The majority of car buyers subscribe to the “Newer is better” philosophy when it comes to deciding on a purchase. It's an entirely reasonable approach to take, after all: cars, like everything else on this planet, have finite lives.
By buying as new a car as possible, buyers hope to acquire a car without typical old-car ailments such as smokey engines and creaky joints, and, hopefully, with a minimum in repair and maintenance costs for the near future.
Related: How does mileage affect the value of my car?
Generally speaking, the lower the mileage, the further away from the point where things would wear out. This still applies as much today as it did right through the history of cars, but there's another question to ask as far as the mileage goes: under what conditions did the car travel that distance?
A tale of two buyers
Let's consider an example. Two cars with identical specifications were bought brand new on the same day. The one buyer works at a bank in the city, and his daily commute consists of about 20 km in stop-and-go traffic. As a result of his commute and one vacation trip every year, his car's odometer will read just shy of 40 000 km when he trades it in after 4 years.
The other buyer is a sales rep who covers about 30 000 km per year, most of which are on the freeway. After 4 years, there's a solid 120 000 km on the clock. Both cars are serviced according to schedule, and they're only being traded in because their maintenance plans are about to expire. Which one would make the better second-hand buy?
How much mileage is too much mileage, though?
Distance affects a car's value
As far as trade-in values are concerned, the high-mileage car is the clear loser here. Due to its high odometer reading, a certain measure of wear-and-tear is brought into the depreciation calculations, leading to a lower trade-in value than for the low-mileage car, which is seen as “closer to pristine”.
This is a little misleading, though, because our long-distance car actually shows fewer signs of wear: its clutch has a nicer bite than the “younger” car, its engine mountings and shock absorbers feel tighter, and its engine runs smoother and quieter. How is this possible?
Does this mean low-mileage cars are better?
Usage pattern plays a big part
While our banker's car didn't travel a huge distance in 4 years, that distance was nonetheless punishing. It traversed speed bumps, rumble strips and potholes on a daily basis, and interminable traffic jams led to frequent gear changes and clutch-slipping. And, because the daily trips were so short, its vital fluids never quite reached operating temperature, which led to extra wear inside the engine and gearbox. The poor catalyst never had a chance to achieve its peak temperature either, causing it to become partially blocked and reducing performance.
By contrast, the rep's car spent most of its time at steady speeds in top gear, travelling straight on (usually) smooth surfaces. Everything always had the opportunity to attain its optimal operating temperatures, and the catalyst could keep itself clean. Because its suspension didn't have to deal with as many rough roads, the control arm bushes and shock absorbers are probably in better condition than those of the banker's car as well. In short, the high-mileage car is a more agreeable option than its counterpart.
That's fine and well, but things still wear out
With modern advances in technology, manufacturing techniques, materials, and lubrication, today's cars are better engineered and better made than ever. Most have the potential to rack up intergalactic mileages with ease and nothing more than prescribed maintenance.
However, replacement of wear items such as friction materials, cooling system components, and drive belt assemblies will always be a part of car maintenance, so the high-mileage car will probably still need a clutch replacement or a new coolant pump soon enough. This is why the “older” car is worth less both on resale and in the trade, even though its internal components may well be in a better condition than those of the low-mileage car.
Sales implications
Determining which is the better buy depends on whether you're looking at it from a dealer's perspective or from that of a buyer. Higher mileage affects a car's trade-in value, meaning that a dealer will buy the car for less. Of course, that reduced value also applies to the eventual resale of the car, so the next buyer will also pay less for the higher-mileage car, but that difference can, to some extent, be offset through financing incentives and extra-cost add-ons.
A dealer might also have difficulties persuading the buyer that this high-mileage car would still be reliable, possibly resorting to drastic price cuts to entice would-be buyers with a bargain price. Fortunately, the system is designed to allow for various mileages, ages (as measured in years), and overall conditions to be factored into the buying process, although these factors will also determine dealer profit margins.
As a result, a dealer might frown upon buying the high-mileage car for dealer stock (and its attendant smaller profit), but their customer might just score a nicer car in the short term. However, bear in mind that buying a high-mileage car will result in a lower trade-in value for the consumer when the time comes to sell it in the future. Of course, a clever dealer will explain this to the buyer, and hopefully end up clinching the deal and at a more lucrative price, in spite of the “older” car's higher odometer reading…
Now that you're armed with this information, you can start searching AutoTrader for your next car while also selling your current car here too.
