You accuse people of stacking the deck in the favor of the 5k car, when you manipulate the numbers in your comparison to make the difference smaller than it is likely to be. Modern cars on average last 200k miles, not 175k. Also why would I compare two of the exact same model cars just with different years? So long as the car is relatively safe, known to be reliable and has the same size to me it is an apples to apples consideration.
I drive about 10k miles a year and I expect my car to last to 200.000 miles. This is of course on average, but over my lifetime at 10 years per car I expect to go through at least 5 cars in my life so some will underperform the 200k, but some will outperform it.
2016 Honda Civic LX
- 0 miles, 0, previous owners, 0 accidents, 0 wear/tear, full warranty
- $18,738 (from NADA.com), not including any eligible discounts/cash back/financing specials
2005 Honda Civic DX
- 112K miles, 3 previous owners, 2 accidents reported, wear/tear, NO warranty
- $4,999 (cars.com)
Let's assume you drive 10K miles/year and get a new car when you reach 200K miles. Under this scenario:
- 2005 model will last you 9 years, costing you $555/year (purchase price only)
- 2016 model will last you 20 years, costing you $937/year (purchase price only)
- The brand new car will cost just over $382 per year more than the 11 year old car.
Using this extremely simplistic calculation alone it is $7640 of savings after 20 years. This isn't even considering opportunity cost as mentioned by other posters and for plenty of americans they would have to take out a loan on the 18k car which would mean even more money.
Now on top of this I also start with having $13739 not tied up in a car. My car lasts 10 years. With a 5% inflation adjusted annual return on that I would be at $22379.38. I buy another $5k car putting me at $17380 then have that for 10 years again putting me at $28310. This means I would have to spend an average of $1415 a year on additional maintenance compared to your newly bought car for us to even break even. Not to mention that I will likely save on insurance costs even if I use the same level of insurance, but also having a cheaper car also allows me to self insure more without risking too much money meaning I will likely save even more on insurance. Now if someone starting at 18 were to do this until they retired at around 68 for 50 years we are talking about up to about $150.000 they could have more for retirement than using your strategy. This would give them $6k extra per year at 4% withdrawal rate or about $500 a month. The average American collects $1,180.80 in SS. If you simply managed to get the average SS and never save any yourself outside of your potential car savings you could come out with almost 50% more money for a regular retirement. If you end up with below average SS it would be an even larger portion of your retirement.
Also new cars fail too, actually new cars on average fail more than slightly older cars following the bathtub curve
https://en.wikipedia.org/wiki/Bathtub_curve. By buying an older car I am likely to avoid what commonly is referred to as a lemon. Now my used car could have some serious failure, but if my 5k car fails which can also happen with new cars too you are out 18k investment, I'm out 5k.
You mention needing to have that 5k available instead of having it invested due to the risk of short term losses, but I can afford to buy another 5k car using my emergency stash and just build it up again afterwards.
This is simply following your premise of comparing two of the exact same models, I would not be limiting myself to one and only one type of car when searching for a new car and would thus open a whole new level of savings on top of the ones I calculated above. If you want to just be convinced that your way is the best way counter to any actual evidence.
The gist of it is you keep moving the goalpost to try to justify why you like buying new cars. Go ahead and buy a new car, it will not take money out of my pocket, but don't argue that it is the financially smarter decision.