The family 'ride' as personal icon is changing. The auto industry has counted upon America's obsession with the car as an extension of self for many decades. But the growing new paradigm of caution and frugality when it comes to consumer spending is not good news for Detroit -- or Toyota, Honda, Audi, VW or DaimlerAG for that matter. It's not that the automobile will cease to be a status symbol but rather how that status may become redefined. Our romance with cars has exhibited all the trappings of irrational, overly emotional poor spend judgment for generations. As we all know, the purchase of a new vehicle has never been a wise investment. What other large ticket item loses over 20% of its value on the day of purchase?
The Hot New Car Is Your Old Car reads the Wall Street Journal, Personal Journal headline on 01/14. Columnist Jonathan Welsh quotes "'The three-year ownership mentality has crumbled,' says Trevor Trainia, founder of Driverside, a website that helps people keep up with car maintenance and avoid overpaying for repairs". "The average trade-in age for cars has crept upward to 6.2 years in October, up from 5.8 years in October 2007, according to J.D. Power & Associates." John Wolkonowics, an analyst with IHS Global Insight says that "if the downturn lasts another year or two, a 'new frugality' could take hold that would include longer-term car ownership and disdain for pricey new models". Welsh goes on to quote Blue Magic, an automotive aftermarket maker of leather-care cleaners, spokesman Jeff Schell that they "increased their line of 'appearance chemicals' to eight products from three a year ago".
Extending the useful life of your car can also provide a mechanism for increased saving. Keep making that monthly payment to a separate savings account. Treat it as a sinking fund for repairs and I'll bet that in a few years, the balance will provide a major replacement contribution when it finally comes time to retire the old buggy.
Full disclosure: I've previously owned a '79 MB 240 Diesel and an '83 MB 300 Diesel -- both of which made it to well over 200,000 miles. My father still drives a '79 MB 300 Diesel in the summer and an '89 MB 420 SEL in winter -- their combined odometers total 389,000 miles. Maintenance for the past 20 months has cost him $2,100 and he recently told me that "while I might be imagining this, fellow drivers have recently been looking at me with a smirk of admiration." Doubtful -- unless the fumes are getting to them -- but perhaps understandable given the importance of frugality these days!
- Jason Busch