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Owning an expensive car is actually not as bad as the author suggests. Once you get beyond around $80K cars depreciate at a much slower rate than other cheaper

Owning an expensive car is actually not as bad as the author suggests. Once you get beyond around $80K cars depreciate at a much slower rate than other cheaper cars. One reason for this is that the more exotic a car is the lower the mileage it is likely to carry becomes. Another strong factor is that when you are paying more than $80K for a car you are paying a lot for the brand of the car and this is likely to be evaluated later at an emotional rather than mechanical level. A 5 year old Aston Martin is still an Aston Martin, whereas a 5 year old Honda is basically a commodity to be evaluated on its mechanical merits. In terms of this argument the worst car to buy would be something like a BMW 5 Series - its not expensive or rare enough to ensure it would be evaluated on its emotional appeal when you are selling it - but it is still pretty expensive.

ahoyhere 16y ago
I love it when somebody makes an intelligent distinction in an overarching argument. Thanks. Especially when it's something I can use to talk my husband out of his delusion of getting a BMW as our first car, when we'll drive it 10 hours a month. In Europe, where BMWs are twice as expensive... and four times as common.
- binarycheese 16y ago
  BMW's are twice as expensive in Europe? You lost me there. I currently on vacation in Europe, and you won't believe some of the deals (on both brand new and used) BMW's I've seen.
  - ahoyhere 16y ago
    Where are you? In Austria, a Toyota Yaris (different name) costs 15,000 - 16,000 euros. That's around $19,000+ even with the weak euro right now. A BMW X3 SUV starts at 41,500 euros. That is $52,000 now but, before the colossal euro drop, it would have been more like $62,000. Last I checked, a Yaris costs $12k in the US and an X3 starts around $37,000. So you're right, it's not double, but it's close enough for me. Especially as soon as the Euro gains its strength again, or the US dollar drops down. That amount of money for a car is ludicrous to me. When I spent 10 hours a week in the car, I had a Toyota Matrix and it was perfect. When I plan to spend 10 hours a month in a car, it's beyond ludicrous. :) EDIT: If you're looking at export deals, you might be looking at prices without the 20%+ VAT and additional luxury taxes.
    - matwood 16y ago
      I don't know how it is in the EU, but in the US it makes very little sense to buy a new luxury car. Many people who like luxury cars also like owning the newest one. This means they lease and/or buy them and only keep them for 1-2 years. If you look in the used luxury car market you can find great deals. So great in fact that I'm amazed anyone buys one new, but that's what people like to spend their money on I guess.
      - ahoyhere 16y ago
        I'm from the US. Here's why I previously bought a new car (the high-end trim level Matrix, not luxury though): I wanted a low mileage car because I had owned several high-mileage, but reliable, used cars, and calculated that I spent at least $200/mo over the year on routine repairs and maintenance. A low-mileage (sub-30K) late year model, otherwise identical used car cost only $2,500 less than the new car. The interest rate on a no-downpayment loan for the new car was 0% for 12 mos and 3.9% after. The interest rate on the no-downpayment loan on the used car was 13% from the start. On the new car, I wouldn't have to pay for the first major service for about 18 months. On the used car, it was coming up in a matter of months. (The 30k). Not to mention it would soon need new tires, brake pads/rotor turning, and it was the half-life for the struts and major transmission services, too. (That's $1000 right there.) You have no idea how the used car was treated in the breakin period and early oil changes, etc, and by only 30K miles, the damage won't have shown itself the way it will have by 80K miles. So when buying a low-mileage used car, sometimes you're actually making a greater gamble. As you can see, all the logical points added up to buying the new car. It would actually cost less because of the financing and repair bills I would be less likely to pay during ownership. Additionally, I was able to buy it right away, without having to hunt around, because the first few used ones I found with the trim level I wanted were safety cone yellow. Ugh. Moral: BUYING USED ISN'T ALWAYS A SMARTER DEAL. I love splurging on things, but not when the splurge comes back to haunt me month after month. ;) EDIT: I agree with you about the luxury car, period, and also I wouldn't buy one used. That's why I'm trying to talk my husband out of a BMW, period. IMO the cost difference between a low-end BMW and a high-end VW isn't worth it.
        16y ago
Goladus 16y ago
Yeah, to extend the authors point it's probably worth making a clearer distinction between the cost of owning a car versus the cost of using a car. If you have a $150,000 sports car that you drive four times a year and keep it covered in a secure garage most of the time, the yearly expensive probably won't be great.
dedward 16y ago
They may depreciate slower, but the insurance and maintenance costs are a heck of a lot higher in absolute terms.... I'm sure they more than make up for the lesser depreciation. Cars aren't investments.... bottom line. You buy an aston martin or ferrari because you want one and can afford to treat yourself to one..... not because you've somehow rationalized it's resale value into some kind of pseudo investment - if you think that way you probably won't keep your millions very long.

