Does depreciation of ~12k/year sound right for Dec 2018 M3 LR AWD?

[xanatos]

On a whim, I was trying to calculate the depreciation of my excellent condition, December 2018, Blue M3 LR AWD 18" EAP white interior with 14k miles, via offers from Vroom, Carvana, and Shift, and it comes out to be about 12k/year.

My compare method is the offers from those websites vs. the sticker price on my MVPA before sales tax.

Wondering if that sounds about right, or if it should be higher/lower?
Anyone else tried calculating their depreciation using similar web sites to get an idea?

 

[valaeyron]

The used car market fluctuates a lot. When I sold my 2015 CX-5 the other month to defray the cost of the M3 they said that prices might drop a bunch due to over supply in the used car market. ymmv

 

[jjrandorin]

On a whim, I was trying to calculate the depreciation of my excellent condition, December 2018, Blue M3 LR AWD 18" EAP white interior with 14k miles, via offers from Vroom, Carvana, and Shift, and it comes out to be about 12k/year.

My compare method is the offers from those websites vs. the sticker price on my MVPA before sales tax.

Wondering if that sounds about right, or if it should be higher/lower?
Anyone else tried calculating their depreciation using similar web sites to get an idea?

Your "compare" is wrong, unless you didnt get the 7500 tax credit..

I bought a very similar car, except mine is the performance model so was more expensive than yours. My MVPA says 71,500 before taxes. That includes EAP. I am not sure what your MVPA number is, but its likely lower than mine.

We both got a 7500 tax credit so subtract that (I dont want to hear anything about "thats mine, it doesnt count" etc. It DOES count in your cost of the car and depreciation, especially since new cars do not have access to that credit.

You are also in the Bay area in CA so I am virtually certain you applied for, and received the california tax credit, as there were less restrictions then (as I did)... unless your household income is such that you didnt qualify for that which is I believe over 300k.

So, you take your MVPA, subtract the 7500 tax credit, subtract the california rebate, and THAT is your cost of the car.

In my case, its 71,500 minus 7500 minus 2500 for the California rebate, and minus about 1500 in other rebates I got. Maybe you didnt get the other 1500 but you almost assuredly got the 7500 + the 2500. So subtract 10k from your MVPA number and thats what your cost was.

Now, if you want to figure out the depreciation by carvana offers instead of private party ones, go ahead. But it isnt anywhere near 12k a year. In my case it looks like this:

71,500 minus 7500 minus 2500 = 61,500 my cost pre tax for a Model 3P with EAP. Car cost new right now = 64,990, so it actually cost me less, not "20k-25k more" like some people like to say. So if my cost is 61,500, I could sell this car easily for 47k, but could probably get up to 52k for it if I waited on the right buyer.

Lets go with 47k thats 14,500, or 659 a month which doesnt count me actually using the car as well.

 

[SageBrush]

Sounds ballpark. Welcome to the wonders of tax credits

Addendum: jjandorin beat me by a msec. I don't take the length of the post into account

 

[jjrandorin]

Sounds ballpark. Welcome to the wonders of tax credits

But the tax credit was money actually received, so it should be calculated as a reduction in the cost to own the car. for some reason, though, everyone always "forgets" or discounts that number. Just like when someone puts a big down payment down on a car, a lot of people forget they did that, when they start talking about how their car only costs them "350 a month" when they neglect to talk about the 8k down payment they put down.

This is that, but in reverse. "lets talk about this money I lost on this car, but lets also ignore the money I got back from over here by buying it when I did.. that doesnt count".

Not directed at you @SageBrush , just at people who somehow forget they got that money and dont want to count it when they start talking about "this depreciation!" on this vehicle.

The model S and X owners are the ones who should be (rightfully so) upset. Not model 3 owners.

 

[xanatos]

Your "compare" is wrong, unless you didnt get the 7500 tax credit..

I bought a very similar car, except mine is the performance model so was more expensive than yours. My MVPA says 71,500 before taxes. That includes EAP. I am not sure what your MVPA number is, but its likely lower than mine.

We both got a 7500 tax credit so subtract that (I dont want to hear anything about "thats mine, it doesnt count" etc. It DOES count in your cost of the car and depreciation, especially since new cars do not have access to that credit.

You are also in the Bay area in CA so I am virtually certain you applied for, and received the california tax credit, as there were less restrictions then (as I did)... unless your household income is such that you didnt qualify for that which is I believe over 300k.

