[junkishya]

Originally Posted by JediKnight

An average IT ( young < 35 yrs ) joe can buy a bmw if:

2. He is financially illiterate:-

- Confuses short sightedness for "enjoying the present"

- Does not understand the real cost of car ownership.
Only has a vague idea of concepts like depreciation, cost of capital,
oppurtunity cost etc.
"

Couldn't agree with you more ..

Since we are talking about "IT Joe", after working in this industry change for the last 15 years and having seen the changes and the surprises that it brings, any "IT Joe" would be cautious in making use of his money. Buying a 3 series shouldn't be a big deal .. what matters is :
1) Do you really need the BMW?
2) Can you afford to maintain it after 5-6 years ?
3) What can you do with that money instead of spending it on a BMW?

If I were to spend that kind of money, I would rather take my chances by investing it on high risk shares for a year NOT bothering that I would lose all the money INSTEAD of SURELY losing that money on the depreciation of the BMW ;-)

Regards,
Kishor Shinde

[Joe M]

Being an IT Joe myself, I have seen none of my colleagues or managers consider buying a Beemer. One major reason I guess is that contrary to big businessmen or rich-guys-of-the-town, they're less attached to the location and surroundings they are in. All managers in IT are generally very busy and/or away from their hometown, and they usually don't get any time to show off in town or enjoy their own cars, or people appreciating their cars [ CEOs apart ].

Also when they get money they like to invest in shares or the likes, which they can monitor/see online, whenever they wish, or max in real-estate. After making these, they don't have any money to spend on car, unless they're in really good positions - that's another case

[radek]

A lot of posts argue about if you can buy house, then why not a BMW? Also, one of the theme is, you can buy it post 40 years of age. Now I am regular IT guy at exact age of 40 who has never worked outside India. Am I in position to buy a BMW? NO. I still can not buy a BMW.

I do have money to buy BMW, but I can not do that without disturbing my investment target.

Is my priority not correct? Should I have gone for BMW instead of my second house? But here buying a house is part of my investment target. It is like you make FD, you buy gold or invest in Stock and mutual fund. House is one more asset class to reach your investment target.

So it is wrong to say that if you can buy house worth 50 Lakhs, then why can't you buy car worth 35 Lakhs rupees. For buying a luxury car or that wristwatch costing few lakh ruppes, you need have that much desposable income. It will be insane to spend from your retirement kitty.

BTW, I do have reportees who have better car than mine. This does not affect me at all. I know their salaries are lower than mine. It is just that they are in different situation (like they stay in parent's house etc)

[Sugeeta]

I work for a Semiconductor company where most of the entry level engineers are BTech. / MTech. from some of the best institutions like IISc, IITs etc.. The ones on the non-tech side come from some of the premier B-Schools like XLRI.

Salary ranges are in the 90%th percentile range for most of the employees. Most of the old timers encashed BIG TIME in the ESOP Boom in 1999-2002.

Does anyone own a BMW or similar cars? No.

Most of us own C segmenters. Some of the highest paid folks are still driving the original model Maruti 800 (I am not kidding). Some even use the Metro. Many of them are motor enthusiasts who check various auto forums regularly.

They are practical folks. They have huge investments in real estate, stocks and cash savings. Its just that they shun the thought of overspending.

They CAN buy a BMW. But they do not WANT to buy a BMW.

It would look sad if the recession hits us again tomorrow and we are left with a big car (a depreciating asset) rather than money in the bank or appreciating assets.

This time round I started scouting for a premium segment but finally settled to book a new ford sedan after running the math on my net outflow. I would prefer to provide my kids with a better quality of education than splurge on a luxury vehicle.

Finally, it is a matter of priorities over choices.

To each his/ her own. GTO has run the calculation to this effect somewhere on the Forum.

PS : A co-founder of our company drives a 17 year old Toyota back in the USA. His net worth is in unmentionable figures.

[StarrySky]

Originally Posted by Sugeeta

PS : A co-founder of our company drives a 17 year old Toyota back in the USA. His net worth is in unmentionable figures.

Just out of curiosity - what does his son/daughter/wife drive?

Speaking for myself, I would definitely buy a BMW/Merc/Audi when I can "afford" one (what I mean by "afford" is in my earlier post #78 on this thread). Why should the children have all the fun with my hard-earned money?

[Geo_Ipe]

Originally Posted by StarrySky

Why should the children have all the fun with my hard-earned money?

Starry, its high time you migrated to the USA!

Actually if an IT Joe is at least considering buying a BMW, he can't realy be called a 'Joe' can he?? And definitely not 'regular'!

Actually this has been a pretty informative thead on how not to splurge all you have on a depreciating asset like a car.
Cheers to all the seniors on this forum!

