Personal Finance 101: Do you buy a car because it saves petrol?
Must we save money via spending less on petrol? (Or electricity if we are driving an EV?)
The answer is very clear. We want to save on petrol expenses because we want to save money. We want to save money because we want the money to be used in some other places. It could be for another vacation, could be for another investment. So, the more km which the car can run by using every 1 liter of petrol, the more savings I will gain. Today, we just talk about saving a lot of money from petrol.
My car can run 25km per liter. Yours only 15km per liter. Great statement.
Too many ‘experts’ out there tell the story solely from their perspective. I give you these examples related to car purchase. A long time ago, I wrote the actual story about my conversation with an engineer friend who told me his RM72,000 car saved more petrol than my RM52,000 car. Yes, even at that time, I already gave him a piece of my mind. Haha. That’s 15 years ago. Now, let’s talk about this typical conversation.
“You know, this car 1 liter can go 25km. Saves a lot of fuel.” They are comparing this with a similar sized car which could only reach 15km per liter. Well, that similar sized car happened to be RM15,000 cheaper. Let us skip the loan interest because the higher the car price, the more interest we have to pay. In this case, we just treat this interest amount as the same yeah. Let’s just look at the fuel saving part.
RON95 price?
RON 95 Petrol is at RM2.05 per liter. A car that could travel up to 25km per liter means just spending 8 sen per km. This is very good number. This is how 8 sen came about. RM2.05 divided by 25 km.\
Meanwhile 15km per liter means 14 sen per km. RM2.05 divided by 15km. Yuck… Actually the difference per km is 6 sen. 14 sen per km versus 8 sen per km. Means someone is technically losing 6 sen per km every time they drive their high fuel consumption car.
Typical person usually drives 15,000km per year. If your home town is not somewhere in another city, 15,000km is not easy to reach also.
The actual savings after 10 years?
Anyway, at 15,000 x 6 sen, this means a total savings of RM900 per year. If this same person does not sell his / her car, after 10 years, he / she has saved RM9,000. RM900 x 10 years.
Looks like a WOW but all these would still depend on the actual car price one has paid for. If it was extra RM10,000 in order to save RM9,000 over 10 years, then I think we ought to understand what is truly saving money yeah. We could have saved right from the beginning at the car price level and not wait to save the same amount 10 years later!
If we truly wants to save money
So, the next time someone tells you about fuel saving etc, I recommend you to buy this cheapest car in Malaysia instead. You will immediately save a lot of money. As per carlist, this is the cheapest new car in Malaysia now.
Or if you like the second cheapest, this is it:
These two cars would save you huge $$$ on the day you bought. No need to wait and save on petrol slowly over the next 10 years. I have no idea if you will still be driving the same car 10 years down the road. You may have been promoted and needs a new car to better reflect your new status. Correct? The type of car reflects the social status of the person. This is what everyone says except the one (me, me and me) who could not afford a new car, then I say, ‘I just need a car to move from point A to B.’
Like I have written before, I am happily driving a RM52,000 Proton Persona 1.6 (manual) today. Yes, I told my wife we should buy a new MPV for her maybe next year. At this moment, that new MPV I think is good value has not been launched yet. So, she is still driving Exora which has since breached 200,000km last week.
Meanwhile this is a great reason to buy and no one can debate with you
Have a better reason to buy that car. It could be, “I love this brand.” or it could be, “My whole family loves this brand” or it could be “If I drive this brand, people see me better than if I drive that brand.” These three reasons are valid and no one could debate with you at all. Just do not hide behind fuel saving story because it is not true at all.
How do I choose my car then, if not based on fuel economy?
I also have three things I consider lah. My Need, How it Drives and then the price. That’s why I did not just go and buy that cheapest car I could find in the market. When I bought the RM52,000 Persona, there were at least two cheaper cars by far. In other words, way cheaper. At least RM15,000 cheaper. The Perodua Viva and the Proton Saga.
Yes, in this order. Need, Drive and then the Price. If I need a new car or if my current car keeps giving me problems, I will shop for a new car. If not, then I continue driving my current car. I need money for property investment lah, not for car depreciation. Lose face a bit due to an old car? I am okay… And if I need a 7-seater and there’s a huge discount for a sedan, I will still NOT buy the sedan yeah. I will still shop for a MPV. So, it’s definitely based on what I really need, first.
Drive is the next important point. Sorry, I cannot accept cars which drives like a ‘sampan.’ Come on, we need a proper car to drive lah. Not a car which I need to always remind myself to brake when coming to a corner or to slow down when reach a certain speed because the car feels floaty etc. Then again, some may not understand what I am talking about. Haha. It’s perfectly fine. Just enjoy your car.
Finally, we come to the price which I explained in full detail with calculations above. All the best and remember, if you like the car, just say you like the car. When it comes to preference, your argument is supreme. No one can debate at all. However, if you want to say it’s because of fuel economy, then the two cars; Axia and Saga will save you way more money versus any other more expensive car giving you great fuel economy or even so-called lower depreciation. This one will be another article. Haha.
If the car is needed to earn more money, then it’s an investment and all the above does not matter at all
A close friend bought a new Mercedes. Not a second-hand one. New. She drove me in her car before. Quiet and Contemporary. The reason is because she is a branch manager and she could not tell her sales people to earn more commission and drive better cars if she was still driving her 7 year old Vios… It also does not look good if she drives her old Vios to meet a potential developer and tell them that she can help them sell many units because if she could sell many units and therefore earning high commission, then why still driving an old car…?
For this kind of purpose, please buy the right car okay. Just any new car cannot work. It has to be a certain brand too. All those fuel saving or even saving money or whatever does not matter. Skip them and buy the right car to give the right impression.
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