Cars: Status Symbol or Investment?

by Abigail Knowles Wolfe (BPRW)

While we all have one dream car in the back of our minds, the vehicle we’d drive if money and gas prices were not an issue, many of us could become better educated consumers in the automotive arena. African Americans and Americans of all ethnicity it seems, judge others based on the car they drive. We make assumptions about finances, environmental concern, style, taste and personality when looking at the car a co-worker or neighbor drives. Add to this the fact that many Americans drive cars that they cannot afford just to make a particular statement to people they probably don’t even know!

Let’s face the facts. A car is not typically an investment. Cars are something driven to get us from point A to point B and are depreciating the minute we drive away from the dealer’s parking lot. Truly conservative and practical financial analysts would say that spending the least amount of money on a car and its maintenance and using all remaining finances to invest in other ways is the smartest financial decision to make. However, there is admittedly a certain romance and glamour to driving a car just because you like it.

Forbesautos.com has recently come up with a list of the ten least expensive vehicles to own. Included in this list are the Honda Fit ranking second and Toyota Yaris ranking first. Forbe’s ranking was based on statistics provided by the automotive data analysis company Vincentric who calculate lifetime ownership expenses for vehicle manufacturers and car dealers. Vincentric estimated cumulative losses in the purchase of a vehicle from depreciation, financing fees from car loans, maintenance, repairs, taxes, fees, insurance and fuel in order to rank the most economical cars appropriately.

People driving inexpensive economy size vehicles such as the Fit or the Yaris may be financially astute or just want to drive a car that doesn’t take a chunk out of their wallet. This may even be a question of values. People buy larger, more solid cars if they know their children will be transported in it and smaller, sportier sedans for their own joyriding. While the economics of car buying may require a great deal of consumer savvy and an understanding of need versus want, it is also interesting to note that the vehicles that are the least practical, fastest and most expensive may also be the vehicles that retain their resale value in the long run. Who would’ve of thought?