[Live To Jive]

Is this TBHP or some investment forum? Where is the love for cars gone? If you love cars (BMW to be specific) just buy it. You will never get a second chance.

[vivekiny2k]

Originally Posted by Sugeeta

They are practical folks. They have huge investments in real estate, stocks and cash savings. Its just that they shun the thought of overspending.

They CAN buy a BMW. But they do not WANT to buy a BMW.

There is a term often coined in this context, "asset rich, cash poor". Refers to a typical millionaire from chandni chowk who still drives a moped, his earnings from the asset (land/shop) may not even justify holding the asset. But he would not be willing to let go of the asset in return of good money.

While one extreme of human consumption is overspending and borrowing to buy cars and other things, the other extreme is hoarding assets without knowing what to do with them.

Something to think about.

[aniketi]

My honest answer is NO. A typical IT guy cant even think of buying a BMW. I am also IT guy & earn good amount of money. But working in IT means you work in big city like Pune, Mumbai, Banglore etc. It means your monthly living expenses are too much. If you buy home, your half salary goes in EMI only & u are booked for at least next 10+ years. So thinking of buying a BMW? Just forget it. For good earning IT guy in Pune, buying a C class car is also a dream. In my company most of my managers are also using hatches only. They dream about Honda City, New Verna, Linea etc but cant afford as other expenses & priorities are much more. Having one kid is like your 10-15% salary is gone. And these managers are earning more than 15 L per annum. Even they cant think of buying cars like Corolla, Civic, Cruze etc. So forget about BMW Yes, one with very strong financial background may think of. Or very senior guys like VP, CEO may buy in reality ... I have not seen many though

[NikhilReddy]

Anyone with a decent salary should be able to effort brand new BMW. I see that luxury segment is becoming more and more affordable these days. Remember the day's when driving a Maruti 800 was considered a luxury.. this was not very long ago. Today all you needs is smart thinking both from the dealers and buyers and you can seal the deal.

I have heard Merc is coming up with a lease program from the dealers. All you have to do is sign-up for lease period, say 3-5 years, no down-payment needed, just pay monthly rent. After the end of the lease period you can buy back the car if you want to at depreciated price or just return it and go for the latest model.

I am sure BMW will also be coming with something similar to counter Merc scheme. Well then owning BMW is not very far for many.. all you need is passion and some smart thinking.

[prabhuferrari]

How about leasing a BMW? No down payment hassles. And EMI is deducted from your taxable income. Leasing helps if one will be in same company for sometime, and does not mind the car not being in your name.

[jods]

Having worked as a regular IT Joe earlier, I don't think one can buy a BMW. If you are a regular IT Joe, you probably would come from a middle class family. And your middle class values of saving for a rainy day and growing your assets, would never leave you with enough money to splurge. I earn more than 15 LPA but I can't even push myself to buy a sedan. I would rather settle for a Swift and put my money in stocks or real estate. These strong values would always prevent the regular Joe from spending so much on a car. Heck, my boss and his wife earn over 1.25 cr annually and now only are they thinking of buying a Merc. First they had the house to buy, then they had kids and now they have to plan to send their kids to a good US univ. Your responsibilities to your family would increase so much that you would rather invest in their future than spend it on a car.

Also, as your salary increase so would your status and hence your expenses. It would be hard to keep your expenses low when your colleagues would wear Hugo Boss suits and the best you can have to keep your expenses low would be Blackberry.

[shabash]

Well the company that I work for allows company leased vehicles with a cap of Rs. 72000 per month lease amount per month. Working at 2300 Rs per lac, you can buy a car of max worth just over 31 lacs. You can also opt for paying the Road tax on your own on top of this, so that is easily another 5 lacs for a car with Ex-showroom price of 31 lacs. I think the Corporate editions of the BMW and Merc are available in that range. Now looking at 30% savings on Tax, you save around 21K, i.e. you end up with an EMI of 51K with just the Road Tax as down payment.

From my knowledge of IT salaries in BLR, that amount is something that one can afford with 15+ years of experience. But you still need to have it in you to shell out that kind of money and also spend enough to maintain it.

[Hayek]

Of course he can, if he is happy spending all his savings over a number of years on a car. But what next? Will he be happy driving a 7 year old BMW 7 years later? And would his kids, who are accustomed to lording it out in a Beemer be able to adjust to an ordinary car? The decision to buy a new luxury car is a commitment not just to one such car, but a series of them, once every 4-7 years, for the rest of your life. If you love cars, consider a 5-7 year old pre-owned Beemer, and hold it for 5 more years. But don't actually buy a new car that costs more than 3-4 months of post tax base salary.

[xander]

Very interesting topic!

Owning an ambassador used to be a dream for the salaried class 20 years ago. Now times have changed. I would really love to come back and see this thread after 15 years.