> Based on repair prices I keep hearing quoted in the area where I
> live-some areas may have independent mechanics not booked for months
> in advance-you just can't afford to keep a vehicle running for more
> than a few years after EOW (end of warranty) unless you are doing you
> own repairs.
If your comparing them to used car prices, then yes. For example,
if you have a 1994 Ford with a $1000 book value and 180K miles on the
odo that has a blown rod, then sure, you can buy a used 1997 Ford for
$4000 that has maybe 120K. Yes, the numbers are going to work out
in favor of the newer used car.
But it's a whole different ballgame if you have a vehicle with a clean,
straight
body, good paint, and screwed up engine and drivetrain., and your comparing
this vehicle plus rebuilt engine/drivetrain against a brand new vehicle.
> My next door neighbor sunk $3400 into having a Dodge
> minivan "gone through", which wouldn't have an "ACV" of $3400 even if
> the factory paint-the dull rose beige- weren't sloughing off.
As an owner of a 95 T&C myself I know a bit about these vehicles. While I
don't know what you mean by "gone through", let me tell you that a 90-95
minivan that has good interior, good paint, no rust, no accidents is
definitely
worth replacing both engine & transmission with rebuilt units, if the engine
is
a 3.3 or 3.8L model and does NOT have ABS or AWD.
> I'm in the planning stages of a Jeep project and planning to use
> fiberglass body parts. I looked around for a shop to paint them-new
[quoted text clipped - 7 lines]
> route, but it was obvious these guys either had monster overhead or
> wanted to retire to a penthouse in Manhattan.
Don't confuse independent mechanics with bodymen. The two are totally
different markets.
Body shops with rare exceptions pretty much exist as parasites on the auto
market, feeding off the insurance companies. The only kind of work they
bother with are vehicles that are 7-8 years old or younger, and the reason
is that is the range whereby the vehicle has this artificial value called
"book
value" that the automakers and insurance companies use, that is actually
high enough to where the insurance companies have an interest in saving
money by repairing, rather than replacing.
You got to think of it this way. What, really, is the real intrisic value
of a
vehicle? Well, the answer is the following: if new, the value is the sum
cost
of all parts plus assembly plus profit. This dollar amount cannot be
reached
by most of the market without financing. So, most new vehicle owners are
stuck paying a loan over 5 years or whatever, and so you got to make sure
that at any point during that loan, that with AVERAGE use, the vehicle value
does not dip below what the owner owes. Why - because if the owner
defaults, the loan guarantee organization isn't going to take a loss.
Imagine going into a bank and saying you want to borrow $20K, and spend
it on an item that 6 months from now will be worth nothing - and by the way,
you want to make payments on this $20K over the next 10 years. The
bank isn't going to make the loan without collateral. Thus, the banks and
the auto industry and the insurers have come up with this idea that cars
somehow depreciate at some formula based on the total mileage, etc. which
produces a depreciation curve that approximates what a financed auto
loan would create.
In reality, of course, used car prices are set by the market - not by "book
value"
Many people discovered this to their dismay in 2002 when the used market
has been so flooded with vehicles (due to the 0% financing incentives) that
actual street value of used vehicles was much lower than KBB's book value.
But, if the automakers actually came out and told new car buyers this, it
would
cut into their business because new car buyers would not be able to count on
a "trade in" value.
Thus, we have book value, and thus we have an opening for body shops to
hold the insurers over a barrel on pricing. If book value says the heap is
worth
$20K and the body shop promises they can fix it for less than $20K then the
inurance companies are stuck paying the bill.
Ted