sws1

Here's the mental model I use, whether I borrow the money, or paid outright.

Let's say the car cost $1500 per month (Depreciation, payments, etc). Multiple by 12 months. Equals $18000 per year.

Take $18,000 per year off my yearly salary. I still make more than I need.

TRAKCAR

Here's my math;

Bought a GT3 for 100K in '08 sold it in '10 for 80K lost 20%.
I did not have any stocks in '08 because I sold all to buy GT3.

Would have lost 50% with stocks.
Made 15K flipping Nissan GTR because I liked the GT3 so much I had to sell it.

Buying a GT3 offered a net result of +30% and 15K and offered me an opportunity to load up on gold and silver and get back in stocks at Dow, 7K, 8K and 9K..

Then I bought an RS and now I am back to zero LOL.
We can do this all day long; It's better to be lucky then smart. Or to be good looking or funny for that matter......

amaist

No it will not cease to exist but would transform greatly. Old cars do go to the crusher and new cars are needed to replace them. The supply of lightly used cars would diminish driving up their price if production volumes go down. Then the margins would recover. Maybe most new cars will resemble the stuff sold for fleet purchases.

It would be very disruptive, of course. The invisible hand doesn't have any sense of touch and is very harsh.

Carrera GT

The problem being, few people have a financial plan to define what they "need" and to measure their actual performance against their plan. This becomes harsh reality only in the second half of the show.

While carpe diem is a romantic notion, I don't think it was intended as the rally cry for consumerism.

The only sound argument I can find in favor of a "can't take it with you" approach (aka "die broke" and leave no burden for your family) is that there's no denying the capacity to spend and enjoy spending diminishes with, say, age 65. Certainly by 70, you're not likely to be Paul Newman and I wouldn't encourage anyone to plan their life on the exception.

911rox

The decision to buy new or old is not influenced by the merit of the decision in a financial sense because unless you are making squillions of dollars buying any sort of high priced car isn't going to be a financially sound decision, full stop.

The things important to me are whether I will get a vehicle in great condition if I buy second hand. A GT3 is a track focussed street car. It is purchased by enthusiasts predominantly in our market. Thus it stands to chance that a great number will be thrushed, will not have been maintained as meticulously as I would like and are likely to have been abused. I'm not interested in spending AUS$220-250k for a headache... I therefore would only buy such an example new assuming what I want was still available.

A Ferrari on the other hand has a different sort of following. It is generally bought by older people wilth more interest in status symbols and less interest in driving psycho or tearing up the track... They usually have 3-5k kms on them after 3-4 years and even the new car smell. The greatest concern with these cars would be panel repairs which are easier to identify to a trained eye... A Ferrari or similar, I would gladly buy second hand...

My GT3 does not necessarily represent a single figure % of my net worth but I research the running cost of everything I buy and ensure not only that I can afford its purchase price but can also afford to run it to the capacity I intend for years to come. With the GT3, I made sure I knew the cost of servicing, alignments, tyres and brakes to ensure my budget could cover these as these were all likely to be very regular costs. I buy for long term ownership, never borrow for depreciating assets and realise that I will be tossing away at least half of my buy in price... Anyone who is forced to sell a car 6-12 months later because "they didn't realise the cost of running their car, etc" obviously hasn't done their homework, is a bad decision maker or is simply an impulsive buyer IMHO...

Carrera GT

It's far to complex to analyze, let alone predict what would happen to the auto industry if consumers made rational purchases. I can't even define a rational purchase, but it would look more like our parents or say the 1960's. The first principle to question is simply why the auto industry exists at all. Cars are built using plastics and metals in factories using coal and oil. Plastics rely mostly on the oil industry. And roads are made out of oil products which are terrible choices because asphalt deteriorates quickly, requiring constant renewal.

It's far too much of a coincidence to attribute these three factors to "oil being the energy of choice" since it isn't -- it's the most difficult, most expensive and least effective energy available in the last 100 years.

But here we are driving cars made out of oil, fueled by oil and driving on roads made out of oil. So that's one part of the "why?" puzzle solved.

The second part is banks. If people bought one car at any price and drove it until they owned it, then drove it some more until they had cash to afford updating to the next car, banks would lose their second most lucrative product (second only to home mortgages.) This is how my parents bought their cars and our home.

