Here's the question: How many people do you admire or respect because of the car they drive?
Note I said "admire or respect," not "envy."
No one, huh?
So now that we've
established that you don't care what someone else drives and that no one else
cares what you drive,
let's get serious. The fact is that for most of us after our houses and maybe
college educations for the kids
(at a really, really good college) cars will take more of our money than
anything else. And Detroit (and Nagoya and Stuttgart)
want as much of that money as they can possibly get.
Hence all the expensive
advertising trying to convince you that you'll feel better about yourself
-- and others will feel better about
you, too -- if only you drive a particular car.
What hogwash! Get
past the marketing and advertising and when you buy a car you're buying something
very simple:
a steel box with wheels that contains about 150,000 miles. You can buy an
expensive box of miles, a mid-priced box of miles
or a really cheap box of miles (read "used cars") and you'll generally get
the same thing: 150,000 miles (less, of course, the
number of miles a previous owner put on a used car). The only difference
is how much you pay to go each one of those miles.
Hidden Cost
But here's the
real catch: any one of those cars winds up costing you a lot more than you
think.
Sure, there's sales tax and operating costs and insurance, all of which take
an additional toll on your wallet.
But what I'm really talking about here is opportunity cost: every additional
buck you spend on that box of miles is a buck that you
no longer have to invest and watch grow in value for years to come.
If you save $10,000
by buying a Toyota Camry instead of a BMW and invest that $10,000 in stocks
with an average annual return
of 10%, at the end of 10 years (about when your Toyota is coming up on that
150,000-mile mark) you'll have $25,937.
At that point,
save another $10,000 by buying a less expensive car, invest it, and the combined
savings on those two cars will,
10 years from that second purchase, be worth more than $93,000. (That's $67,275
from your initial $10,000 investment 20 years
ago and another $25,937 from your latest $10,000 savings.) Can driving a
car that is $10,000 more expensive than another really
be worth nearly $100,000 to you?
More Than Money
Now there are certain
criteria that a car has to meet if you're going to drive it 150,000 miles.
Over the years I've found that the
things that are important to me, in descending order, are reliability, safety,
efficiency and comfort. Reliability might not seem that
important in the overall scheme of things -- most people would initially
choose safety -- but the fact is you won't keep a car that's
unreliable for 10 years.
The real point,
though, is that all four criteria are important, and you'll have to make some
trade-offs.
You can't have the most efficient car while still having the right balance
of safety and comfort. That's why over the past 30 years
I've invariably wound up driving a Honda or a Toyota. Cars from those manufacturers
consistently get high ratings for reliability,
safety and efficiency.
When I was working
in The Wall Street Journal's Detroit bureau many years ago, a very, very high-ranking
Ford executive told
me off the record that the challenge facing his company was to be able to
build a car as good as Honda's Accord.
From everything I read today, Ford still hasn't accomplished that goal, nor
have Chrysler, GM or various other global manufacturers.
Sure, the car freaks
may find Toyotas and Hondas boring, but for $100,000 in savings over time
I'm willing to be really bored,
as long as I have reliability, safety, efficiency and comfort.
Replace That Box?
Having said all
this, I acknowledge that there may be circumstances in which you shouldn't
keep a car for 150,000 miles.
The advent of antilock brakes and air bags were such significant strides
forward in safety that they made it almost imperative
that you get out of a car without those features and into one that had them.
We may be approaching
another such threshold in terms of efficiency when the major auto makers begin
offering plug-in electric
vehicles a few years from now. We'll have to wait to see how reliable, comfortable
and safe they are. But plug-ins will be a significant
step beyond today's popular hybrids, which so far seem to be more expensive
than they're worth in terms of overall fuel savings.
Still, the bottom
line remains this: Every dollar you spend on a car (or anything else that
costs more than a few hundred dollars)
is a dollar that you're not saving and investing for tomorrow.
