Tuesday, October 5, 2010

Will your car really go 300,000 miles? Probably not.

Subaru is running a series of ads trying to burnish their reputation for reliability, which they desperately need to do.  They suggest in their ads that driving a car 300,000 miles is not that unusual.  But most cars will see the wreckers long before that happens.

How long should you keep a car? And will you get astounding miles out of your car before you junk it?  These are hard questions to answer, but in general, expecting a car to go 300,000 miles is not really realistic.

Cars do last a lot longer than they used to, that is true.  Part of this is improved technology, part is that the increased cost of a car that makes keeping it longer essential to recover the costs.  But a big part of it is, people simply drive a lot more these days.

Average mileage driving by most Americans today is about 15,000 miles a year - which is why these lease deals with 10,000 or 12,000 miles a year allotted are such a bad bargain.  Historically, Americans drove about 12,000 miles a year in the 1960's and 70's, but it has increased over time.  People are commuting longer distances from outlying suburbs.  In addition, modern suburbs are laid out so that you have to drive from your house to the store, to school, to friend's houses, to, well, to just about anything.  You literally cannot live without a car in America, unless you live in Manhattan.

So people drive more.  A 10-year-old car now has an average of 150,000 miles on it - almost double what we expected only a few decades back.  But some folks drive a whole lot more - like 20,000 or 30,000 miles a year.  These "high milers" are the ones that put 300,000 miles on a car in short order.  And these are generally the cars you hear about when someone mentions that they got astounding service life out of a car.

When I lived in Washington, DC, there were people who would commute to the District from Pennsylvania or West Virginia.  If you are not from the area, let me tell you, that is a long way to commute - 50, 75, 100 miles or more - each way!  They get up at 5 in the morning and drive 2 hours to work and repeat the process on the way home.  Why they do this is the subject of another post.  But suffice it to say they are making a very poor (in both senses of the word) economic choice with both their time and money.

But even lesser commutes can "rack up" mileage quickly.  So it is not hard to add miles in a hurry - and often this is the least amount of wear per mile on a car.  Long highway drives put a lot less strain on a car than stop-and-go short city trips.  So if you live "close in" and commute 5 miles to work, it is actually more wear than the fellow driving 20 miles in the country to work.  He never sees a stoplight.  Your car never warms up.

The image above is of a speedometer on a 93 Subaru with 386,000 miles.  Sounds impressive, until you realize that they are driving a staggering 22,000 miles a year.  Many other 300,000 mile stories are about the same - large amounts of miles driven annually, not necessarily a car that lasts 25 years or more.

You don't hear many stories about 1980 Subarus with 300,000 miles on them (a paltry 10,000 miles a year!) as most of those cars rusted out long ago and went to the junkyard.  Even Subarus from the mid to late 1980's or early 1990's are hard to come by.  Most of these "300,000 mile" cars are later models which were driven a LOT by their owners.

You want to get high mileage out of your car?  Just spend your whole life driving it!  Rack up the miles quickly, and it will go a long way.

On BMW websites, you see the same thing.  People bragging that they put 300,000 miles on a 10-year-old car.  Very impressive, until you realize that they are driving 30,000 miles a year, and thus most of their driving is highway mileage.  A car traveling at constant speed on the Interstate uses no brakes, little fuel, and generates little horsepower (about 10-20HP will keep most cars going 65 mph on a highway).  Even things like the car door don't get much more wear on long trips - as opposed to short stop-and-go trips in the city.

You want to wear out a car?  Deliver Pizzas.  In one night, you will use the starter motor more than most people do in a month - and ditto for the car door, the shifter, the brakes, etc.  Lots of short trips, stop and go traffic, and starting and shutting off the car, acceleration (max HP) and deceleration (max braking).  Not many miles, but lots and lots of wear.

So mileage alone is hardly an indicia of longevity of a car.  How it is driven - and where - make a big difference.  Ten miles of big-city potholes will do more damage to a suspension than driving across the entire State of Wyoming.

AGE also determines the life of a car.  Many items on a car simply dry up, crack, and break with age.  Interiors will fade, paint will peel, rubber parts dry up, and even oxygen sensors go south, just from age alone - regardless of mileage.  Go to any retirement community in Florida and see how a 10-year-old Buick looks after sitting in the sun for 10 years, even if granny drove it only 30,000 miles.  It is pretty much trashed.

And when a car ages, it becomes worth less and less, until it is worthless.  Most of those 300,000 mile Subarus are going to the junkyard shortly, only because they aren't worth much, and even putting a new clutch into one will exceed the market value.  Heck, putting new tires on a 300,000 mile car is often a dicey proposition!  Unless some nut wants to make a talisman out of a car and throw money at it, it won't be long for the world.

And there's the rub.  ANY CAR can be made to go as far as you want it to, if you are willing to throw money at it.  So long as you want to spend, the car can keep running.  And some folks will throw good money after bad, keeping an older car alive, when they should just pull the plug and move on.

