I should probably preface this post by saying that the s2000 is an unbelievable adrenaline rush and an amazing car, regardless of the cost! But because every car comes standard with a price tag, I have done the following study.

I noticed that someone had done an informal financial analysis of s2000 depreciation schedule using Kelly Blue Book resale vales as a reference. This seemed like a very good idea and a good basis for figuring out the initial cost of ownership. I decided to go into this analysis a little more deeply and wanted to share my results with everyone.

The main assumption in this analysis is that buying a new my2005 and selling it in 2 years would be like selling a my2003 now.

I understand that ownership periods vary greatly on this forum, but have used a two-year holding period, averaging 12,000 miles per year. My goal is to own the car within the 36,000 / 3yr warranty period and try to avoid as much in unscheduled maintenance as possible. Based on the idea that depreciation is greatest in the first year of ownership, I projected that buying a slightly used model would be the cheaper way to go. However, based on this analysis, it might not be the best option.

DATA: model year, mileage, condition: price

2005, 0, excellent: $32,000 (based on carsdirect.com)

2004, 6k, excellent: $27,910
2004, 12k, excellent: $26,935

2003, 12k, good: $25,465
2003, 24k, good: $23,200

2002, 24k, good: $21,625
2002, 36k, good: $21,000


Option 1: Buy my2005 new ($32,000) and sell in 2 years ($25,465). Cost of ownership $8,800 over 2 years, or $366.67 per month.

Option 2: Buy my2004 with less than 6k ($27,910) and sell at the end of 2 years with 30k ($21,000). This brings the cost of ownership to $6,910 over 2 years, or $287.92 per month.

Option 3: Buy a my2004 with 12k (26,935) and sell at the end of 2 years with 36k (21,000). Cost of ownership $5,935 or $247.29.

Now the interesting part... After doing this I noticed that people were getting new my2005 and my2004 for significantly less than $32,000. If you were to get it at say, $30,000 btt which has been quoted numerous times on this forum, that would bring the cost of ownership down to $6,800 over 2 years, or $283.33 per month. Getting the car at this price greatly reduces the cost of depreciation over the first year, and definitely justifies the depreciation awards this car has received.

If the my2005 prices are correct, then the price difference in the three options is pretty small ($40 p. month). I would most likely pay the extra money to take it home from the showroom.

I am eager to hear your comments...

 

If you're most concerned with cost of ownership then get the least expensive if it makes you feel better. Otherwise, compare the 2003 vs 2004 and get the one YOU like better.

Good luck

 

Your over analyzing. If you are buying this car based on all the factors you discussed above, this car is not for you. The joy of owning this car a month is triple what you figure the cost to be.

 

Its cool that you are analyzing your purchase at this extreme level of detail but its too much. Just buy an 2005!

 

IMO, I'd pay the $2-3k additional cost of ownership over a few years for a brand spanking new car. Unless of course I found a garage queen for a good price that was absolutely mint, which is not easy to find. There's just something about pulling away from the dealer in your brand new car that is worth that much more to me. Some people have great luck with only buying/driving used cars. My S is my daily driver and only vehicle. If I were looking for an additional vehicle for myself, my view on buying a used car would probably be different, but there are so many little wear and tear items like chips in the bumper from rocks and that minor scratch or ding you may have to "settle" for when buying a used car and that just doesn't interest me. Sure, 8 months later, I've got plenty of rock chips in the bumper of my '04, but I put them there.

In your analysis, you didn't mention how the car would be purchased. Will it be paid for in full or financed? If financed, used car interest rates are abit higher, so your sticker price vs. sticker price analysis is somewhat inaccurate.

It all depends on your financial wellbeing. If the difference between a nice used S at $25k and a new one at $30k is going to break you, then the choice is simple.

 

Several flaws in your analysis. One is that you assume that the cost of depreciation is constant. Another is that you are not comparing "apples to apples."

 

depreciation slows each year. It is fastest in the first year, slower in the next, slower in the next, etc. The difference between a 00 and 01 is mayber $1K, for example. The best financial option is to buy a 00 or 01 and sell it in a couple years. The depreciation probably won't be much at all.

As the S2000 lowers in price, it is attainable by more people. All the Honda kids want one, yet most can't afford it yet. When the price reaches a threshold, the depreciation will be SLOW. There are not many S2000s out there, and in the future the demand for used ones (from buyers who can actually afford it) will be HIGH and supply LOW.

 

If your going to sell the car in 2 years go with the higher mileage 04 or the 03. The cost of ownership is the lowest which is what you want if your going to sell. If your going to keep it....get the 05 to get a jump on depreciation. The 04 will already be a year behind.

The lower cost of ownership will also allow more money for modifications.

A new cars a new car. 12,000 miles.....on a car that will last over 100,000 miles leaves you with 88% of the original new car.

 

Get the cheapest MY04 that you can find and be through with it. You did all that analyzing when you can just think about it like this.

The cheaper the car, the cheaper the cost of ownership... period. Who cares about miles? It's a Honda. I had my MY00 S2000 for almost 3 years and never had to worry about anything... that is, until my roof started coming apart from the frame ripping it.

 

Interesting assumptions and observations. As a banker of 10 years and being pretty close to my institution's sizeable auto lending business, let me add a few points to your analysis.

Depreciation is not constant and can increase or decrease depending on a number of factors, including economic conditions, market conditions, operational risks and reputational risks, etc. The assumptions you use are not overly conservative or optimistic, but they clearly will not play out so exactly.

A very distinct environmental factor is playing out in used car markets across the US, to varying degrees. Used car invetories are actually increasing in value. Why you might ask? The domestic manufacturers are cutting 2005 production estimates and the foreign manufactures are facing tougher exchange rates. Therefore there will be fewer new cars available.

SUVs are falling out of favor. The price of gas is killing them and maybe people are realzing how dumb they are to own in the city (sorry a little subjective there). The hybrid SUVs may continue to sell well, but the Battlestar sized gas guzzelers are only moving because of heavy rebates and discounting.

Finally, the price of gas is high and will stay there. Oil production is down or flat. Demand is up because in the US usage is up and China has grown into a big player in the auto business (a billion Chinese are buying cars left and right and need gas for them).

That's a lot of business crap I am compiling for the end of the quarter and it is really less than relavant with the S2000.

Buy this car because you want it and because you want to drive it. I drove someone elses car on Wake the Dragon last spring and bought one when I got home. It was an emotional decision, but I don't regret any part of it.