In 2002, I foolishly purchased a brand new luxurious automobile, a Mercedes Benz G500. I had simply gotten a increase and a promotion to Affiliate. Why not YOLO?
The G-Wagon price $78,000 out the door, which was truly an excellent deal on the time. Only a yr prior, a dealership in Santa Fe with import rights was promoting G-Wagons solely for $150,000+.
A yr later, I bought the automobile for a $18,000 loss as a result of it would not match within the storage of this condominium I needed to purchase. It was two inches too tall for clearance!
I made a decision it was extra accountable to purchase this two bed room, two toilet condominium dealing with Lafayette Park than hold proudly owning an costly automobile with a $760 a month automobile fee. That is when my love for actual property, my favourite asset class to construct wealth started.
After taking a shower on my new luxurious automobile, I swore by no means to purchase one other once more. While you’re in your path to monetary independence, having a pleasant automobile is the very last thing you want!
New Luxurious Automobile Costs Are Outrageous As we speak
After the G-Wagon I went the exact opposite course and purchased my mother’s 1997 Honda Civic for $7,500. I then went by means of a collection of different automobiles, together with a 1997 BMW M3, 1995 Nissan Pathfinder, 1983 BMW 635 CSi basic, 2001 Land Rover Discovery II, and new Honda Match. All of the automobiles had been between $7,500 – $20,000, nice worth as compared.
Then in December 2016, with a child on the way in which, I purchased a one-year outdated Vary Rover Sport for $60,000 after tax. It had 10,600 miles on it and I assumed it was good worth as a result of model new, it was promoting for about $80,000 after tax.
Given I am considering of shopping for a brand new automobile in mid-2025, when the Vary Rover Sport is 10 years outdated, I made a decision to drop by the Land Rover Supplier in Redwood Metropolis after a pair hours on the pool with my children. I hadn’t gone to a automobile dealership since 2020, so I used to be curious to see what new luxurious automobile costs had been.
Once I bought to the Land Rover supplier, I used to be shocked. A model new Vary Rover Sport SE price a whopping $104,600 earlier than tax, or about $113,000 after tax! That is a 41% worth enhance since 2016. The automobile is a magnificence with 23″ rims, cozy seats, and an up to date physique type. However wow! That is some huge cash.
Then I checked out one other Vary Rover Sport SE mannequin on the San Francisco supplier that price $119,870 earlier than tax as a result of it had a sport bundle and safety movie. After tax, the automobile would price about $130,000. Who can afford these costs?
A Look At New Luxurious Digital Autos
After being blown away by the price of new Vary Rover Sports activities, I made a decision to take a look at some electrical autos by Mercedes Benz as a result of it was on the way in which dwelling. Don’t shoot me for wanting.
I’ve bought a Tesla wall charger in my new home and Mercedes and different manufacturers will begin being suitable with Tesla’s chargers in 2025 and past. Teslas are good however they’re ubiquitous right here in San Francisco. I needed one thing totally different.
I have been studying all around the information that EV costs have declined, particularly Tesla’s common automobile worth. Finally, possibly getting an EV is the way in which to go. See the chart under that reveals an enormous decline in EV costs since mid-2022.
Sadly, a 2023 (not 2024) Mercedes Benz AMG EQS electrical sedan sitting within the showroom was much more costly than the Vary Rover Sport! The asking worth was $153,000 earlier than tax, or about $166,000 after tax! Spending $166,000 for a final yr’s mannequin electrical mannequin sedan can also be outrageous.
Then the kiddos and I hopped right into a Maybach EQS 680 for $197,350 pre-tax. It was good, however come on now! I’d be burdened as hell driving or parking certainly one of these items. One dent would price $5,000+ to repair. It’s a lot much less annoying driving an outdated automobile. These luxurious new automobile costs are clearly inflated.
After being upset in Mercedes Benz and Land Rover, I made a decision to not hassle dropping by the BMW dealership and take a look at their iX fashions. Why hassle once they’re simply going to cost the same quantity for an EV as effectively?
A Higher Spending Different
As a substitute of spending a fortune on a brand new luxurious automobile, I might purchase a well-equipped 2024 Toyota Corolla for $26,000 or a top-of-the-line Toyota Highlander for $60,000, which might save me between $106,000 and $140,000. With these financial savings, I’d allocate 60% to the S&P 500, 25% to Treasury bonds yielding 5%, and 15% to a non-public actual property fund.
This method feels way more accountable, offering each the satisfaction of proudly owning a dependable new car and enhancing our monetary safety for the longer term.
The idea of alternative price at all times weighs on me once I ponder a major buy. I can not assist however contemplate how way more cash I might accumulate in 5-10 years by means of compound returns if I determine towards shopping for the merchandise.
