Theme: Economy – Spend Now Or Spend Later?

Economy sounds like a very objective word. It’s to do with numbers and we all agree what they mean, don’t we?

A lifetime of motoring: hyundai uk
A lifetime of motoring: hyundai uk

If we assume a person drives for fifty years of their life, is it cheaper to buy a long-lived car or to drive a fuel-efficient but short-lived mayfly? Whilst numbers can be applied to both scenarios, it is really a value judgement about which set we prefer.

In a simple example, I paid £150 (Irish pounds) for a jacket in 1997 and I still have it. The annual cost has been £8.33 per year so far. I expect I will still have it in another decade as long as I keep the kilos off. The annual cost can only fall. In the meantime I bought another jacket of lower quality which needed adjustment. It’s about six years old and fit for very little now. The annual cost of that financial disaster is £12 per year.

Turning to another case, I am often told I should stop paying for repairs to my bike’s chain set. This works out at about £100 every two years. I paid £100 for the bike in 2004 and have replaced the chains four times since then. Total cost: £500 or £45 per year. Some (including the mechanic) suggested replacement of the bike. If so, then I would have spent at least another £400 on a bike and one further replacement of the chain set. Total cost £300 plus £400 plus £ 100 or £72 per year.

So, we see that there are economic arguments against buying a cheap jacket and disposing of a bike to get a new one. What isn’t factored into this is the qualitative. You could argue I would enjoy riding a lighter, less rusty bike. And you could argue that having new jackets is nicer than having an old one (I have several, in fact, of various ages). So here the qualitative argument could trump the quantitative. Actually, qualitatively I prefer the old jacket and am very much happier with a bike I don’t have to worry about.

2000 Bristol Blenheim 3

This is car website so let’s turn to cars and our opening question. If a person were to buy a car like a Bristol twice in their life (at £140,000) they would spend £5,600 per year plus fuel. Fuel is up to them so I discount it. If they bought a new mini-car every seven years they’d pay £57,000 or £1140 per year over fifty years (I assumed the car cost £8,000].

Here one can say that the mini-car buyer has saved quite a lot of money and the case is unarguable. Or is it? We can muddy the waters now by bringing the qualitative into the equation. The Bristol owner will get through two cars, or use about 3500 kilos of material, at a minimum. The mini car buyer will use seven cars at about 5600 kilos of material over the course of the five decades. The mini car buyer thus uses more material and energy than the owner of the two Bristols.

I consider the fuel consumption to be equivalent; many mini car owners drive long distances which is why they choose light fuel-sipping cars. Nobody commutes in a Bristol and if they do, please write and tell us. What we see here is that while the mini-car owner can point to clear savings in annual costs, they have externalised those savings to the tune of nearly 2500 kg of material consumed. They are also burdening the road more with their extra miles.

The Bristol owner, far from being a planet-destroying plutocrat (though they might be) is in this regard, selflessly taking on the burden of resource conservation and also channelling their money to labour costs. The mini car buyer is basically paying for the amortisation of machines and tools. The labour on a Clio is about 16 hours whereas the labour needed to make a Bristol or its modern equivalent must be vastly higher. I might guess at about 200 to 500 hours.

What I haven’t considered is the case of the person who buys a cheaper but still-durable car like a Volvo 240. But in the battle between plutocratic durability and economy car credentials, the case is not as clear as one would think at first glance and the issue is not the money but values.

Author: richard herriott

I like anchovies. I dislike post-war town planning.

7 thoughts on “Theme: Economy – Spend Now Or Spend Later?”

  1. As I am sure you are only too aware – this is rather simplistic and I’ll be the one to start the devils advocate Richard.
    1. You can’t leave fuel out of the equation it’s a very significant % of the cost of ownership of a motor car.
    2. You have failed to factor the ownership of a used car – this significantly reduces the Bristols end of the spectrum.
    3. Buying one super mini and running it for 15 years.

    I drive a SAAB 900 and have done so for approx 15 years, I paid £800, I have certainly spent money and the most recent significant cost was £1500 for a wheelarch replacement of all 4 arches and some additional work + a replacement gearbox at 220k miles (perhaps if I’d checked the oil I would have noticed it was gearbox oil I was leaking and not engine oil) at a cost of £500. Add in maintenance costs of brakes and oil etc etc etc say £2000. Total cost over 15 years is £4800.

    However I rarely manage more than 27mpg in normal mixed driving but rarely do less than 24mpg even in town.,, and can get a few 30mpg fuel tanks.

