Bill Roper's Journal

I keep a spreadsheet with the purchase price of my car (a 2010 Toyota Highlander Hybrid) and all repair and maintenance costs, so that I can compute the average cost of ownership per year, which, after N years, is (purchase price)/N + (total cost of repairs and maintenance)/N. For simplicity, I ignore gas, insurance, inflation, the current market value of the car, and the greater utility of a new car. I plan to replace the car when the average cost of ownership per year starts to creep up. You can verify that this will occur when (purchase price)/N + average annual cost of repairs and maintenance over first N years < cost of repairs and maintenance in year N+1.

Given the age of your car and the purchase price of mine, two numbers that don't make sense together but that I will use because I know them, I find that (purchase price)/N = $3273. So it would take a pretty expensive repair to persuade me to replace my car, even after 13 years.

Ignoring the greater utility of a new car might not be smart. A new car that tells me when another vehicle is in my bind spot and gives me a bird's-eye view of obstacles near me when parking might help me avoid an accident. But I hope I can keep my car long enough so that my next car will be self-driving.