A comment from Mapmaker on another thread made me think this is something we should explore more thoroughly.
...A guarantee that once a car is worth under £4k many repairs will be uneconomic.
But what does this actually mean? In my business (IT) we tend to replace a computer as 'beyond economic repair' if the cost of fixing it is more than half the cost of replacing it. Here, though, we tend to hear things like "That'll cost more to fix than the car is worth".
Two key differences between computers and cars:
- A business computer has a useful life of no more than six years. By the time it suffers an expensive failure, it's usually close to the time it would have been due for replacement anyway.
- Whatever some may think, there's comparatively little built-in obsolescence in a car. Provided it doesn't run on something unobtainable, it can go on being useful more or less indefinitely.
My point is that 'what the car is worth' is barely relevant to the decision on whether or not to fix it. The question to consider is what it would cost to get back to a useful degree of mobility, and whether the cost of the repairs is justifiable in the face of the alternatives.
Running an ageing car, as many of us do, means we exchange a large (and invisible) annual depreciation for a smaller but very tangible outlay on replacing the bits that wear out. My car is worth no more than £2,000 but I've spent more than that over the last two years on mechanical repairs; on the other hand its resale value has pretty well stabilized and it's still a useful and enjoyable piece of kit, so I think that's justified. I know I'll have to replace it eventually, but I think the trigger would only be a bill greater than the first year's depreciation on something comparable but newish - say £2,500 in one go.
We'll see. What do others think? And what would be an uneconomic repair on a £4,000 car?
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You cant use a business computer as a yardstick. Its value is depreciated in the asset register so has a given lifespan and known value at any time.
A car in private hands is not like that. The depreciation is not fixed, indeed its residual value might increase at some point in its lifetime.
its simply a matter of what the owner can afford to do.
Last edited by: Zero on Fri 30 Sep 11 at 15:43
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Not a yardstick, Z, but a useful comparison. Its value isn't considered at all, merely the relative costs of repairing or replacing it. Quite a lot of businesses depreciate over three or four years but go on using for five or more.
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The question an insurance company asks is: 'What is our cheapest option?'
Those two options are usually the overall cost of the repair, and the amount they will have to pay the insured if they write the car off.
Bear in mind the total bill to the insurer for repair can include courtesy car hire costs and other incidentals.
And if they write the car off, they get something back for the wreck.
So a swift write-off is a good option - for the insurer.
Were the owner of the car dealing with the damage on his own, then other factors such as service life of the vehicle and what he paid for it would come into play.
Last edited by: Iffy on Fri 30 Sep 11 at 16:20
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>>A comment from Mapmaker "A guarantee that once a car is worth under £4k many repairs will be uneconomic."
I deny ever having written that. I would never, ever have written such a shockingly vague sentence that "guarantees" something happening "sometimes".
>>My point is that 'what the car is worth' is barely relevant to the decision on whether or
>>not to fix it. The question to consider is what it would cost to get back to a useful degree
>>of mobility, and whether the cost of the repairs is justifiable in the face of the
>>alternatives.
That's just plain wrong. On the basis that the only alternative to repair is to sell it and buy a new one, then "what the car is worth" is the only rational other piece of information one needs. A known car, of course, is often worth more than an unknown near-identical car.
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My mistake, MM. It were Madf wot done it. Beg pardon.
Also, for the sake of clarity, I'm thinking of mechanical repairs here, not the results of accidents.
Last edited by: WillDeBeest on Fri 30 Sep 11 at 16:24
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>> That's just plain wrong. On the basis that the only alternative to repair is to
>> sell it and buy a new one, then "what the car is worth" is the
>> only rational other piece of information one needs.
>>
Reading that makes me think any "Executive" car is a financial disaster yet some happily run them for many years for not much more than your average family hatchback.
An uneconomic repair for me is one which requires multiple trips back to the garage afterwards e.g. if the car was fire or water damaged and repaired then having to make several return trips to sort things out. You know with water damage the engine, interior and electrics are never going to be the same again.
A one off bill is OK if it fixes the problem.
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The Fiesta would be beyond economic repair if a brake pad needed replacing as the car is worthless but for my farther he cannot afford anything else so he will happily pay a few hundred every year to keep it on the road, and that is all it costs.
However once the rot gets it (it already has) then when it finally fails the MOT for it it won't be worth bothering because the issue will keep coming back.
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Another angle from my view.
I have one vehicle and no reasonable access to another unless I rent one.
I am considering changing my car which still passes the MoT and is otherwise OK (cam belt done, A/C still working, good tyres and battery etc,) but the gearbox failed. The repair cost more than the car is worth in £££s terms but I went ahead so that my mobility is restored thus allowing me to hunt for a replacement car at leisure and also travel to view a replacement.
I console myself that I have a car that I can sell as a runner rather than "for spares" he says hopefully.
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>>My point is that 'what the car is worth' is barely relevant to the decision on whether or not to fix it.
I tend to agree. However, it has long been used as a convenient model of reasoning by the motor trade when talking to customers. It suits the motor trade to have rather a pessimistic test of when it's time to change.
It would be more rational to track total costs, and keep a running average annual cost of ownership, and continually compare this against the costs of running the "new" car you have in mind to determine when to change.
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I've run a few old cars over the years.For me spending money on other things and bringing up three kids came first.Having a old car didn't stop me driving abroad the cars i had where reasonble simple mechanical.We've owned new cars over the last fifteen years,last two cars motability.
The longest ownership I had of a old car was a VW Jetta.Go it after my dad died.The car drove on LPG and Petrol.I got the car at seven years,had one reconditioned engine put in and the auto gear box overhauled.The auto box broke again,the car was by then fifteen years old.Part exchanged the car.
I kept the car that long for sentimental reason and I had some good mates who helped me keeping it running.
When the lease runs out on this car not sure what to do.Might go for second hand two three years and keep it running.Looking for reliable engineering and robust,also problaby petrol.
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An economic repair to an insurance company is totally different from an economic repair to an individual.
To an individual running an old car its market value, before or after repair, is irrelevant.
What matters is whether the car after repair will give the owner what he wants from it, or not.
What I want is:
1) A car that can be used reliably as my daily driver
2) This particular car, because I like it
3) Failing that, another car exactly like the existing one.
So on that basis I don't care what it costs to keep my 20 year old Volvo on the road. All parts are cheap compared with the depreciation costs of buying a more expensive car.
And if I did replace it, I would have thrown away the depreciation costs and then be back in the same position, minus several thousand ponds.
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>> And what would be an uneconomic repair on a
>> £4,000 car?
There's no single answer to this, especially after reading the other posts. It all depends on how much the owner wants to keep the car. I don't think a computer bears comparison as people don't have an emotional attachment to them, at least, most people don't, apart from Iffy and his Apple.
You've had a chuckle at some of us waxing lyrical over engine noise (and you have to admit you're fond of your D5, not just for the armchairs I'll wager), but the fact is there are people on this forum who would spend large amounts to keep their existing car on the road, where economics wouldn't come into it.
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i wish i had 4 grand for a car....welcome to the real world
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What constitutes an uneconomic repair? - Zero
