Car sales - surprise, surprise

The Silly has an article today regarding Australian car sales.

The Silly is shocked to learn that:

Contrary to perception, sales of four-wheel-drives have never been stronger. Sales of light cars are up by 9.2 per cent and small cars are up by 5.4 per cent, but sales of four-wheel-drives are up by 15 per cent.

Ok stupid, there are a number of ways to break that down.

To start with, 4WDs come in all shapes and sizes. There are big ones, little ones and in-between ones. It may be that sales of tiddler 4WDs are booming whilst sales of big fat whale 4WDs are in the toilet.

Or, people might have finally figured out that putting fuel in the tank is only a small part of the total cost of running a car. Maybe something like 20%.

I leased a car a few years ago, and here are the costs (rounded) of a three year lease on a $34,000 vehicle.

Lease payments - $18,000
Interest - $5,500
Rego - $2,200
Insurance - $2,500
Maintenance - $4,000
Tyres - $1,800
Fuel - $10,000
Other - $700
Management fee - $1,500
FBT - $5,800

That gives a grand total of $52,000, and I still had to pay the balloon (or residual) at the end of the lease of $15,000.

The cost of diesel was $10,000/$52,000 = a bit under 20%. If I bothered to add in depreciation, it would probably drop to under 15%.

Over that period, I drove 80,000 km. The average fuel consumption was 11.28 litres per 100km, which is not bad for a 4WD. Funnily enough, the government fuel consumption guide can't tell me what the fuel consumption is supposed to be.

I did try the Green Vehicle Guide and compared a new Commodore, Falcon and Magna (since we would need to replace the Disco with either another Disco or a large family car) and found that it has better fuel consumption than most of the variants currently available.

I also tried comparing a diesel Disco against a Landcruiser landyacht and found that the landyacht gets 16l/100km, which is pretty nasty.

However, let's assume for a moment that you have a choice between leasing two vehicles that cost the same. Let's assume they both cost $34,000, so I can re-use the numbers from above.

Vehicle 1 gets 11l/100km.

Vehicle 2 gets 16l/100km.

The total 3 year cost of running vehicle 1 is $52,000.

The total for vehicle 2 is $56,500.

This is only 8% more than vehicle 1, even though it is 45% thirstier. And frankly, if you can afford to spend $52,000 over three years, you can probably easily afford to spend $56,500 - after all, it's only an extra $1,500 per year.

Now I leased my car when diesel rarely got over $1 a litre, and it is now around $1.40, but the essential truth holds the same - the cost of putting fuel in a car is only a minor part of the entire cost of running a car. And remember, I was driving 25,000km a year. Try doing to sums on a car that only does 10,000km a year - which will produce much lower fuel costs.

In short, sensible drivers have done their sums and figured out that higher fuel prices are not going to have any impact on their decision to purchase a new $75,000 4WD. I based these numbers of a second hand $34,000 vehicle. Try doing the numbers with a $75,000 vehicle (which is what a decent new 4WD will set you back).

Journalists have no brains. Especially those working for the SMH.

PS - if you own a new car, and fuel prices go up 30% and it starts to hurt, then you are an idiot who has overstretched yourself, and I have zero sympathy. Maybe you should have wound things back a bit and bought a cheaper car rather than going all out to the edge of your finances.