The US automobile industry was on its way to a disappointing year amid the pandemic before it recovered as the year closed. Similarly, luxury car sales also ended on a high note following an increase in demand in China. The recovery in the sales of non-luxury cars is understandable since people need cars to move from one place to another.
But people may ask if the same thing can be said about luxury cars. They may ask if buying high-end cars are worth the cost, especially in the middle of a health crisis. So, we’re going to look at factors to see if it’s a good decision for a person to buy a luxury car.
Owning a car is a necessity for some people depending on their lifestyle. But for others, it’s more of a luxury. While they may say they bought it because they can afford it, it does not always mean it’s worth it. There are several factors to consider when deciding to buy that luxury car people have been pining for in the last decade or so.
One thing people should consider is the annual depreciation cost of a luxury car. Ordinary cars normally have an annual depreciation of 10 percent. In comparison, high-end cars have a 15 percent annual depreciation cost. The reason for the higher cost is the smaller market for a BMW compared to a Honda.
With this in mind, the depreciation of the car increases as the years go by. For instance, the value of a Honda is around 60 percent compared to its original value after three years. On the other hand, a luxury car, such as a BMW, will have a residual value of around 50 percent in the same period.
This means people who own a luxury car will see the value of their property going down faster than an ordinary car.
The cost of maintaining high-end luxury cars is quite high compared to affordable models. For instance, the cost of maintaining a Porsche 911 can go up to $19,600 over ten years. And to ensure it’s well taken care of, you may need to find a reliable Porsche service center. Similarly, maintaining a BMW 640i Gran Coupe can cost up to $15,700, while a budget of $12,550 may be enough to maintain a Ford Mustang.
In comparison, maintaining a Toyota Yaris costs around a sixth of the maintenance cost of a Porsche 911 at $3,289. On the other hand, a Toyota Camry only costs $3.499 to maintain over 10 years. Over the same period, you can maintain the Kia Soul at $4,353.
Taking a look at these figures, the cost of owning a luxury car does not end with the purchase of the car. It’s also important to include the maintenance costs for a few years. The figures do not even include the cost of repairs in case something happens to the car.
So, if potential car owners are thinking about buying a high-end car, they should prepare for the cost of maintaining the car and possible expenses if it needs repair.
Aside from the cost of maintaining and repairing a luxury car, people should also take into account the cost of insurance. The insurance of luxury cars is much higher compared to ordinary cars. For instance, the cost of insurance for a Mazda CX-3 Sport is only $1,324 per year, while a Honda CR-V LX costs $1,333 per year to insure.
On the other hand, the annual insurance cost of a BMW M8 is $3,953, and an Audi R8 costs $4,033 per year to insure. With this, owning a luxury car can easily drain the funds in the bank to keep it covered by insurance each year.
Even though the luxury car is covered by insurance, it still doesn’t take away the anxiety a person feels while driving it around. While even the most attentive drivers can figure in an accident, it’s a different thing when they’re driving an $85,000 BMW 8 Series Gran Coupe.
At this point, the anxiety levels may already reach the roof. The driver may end up being overly cautious about bringing the car out of the garage. The thought of getting rear-ended by another car can be nerve-wracking.
In comparison, they may not feel the same level of anxiety if they are bringing a $14,400 Chevrolet Spark out on a grocery run. They may not even mind a bit of dirt inside the car when they fetch the kids from soccer practice.
Buying a luxury car isn’t a big thing if you’re earning six figures every month. But if your pay grade isn’t that high, you may want to ask yourself if buying a luxury car is worth it.