## Tuesday, May 25, 2010

### Optimal Cost of Cars

Optimal Cost of Cars
Andre Willers
25 May 2010

Synopsis:
If accumulated maintenance(excluding fuel) exceeds 1/3 of remaining book-value , sell it .

Discussion :
The argument used in http://andreswhy.blogspot.com "New Tools" "Reserves" is ideal here . We argue on the number of errors in the vehicle , without necessarily specifying the particular errors .

Book Price :
The optimum usage is 1/3 of the price . The reserve . The book price costs in future expenses . This includes the Industry's expectancy of future expenses .

Maintenance :
Service and repairs . The Accumulated Maintenance is the sum of these since you bought the vehicle .

Optimal usage :
When Accumulated Maintenance = 1/3 Book Price .
This is a Retrospective argument , hence very accurate .
It is also fractal . The car can be second hand . Note that this is how second-hand car dealers work . What you may have spent on the car does not add an iota to his offer .

Example :
Renault Scenic 1998 : 81 000 km
Book Price 36 000
Accumulated Maintenance = regular services and 3 new tyres .
=approx 8 000
Room for future maintenance = 1/3*36000 – 8000
= 4000

Dicey .
A blown gasket will cost about 6 000 . But the car is in good condition and has low km's . But , it is on the downhill slide of needing increasing repairs .

A bargain for a do-it-yourself person , but not ideal for a little old lady .

Flip a coin .

Andre