More depreciation nonsense for cars

I’ve covered this before, but it’s popped up again, thanks to The Overhead Wire and others. A short summary:

You will not save much money by leaving your car parked in the driveway and taking the bus. Yes, the IRS allows you to deduct based on a formula that includes depreciation – because it’s the only way to give you any credit for having your personal vehicle tied up for business use. It does not under any circumstance mean that depreciation is mostly a function of miles driven – because it is definitely NOT; depreciation has more to do with age than use.

The last time I did this, I ran the numbers and estimated that depreciation due to age is roughly ten times the depreciation due to miles in a high-mileage scenario.

The summary is: in most cities, you will not save much money, if any, by leaving your car at home and taking the bus or train to work – unless you’re unlucky enough to have to pay a lot of money to park. And, of course, you have to have unbundled parking costs (pay per day rather than per month).

The converse of this, though, is: You will save a surprisingly large amount of money by going from two cars to one car. Insurance. Registration. Car payments. Most of the depreciation bill. Maintenance (like depreciation, most maintenance is a function of time rather than miles).
Alternatively, if your company opens up an office in one of the few parts of the suburbs to which even I can’t tolerate the bus commute, you face spending a LOT more money going back up to two cars. That’s where to focus the energy – not on the “leave your car at home today and save N bucks” argument – because N is likely too small to be worth the trouble.
For my trip, for instance, google doesn’t have cost figures (must not be hooked up to Capital Metro’s farebox) – but I can give an estimate from my own commute calculator which shows that the bus trip cost $1.00 round-trip (allocate 50 cents each way) compared to $1.32 for the car (66 cents each way). That means that I can save 16 cents by spending an hour and forty-five minutes on the bus instead of the 15-30 minute drive, which is only a good deal if the value of my time is at or below 15 cents / hour.

15 Replies to “More depreciation nonsense for cars”

  1. No, it’s really not much more than gas + tires. Follow the link at the beginning of the post – in an example from KBB, about 90% of depreciation on an 8-9 year old car was a function of time, not mileage.
    Take a look at your maintenance schedule sometime. Mine says I ought to take the Prius in every 5000 miles OR FIVE MONTHS.

  2. Of course, there are also intangibles, such as not having to deal with the stresses of driving in rush hour traffic (which has gotten worse in recent years on most, if not all, corridors in Austin). At least, that was a major reason for me to ride the bus, when I rode. The savings were okay (even small amounts add up eventually), but being able to destress after work was very helpful.

  3. My last trip home on the bus (in evening rush) was super-stressful, because the bus was full, crowded, and jerking and swaying and bouncing, when it was moving at all. Driving in the car would have been an improvement, and for me to say that is quite something.

  4. What exactly do we need to do to get a bus running up and down 360? I know Westlake doesn’t want one, but there are two lines to Barton Creek so obviously it’s possible. I could go back to one car if they had one.

  5. CM will never do it – not in our lifetimes. Not enough employment density out here to make it feasible; even though the whole corridor has a thousand or two employees, gotta remember that optimistically they might be able to get 1% to ride the bus at first, which is an order of magnitude too small to justify the service.

  6. A couple of factors can change the equation quite a bit.
    First, if you pay for auto insurance by the mile, your insurance costs will be low (e.g. $110 per year) if you keep a car garaged but don’t drive it. (I use
    Second, if your car has already depreciated so much that it’s no longer worth more than a couple thousand dollars, the yearly depreciation (in raw dollars) from there on out is not too big a deal.

  7. Roger,
    Note that this post was written before MileMeter existed; but even then, the savings from MM are minimal compared to a decent all-miles policy (our far-from-bare-bones USAA policy for our 2008 Prius is about 600/year; last time I looked at one of the mile-based ones I’d not save even one dollar until I went below 2000 miles/year, which is ludicrous – I ought to get savings almost the whole way down from our current 10,000).
    MileMeter won’t give me a quote without me giving them personal information, so I have no way of comparing to their current rates, though.

  8. @M1EK, I thought the focus of this blog entry was people who kept a car garaged and hardly ever drove it:
    “You will not save much money by leaving your car parked in the driveway and taking the bus.”
    I’m one of these people. I have a car parked in a driveway a few miles from my home and drive less than 2000 miles per year. My primary mode of transportation is the bus.
    My actual cost for six months and 1000 miles of MileMeter insurance is $55.
    I suspect now that I misunderstood your focus. If you’re talking about taking the bus every once in a while to save on gas and wear and tear on your vehicle, then insurance by the mile isn’t going to be cost effective.

  9. Well, the focus of these commute calculators is really on the guy in the suburbs who’s thinking of taking the bus to work a couple days a week at starters up to every day – meaning he might cut his mileage in half (i.e. still needs to drive to do all of his shopping, unlike you, or me in Clarksville back in the day).
    However, even the figure you quote is actually competitive with what we’re paying USAA for 6 months for basically 5000 miles (they give us a ‘discount’ for ‘low miles’ at that rate). Would be interested in hearing what kind of service / deductibles / etc is covered at that cost.

  10. @M1EK, you seem to have completely missed my point with this remark:
    “However, even the figure you quote is actually competitive with what we’re paying USAA for 6 months for basically 5000 miles (they give us a ‘discount’ for ‘low miles’ at that rate).”
    My point was that, if someone makes a choice to keep their car but drive it only occasionally (e.g. of course your typical insurance will be “competitive”.
    Unless you’re claiming that your annual insurance costs are $110 for the 10,000 miles you and your wife drive?
    And my coverage from MileMeter is roughly the same as my State Farm coverage used to be, for less than a quarter of the cost.

  11. Some how that last message got garbled. The third paragraph should read:
    My point was that, if someone makes a choice to keep their car but drive it only occasionally (e.g. less than 2000 miles per year), then MileMeter will make a big difference in the cost comparison. But if you choose to drive 10,000 miles, of course your typical insurance will be “competitive” (relative to MileMeter).

  12. Roger, I was actually trying to compliment MileMeter; several years ago when I wrote this post, information from other states made it apparent that the mile-based insurance available at THAT time wasn’t remotely competitive at 10,000 miles.
    In other words, were I living in the condo in Clarksville and putting 5,000/year on the car like I did back then, MileMeter (now) probably would have saved me money; the stuff on the market in other states back then (nothing existed in Texas then) would have cost me as much as the full-10,000/year coverage I have now.

Leave a Reply