Reader Question: High Miles and Selection Bias?

Here’s the latest reader question, alomg with my reply!

Anri asks: For obvious reasons, in the used car market low-mileage cars tend to fetch much higher price than otherwise identical cars that have been around the block a few times. Cars like all machinery break down over time, and the more a car’s been driven, the more wear one can expect on it. Therefore, a car with less miles should last a buyer longer, and therefore be a worthwhile investment. However, if one has access to the maintenance record of a vehicle through Carfax or a similar service, could it be that high-mileage cars are in fact a wise investment due to selection bias? If a particular vehicle has gotten to say, 100,000 miles without incurring any major repairs, one might conclude that it has run the gauntlet and proven itself a hardier vehicle than its counterparts. Therefore, it may be less likely to fail in the future, and is in fact a steal due to the lowered price from the higher mileage. Lower mileage cars by contrast are less “proven”, and may have some nasty surprises hidden down the line. Is this an accurate line of reasoning, or does it downplay the effects of regular wear and tear even on hardy, well-cared-for vehicles?

My reply: There is truth in both! A well-cared-for car with high miles can indeed prove to be a more reliable car than a lower-miles car of the same make/model that wasn’t well cared-for.

But it can also be true that a car of a different make/model with lower miles can prove to be a less reliable car than another car of a better make/model with higher mileage.

Condition is always important, but at least as important is who built the car.

And not just the car, either.

Some cars have major components built by outside suppliers – and sometimes they are supplied with problem-prone components. For example, a transmission that has a higher-than-average rate of failure.

I encourage people shopping for a used car to adopt a Libertarian approach. This means considering each car as an individual, with unique attributes such as mileage for the year, condition, service records and so on.

But don’t forget the collective truths. Toyota Corollas are generally speaking better-built and more reliable than Dodge Darts. I would much prefer a ten-year-old Corolla with 100,000 miles over an eight-year-old Dart with 75,000 miles!

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