    Whether someone can use that information to determine any economy I do not know. Obviously i drive my car because I like it. My young neighbour across the road whom I have known since 6 has had at least 5 cars from 18 – 28 so he’s suffered the next economy crisis – depreciation on at least 4 occasions.

  2. I am convinced that there is no master plan for all of us. We need the mixture of all kinds of car owning.
    Those who buy a new car every two years are important for the car industry and those who want to buy a cheap used car. Those who only buy cheap used cars in order to maintain them for a long time are important for the used car salesmen and the spare part industry. Those who buy a new car and keep their car in perfect shape for a long time are important for the local mechanics.
    And the whole variety of car-owners are important for the African markt, which needs a lot of heavy used cars…

    Maybe in 20 years or so, a world of electric cars does modify the ways of car owning. Maybe in 2040, the car is a Use-and-throw-away-thing which we normally just rent for the the time we need it. (i am sure, this is a real horror story for the car industry).

  3. As a car enthusiast I could never live with only one or two cars in my life time so that’s a non starter!
    You left out another situation whereby the first and subsequent cars still have a value which will be applied to the next purchase. This will vary depending on time between changing and if the car appreciates or is still in decline.
    And why presume the cheaper economical choice to be inferior? Its down to design and use or abuse by the owner in either case.
    Small simple light weight modern cars are nothing like the same a few years ago. They have low revving unstressed engines, galvanised bodies, tall gearing and the tyres are cheap and long lasting.
    Quality can still be had without spending a fortune on high end cars, as the saying goes been there done that!

  4. With the best will in the world, I doubt I could drive the same car for seven years. I usually finance mine for three, and towards the end of the term I am counting down the months. As for driving a Hyundai i10 for seven years, I think suicide would be a viable alternative.

  5. There’s no disputing tastes.

    That said, much depends on the cars and on the states of the market for new and used ones.

    For example, in ’09 my ’04 Civic that had gone only 248,000 miles developed an invisible and incurable coolant leak. The best diagnosis was an undetectable crack in the block, likely cure a new or used short block. My wife vetoed this because she feared that the car would soon develop other expensive faults.

    So we shopped for a replacement. Thanks to the Great Recession new car prices were very low. New ’09 Civics went for approximately the going rate for used ’07 Civics with 20 – 30 k miles. They were much the same as the used alternatives and came with a bit more useful life.

    Given the cost of tires and the likelihood that a used car would require some servicing, the new car seemed the better deal. Because of insurance considerations (we pay by the mile, the more valuable the car the higher the rate) Madame, who drives little, got the new car. I took over her ’99 Civic that had gone only ~ 90,000 miles.

    About y’r Bristol example. I’ve wanted one for years, very nearly imported a 410 in 1976. Bristol wanted only 1,000 UKP (~ 2,000 USD at the time) for it. A colleague in London looked it over and reported that it was in good order. A ’68 model built in ’67, it was US-legal. I didn’t buy it because I couldn’t get insurance cover.

    I recently received a small inheritance, contemplated squandering part of it on a used US-legal (this year, made no later than 1990) Bristol. Insurance for expensive cars that are going to be used much is still a killer. The cars’ poor fuel economy doesn’t help either, even at today’s low fuel prices.

  6. I’ve reflected on what I posted here yesterday. I missed an important point. From 1984 until my retirement in 2011 I had a horrendous commute. Initially 200 miles/day, eventually, after I found shorter routes and my office moved a little closer to home, 135 miles/day. Add my long domestic trips to that and I was driving between 40,000 and 50,000 miles/year.

    So I was using cars up. I replaced cars when maintenance costs got too high, when rust seemed incurable and, once, when the car was stolen. I can’t imagine any car surviving indefinitely in my little world. Replace as needed, my motto.

    1. Fred. That’s an impressive commute. I recall Thomas Bscher’s notorious 125 mile / 1 hour each way McLaren F1 commute in Germany in the 90s but, generally, we forget in Europe what large distances you often cover in the US – in England, the average annual UK 4 wheel vehicle mileage in 2013 was 7,900 miles and dropping, apparently (I looked it up, I;d guessed 10,000). In the US it is getting on for twice that. So, looked at simplistically, an average US car should have half the life of an English one.

      Bristol prices are a law to themselves. Five years ago I thought about buying a 412 which was a good deal at around £15,000, though by relative old car values logic would have told me it was overpriced. Fitting a more modern auto is supposed to improve consumption radically, but they’ll never be economical. They do have a character all of their own though.

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