Owning a more expensive car

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jonb

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#281506 22-Feb-2021 09:50

I've always viewed cars as a depreciating asset, to spend as little as possible. Practically that has meant buying a sub 10k car and using it for like 8yrs until the cost of maintenance starts becoming a significant cost. First car in NZ was a 1999 Mazda Demio in 2008, sold for scrap in 2018. Current car a 2007 Hyundai Santa Fe, which also seems to be on the same path of lifecycle.
Aware can buy something like a Landrover that holds its value in theory. How do you run the sums in your head to have like a 30k vehicle? Living in S Island getting a bit of 4x4 envy..

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#2661004 22-Feb-2021 10:19

I just accept that a car is always going to be a depreciating asset (unless you get very lucky and buy something which becomes a future “classic” - unlikely around the $30k price point) and see that depreciation as the price you pay for buying something “nice”.

If you are a fan of cars/driving or are looking for something special/specific then you just have to suck it up. Enjoy it and don’t think about it rather than running the numbers!

If you want to ensure that you maximise value and minimise depreciation then you carry on the way you have been.

Neither is “correct” - horses for courses innit. For me Life is a depreciating asset and I am happy to buy a car I like/want so I can enjoy it, rather than worrying about the maths.

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#2661005 22-Feb-2021 10:21

That said, I wouldn’t buy anything made by Landrover unless it had a bumper to bumper warranty for the entire duration that I was intending to keep it.

Inphinity

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#2661017 22-Feb-2021 10:36

Personally, I don't treat it as an asset. It's an expense. So running the sums, as you put it, is simply "Can I afford $X" and "Am I comfortable paying $X for what it gives me". Safety ratings, operating costs, features & functionality, entertainment/enjoyment all play a role.

lxsw20

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#2661021 22-Feb-2021 10:42

Item:

That said, I wouldn’t buy anything made by Landrover unless it had a bumper to bumper warranty for the entire duration that I was intending to keep it.

Yes one of many European brands that sit in the category of if you're not willing to buy a new one, you won't want to pay to fix a second hand one.

There is no one answer that fits all here. Some have cars as a hobby, some want it for status, some just want a practical run about. All are fine.

For yourself it sounds like you want a practical A to B that will go the distance, I'd probably be looking at a near new Sportage or something around that sort of money.

jonathan18

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#2661037 22-Feb-2021 11:11

Item:
That said, I wouldn’t buy anything made by Landrover unless it had a bumper to bumper warranty for the entire duration that I was intending to keep it.

Just to reinforce this point!
http://www.stuff.co.nz/business/opinion-analysis/300234557/the-one-thing-affluent-car-owners-wont-put-up-with

alasta

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#2661041 22-Feb-2021 11:18

New Zealanders seem to have a weird obsession with vehicle depreciation, and indifference towards other operating costs. A new vehicle might lose a huge amount of value when you drive it out of the showroom but if you average the deprecation over five years then it's not that scary. In contrast old high mileage cars cost a fortune in maintenance, so there goes your depreciation saving.

If minimising TCO is your objective then buy a low mileage Japanese or Korean car second hand but less than a couple of years old. Do not buy a Land Rover.

lxsw20

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#2661044 22-Feb-2021 11:22

alasta:

In contrast old high mileage cars cost a fortune in maintenance, so there goes your depreciation saving.

Eh, buy something common and Japanese and that isn't really the case. Plenty of Toyotas/Nissans etc around with 200-300k on the clock still going strong.

Higher safety standards / better emission controls etc are great reasons to consider a new car, but I don't think it's really all that true that older = fortune in maintenance.

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Handsomedan

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#2661048 22-Feb-2021 11:25

alasta:

New Zealanders seem to have a weird obsession with vehicle depreciation, and indifference towards other operating costs. A new vehicle might lose a huge amount of value when you drive it out of the showroom but if you average the deprecation over five years then it's not that scary. In contrast old high mileage cars cost a fortune in maintenance, so there goes your depreciation saving.

If minimising TCO is your objective then buy a low mileage Japanese or Korean car second hand but less than a couple of years old. Do not buy a Land Rover.

This is absolutely correct.

I own a 15 year old Euro wagon. It's safe, practical and nice to drive.

It costs me (on a good year) around $1000 a year to maintain. ON a bad year - upwards of $3-4k. Right now it's booked in for its latest $2k fix. It now owes me too much to be practical to sell and upgrade. But I love it. It's now done 150,000kms. This latest fix should see it running for at least another 50k km, if I continue to keep it regularly maintained.

It was a $120k car new - I got it when it was only 7 years old and it cost me $15k. You do the math.

A new car at the time I bought this, from a Japanese manufacturer, with similar specs may have cost me around $45-50k.