ahoyhere 16y ago

I love it when somebody makes an intelligent distinction in an overarching argument. Thanks. Especially when it's something I can use to talk my husband out of his delusion of getting a BMW as our first car, when we'll drive it 10 hours a month. In Europe, where BMWs are twice as expensive... and four times as common.

binarycheese 16y ago
BMW's are twice as expensive in Europe? You lost me there. I currently on vacation in Europe, and you won't believe some of the deals (on both brand new and used) BMW's I've seen.
- ahoyhere 16y ago
  Where are you? In Austria, a Toyota Yaris (different name) costs 15,000 - 16,000 euros. That's around $19,000+ even with the weak euro right now. A BMW X3 SUV starts at 41,500 euros. That is $52,000 now but, before the colossal euro drop, it would have been more like $62,000. Last I checked, a Yaris costs $12k in the US and an X3 starts around $37,000. So you're right, it's not double, but it's close enough for me. Especially as soon as the Euro gains its strength again, or the US dollar drops down. That amount of money for a car is ludicrous to me. When I spent 10 hours a week in the car, I had a Toyota Matrix and it was perfect. When I plan to spend 10 hours a month in a car, it's beyond ludicrous. :) EDIT: If you're looking at export deals, you might be looking at prices without the 20%+ VAT and additional luxury taxes.
  - matwood 16y ago
    I don't know how it is in the EU, but in the US it makes very little sense to buy a new luxury car. Many people who like luxury cars also like owning the newest one. This means they lease and/or buy them and only keep them for 1-2 years. If you look in the used luxury car market you can find great deals. So great in fact that I'm amazed anyone buys one new, but that's what people like to spend their money on I guess.
    - ahoyhere 16y ago
      I'm from the US. Here's why I previously bought a new car (the high-end trim level Matrix, not luxury though): I wanted a low mileage car because I had owned several high-mileage, but reliable, used cars, and calculated that I spent at least $200/mo over the year on routine repairs and maintenance. A low-mileage (sub-30K) late year model, otherwise identical used car cost only $2,500 less than the new car. The interest rate on a no-downpayment loan for the new car was 0% for 12 mos and 3.9% after. The interest rate on the no-downpayment loan on the used car was 13% from the start. On the new car, I wouldn't have to pay for the first major service for about 18 months. On the used car, it was coming up in a matter of months. (The 30k). Not to mention it would soon need new tires, brake pads/rotor turning, and it was the half-life for the struts and major transmission services, too. (That's $1000 right there.) You have no idea how the used car was treated in the breakin period and early oil changes, etc, and by only 30K miles, the damage won't have shown itself the way it will have by 80K miles. So when buying a low-mileage used car, sometimes you're actually making a greater gamble. As you can see, all the logical points added up to buying the new car. It would actually cost less because of the financing and repair bills I would be less likely to pay during ownership. Additionally, I was able to buy it right away, without having to hunt around, because the first few used ones I found with the trim level I wanted were safety cone yellow. Ugh. Moral: BUYING USED ISN'T ALWAYS A SMARTER DEAL. I love splurging on things, but not when the splurge comes back to haunt me month after month. ;) EDIT: I agree with you about the luxury car, period, and also I wouldn't buy one used. That's why I'm trying to talk my husband out of a BMW, period. IMO the cost difference between a low-end BMW and a high-end VW isn't worth it.
      - 16y ago

Goladus 16y ago

Yeah, to extend the authors point it's probably worth making a clearer distinction between the cost of owning a car versus the cost of using a car. If you have a $150,000 sports car that you drive four times a year and keep it covered in a secure garage most of the time, the yearly expensive probably won't be great.

dedward 16y ago

They may depreciate slower, but the insurance and maintenance costs are a heck of a lot higher in absolute terms.... I'm sure they more than make up for the lesser depreciation. Cars aren't investments.... bottom line. You buy an aston martin or ferrari because you want one and can afford to treat yourself to one..... not because you've somehow rationalized it's resale value into some kind of pseudo investment - if you think that way you probably won't keep your millions very long.