It's very simple maths, isn't it?
Yes, it’s very simple maths. Nowt wrong with my maths on the assumptions I made either. You assume retained value less than GFV, 60% is more realistic. GFV is a worst case figure that isn’t massively out from reality, but is still out. You also assume that 55% will be retained on £2777 of optional equipment, which won’t be the case. The way I would consider depreciation, I would keep the cost of the car and the options apart – options will always cost you a lot of money unless they can be transferred to the next car and not everyone takes up options. You make a slightly different set of assumptions to mine and the difference can be a few thousand pounds. Taking into account significantly lower ongoing running costs (as I did, but you have not given any consideration to) wipes out some of the higher depreciation of the new car – you can’t avoid running costs.
Interest rates are subjective – some have the money sitting in the bank, some don’t. Some will get a loan cheaper than the rate VW finance is offering (bank loans of 5.0% APR are freely available to people with a decent credit rating).
In terms of depreciation we’re not taking most cars – by the terms you are talking in (25% year on year), the GTD would only be retaining 42% after 3 years. The biggest depreciation cost on any car bought from a forecourt is the forecourt’s profit margin. Buy a 4 year old £10k GTI and decide it isn’t for you, you’ll get offered £8k p/x if you’re being treated fairly, 20% wiped out immediately is usually the case. To have bought privately and run for 3 years is the smarter option – it will cut the OP’s depreciation in half vs going through a dealer – you have to be confident to know you’re not buying a lemon – reassurance of buying from a dealership comes at quite a price.
Everyone has their threshold of what they’re prepared to pay for a car and run it. I think I demonstrated competently that there isn’t a lot of money between running a new GTD (if you buy wisely, get a discount and minimise the options) and a 4 or 5 year old GTI which will have similar performance, but it’s lower depreciation will be countered with much higher running costs (fuel/road tax/insurance/potential for repairs and maintenance).
For running that car only 10k miles per year, if we assume the MK5 GTI will give an average of 35mpg and the GTD 55mpg (both 20% under book combined) over the 3 years, assume that the GTI is running 95RON at 135p per litre and GTD is running diesel at 140p per litre, and that the GTIs brakes/tyres are half worn (so consider half the cost of a set of tyres and pads), the GTI is a stonking £260 a year to tax vs £20 on a manual GTD.
The GTI costs £2942 more to run without even considering insurance implications (a MK5 GTI costs me almost twice as much to insure as a MK7 GTD/GTI):-
£1802 fuel
£740 tax (£780 vs 2 x £20 as first year on GTD is free)
£400 for half the cost of a set of tyres and brake pads
Higher mileages really open up that fuelling difference that will be significantly higher than the effect on depreciation for the higher mileage accrued on either car.
Bottom line is about £1500 PA depreciation lost on the the GTI plus £1000 PA in extra running costs over a 3 door GTD that if bought for 90% of RRP (exclude options) and retains 60% of it's RRP at 3 years old, loses £2500 per year or thereabouts. Result: Same cost to own, run for 3 years and sell on - excludes insurance implications (in GTDs favour in all cases) and interest costs (in GTIs favour, assuming buyer needs to borrow).
