’12 Focus Depreciation – That Bad? Really? <DATA ANALYSIS INCLUDED>

[asting]

Originally Posted by Arco-Zakus

When I first read the original post I wondered whether differences in the volume of new sales between brands or locations might affect the results in some way, but with my limited knowledge of statistics I could not identify what the effect might be. Same for differences between brands and cities in the total number of used cars for sale.

You point out that for different volumes "it does not mean the same thing". Can you explain how? I'm not looking for a detailed tutorial on statistics, just a general idea of whether it makes a big difference or not for the purpose that kam327 did the original analysis.

Here's the paragraph I was referencing from the OP

Here’s a graph of number of cars on the market. Someone pointed out not long ago that if you search the entire country there are far more used Focuses on market than any other car. True, but in the 5 sample markets I looked at, that’s not true. There are generally no more Focuses on the market than the competition. There must be a market out there somewhere that has tons of them, but I haven’t found it (though Cleveland is pretty high).

I was simply trying to make the point that a simple number does no justice. If, say, a toyota is the most popular car and there are 10x as many toyotas produced and sold as the focus then you would expect much more trade volume, and a higher number of used toyotas for sale at any given time. If there were just as many Foci for sale in this hypothetical as toyotas a reasonable reaction would be to not accept the hypothesis that there are relatively as many Foci as toyotas for sale. Therefore, comparing these numbers without some sort of weight seems a little hasty.

Sorry if that wasn't clear in my first response.

[kam327]

Originally Posted by empowah

The problem is that you're comparing the car's trade-in value against its CURRENT sales price. A year ago, people were paying more for a new Focus than they are now.

The presence of incentives to boost sales has lowered resale values for owners.

That is true. I am comparing it to Truecar's average sales price. Anyone who paid above average will be worse off. Anyone who paid below average will be better off. This applies to all makes and models.

But as far as I can tell the huge rebates started in late 2011 and have not been reduced since - maybe a month here or there. So the vast majority of '12 and '13 buyers have been eligible for a rebate. That is probably the main reason why the Focus won the recent best compact car bang for the buck award, which I believe was based on the average transaction prices, not MSRP.

[kam327]

Originally Posted by asting

I was simply trying to make the point that a simple number does no justice. If, say, a toyota is the most popular car and there are 10x as many toyotas produced and sold as the focus then you would expect much more trade volume, and a higher number of used toyotas for sale at any given time. If there were just as many Foci for sale in this hypothetical as toyotas a reasonable reaction would be to not accept the hypothesis that there are relatively as many Foci as toyotas for sale. Therefore, comparing these numbers without some sort of weight seems a little hasty.

Sorry if that wasn't clear in my first response.

I was only trying to address the notion many have that there are far more used Foci on the market than any other competitor, likely dumped by the rental fleets, which is why depreciation is supposedly so horrid. All I tried to show is that no, there are not significantly more used Foci on the used lots in the random markets I looked at. Which helps explain why those used Foci asking prices are not significantly lower than the competition.

I'm trying to not make it more complicated than it needs to be for the simple gut check I was attempting. I never claimed this was a thorough statistical analysis. I don't have the free time for that.

[flyboyike]

Originally Posted by empowah

In my case, depreciation has been pretty horrible. It's costing me more per month to drive a Focus ($426/month) than what my folks are paying to lease their $60,000 diesel E-Class ($315/month, $0 down, 24 months).

MSRP: $20,985
sales price + tax: $20,700 ($300 below invoice minus all incentives)
private party value: $14,300

DEPRECIATION = $6,400 over 15 months and 17,000 miles
= $426/MONTH

It doesn't help that Ford has been flooding the fleets with Focii and that there are a lot more incentives now.

Might as well compare it to a house (although these days even some houses manage to depreciate).

[flyboyike]

Originally Posted by Arco-Zakus

Other buyers give a higher priority (maybe even "critical") to likely resale value because they do not plan to keep a car more than a year or two in any case.

Then they're gambling. Not that there's anything wrong with that.

[RonMaiden]

I plan on keeping my Focus for a while and my hope is taking really good care of it,keeping it garaged and keeping miles to a minimum so if I do resell it in 7 years or so it still might be worth a lick.

[Arco-Zakus]

Originally Posted by empowah

The presence of incentives to boost sales has lowered resale values for owners.

And now the people who let their enthusiasm for an impressive new car override the age-old advice to not be among the first to buy a new model in its first year know how much the tuition is to learn this lesson first-hand. "Experience is a dear teacher, but fools will learn at no other." -- Benjamin Franklin.

I am not being unsympathetic. I learned from the same teacher. More than once. (It has taken enormous restraint to not repeat the lesson with the 2012 Focus over the past year.)

=====================================================================
There's no fool like an old fool. It's like anything else -- the longer you are one, the better you get at it. -- Me.

[PratoN]

^True that.

The lesson I've taken from this experience is to never buy a new car again. Ever.

[Arco-Zakus]

Originally Posted by RonMaiden

I plan on keeping my Focus for a while and my hope is taking really good care of it,keeping it garaged and keeping miles to a minimum so if I do resell it in 7 years or so it still might be worth a lick.

With almost any car, the longer you keep it in great shape the better you do when you sell it. Over time the supply of other samples in similar condition shrinks. It may be hard to find an interested buyer, but when you do they don't have many alternatives. In the years following the Edsel's introduction it was the butt of many jokes and depreciated wildly. Look what a clean one (if you can find one) sells for these days.
(http://en.wikipedia.org/wiki/Edsel#End_of_the_Edsel)
(http://en.wikipedia.org/wiki/Edsel#Today)

On the other hand, if you enjoy it and drive the heck out of it as much as you can for as long as you can you might not get much for it in the end, but you will have gotten your money's worth anyway. You just have to decide which means more to you.

[Arco-Zakus]

Originally Posted by PratoN

^True that.

The lesson I've taken from this experience is to never buy a new car again. Ever.

Do you mean "new car", as in not a used car, or as in the first year of a new model or generation?

If you mean the first way, well, buying used cars has its own risks. At least you get to see what it's like "after the new wears off," though.