Playing around with the Kelly Blue Book–the gospel for the used car market—I found a surprising fact: the first 7,000 miles or so you drive every year has little effect on the resale value of your car.
Sure, your car loses a little bit of its value every year, whether you drive it or not. But driving just a few thousand miles per year doesn’t do much to your car’s value: according to Kelly a five year old car with 10,000 miles on it is worth the exact same amount as a 5 year old car with 34,999 miles on it.
Once a five year old car has logged at least 35,000 miles, though, depreciation starts to bite into your car’s resale price.
Of course, drivng an extra mile can help move a car from “excellent” condition to merely “good,” which does reduce your car’s value. So miles do matter, even for low-mileage cars. But not a lot. Time, rather than miles, is the bigger factor.
Drive more than 7,000 miles per year, however, and Kelly says that depreciation accelerates. By the time a 5-year old Ford Explorer, for example, has reached 65,000 miles or so, each additional mile reduces the car’s value by about 8.5 cents. Or—if you factor in the likelihood that extra miles reduce a car’s condition from “excellent” to “good” or “good” to “fair”—each additional mile probably decreases the SUV’s value by 9 cents.
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Of course, depreciation rates vary substantially from model to model, and (curiously enough) even from mile to mile: a Ford Explorer driven about 40,000 miles over 5 years loses about 3 cents in value for each additional mile driven; at 70,000 miles, each mile reduces value by 8.5 cents; at 120,000 miles, an additional mile reduces the vehicle’s value by 1.2 cents.
There are 2 important points to consider here. First, on those rare instances when we do think about depreciation, we don’t connect it with how much we drive. And as a result, we underestimate the cost of driving a mile. That’s a mistake. In fact, if we considered the comprehensive costs of driving—depreciation, tire wear, maintenance, and even incremental insurance and crash risk costs—we’d realize that, even at $3 per gallon, gasoline may still represent less than half of the per-mile cost of driving.
And second, if we did keep good track of the variable costs of driving—that is, the costs of driving that are based on how much we drive, rather than the fixed costs of owning and financing a car—we’d probably drive less. Trips that seem worth doing at 15 cents a mile (the cost of gas for a low-mileage vehicle) might seem too costly at 30 or 35 cents a mile. And if we drove less, we’d save money, gas, and lives, all while reducing our climate-warming emissions.
All of which makes me want a little device, up there on my dashboard, that would remind me of exactly how much I’m spending when I drive—sort of like a smart odometer. (Then again, maybe I’d just find it distracting and depressing to see how quickly the cost adds up.)