Replace or repair your old car?
There’s no one easy answer to when you should stop fixing an older car and invest in a newer one
It’s a tough decision: keep maintaining your old vehicle, or replace it with a new one? You need to weigh up the costs and benefits of a new car against the ongoing costs of keeping the old one on the road.
With the cost of fuel now so high, and the general cost of owning and maintaining a car on the rise, it’s more important than ever to make sure you’ve invested in the right vehicle.
This decision-making will be unique; it depends on the individual budget, lifestyle and preferences. You may not need a car at all any more, or maybe your household doesn’t need more than one. Whatever the reasons, here are the arguments for and against replacing an old vehicle.
Reasons to keep an old car
• It will be much less expensive in the short term. Keeping an existing car can be cost-effective, particularly if it’s maintained well and running smoothly. The only time you might spend less by buying new is if the existing car needs a lot of expensive repairs and you’re planning to replace it with a relatively cheap secondhand vehicle. In every other instance, maintaining your current car will be much cheaper than replacing it.
• It’s convenient. No paperwork, no car hunting, no salespeople – no stress. • You know your car. You know it’s reliable and all the features are familiar. If it’s not reliable, that’s probably a sign that it needs repairing or replacing.
Reasons to replace an old car
• A new car should be safer. Safety features evolve rapidly – buying a vehicle that is five or more years newer than an existing vehicle should bring some major safety upgrades. • Better features. A new infotainment system, reversing cameras and compatibility with your phone; you should get a lot more features on a new car.
• Cheaper to run. Upgrading to a more efficient car, particularly from an internal combustion engine (ICE) car to a battery electric vehicle (BEV) or hybrid, will help to reduce your day-to-day running costs.
• Reliability. If your old car has started to become unreliable, or you know that it will soon start to need many thousands of dollars in maintenance annually, a newer car should remedy those problems. • It’s time to trade in your old car. The older a car gets, the less it’s worth. Ideally, you want to sell it before it starts to need major maintenance.
Is this an ideal time to swap ICE for BEV?
As BEVs begin to become the norm on our roads, it’s likely that resale values for ICE vehicles may begin to decrease. At the moment those values are still quite high, but as the popularity of BEVs grow, the demand for ICE cars will decline.
Around the world, legislation is pushing markets to phase out ICE vehicles. In New Zealand, the plan is to ban the sale of new ICE vehicles by 2040. Electric cars will be cheaper to produce than ICE cars by 2027, according to international forecaster BloombergNEF, which should prove a tipping point.
With all types of cars in short supply right now, the market for ICE cars is still strong, which will help maximise resale on an older vehicle. But once the supply of EVs increases, and prices align with ICE cars, demand for ICE will reduce and the resale value may start to fall – slowly at first, then rapidly. The big question is when this will happen; it’s hard to know the answer to that just yet.