bfginger: Buying a new car generally isn't a good financial decision.
This is generally true. Here in Oz however we have the lovely concept of a novated lease - essentially leasing a vehicle for personal use via your employer. The AU government brought the scheme in many years ago to try and encourage people to buy new cars - in part to raise the safety standard by bringing down the average age of cars on the road, but mostly as a means to help the car manufacturing sector. Now that car manufacturing is gone that doesn't matter anymore, but the system is so embedded I doubt there will be moved to scrap it. It is quite contrasting when I travel between AU and NZ to notice how much older (generally) the cars on NZ roads are compared to here, which is in part due to the incentives of the novated leasing scheme.
Essentially what you're doing is packing up all car costs (Lease, fuel, maintenance, rego, insurance etc.) and taking a pre-tax salary deduction to pay for it. You do have to pay some FBT (beyond a concessional amount) but you also benefit from not paying GST on the vehicle or any of it's running costs. The leasing company is also able to negotiate some pretty awesome pricing on vehicles and insurance.
When I did the sums before buying our Golf, all up the costs of running our 10 year old car (insurance, basic maintenance, rego, fuel, depreciation) were basically the same as leasing a brand new base model Golf. We ended up getting the highest spec TSI (Highline) so it does cost us a bit more each month than the old car, but pretty minor in the grand scheme of things, and one major repair bill on the old car would probably break us even.
I'll reassess in a year or so when the lease is up, but so far it's been a fairly good decision, and gives us certainty on our car running costs.