I read an article by a very prominent financial website on which are the cars that is worth buying based on the value of depreciation over a period of 5 years. It said that certain cars are worth buying because they lose less in terms of % over a period of 5 years. Sorry but I beg to differ. When it’s LOSS, it should be based on actual figure instead of %. Basic example, if a company loses 50% of its value after 10 years, would you still buy its shares? However, if you sell a property during a downturn, instead of earning RM100,000, you only get RM50,000. Do you see the real difference here? For losses, especially for cars, it should be in absolute numbers because in actual fact this is the actual money you lost! Imagine you buy a car for RM86,000. After 10 years, somehow you can still sell it for RM43,000, so you only lost 50%. In actual fact you have lost RM43,000 which could have been downpayment for a RM430,000 property! And if this RM430,000 property ONLY increase by 1% in price every year, after ten years, your ROI is easily 5% or more per year, better than FD. I have not even began to count the rental from this property for ten years.
Of course, for those who are able to afford Mercedes, I do not think they care about the losses. However, I can safely tell you that the reason why people buy a RM86,000 car is definitely not because they are way too rich. It’s because that’s the car they believe gives them some ‘face’ amongst the peers. Please do not start to tell me that it saves fuel, I will just let you win if you want to argue about fuel savings. Please do a calculation before you even start to talk about this savings. 3 years ago, I bought my car for RM43,000 (year end discount) and if I drive it for ten years and I can only sell it for RM10,000 my actual loss is only RM33,000. Assuming I could not sell and its value dropped to zero, it meant I lost the same amount as the one who paid much higher price for their car. However, every month for 10 years, I am able to save on car loan and perhaps can change handphone every 4 months? (If I just want to waste money).
If you sincerely want to save money, Perodua Viva’s fuel consumption is very low. If you want value, Segment B Persona has the most superior features you can ever have for less than RM46,000 over cars twice its price. Alternatively, lots of well maintained second hand cars. Oh yeah, a second hand Hyundai Sonata 2.0 with 4 airbags is only RM35,000. My friend survived a highway crash in one due to its rigid body and airbag. Her company cars are now full of these second hand Hyundai Sonatas. Think objectively, what is it that you want? Losing less money in real RM or losing less money in terms of %. Then, you decide.
Written on 14 Feb 2014
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0 Responses
Hi, forgive me for not being fluent in Malaysian to USD converstion.
You paid ~$13,000 for a car. Me too! I bought a Nissan Versa for about that amount. It’s a very basic car, no key-less entry. However, has air conditioning (I live in Florida, this is important) , I can play music from my mp3 player on my car’s stereo, the gas mileage is good (30 mpg city 40 mpg highway), and, most importantly, gets me from point A to point B.
86000 RM is ~$30,000, which in America, most “decent cars” seem to be about $40,000, although there are more expensive options available.
A car is a terrible investment. You should only buy enough car that is 1) safe and 2) reliable.
Hi duaimei, Nissan Versa is known as Latio here in Malaysia. I happen to be a Nissan supporter too. I drove a Nissan Sunny for 20 years! Haha. Was still in a good condition when I sold it. A car is definitely like you mentioned, ‘a terrible investment’.
I’m glad you knew what I was talking about Lotia Nissan.
i totally agree with you. i also have many friends who prefer to buy cars rather than property (big investment and cannot show off).
the same group of friends also try to “convince” me to change to a better, safer, bigger and more reliable car + higher resell value. what i thought is the same as you, even if my myvi make 60-70% loss vs. a 86k car make a 50% loss, i rather stomach the 60-70% loss because in RM sense, i still loss less.
not to mention your extra installment amount per month, you can easily use the extra money + the amount you are willing to loss as a downpayment for a property.
cheers!
May mei, love your views. Are u gen y or gen x like me?
the older generation of gen y. 😀
haha…. great to hear. wise gen-y
Wow, 2nd hand Sonata for only RM35k? Which year made? Can u get me one?
Fred, go to any online car listings site. Search for Hyundai Sonata. Put in your price range with maximum of 35,000. You will see lost of options. Years are between 6-8 years old. Happy buying one! suggested car sites: http://www.autoworld.com.my, car list.my, oto.com.my