One of my friends announced at the weekend that he was getting a new TV and his budget was up to £1500. This provoked a discussion about how you could buy a car for that etc.
However it did make me think. Say a bog standard car that costs £10k. I think you could probably get a Focus for that for argument's sake. If you had to rebuild the car from all its individual parts, how much would it cost? I realise dealer parts prices inc a margin but do you think it would cost more than 10k? Remember to include the labour for putting it all together! IIRC you can be about £2k for a full car respray although perhaps some of that cost is down to labour intensive masking of parts, preparing surfaces etc.
Then the manufacturers tell us that every new model costs them stillions in research and development. How do they recoup that cost? When a 40/50 inch TV can cost £1500, does a 4/5metre car represent good value? Thats lots of electronics, metal, plastics, tyres, etc etc!
A mobile phone at say a few hundred or even ipods at similar prices - surely the electronics and chips in them don't cost that much to mass produce?
It starts to look at better value when you maybe look at the cheaper Japanese cars at around the £7/8k mark?
Its amazing what you can discuss when you have a few pints in you!
You can then take it to the "bangernomics" stage whereby the value of the parts most definitely can be worth more than the complete car!
So should we be happy that for some cars, say sub £10k, that they actually represent good value for money for what you are actually getting?
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If you need a car and get the right one, they are wonderful value. If you don't and don't, it's another matter.
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They're like most things you buy, the goods are usually good value for money, it' the tax that makes the difference
MVP
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The Mini, when originally introduced was £365 tax free, in Cyprus, which would equate to about £500 in UK. The original Range Rover was £1999. I don't have a formula for converting those prices to 2008 £s but I think they would make cars, at today's prices, very good value for money. Another way of looking at it is, how many week's average wages would it have taken to buy a car then and how many for the equivalent car today? Answer, I think, would be that it would be fewer week's wages now than in the 50s.
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The Mini when originally introduced was £365 tax free in Cyprus which would equate to about £500 in UK. The original Range Rover was £1999. I don't have a formula for converting those prices to 2008 £s
See here AS, works for years up to 2006:
www.measuringworth.com/calculators/ukcompare/
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Thanks for that link Rich. I surprised to find the the Mini was a lot more expensive, relatively, in 2006 than 1962 but then it was a very different and much better car too!
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I don't have a TV, and have never spent anythink like 1500 on a car.
So that makes me....
... if RF were around, he'd say 'stingy'.
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If you hadto rebuild the car from all its individual parts how much would it cost? I realise dealer parts prices inc a margin but do you think it would cost more than 10k?
I think it would be closer to £30k. I seem to re-call a magazine artcle along these lines once.
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When I first started full time work, a colleague told me to buy a car that cost half your annual salary when new. With the odd digression I've done that.Seemed to work for me. And leave money over for fripperies like beer , holidays and a modest home.
Admittedly the new Hyundai was discounted before I laid out the money.
But to answer the question , I seem to have got better cars nowadays- largely due to my salary creeping up and the general QA improving.
Now I am an 80%er I'll have to rethink.
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taking out the cost of production, a lot of the price of the car is to pay back the R&D that has taken place. Whether it is cars or ipods. Take your ipod for example, I have no idea how much R&D costs were let alone the launch costs, but I agree that it might not be that expensive to produce the chips. {I wonder if Apple still have to pay royalties to Microsoft - apparently they forgot to patent the ipod (or some of it) and Microsoft came along and did it instead and charge Apple $10 a unit}
Edited by rogue-trooper on 13/03/2008 at 20:37
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Depends how you define "value" I suppose. For a bit of arithmetical trivia, consider the two cars currently on our drive.
1/ Mondeo TDCI Estate now six years old but bought by us three years ago for £8000. In "our" three years it has covered 120k miles in addition to the mileage which was already on it. It might be worth around £2000 on a good day now. ( don't care really as it will not be sold or disposed of until it is properly run in ! ) So the depreciation/mileage cost at present is £6K over 120k miles or 5p per mile. The depreciation/time version is £5.50 per day
2/ Ford Ka four years old and bought new for £5000. It has 16k miles on it. It may be worth £2500. The depreciation/mileage cost here is 16p per mile. The depreciation/time cost is £1.71 per day
Whether or not my residual value guesstimates are correct, the point is that if you buy a car to use a lot and you don't pay over the odds to start with it can be very good value, provided it does not give you any reliability grief of course.
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There is an old adage that short circuits a lot of, sometimes quite logical, argument here. Namely, "The price of something is what you can get for it"
That is no bad thing, it is what makes the economic wheels go round; and far better than "it does not matter what it costs if it buys votes and we can screw rhe taxpayer for it"!
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