The third piece is the ultimate adversary to the financial health of the individual: governments. Note the recipients of "bail outs" based on money: auto makers and bankers. Money the government created today as debt so that tax payers would have to make good on that debt in the future, with interest. If the governments of each sovereign state, like the USA, printed money as currency instead of letting a central bank print money loaned to given country as debt with interest, foreign trade deficits would not accrue interest and servicing any deficit becomes a trivial financial concern. It's as if the governments of the world can't control their own greed and simply don't understand simple economics and the affect of compound interest. Clearly the central banks understand compound interest and Bernanke delights in creating as much debt burden for the country as possible, literally smiling all the way to the bank. $3.3 Trillion was the last rough count. Round numbers. We still don't know where it went in total.

Back to the auto industry cash cow. If we took the sum total of all taxes and government revenues associated with the auto industry into account, it is second only to the primary industry of government: war. And war exists only to drive business to the military industrial complex -- they're a sort of "bail out" based on blood.

The only problem with the auto industry was GM which had turned into a retirement fund which also happened to have a car building business. To dispose of all that troublesome retirement fund obligation, the only (semi-legal) way out of that responsibility was bankruptcy. Now that GM has been guided through their debt-extinguishing bankruptcy, the bankers and the oil men have their cash cow back. Tough luck for the factory workers expecting a retirement.

And there's a lot more complexity if you take into account the energy industry, steel production, factory workers, working class employment, education ... all too complex and far too OT.

I respectfully submit, in my humble, the next time you turn the key on the 911, realize the beneficiaries are, in order: oil man, banker and big government.

stevecolletti

I don't see myself in that group.

I keep cars for a while - seldom less than 6 years, with most being held for more than 10 years.

I find I get mad at the initial depreciation (I did the same as you on my 08), but it's usually hard to find a 'used' car spec'd close to the way I'd want it (though that's less of a problem with a GT3). Sometime around the fourth to fifth year, I look at depreciated garage queens being worth 10-15% more than my high-mileage car and I'm back to being happy with my choice.

stevecolletti

That hasn't been my experience.

While I mostly agree with your (stereotyped) assessment of the different owners, most people I know that track a car are meticulous about maintenance. The cars may get driven hard, but they are seldom 'put away wet'.

My Ferrari experience is the opposite, those status seekers tend to be the definition of deferred maintenance, and it even seems 'reasonable' since there are so few miles on the car. Three to 4 years of short-trips, never changing the oil, flushing the brakes, or the radiators can be very expensive for the next owner...

NVRANUF

For anyone trying and boil down the purchase of such rapidly depreciating assets such as our Porsche's represent, into some rational analytical process is always fun to watch.

Emotion is what high end manufacturer's tap into, and their dealers prey on... The good one's are VERY good at it and success is their reward.

and eventually everyone in here succumbs to it on one one level or another.

Simply, that level is determined by one's ability to withstand or sustain "cash burn" while feeding their emotional triggers.

beowulf

Izzone

Larry.....PLEASE do not sell your GT3......of any optioned out cars, your is my favorite

you will regret it

if you do Pm me I could make due with a non RS and I have seats that someone forgot to order on yours

Izzone

Cars are like women....the new car smell wears off.

Once you get used to it you start looking at other new cars.....because they smell and feel different.

Then you sell your "old" car to get the new car and have that feeling all over again. It is a repetitive cycle.......this is why we have so many divorces....new car smell

The probelm is the new car smell always wears off.......then you get rid of it.......then once you have not had it for a while you get back in it and it has the new car smell again (this is what we call a cougar)

funny how that works

Larry Cable

Having thought about it hard I have decided *NOT* to swap the Mex Blue car for an RS.

Not because I don't want an RS, I do, but I just cant swallow a 30% depreciation in 8mnths/14xx miles... then
start again with another new 3RS... especially since I took a similar depreciation on the the '07 in order to buy the
'10...

and...

I love my Mexico Blue car, especially now that I have my HRE wheels on it ...

I know it looks like something you'd get for your kid free with a full tank of gas at a 76 station, (only one per customer please) but ... I kind of like that look!

If Uncle Sam is nice to me 4/15/11 I will get some sport buckets and a set of MPSCs and I'll be a happy GT3 driver!

Larry Cable

I dont think I can go there with the combination of women, smells, and "getting back into it..."



But you know what, I have never gotten into a GT3 (new or old) driven it, and not got that goofy grin feeling all over again like you do the 1st time you drive in one ... Ive had 4 GT3s in the last 10 years, and unless the 991 GT3 is nonexistent or a complete disasster (launch control, flappy-paddles as std) I will probably have another one at some point ...

This time though, I will have an allocation of my own, order the car I want, and take delivery as I did with my '07...

pissedpuppy

what is your business???