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Comment by jakemoshenko | Hacker News Reader

> The fact that cars depreciate seems like the best reason to "rent" them. The manufacturer ends up dealing with the now less valuable asset.

Except that they charge you for all of the depreciation plus a rental fee. The dealer/manufacturer ends up with an asset that is more valuable than the price they paid for it less the money they've received for it through the terms of the lease.

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The asset isn’t always worth more. If you don’t believe me ask GM and Chrysler.

Further, it doesn’t matter. I don’t care if the manufacturer makes or loses money. I only care about maximizing utility per dollar.

Do you only drive like once a month or something? If you drive every other day or so then buying is the way to go...otherwise I agree, renting is probably going to be a better deal than owning a depreciating asset that you rarely use.

It’s a complicated formula sometimes it works for you but most of the time the manufacturer gets gets the better deal

Why would that be? If I'm leasing a vehicle, not only does the manufacturer need to earn back the cost of manufacturing plus some margin, they also need to earn back the cost of administrating a lease and the cost of selling the car again later (with depreciation). They're not going to cover those extra costs for free, they're going to pass them on to the consumer. So how can leasing a vehicle possibly work out in the consumer's favor?

Via risk miscalculation or bad luck on the side of the manufacturer. The lease conditions are usually fixed at the start; if the car ends up requiring a lot of warranty covered repairs or deprecates faster than anticipated (for example because they cheated on emissions), the manufacturer ends up with a bad deal.

The miscalculation is often intentional. Manufacturers for example know that Low end EVs depreciate faster than equivalent ic cars but still assign similar depreciation tables because otherwise they couldn’t get rid of the cars or would have to sell em at steep discounts and take immediate losses

Simple financial engineering. Sometimes they take the loss but cover it up or push it out using lease terms. The company has profit now but takes a write off later. Good for juicing executive bonus packages.

Also because lease terms are complex they can stack with other promotions or incentives and allow for leases lower than the cost of ownership would have been otherwise. There is a whole lease community dedicated to finding these crazy deals but they wouldn’t be something you could do by just walking into a random dealer.

Not all cars are set to depreciate. If you buy something more rare or in demand you will probably see it worth about the same when you sell, sometimes decades down the line. If you bought an aircooled 911 or some old land cruiser today, it would probably be worth even more in 15 years even with your mileage.

This is a very niche case, though, maybe 1% of cars, at best. It doesn't apply to mass market cars.

It sure does apply to mass market cars. A 15 year old Jeep wrangler with a manual transmission will hold its value fine. Most trucks actually hold quite a bit of value, especially with the manual transmission as these are sought after.

While it doesn't always work out, in the long run it works out well often enough to pay for the losses.

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