Used cars vs. new cars: cost comparison
Engel & Engel
The choice between a used car and a new car is a strategic investment decision for companies. In addition to the purchase price, depreciation, ongoing operating costs, and financing structures in particular influence the economic efficiency of a vehicle over its useful life. A holistic view of the total costs is therefore crucial.
1. Purchase price and depreciation
New cars require the highest initial investment and lose an average of 20 to 30 percent of their market value in the first year. This rapid depreciation represents the largest cost factor. Used cars have already undergone this initial loss, are significantly cheaper to purchase, and subsequently lose value more slowly, which reduces the cost per year of use.
2. Maintenance and servicing
New cars usually incur low repair costs in the first few years and benefit from warranty services. Maintenance is easy to plan and major defects are rare. With used cars, maintenance and repair costs increase with age, but can be limited by careful selection and maintenance histories. Despite higher maintenance costs, they often remain economically advantageous.
3. Insurance and taxes
Due to their higher vehicle value, new cars are generally more expensive to insure. Tax burdens can also be higher. Used cars usually incur lower insurance premiums and often lower tax costs, which reduces ongoing expenses.
4. Financing and capital commitment
New cars are often financed or leased. Even with favorable terms, interest costs and long-term commitments arise. In addition, more capital is tied up. Used cars require lower financing amounts and thus offer greater liquidity and flexibility.
5. Short- and long-term cost impact
In the short term, new cars weigh on the cost calculation due to high investments and rapid depreciation. In the long term, they score points for reliability, but only partially offset the financial disadvantage. Used cars impress with low entry costs and moderate depreciation. Even with higher maintenance costs, the overall cost balance is often more favorable.
Conclusion
From a business perspective, used cars are the more cost-effective solution in most cases. The lower purchase price, reduced depreciation, and lower running costs usually outweigh the higher maintenance risks. New cars offer predictability and technical reliability, but their higher overall costs are only justified in special cases.