Go Back   Team-BHP > BHP India > The Indian Car Scene


View Poll Results: %?
<15% 288 55.81%
16 - 30% 145 28.10%
31 - 50% 36 6.98%
51 - 75% 22 4.26%
ARE YOU KIDDING ME ? ALL OF IT ! 25 4.84%
Voters: 516. You may not vote on this poll

Reply
 
Thread Tools Search this Thread
Old 9th August 2011, 15:22   #121
Distinguished - BHPian
 
sgiitk's Avatar
 
Join Date: Dec 2007
Location: Kanpur
Posts: 7,162
Thanked: 3,757 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

I have one point : Is it including depreciation or excluding it? Will make a lot of difference.
sgiitk is offline   Reply With Quote
Old 9th August 2011, 15:54   #122
Senior - BHPian
 
mayankjha1806's Avatar
 
Join Date: Jan 2011
Location: BLR/Gurgaon
Posts: 2,133
Thanked: 820 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

I choose <15%, and by that i meant the EMI needs to be approximately 15%, i did not account for Down payment and also did not include insurance and maintenance. So if these figures are included i guess the car that i would have ended up buying would have been much smaller than my Baleno.

So in my case i would stick to 15% for the EMI only, that leaves the rest 85% for living, eating and savings.
mayankjha1806 is offline   Reply With Quote
Old 24th August 2011, 13:46   #123
BHPian
 
Join Date: Jan 2009
Location: mumbai
Posts: 100
Thanked: 31 Times
Cool what percentage of your savings/ assets would you spend on a car ?

Hi Friends ,

These days I have been seeing that many people including some of my friends have bought cars which seem to be too expensive for their life style and earnings , just like many others having salary of 30 k a month and still flaunting thier I-phones or other similar expensive smart phones.

I do not dare to ask any one of them about it but i would like to know everybody's opinion on this , I mean what amount , what percentage of your savings or assets would you spend on a car ? and how much would be safe ? I am specifically not talking about annual income. Assets and savings would actually indicate financial strength in better way than the present annual income.

I am sure we have many car lovers with finance , investment background on this forum , I request all of you to express you opinion. I know that this is a very relative thing but still I am sure you guys would be able to agree on some sort of a generic precentage.

regards
Amol
amolathalye is offline   Reply With Quote
Old 24th August 2011, 15:30   #124
Senior - BHPian
 
NetfreakBombay's Avatar
 
Join Date: Jan 2008
Location: Bombay
Posts: 1,387
Thanked: 338 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

This post summarizes the discussions pretty well:

http://www.team-bhp.com/forum/indian...ml#post2460995 (Vitamin M - What percent of your annual income do you spend on your car?)
NetfreakBombay is offline   Reply With Quote
Old 24th August 2011, 16:07   #125
Senior - BHPian
 
shankar.balan's Avatar
 
Join Date: Apr 2008
Location: BLR
Posts: 8,027
Thanked: 5,326 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

The bridge between "need" and "want" is what needs to be addressed here.

Most of us may "need" only a car/ vehicle which has all the essential stuff and may be priced anywhere between 3-10 lakhs depending on income level and relative position overall in life.

What drives most of us, however, is the "want" which motivates people to sometimes stretch beyond their means to acquire that absolute "dream" vehicle.

There was a very good article in the latest Sep 2011 Top Gear, which gives an interesting "middle-class" point of view on buying cars such as the Aston One 77 and Bugatti Veyron et al.

But, if one were to live one's entire life listening to only one's "head", then what space is left for the passion and emotion and the voice that comes from the "heart"?

Personally, I would like to strike a balance between head and heart when deciding on something like a car/ vehicle, considering the fact that I spend about 20% of my waking hours sitting in it and driving it about. (assuming 3 hours a day out of a typical 14-15 hour working or leisure day).

By this yardstick I could perhaps consider spending atleast 20% -25% of my income on an EMI towards the purchase of a car of my choice. Most of the time I guess responsible people with other priorities such as kids, family, older parents etc would tend to err on the side of caution and buy something whose EMI is closer to 10%-15% of the income. Sometimes one acts out of passion and buys something whose EMI is closer to 30-35% of the income leaving aside the rest for other expenses.

There's very little logic when it comes to matters of the heart so I would think it is always going to be different strokes for different folks.

Ultimately its what makes each individual tick, that decides what he spends on his car etc.

There can be no one-size-fits-all formula.

All we can probably appreciate is that there are some accepted financial best practices which can at best, serve as indicators and pointers to making the decision.

