GM Supplier Discount - Worth Trading Every Year Or

[Chad52]

I've got a friend who get's GM supplier discount and he trades in his vehicles every year. He got a new AV last fall and said he plans to get a new one next fall. I also got my AV last fall, but I wonder about the economics of his method. Can you do this and not loose your rear end? Every vehicle (not just AV"s) take a major hit on front end depreciation in the first year. Does anybody else do this? It would be nice to have a new vehicle and avoid the maintenance costs, Onstar fee's, new tires, etc. but would it actually be worthwhile? I would like to put a cat-back system on mine and add a brush guard, but if people can break even and stay ahead of depreciation curve (or even just slightly behind it), I don't know if I would put a lot of money into the upgrades. Does anybody else have any experience with this type of vehicle trading philosophy?

Chad

 

[ygmn]

I dunno seems he would lose money but probably does not care.

Lets say his purchase price increases about 5-10% each year. He will have additional TTL every year. His trade in will be worth much less then what he paid for it. So it seems he will be losing money each year. I mean the Onstar it was $200 a year if you elect to renew.

Maybe he has money to burn.

Anyone have any idea what Used Avs are selling for yet?

 

[Chief]

Rule Number One: A new car is not an investment. Anything that depreciates in value is not an investment.

Rule Number Two: Automobiles depreciate on a slower scale as more time goes by. The amount of value lost in the first year is the greatest on just about every vehicle in the world. That rate of depreciation slows until theoretically the vehicle becomes "worthless." If you trade in at one-year, you're paying a very high premium for ownership.

Rule Number Three: Keeping a vehicle until the wheels fall off may not be the best for fiscal sense. When care and repair payments are equal to or greater than a new car payment, your better off dumping the old ride (this is why I got rid of my Montana). This is best achieved when the vehicle is 3 to 7 years old and has less than 100,000 miles.

Translation - I wouldn't trade in every year. I pay off all my vehicles in 3 to 4 years, go with the lowest rate possible, and trade them in before they hit 100K. I also will not purchase with less than 20% down hence I don't get into a negative equity situation.