People are keeping their cars longer. Dealerships across the country have had increased activity in their Service and Parts departments since the economic downtown started. And some consumers who feel the economy is still on shakey ground are holding off on a purchasing for the following reasons.
First, manufacturers are forced by market conditions to offer larger incentives to move new cars. These larger rebates lower used car values. Thus the car you are currently driving has lost value due to the incentives the manufacturer is offering on new vehicles. Consumers tend to find themselves with less equity and in most cases negative equity (where the vehicle is worth less than the outstanding loan). By keeping your vehicle longer, you have more time to pay down the loan and avoid the outlay of cash needed to satisfy the negative equity on your vehicle.
Second, the cost of maintenance and repairs is less. Vehicles today are lasting longer and come with longer warranties. This helps offset the expense a consumer bears. And even if repairs are necessary, dividing the cost of the repair over the time you own the vehicle is generally less than the cost of satisfying the negative equity you might owe.
Finally, remember that depreciation slows down as time passes on. There is proportionally less difference in value between a five and six year old vehicle as compared to a one and two year old vehicle. So your "cost of ownership" (the cost of the vehicle including all expenses for payments, insurance, maintenance, repairs, and depreciation) continues to decline the longer you own a vehicle - - thereby making your current vehicle your best investment if you decide to keep it longer.
