The misunderstanding of the cost of modern cars

[Devil2575]

StottyZr said:

I don't think prices have changed as much as many think. I had a debate with a friend at the weekend, I thought the 458 Italia was a lot more expensive than the 360 when it was released. The 360 was £105,000 in 1999, the Italia £170,000 today.

Factoring inflation the 360 is very close to £150,000 in todays money. Not a huge difference really, even though on the face of it, it seems so.

20k not a huge difference?

i'd say a 13% price hike once inflation is taken into accound is a big difference.

[Devil2575]

thinfourth2 said:

And neither in resale grey

Love it.

I bloody hate grey cars. As my wife says, grey is the colour of a miserable day, why would I want a car in that colour

[Devil2575]

Jonty355 said:

£40k


Or




And before anyone mentions running costs, consider the fact that the Ferrari has finished depreciating, where as the Golf in a few years will be worth about 20p!

I reckon that even including depreciation the total cost of motoring will still be less in the Golf.
Mind you, I wouldn't buy a £40k Golf...

[LukeBird]

Devil2575 said:

StottyZr said:

I don't think prices have changed as much as many think. I had a debate with a friend at the weekend, I thought the 458 Italia was a lot more expensive than the 360 when it was released. The 360 was £105,000 in 1999, the Italia £170,000 today.

Factoring inflation the 360 is very close to £150,000 in todays money. Not a huge difference really, even though on the face of it, it seems so.

20k not a huge difference?

i'd say a 13% price hike once inflation is taken into accound is a big difference.

Ok, I may have been drinking, but surely inflation hasn't accounted for a near 50% price rise in the base model in 13 years; I appreciate currency fluctuations will have had some impact, but even so that seems like a hell of an increase.

[Globs]

LukeBird said:

Ok, I may have been drinking, but surely inflation hasn't accounted for a near 50% price rise in the base model in 13 years; I appreciate currency fluctuations will have had some impact, but even so that seems like a hell of an increase.

It's just over 3% inflation per year. Compound interest/inflation is a bh!

[okie592]

Welshbeef said:

Lol you tool.

How much does it cost to get there and back
The risk of trolly damage or someone opening their door into your car
How much do you value your free time walking round a supermarket then waiting to pay then car park getting out of nightmare.
Also best bit of all you don't buy anything you don't really need you have a strict list so you will not be wasting any grub.
Lastly with Waitrose spend over £50 it's free delivery and given average weekly food shop is £100 seems a no brainer.

the average shops in waitroses being one pear and 1 liter of organic freerange farmfresh welsh bread milk from pastures fertilised only with the finest seeds on the 3rd Tuesday of every month

[kambites]

Globs said:

LukeBird said:

Ok, I may have been drinking, but surely inflation hasn't accounted for a near 50% price rise in the base model in 13 years; I appreciate currency fluctuations will have had some impact, but even so that seems like a hell of an increase.

It's just over 3% inflation per year. Compound interest/inflation is a bh!

Yup, 50% in 13 years is, if anything, probably below the average "real" rate of inflation.

[LukeBird]

Globs said:

LukeBird said:

Ok, I may have been drinking, but surely inflation hasn't accounted for a near 50% price rise in the base model in 13 years; I appreciate currency fluctuations will have had some impact, but even so that seems like a hell of an increase.

It's just over 3% inflation per year. Compound interest/inflation is a bh!

True, I had thought of the compound (just looking at the figures, not really working it out) and it just seemed too much, but 13 years is a long time.
Regardless, the £20k difference between the inflation price of a 360 and the 458 is still pretty high.

[Globs]

Compound inflation is the unseen thief in your wallet, fools most people most of the time.

If you look at cars that have 'gone up in value' like the 911 3.3 turbo, a quick check on recent inflation history confirms that they have held their value only, things rarely go up but the money value is always falling. That's why smart people by gold, property, classic cars, paintings, shares etc.

To find out the price rise due to inflation (or interest) you just multiply. So if something goes up by 4% a year, that's going to be 1.04 x the value in a year. For two years it's 1.04 x 1.04 = 1.04^2 = 1.0816. That extra 0.0016 is the killer, strange as it seems. So for 20 years of 4% price rises you get 1.04^20 = 2.19. So after 20 years of 4% rises the price has risen by 2.2 times.

Compound interest is the most important thing in finance, bar _none_. It's the reason for the debt crisis, the credit crisis, worldwide debt etc, and the reason that everything is so bloody expensive these days, compared to just a few years ago. Politicians sometimes refer to it as 'growth' BTW. It's also why the poor carry on getting poorer (as their wealth is eaten by inflation) and the rich get richer (they protect their wealth from inflation).