So, you take your MVPA, subtract the 7500 tax credit, subtract the california rebate, and THAT is your cost of the car.

In my case, its 71,500 minus 7500 minus 2500 for the California rebate, and minus about 1500 in other rebates I got. Maybe you didnt get the other 1500 but you almost assuredly got the 7500 + the 2500. So subtract 10k from your MVPA number and thats what your cost was.

Now, if you want to figure out the depreciation by carvana offers instead of private party ones, go ahead. But it isnt anywhere near 12k a year. In my case it looks like this:

71,500 minus 7500 minus 2500 = 61,500 my cost pre tax for a Model 3P with EAP. Car cost new right now = 64,990, so it actually cost me less, not "20k-25k more" like some people like to say. So if my cost is 61,500, I could sell this car easily for 47k, but could probably get up to 52k for it if I waited on the right buyer.

Lets go with 47k thats 14,500, or 659 a month which doesnt count me actually using the car as well.

Ok that makes sense. My MVPA was 61700, so that was the value I was using for comparison purposes.

But we can calculate it your way too. To be fair though, if we want to account for tax credits and rebates, we need to include the sales tax too to get the real out the door price.
so it should be:

$61,700.00 price
$6,396.30 tax
$68,096.30 total
$60,596.30 after 7500 tax credit (don't qualify for the CA credit)

so using your calculation, it's only about 1k off from the value I was using originally.

So using either 61.7k or 60.6k as starting price, and comparing with offers below, I guess it's still about 12k/year?
(don't want to consider private party yet, that's another story).

1) vroom - $38,642
2) shift - $39,100
3) carvana - $36,341

 

[OCR1]

Cars don’t depreciate in a straight line. They will depreciate the most in the first year, then a little bit less in year two, and so on. So in the first year a typical car might depreciate 15%, then 10% in year 2, 8% in year 3, and 5% in year 4.

Tesla did lower the prices significantly once the federal tax credit began to be phased out. So while an owner paid more to Tesla for the car in 2018, their net price was about the same as those who bought in 2019.

As an example, we bought our 2018 LR RWD for $49,000 - $7,500 tax credit. We then bought a 2019 LR RWD for $43,000 - $3,750. So while the price we paid to Tesla dropped $6K in three months, the real net price of the 2019 model was $2,250 less than the exact same model in 2018.

 

[run-the-joules]

If you sell to a business, you will get less for it than selling private party unless something is very awry. Businesses need to be able to sell it again at a profit.

 

[pl8dlikafiddle]

Looks like Carvana’s vehicle evaluations have finally caught up.

I sold a 22,000 mile 2019 SR+ with no additional options ($38,990 msrp) to Carvana in August for $35,600. That’s a one year old car with 22,000 miles depreciating $3,390.

There were posts on here of folks getting $36.5k for the SR+ as late as September.

 

[KenC]

Ok that makes sense. My MVPA was 61700, so that was the value I was using for comparison purposes.

But we can calculate it your way too. To be fair though, if we want to account for tax credits and rebates, we need to include the sales tax too to get the real out the door price.
so it should be:

$61,700.00 price
$6,396.30 tax
$68,096.30 total
$60,596.30 after 7500 tax credit (don't qualify for the CA credit)

so using your calculation, it's only about 1k off from the value I was using originally.

So using either 61.7k or 60.6k as starting price, and comparing with offers below, I guess it's still about 12k/year?
(don't want to consider private party yet, that's another story).

1) vroom - $38,642
2) shift - $39,100
3) carvana - $36,341

I don't think you should add sales tax to your total. The car buyer gets a sales tax exemption, but will pay the sales tax to the state, when they sell the vehicle. So, their price to you is without sales tax, and a fair comparison would be if you didn't include sales tax.

So, $54200 to $39100, is a $15000 difference over 2yrs, so $7500 a year.

Also, I think you should include the Cali tax credit, not because you didn't qualify for it, but you're in the Cali market. Buyers are valuing your 3 vs others in Cali, which most presumably did get the credit. So, maybe the valid comparison is $51700 to $39100, a $12600 difference, or about $6300 a year. Half of your original depreciation estimate.

 

[SageBrush]

To be fair though, if we want to account for tax credits and rebates, we need to include the sales tax too to get the real out the door price.

Huh. I thought sales tax was paid on new cars too

 

[CapeOne]

I sold a 22,000 mile 2019 SR+ with no additional options ($38,990 msrp) to Carvana in August for $35,600. That’s a one year old car with 22,000 miles depreciating $3,390.

