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Utter Nonsense: Total Cost Of Ownership

One of the best auto articles I’ve found lately to help buyers not get shafted is in the latest issue of Reader’s Digest (if I can find the link I’ll update the posting).  The article is about the top 5 cars to avoid buying this year. That isn’t the best part … it’s actually the fact that RD gives good examples of total cost of ownership.

If you ever want to get a car salesman to go into a severe pre-coma shock, ask the about the total cost of ownership over the lifespan of the car (or at least the time you will own it).  They shake, they sweat, and sometimes pass out.

Why?

Well, think about this: One of the more “fuel efficient” cars out there that has a fairly low sticker price ($12,000 to $15,000).

Seems cool, right …. low cost, save on gas, etc.

Then there is what you add in for the total cost of ownership: Normal maintenance for that vehicle, wear and tear repairs, etc.  That runs about $20,000 over the lifetime of the car (and in some cases only the time you own it).

BTW … that $20,000 is over and above what you paid for the car (and we’re not including interest on the loan yet).  So, basically you are paying up to $35,000 for a $12,000 to $15,000 car.  This example differs from car to car, etc.

Now, I own a Honda, which I specifically purchased because of the knowledge that you had to repair them less, etc.  The car was certified at 2 years old on the lot for about $10,000 or $12,000.  Once I negotiated, I got it for about $7500.  I also had previously bought cars from Crysler, Chevy, and Ford for much less at the same age – but on a regular basis replaced starters, engines, transmissions, etc.  It got costly.  This is where total cost of ownership comes into play. Although I spent less on those cars than I spent on the Honda I purchased, to this date I have spent 70% less on repairs to my Honda than the other cars, giving me a very low total cost of ownership.  My car is now 12 years old, has never not started, is paid off, and rarely costs me money … although I am thinking about spending $2000 to replace timing belts, belts, do a valve job, and a little refurb on the engine – because the body and other parts are in good enough shape to run another 5 years.

Why do many car companies not want to tell you the total cost of ownership?

Well, it’s because they no longer make money on the actual car sales, and really make money on parts sales and repairs.

So the next time you go to a dealer, as them about total cost of ownership, and if they don’t sweat, talk to them, get the information, compare it to what you find on the net and make a educated purchase.  Don’t buy just because “it has a Hemi”.

If the salesman gets a “deer in the headlights” look … run screaming, “this is utter nonsense … and such”.

-SWB

PS – Auto salespeople going into convulsions after being questioned is rather comical … so hit as many dealerships as you can – it’ll put a smile on your face.

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