I just bought a 2023 RX350h (hybrid) for the sticker price of $65,755. I do a sort of mental accounting "self lease" and expect it will be worth about 55% of that in 3 years at 36K miles with excellent mechanical and cosmetic care and a new set of tires between 18 and 24 months in. Does this sound right?

 

Sounds about right...

 

I guess it depends on where you feel inflation is headed.

that could easily be a $40k car in three years if inflation stays high

 

Could also check and see what the Lexus financial residuals are being offered right now. Leases aren't really being propped up right now with subvented (read: boosted) residuals. So they could be a decent barometer to expected depreciation.

Current 3 year RX350h residuals look to be 65% with 10K a year, so a few points lower for 12K.

 

Lets say a car is at the end of its life at 200k.

36k is around 1/4 of its life. After 3 years with 50k miles, its worth around 50k still.

 

You are dreaming... lol

 

Yeah, thats not how that works at all lol

The bulk of a car's depreciation is in the first 5 years, so if you own it for 3 years, you have shouldered a lot of the depreciation.

 

I judge the value of a car by how much life it has left.

 

You might do that, but the market absolutely does not. If your car $65,000 car is stolen, totaled or otherwise needs to be replaced in 3 years, in normal low inflation times, you'll never ever ever ever get $50,000. From any insurance company or any used car buyer. I'm the original poster. I'm thinking that 55% is about right. This last round I got 66% of what I paid for my 2020 RX after 30 months. Extrapolating that out to 36 months, that probably equates to about 60%. But we had an inflation spike. I think my prior 2017RX fetched 50% after 42 months, with normal miles and excellent condition. I just posted here to confirm my numbers and it seems that it's a good estimate.

 

The market does the same thing. Depreciation is nothing more than an estimate of the value of the car. And that value is determined by how much use you can get out of it. The market can be total NPCs.

 

Say what???? HUH? and what is an NPC?

 

Sir, just look at the definition of depreciation: "How it works: You divide the cost of an asset, minus its salvage value, over its useful life" - Google

An NPC is a non playable character. They're in video games.

 

To be honest, I don't know what you're talking about or really how you think on the depreciation issue. But I wish you well. I've been buying/selling/trading new cars since 1976. In the real world, they depreciate much faster than the way you seem to be explaining it here. Again, good luck!

 

Couple of things if I may.

First:
Nobody will pay 1/2 the MSRP New Price for a car to drive it for the LAST HALF of it's "useful life".
What the heck kinda deal is that? lol
Why would you or anyone else agree to this? lol

Wishful thinking for people selling their cars but nobody is ok with that.

Next:
Who decides what the "useful life" is?

 

haha you are absolutely correct to say that. But, that's the way I judge the value of a car.