New Luxury Car Prices Are Outrageous, Never Buying One Again

In 2002, I foolishly purchased a brand new luxurious automobile, a Mercedes Benz G500. I needed to simply gotten a elevate and a promotion to Affiliate so I assumed I had may as effectively blow all my cash.

The G-Wagon value $78,000 out the door, which was truly a very good deal on the time. Only a 12 months prior, a dealership in Santa Fe with unique import rights was promoting G-Wagons completely for $150,000+.

A 12 months later, I needed to make the troublesome alternative of promoting the automobile for $60,000, a $18,000 loss, as a result of it would not match on this condominium I wished 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 lavatory condominium dealing with Lafayette Park than preserve proudly owning an costly automobile with a $760 a month automobile fee. My love for actual property, my favorite asset class to build wealth started.

After taking a shower on my new luxurious automobile, I swore by no means to purchase new once more. Whenever you’re in your path to monetary independence, having a pleasant automobile is the very last thing you want!

New Luxurious Automotive Costs Are Outrageous At the moment

After the G-Wagon I went the exact opposite route and acquired my mother’s 1997 Honda Civic for $7,500. I then went by means of a sequence of different used vehicles, together with a 1997 BMW M3, 1995 Nissan Pathfinder, 1983 BMW 635 CSi basic, 2001 Land Rover Discovery II, and Honda Match. All of the vehicles have been between $7,500 – $20,000 as I saved and invested as a lot as I may in shares and actual property as an alternative.

Then in December 2016, I purchased a one-year outdated Vary Rover Sport for $60,000 after tax.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Given I am considering of shopping for a brand new automobile in mid-2025, when the Vary Rover Sport is 10 years outdated, I made a decision to drop by the Land Rover Seller in Redwood Metropolis after a pair hours on the pool with my kids. I hadn’t gone to a automobile dealership since 2020, so I used to be curious to see what new luxurious automobile costs have been.

After I acquired to the Land Rover seller, I used to be shocked. A model new Vary Rover Sport SE value a whopping $104,600 earlier than tax, or about $113,000 after tax! That is a 31% worth improve since 2016. The automobile is a magnificence with 23″ rims, comfortable seats, and an up to date physique kinds. However wow! That is some huge cash.

Then I checked out one other Vary Rover Sport SE mannequin on the San Francisco seller that value $119,870 earlier than tax as a result of it had a sport package deal and safety movie. After tax, the automobile would value about $130,000. Who can afford these costs?

A Look At Luxurious New Digital Autos

After being blown away by the price of new Vary Rover Sports activities, I made a decision to have a look at some electric vehicles be Mercedes Benz. I’ve acquired a Tesla wall charger in my new house 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 have been studying all around the information that EV costs have declined, particularly Tesla’s common automobile worth. Ultimately, maybe getting an EV is the way to go.

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 12 months’s mannequin electrical mannequin sedan can be outrageous.

After being dissatisfied in Mercedes Benz, I made a decision to not hassle dropping by the BMW dealership. 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’ve the selection between buying 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 private real estate 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 long run.

The idea of alternative value at all times weighs on me after I ponder a major buy. I am unable to assist however think about how way more cash I may accumulate in 5-10 years by means of compound returns if I determine in opposition to shopping for the merchandise.

Consequently, I’ve directed my indulgences towards investments in residential real estate and collectibles, corresponding to rare 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 Automotive Once more

After testing vehicles 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 active income.

And there is not any method my spouse and I’d be keen to return to work and lose our freedom simply to purchase a luxurious vehicle. It feels method higher to drive a extra economical automobile that will get us from level A to level B at half the associated fee.

I do not know who is ready to buy such vehicles. However clearly, many individuals have to be doing effectively to afford such costly automobiles.

If these luxurious vehicles have been priced between $60,000 – $70,000, I might be tempted to purchase one in 2025. Nonetheless, they’re priced up to now what I consider they’re value that I’ve zero temptation to splurge on these sort of automobiles. No YOLO spending right here!

I’ve a greater resolution to my luxurious automobile needs. Hold proudly owning my present automobile for longer than deliberate.

Going To Hold My Automotive For Six Extra Years

Initially, I asserted that the ideal ownership duration for a car is 10 years. Nonetheless, my assertion was ambiguous relating to whether or not to interchange a automobile after it reaches the age of 10 or after proudly owning it for greater than 10 years. As an illustration, if you buy an eight-year-old automobile, would it not necessitate alternative after two years or after reaching 10 years of possession?

After cautious consideration, I’ve realized there is not any definitive reply regarding upkeep and security. So long as you adhere to common upkeep, exchange worn-out components, and deal with any points promptly, it is best to have the ability to safely drive your automobile for over 120,000 miles.

My very own automobile will attain the age of 10 years in July 2025, and it is nonetheless operating easily and nonetheless appears nice right now. It appears untimely to contemplate changing it subsequent 12 months, 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 maintaining it for one more six years till it reaches 15 years of age. By July 2030, my automobile ought to have round 88,000 miles on the odometer.

An Costly New Automotive Makes Your Present Automotive Manner Extra Useful

The fantastic thing about costly luxurious vehicles lies within the appreciation it brings to the automobiles we already possess. Upon discovering the most recent costs, I’ve discovered my 2015 Vary Rover Sport to be much more beneficial.

With a brand new one priced at $115,000, I now estimate mine to be value at the least $65,000—$5,000 greater than what I paid for it again in December 2016.

The horsepower is much like the brand new vehicles and so is the consolation. In addition to that new automobile scent vs. my In N’ Out burger inside scent, a brand new Vary Rover Sport for a lot cash simply is not value it to me.

New Automobiles Make Upkeep Bills Really feel Cheaper Too

On condition that I will be maintaining my automobile for 5 years longer than deliberate, I will be particularly diligent in addressing upkeep points to make sure it stays as protected as doable.

For instance, I’ve observed a slight creaking sound when driving slowly over uneven pavement. That is probably on account of worn sway bar bushings, which might be changed for $450. Beforehand, I may 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 cheap.

I am keen to spend $1,500 – $2,000 yearly for 5 years to deal with any points with my automobile as an alternative of spending $115,000 upfront on a brand new Vary Rover Sport. Moreover, I may earn 5% risk-free curiosity per 12 months, totaling $28,750 after 5 years!

Furthermore, should 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 outstanding what a clear automobile can obtain.

Automobiles usually rank among the many worst culprits for undermining monetary independence amongst shoppers. Individuals incessantly overspend on vehicles to their very own detriment. Let’s decide to maintaining our vehicles for so long as doable to save cash. Our future selves will undoubtedly thank us.

Reader Questions

Who’s paying these exorbitant costs for brand new luxurious automobile costs? Certainly, all people have to be making over $1 million a 12 months given individuals rationally observe my 1/10th rule for car buying right? Why are individuals keen to pay a lot for a automobile as an alternative of make investments the cash as an alternative to safe their monetary future?

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