You’ve probably been told - as if it was a proven fact - that cars beyond a certain age cost more to repair and maintain. This, allegedly, makes it more economical to trade up to a new car rather than keep an older car running. When speaking to several car salesman recently (for research only) they implied I was throwing money down the drain if I didn’t replace my old car immediately. Being a curious fellow, and they being salesman, I wondered if it is really true.

In the spirit of the Mythbusters TV program, I decided to put it to the test. Since buying my car over 20 years ago, I have kept track of every dollar I have ever spent on it, and most of the numbers were already in a spreadsheet. I did some calculations, made some charts, and the result was clear.

I excluded car licensing/registration, treating this as a fixed cost because it would be the same whatever I was driving, within that category of car. The only significant variations have arisen due to changes in government policy - not something I wanted to figure in my calculations. I also excluded petrol expenses because of their great variability which has little to do with the age of the car.

Everything else was included - servicing, all parts, labor, oil top-ups, new tyres, major things like a new engine down to little things like a replacement plug lead or light globe - whatever costs were required to keep the car running. I also included insurance because it varies according to the age of the car, and I’ve kept the same policy throughout. Because of the long time period involved I’ve adjusted for inflation (using the government CPI figures) in order to make fairer comparisons. The chart below illustrates the year by year total real costs:

As you can see, costs varied from year to year. The last year was particularly expensive due to a new reconditioned engine and a variety of other parts that were best replaced at the same time. However, more expensive years are balanced out by cheaper years, and its the long term averages that tell the real story.

The car salesmen I spoke to all agreed on ten years as being an optimum age to replace a car. With twenty full years of my own data, the obvious thing to do was obtain an average annual cost for the first ten years and compare it with the last ten:

Average Total Car Costs
(including insurance, excluding licencing/fuel)
First ten years: A$ 1268.90 per year
Last ten years: A$ 954.90 per year

Despite what the salesmen said, my car has cost me LESS to keep on the road as it has grown old … and I’ve got all the receipts to prove it! That’s even after taking into account the recent cost of a replacement engine, which is possibly the biggest expense an ageing car is likely to incur. After the recent work, I expect the average cost over the next few years to be even lower.

What I didn’t consider was the cost of purchasing the car, including loan interest. In my case this was all paid in the car’s first three years, which means I’ve now had over 17 years with no purchase or loan expenses to bother with. This makes keeping an older car even more economical. Had I replaced my car after ten years, I would have had the extra purchase or loan costs - and the higher trade-in value of a younger car would not have offset this.

Also the insurance premiums on a new car are more expensive (approx $150pa more on a similar car). The salesmen’s estimates of the servicing costs of a new car under warranty weren’t much less than I’m currently averaging, so I don’t think having a warranty saves as much as they like us to think, as my experience bears out.

My situation may not reflect everyone else’s. I bought my car new and have looked after it and driven it sensibly. Had I bought a second hand car with dubious history, or neglected it and thrashed it with stupid driving, then the outcome could have been different … logic suggests an abused vehicle could cost more to maintain.

Now when a salesman assures me it is costs more to keep an old car than replace it with a newer one, I can politely say “poppycock!” As far as I’m concerned, that myth is busted.