Consequently, I’ve directed my indulgences towards investments in residential actual property and collectibles, corresponding to uncommon books. With these belongings, not solely can I derive enjoyment, however there’s additionally the potential to see a constructive return over time.
By no means Shopping for A New Luxurious Automobile Once more
After testing automobiles at these dealerships, I made a decision to surrender my seek for a brand new luxurious automobile. The costs are merely unaffordable for me with out producing a major quantity of energetic revenue.
And there isn’t any approach my spouse and I’d be keen to return to work and lose our freedom simply to purchase a luxurious vehicle. It feels approach higher to drive a extra economical automobile that will get us from level A to level B at half the price. Taking out a mortgage to purchase a depreciating asset isn’t nice.
I do not know who is ready to buy such automobiles. However clearly, many individuals should be doing effectively to afford such costly autos.
If these luxurious automobiles had been priced between $60,000 – $70,000, I might be tempted to purchase one in 2025. Nonetheless, they’re priced thus far what I imagine they’re value that I’ve zero temptation to splurge on these sort of autos. No YOLO spending right here!
I’ve a greater answer to my luxurious automobile needs. Preserve proudly owning my present automobile for longer than deliberate.
Going To Preserve My Automobile For Six Extra Years
Initially, I asserted that the splendid possession length for a automobile is 10 years. Nonetheless, my assertion was ambiguous concerning whether or not to exchange a automobile after it reaches the age of 10 or after proudly owning it for greater than 10 years. For example, if you are going to buy an eight-year-old automobile, would it not necessitate substitute after two years or after reaching 10 years of possession?
After cautious consideration, I’ve realized there isn’t any definitive reply. So long as you adhere to common upkeep, change worn-out elements, and deal with any points promptly, you must be capable of safely drive your automobile for over 120,000 miles. My principal concern for all drivers is security adopted by ballooning upkeep prices.
My very own automobile will attain the age of 10 years in July 2025, and it is nonetheless working easily and appears nice. It appears untimely to contemplate changing it subsequent yr, particularly contemplating that I not too long ago invested $890 in two new tires. Moreover, I’ve already changed the leaking water pump in June 2023, the vacuum pump in February 2024, and not too long ago had an oil change.
With solely 52,000 miles on it and a median annual mileage of 5,500 miles, I anticipate minimal points with holding it for an additional six years till it reaches 15 years of age. By July 2030, my automobile ought to have round 88,000 miles on the odometer.
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An Costly New Automobile Makes Your Present Automobile Method Extra Helpful
The fantastic thing about costly luxurious automobiles lies within the appreciation it brings to the autos we already possess. Upon discovering the most recent costs, I’ve discovered my 2015 Vary Rover Sport to be much more helpful.
With a brand new one priced at $115,000 out the door, I now estimate mine to be value not less than $65,000—$5,000 greater than what I paid for it again in December 2016.
The horsepower is much like the brand new fashions and so is the consolation. In addition to that new automobile scent vs. my In N’ Out burger inside scent, I simply don’t see many advantages of driving a brand new Vary Rover Sport for a lot cash.
New Vehicles Make Upkeep Bills Really feel Cheaper Too
Provided that I will be holding my automobile for 5 years longer than deliberate, I will be particularly diligent in addressing upkeep points to make sure it stays as secure as attainable.
For instance, I’ve seen a slight creaking sound when driving slowly over uneven pavement. That is seemingly on account of worn sway bar bushings, which could be changed for $450. Beforehand, I might need disregarded such a minor downside. Nonetheless, now that I’ve determined to forgo spending over $100,000 on a brand new luxurious automobile, these bills appear extra affordable.
I am keen to spend $1,500 – $2,000 yearly for 5 years to deal with any points with my automobile as a substitute of spending $115,000 upfront on a brand new Vary Rover Sport. Moreover, I might earn 5% risk-free curiosity per yr within the cash I save by not shopping for, totaling $28,750 after 5 years!
Furthermore, in the event you’re keen to buy a brand new automobile, I’ve found that merely washing and vacuuming the inside revitalizes its look and makes it really feel like new once more. It is exceptional what a clear automobile can obtain.
Vehicles typically rank among the many worst culprits for undermining monetary independence amongst customers. Individuals incessantly overspend on automobiles to their very own detriment. Let’s decide to holding our automobiles for so long as attainable to save cash. Our future selves will undoubtedly thank us.
Reader Questions
Who’s paying these exorbitant costs for brand new luxurious automobile costs? Absolutely, all people should be making over $1 million a yr given individuals rationally observe my 1/tenth rule for automobile shopping for proper? Why are individuals keen to pay a lot for a automobile as a substitute of make investments the cash as a substitute to safe their monetary future?
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