So how far will your car go before you junk it?  It is an interesting question.  Most of us sell cars long before they "wear out" simply for style or status reasons.  But assuming you want to extract the most economy out of a car, the average American probably can expect to get 150,000 to 200,000 miles out of any car, with average care and average use.  Beyond that, owning the car is not usually cost-effective, unless you are a high-mileage driver (20-30K per year).

For example, if you drive the average of 15,000 miles a year and drive in combined city and country driving, in ten years, you'll rack up 150,000 miles on the car.  At that point, it may need a lot of work - new struts, shocks, oxygen sensors, ball joints, CV joints, tie rods, timing belt, radiator, alternator - just to name a few things.  These parts typically fail (or are slated to be replaced) after the 100,000 mile mark.

And at that point, most $20,000 cars are worth maybe $5000 or less, depending upon condition.  (A good rule of thumb for mechanical equipment is that it depreciates to half its value every 5 years, so a $20K car is worth maybe $5K after 10 years).  At that stage in the game, any major repair, like an engine or transmission spells doom for the car, as the repair cost is nearly equal to (or exceeds) the book value.  You are better off fishing further upstream at that point, rather than trying to join the fabled 300,000 mile club.

Accidents are the other killer.   A friend of mine had a nice Mercedes wagon that got into an accident.  It had close to 200,000 miles on it, and was 15 years old.  The book value was $5000 and the repair estimate was $7500.  The insurance company gave him a check for $5000 and they called it a day.   And that is how insurance works - he could go out and buy a similar car for the same amount of money.  The insurance company is not required to spend more money on the car that it is worth.   As a result, many higher miles cars can be "junked" even after a simple fender-bender.

(Now, sometimes you can be clever with this, as another friend of mine did, when they junked her Subaru after a small collision with a deer.   She bought the car for a dollar and put a new radiator in it, and is still driving it today!).

However, Subaru's 300,000 mile ad campaign might eventually backfire on them, if they make it seem like their cars are guaranteed to go that far.  It really is a cheap sort of trick, really, as you can pick ANY make or model car and find high-mileage driving owners who have managed to put 300,000 miles on the clock without too much difficulty.  It is no real indicia of the longevity of the brand or an expectation that other owners should have.

My neighbor has a 1985 Chevy S-10 Blazer (remember those?) with 300,000 miles on the clock.  This car accumulated a lot of miles early in its life, and then "retired" in its later years to a lower mileage existence.  He rarely drives it, and it does break down with increasing frequency.  Recently, he spend $750 repairing it, which is probably more than the book value.  His logic was "well, for $750, I can't buy another car!"  But of course, for the $750 repair cost plus the $750 the car might be worth, he could buy a secondhand Toyota for $1500.  And this is presuming another repair isn't right down the road.

In contrast, take my 1995 Ford F-150, which has "only" 130,000 miles on it or about an average of 8600 miles a year.  That's low average mileage, and most of it was highway mileage - towing a heavy trailer.  But regardless, the truck is worth maybe $2500 to $3500 on a good day, and has all original engine, transmission, suspension, and other driveline parts.  While it still runs OK, it probably needs a new head gasket soon, which could cost several hundred dollars to replace - or perhaps even a new engine, which could cost a few thousand.

Either way, any repair cost nearly exceeds the book value of the vehicle.  And even though it was garage kept, the dashboard is starting to crack and the paint is showing the telltale signs of early clearcoat failure, and the seats are a little saggy and stained and the carpet has taken on a dirty hue and it is starting to get a little "old car smell".  I have kept it for the last 5 years to tool around in and do chores.  But now that I am moving South, do I need to keep it when it won't fit in the garage down there?  At $2500 resale, it is a trivial asset at this point.

Holding on to it would only mean making the painful decision down the road to spend thousands more on repairs.  Better off to sell it for what you can get for it, and move on.  (And again, note that this $20,000 truck was worth about $10,000 after five years, $5000 after ten years, and now $2500 after fifteen - the depreciation curve is pretty consistent for most machinery).

Note also that once a car is 15 years old or more, the value drops to nearly nothing - regardless of mileage.  A low mileage example may be worth "twice as much" as a high mileage example, but two times nothing is still nothing.

Then there is reliability.   Yes, you can keep an older car going for a long time, particularly if you are handy with tools.   But, if you want to travel to Alaska, maybe a 200,000 mile beater isn't the car to do it in.   Breaking down in a small town where they don't sell parts for your make is never a fun situation to be in.   You have to pay the going rate for repairs by mechanics who know they will never see you again.   And in places like Labrador, forget about finding BMW parts!   For this reason, I sold my X5 when it hit about 160,000 miles.  Could I have made it go to 300,000 miles?  Maybe, but it would have been a costly trip, in terms of downtime and repairs.

Eventually, you reach a point in the Weibull Curve, where repair costs start to escalate rapidly, and the cost of maintaining the vehicle could exceed the cost of replacing it with a newer used one - or even a brand new car.  Once a car starts to need $500 a month in repairs - or thousands of dollars in overhauls - it is probably time to call it quits.  If you can sell the car and get good money for it before this point is reached, that is probably even a better alternative.

Driving a car "forever" is not always the most cost-effective way of motoring.