecting on that claim. It CAN be done, but only in specific windows of time, separated by great lengths of time.