You've neglected depreciation and repairs. Let's look at a car from 2000 (a made up car):
Mileage at purchase: 30 mpg
Value at purchse: $10,000
Upon leaving the lot, it instantly suffers a depreciation of 40% (standard)
It's new value is $6,000, significatnly less than before
Let's say that nothing major goes wrong until the warranty expires (typical)
Let's say that it takes $1,000 of repairs (usual)
It's new value is $5,000, and as a result of daily commuting, its engine has worn down to 25mpg
So now its 2004, and we have what is now known as a 'beater'. A beater will progressively suffer worse and worse failures until the whole thing just stop and dies.
2 years pass, and another $1,000 of repairs, and the engine falls to 22mpg
Now it's 2006, and the car is worth a measely $4,000. Couple in the dings, the dents, and dogbats associated with daily use and its down to $3,000
So, after an oil change, the owner drives out, forgets to shift into a higher gear, and just keeps pushing the pedal. KA-KLUNK. That's the sound of steel cracking. Uh-oh. Considering that the towing cost is negligible and the negotiations instant, we can neglect any costs associated with those. Find me a respectable dealership that will replace a 6-year-old engine in a car of as many years for a price low enough to make driving that beater, and paying for its aggravating and expensive repairs, for a few more years worth it and I'll eat my hat.
-Penguin