By now I would have just about broken even. But I enjoy this car - I may not have enjoyed the more modern Japanese car.

YMMV.

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mdooher

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#2661065 22-Feb-2021 11:56

Most expensive car I have ever bought (I still have it) $23000 for a 2nd hand jap import BMW.. I have spent a bit on it (but I do it all myself) new suspension, replacement engine (don't ask) but I look at it as a fun hobby.

When I sell it, I don't care what I get for it, but if it works out costing me around $2000 a year for fun motoring and fun hobby time I will be pretty happy.

My previous Alfa 164 cost me 10 Grand, I had it for 10 years and I sold it for a grand..awesome

I love great handling cars, and I can't afford a new one (BMW M5 would be nice) so I buy older ones and get them back to newish it is just my thing. I think I would miss the tinkering if I had a new one anyway

Some people don't care, or don't even notice that the car they are driving is just an appliance with the barest minimum equipment that will keep it on the road (my mothers Mitsi Mirage ...Ahhhh) so for them "flash" cars are an unnecessary extravagance.

Same can be said for any "flash" shoes, clothes, watches, dogs, suburbs, schools....

We are all just a bit strange to someone else

Matthew

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#2661068 22-Feb-2021 12:11

mdooher:

We are all just a bit strange to someone else

jonb

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#2661070 22-Feb-2021 12:12

Thanks, I don't drive everyday for work but when do at the weekends or evening is often as an enabler of another activity. In theory would like to drive off the beaten track occasionally in something like a Jimny, for me probably makes sense to get an older one, as 30k new can get a lot of a different used car (like a 2012 FJ cruiser for mid life crisis/Hilux). For the land rover was thinking the 2000 era is holding value, but not being mechanically minded probably a bad idea.
Sort of have the money in the sense of should really be renovating bathroom instead.

1024kb

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#2661076 22-Feb-2021 12:17

Nobody actually wants to own a car. It’s transport we want - if you could push a button on your watch & be where you want to be instantly, nobody would even consider owning a car. As yet, that push button tech doesn’t exist so we use other, more primitive methods of transportation.

Transport costs, that’s an immutable. Until we develop entirely new technologies, there will always be time cost involved. Add to that environmental cost, R&M, cost of capital, storage & the rest, including depreciation.

If you use your car for just under 2.5 hours every day, your asset utilisation is 10%. That really messes with true ownership costs. At this point, it’s hard to justify ownership vs TAAS.

Take that garage you park in - the one that sits empty all day until you get back home - convert it to a self-contained rental. Fund the conversion by selling your car. Now use your rental cashflow to sponsor your transport.

The appreciating asset that is a collectors car can’t really be considered a transport solution - those vehicles (XY GTHO, Cooper S, RX3 - 7, Godzilla, XU-1 etc) aren’t used as daily drivers. And you need to factor in storage cost too.

A Landrover 90 or 110 Defender is often a hedge against depreciation as they’re tough as nails & very, very hard to break. The cost of this is the crap driving experience - there’s no real comfort difference between on & off road. But when you sell your dreadfully uncomfortable Landrover brick that never let you down apart from every time you sat in it, you will get a better capital recovery than you get from most other vehicles.

The lower depreciation is factored in by free market forces. You’ll pay more for a lower-depreciating vehicle (that’s what makes them lower-depreciating) than you will for an equivalent vehicle with higher depreciation costs. Back to the calculator, increased cost of capital / interest charges.

Transportation has costs attached, the more convenient it is for us, the more it’ll cost.

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Benjip

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#2661077 22-Feb-2021 12:26

1024kb: Nobody actually wants to own a car. It’s transport we want - if you could push a button on your watch & be where you want to be instantly, nobody would even consider owning a car. As yet, that push button tech doesn’t exist so we use other, more primitive methods of transportation.

Speak for yourself! Some of us truly enjoy driving.

mdooher

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#2661080 22-Feb-2021 12:29

1024kb: Nobody actually wants to own a car. It’s transport we want - if you could push a button on your watch & be where you want to be instantly, nobody would even consider owning a car. As yet, that push button tech doesn’t exist so we use other, more primitive methods of transportation.

not true at all, plenty of people own many cars, some own hundreds

like I said, we are all a little bit strange to someone else

Matthew

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#2661082 22-Feb-2021 12:33

Benjip:
1024kb: Nobody actually wants to own a car. It’s transport we want - if you could push a button on your watch & be where you want to be instantly, nobody would even consider owning a car. As yet, that push button tech doesn’t exist so we use other, more primitive methods of transportation.

Speak for yourself! Some of us truly enjoy driving.

If you had the option to simply push that button & be there in a flash, where would you prefer to drive to?

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