Your "MSRP" would have actually been $40,190 ($38,990 + $1,200).

 

[CapeOne]

I don't think you should add sales tax to your total. The car buyer gets a sales tax exemption, but will pay the sales tax to the state, when they sell the vehicle. So, their price to you is without sales tax, and a fair comparison would be if you didn't include sales tax.

So, $54200 to $39100, is a $15000 difference over 2yrs, so $7500 a year.

Also, I think you should include the Cali tax credit, not because you didn't qualify for it, but you're in the Cali market. Buyers are valuing your 3 vs others in Cali, which most presumably did get the credit. So, maybe the valid comparison is $51700 to $39100, a $12600 difference, or about $6300 a year. Half of your original depreciation estimate.

If the OP is trying to get an idea of how much THEIR car depreciated from what THEY paid based on THEIR circumstances, I think including sales tax and not including credits they didn't qualify for makes the most sense. Obviously, circumstances can vary regarding credits qualified for, trade offers, local markets, etc. Whether or not any one particular "depreciation situation" (good or bad) is reflective of the overall market can be debatable given various factors that come into play including condition of the car, miles, options, etc.

 

[xanatos]

If the OP is trying to get an idea of how much THEIR car depreciated from what THEY paid based on THEIR circumstances, I think including sales tax and not including credits they didn't qualify for makes the most sense. Obviously, circumstances can vary regarding credits qualified for, trade offers, local markets, etc. Whether or not any one particular "depreciation situation" (good or bad) is reflective of the overall market can be debatable given various factors that come into play including condition of the car, miles, options, etc.

Thanks, actually that is indeed what I was trying to do, just trying to get an idea of "how much money have I lost out of pocket if I were to sell the car today". I didn't realize using the word "depreciation" would have different meanings and metrics to other people, so I can certainly understand all the other commenters viewpoints too!

 

[Twiglett]

I always get lost in the purchased cost verses current value thing. I don't include the tax credit in the value because I got that back.
I took some of my tax credit and used it to fund the addition of FSD, which was much cheaper then.
To add FSD is much more expensive now (I was looking at switching to a Y), so much so that I'm just going to keep my 3.
Maybe the resale values will start to include the increased cost to get FSD - who knows.

 

[CapeOne]

Thanks, actually that is indeed what I was trying to do, just trying to get an idea of "how much money have I lost out of pocket if I were to sell the car today". I didn't realize using the word "depreciation" would have different meanings and metrics to other people, so I can certainly understand all the other commenters viewpoints too!

I think technically speaking, "depreciation" generally refers to the drop in value from original MSRP to current wholesale. That itself can be a flawed metric as most cars don't sell for full MSRP and therefore part of the depreciation wouldn't really be a loss if the transaction wasn't at full sticker. A better way to calculate it IMO would be to base on actual purchase price (after discounts, rebates, etc. but before sales tax, fees, etc.) but since not everyone pays the same price it's not as easy to do as simply basing on MSRP.

Although other expenses like sales tax, registration fees, etc. are not typically viewed as part of depreciation, they are obviously part of the total purchase price and I think should be included if someone is trying to figure out the difference between a "cash out" number and their initial expenditure which I assumed was what you were trying to do.

In your case and using $38k (approximate average of Vroon, Shift and Carvana offers) as a cash out figure, I would say that so far your car depreciated $16,200 but the overall loss Is around $22,600.

 

[xanatos]

I think technically speaking, "depreciation" generally refers to the drop in value from original MSRP to current wholesale. That itself can be a flawed metric as most cars don't sell for full MSRP and therefore part of the depreciation wouldn't really be a loss if the transaction wasn't at full sticker. A better way to calculate it IMO would be to base on actual purchase price (after discounts, rebates, etc. but before sales tax, fees, etc.) but since not everyone pays the same price it's not as easy to do as simply basing on MSRP.

Although other expenses like sales tax, registration fees, etc. are not typically viewed as part of depreciation, they are obviously part of the total purchase price and I think should be included if someone is trying to figure out the difference between a "cash out" number and their initial expenditure which I assumed was what you were trying to do.

In your case and using $38k (approximate average of Vroon, Shift and Carvana offers) as a cash out figure, I would say that so far your car depreciated $16,200 but the overall loss Is around $22,600.

Thank you so much, that helped tremendously!

 

[arghx7]

Bump instead of a new thread.

any idea how a new tax credit would affect depreciation? A lot of it would depend if Tesla jacks up the price to compensate.