Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-26
CAR DEPRECIATION
PROVES BIG ITEM
Owners Are Urged to Keep
"0Id" Machine Rather Than
Trade 1t In.

When does q new automobile become
Q used car? Generally on the day that
it Is purchased by some buyer, for this
new owner Is quite likely to try out his
new machine as soon as it is delivered.
The fact that an automobile theoret-
ically becomes a secondhand vehicle
o. soon as it is bought has worried some
motorists and prospective car owners.
Worry is usually useless and this form
Of concern is particularly foolish. Be
cause one cannot, SIS a rule, sell a car
q day after he bought 1t for as much
rs he paid for 1t should worry no one.
The fact is the car at its original
price represented lot OF money value.
This is true OF practically all auto
mobiles. II that is true and II it is
true that one buys q car for use and
not for speculation, the car Is just as
valuable to the owner @ week after he
obtained 1t as when 1t was delivered
to him. There really is no used car
problem to the owner of an automobile
II he considers his purchase over the
period OF time he expects to use the
car.
For instance. II a person pays 81 900
for a car which he expects to use for
nve years. he can know that 1t is cost
ing him 5000 year just to own such
q vehicle. If he puts aside 5000 year
for flve years he will have all the cash
needed at the end of such q period to
secure q new car. If he pays $4,000, the
cost is $500 q year for Ave years. or
$500 a year for four, however he wants
to figure. On this basis person doesn't
need to fret about what his car Is worth
the day after he bought it or i've years
later. On this basis he can afford to
keep the old car when he buys q new
one. There is little advantage in trad
ing 1t in toward the new car. There
are plenty Of reasons for having two
ears available for use.
Auto Budget II Urged.
InaSmuch as the used car situation
Is more or less perplexIng to manufac-
turers and dealers as well as to owners,
It might be well to encourage the
owners of automobiles TO adopt q def
mite idea as to the length Of time an
automobile will last and set aside
enough money each year to purchase
Q new car at the end Of whatever period
was agreed upon. 1t is likely that the
owner would set up q period. say. one
70 five years, at the end of which the
automobile would be worth practically
nothing in the regular secondhand
automobile market. On this basis the
used car problem would practically dis
appear, since the owners of these used
cars would almost unanimously decide
to keep them. either for supplementary
use to a new car or to junk
Frequently the owner of q new car,
being ambitious to keep his machine
looking like new, will be glad to have
the old car around to use in case Of
muddy weather or under similar cir
cumstanceS. 1t frequently happens
that where there are children there
Is more demand for the use of an auto
mobile than one automobile can meet.
The man of the family needs q car
In connection with his business more
or less, the housekeeper wife needs
q car in connection with her COM
mercial activities There may be also
grown children who make endless de-
mands Upon the automobile 1t is
the case that parents will |
give the old automobile to their chill
dren for them to rig up and get as
much fun out of as possible.
II people could be made to realize
that what they get by the way of
credit on an old car toward a new one
Is hardly ever q fair representation Of
what the old car is actually worth, and
that there is no point in getting new
automobile and turning in toward the |
purchase price Of the new car an old |
one, when the old car is actually worth |
two or three times rs much as can be |
secured for 1t on q trade-in. People |
often look upon the money they get !
out of their old car as so much money |
actually found. What really happens |
Is that instead Of their old car repre- |
senting reduction on the cost Of get |
ting a new one, 1t usually represents an |
economic transaction OF doubtful value |
to the person doing the buying, as any |
a.
and the price at which the dealer can |
sell it must. at least. indirectly affect |
the selling price Of the new car.
Purchaser Pays the Bill.
It is estimated that less than 10 per |
cent of all new automobiles sold an
nually are straight out and out sales !
OF new cars for . certain price, About |
30 per cent OF all these automobile |
involve the trading in OF |
one or more used cars. 1t Is estimated |
that about 1000, 900 cars are sold an
nually. This means that there are |
about 100000 of these involving q |
trade-in of used cars. This procedure |
necessitates the handling of this enor- |
nous amount of used cars by dealers. !
It means that they must sell lot |
q them to people who ought to be |
buying new cars. 1t means that many |
others must be strapped, representing |
in many cos financial loss to the |
dealer. All of this energy devoted by |
the dealers to reselling used cars and |
all the financial loss which has to be |
sustained in this kind of business must |
eventually be borne by the purchaser |
Of the new car. Without this drag the !
manufacturers of automobiles would |
be able to market their products at |
less cost and consequently be able to |
sell them at lower prices.
The savings which buyers OF new cars |
could make If this unfaVorable used |
car situation did not obtain, would |
probably amount to such q large sum /
that the public would find themselves |
getting more value per dollar out of