Luckily in India, we are generally conditioned to put away around 40% of our income into various savings for the future. We generally shy away from excessive credit - being more transactors on credit than revolvers of credit. Thats been good for us so far - its kept us safe from the depredations of the last recession etc. But things, they are a-changing, with today's younger working set preferring to spend now and enjoy rather than save for a later date!

I would say let them have fun while it lasts - after all, to paraphrase the recent movie - ZNMD!! What say?

Last edited by shankar.balan : 24th August 2011 at 16:10.
shankar.balan is offline   Reply With Quote
Old 24th December 2011, 12:00   #126
BHPian
 
Hayek's Avatar
 
Join Date: Jul 2011
Location: Bombay
Posts: 709
Thanked: 1,635 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Interesting question - one that has always puzzled me. Firstly, we need to define what is spending on a car. I would go with the broadest possible definition - viz depreciation +interest (actual or opportunity cost if you are buying cash down) + maintenance + insurance + fuel expenses.

Let me take my 2004 NHC as an example. I bought it for Rs. 8.4 lakhs OTR, sold it for Rs. 2.75 lakhs after 6 years - so depreciation was ~ Rs. 1 lakh per year. Interest (calculated on average declining balance) was Rs. 40 k per year (calculated at 6% post tax yield on liquid mutual funds, on Rs. 5.5 lakhs average value of my car). Can't remember insurance costs - was Rs. 10k when I renewed in 2009 but the average cost was likely Rs. 25 k p.a. Ran an average of 10,000 km per year, and got a mileage of about 11 kmpl - so about 900 litres of petrol per year, which started at a cost of about Rs. 45 per litre (Rs. 40,000 per year) and peaked in 2008 at about Rs. 55 per litre (or Rs. 50,000 per year) (How cheap that feels!). Maintenance was about Rs. 25000 per year. So the total cost was about Rs. 240,000 per year (viz. Rs. 140k per year on depreciation and interest, and Rs. 100k per year on fuel, insurance and maintenance). For someone who drives a lot more, fuel and maintenance would be a larger part of the total cost - and that cost could partly be considered as business expenses if one uses the car for meetings et al.

I will not comment on what percentage of my income that represented, of course. But agree with GTO that 15% of one's post tax, high certainty income is what one should spend on a car (at least on capital cost + insurance + maintenance + controllable fuel expenses).

Last edited by Hayek : 24th December 2011 at 12:02.
Hayek is offline   Reply With Quote
Old 24th December 2011, 17:57   #127
BHPian
 
Join Date: Dec 2011
Location: Kochi
Posts: 84
Thanked: 47 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Cant answer this, cos I don't want to find out myself.

If I did, I'd have to tell my wife and I'd have to sell my car.

5 cars in 9 years in 4 places. So the only answer I can give is - too much!!
dingolphie is offline   Reply With Quote
Old 25th December 2011, 00:18   #128
BHPian
 
SedatedDrive's Avatar
 
Join Date: Aug 2011
Location: Concord, NH
Posts: 263
Thanked: 130 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Does this poll include cost of the car?
SedatedDrive is offline   Reply With Quote
Old 25th December 2011, 12:48   #129
BHPian
 
bharatbs's Avatar
 
Join Date: Apr 2006
Location: Bangalore
Posts: 374
Thanked: 108 Times
Default

The above percentages while good, seem to suggest a narrower top down approach

My mantra is don't reduce your spending but rather increase your earning.

Life comes once so work harder/smarter and buy that car you have always been wanting.

One way of making sure you are not overspending (as it is a depreciating asset) is by financing you entire purchase by own funds (assuming, investing that money won't offer a higher return than the loan you will take) and also purchasing a vehicle which has the highest resale value in its segment.

Last edited by bharatbs : 25th December 2011 at 12:50.
bharatbs is offline   (1) Thanks Reply With Quote
Old 26th December 2011, 22:00   #130
BHPian
 
antorquetik's Avatar
 
Join Date: Apr 2011
Location: Bangalore
Posts: 63
Thanked: 37 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

I choose 16-30%.

I feel this is the most comfortable bracket (provided you have no other major liabilities on your shoulder).
antorquetik is offline   Reply With Quote
Old 27th December 2011, 18:37   #131
BHPian
 
Join Date: Oct 2008
Location: Pune
Posts: 138
Thanked: 147 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Voted for 10-15%.
I consider total car expense=Depreciation(20%)+insurance+interest+fuel+ maintenance.

In the initial days of the career one tends to be in the 16-30% bracket because of lower incomes and not many enthusiasts cars below 4-5L mark. But, later on as the income increases we get decent options even if we settle for 10-15% expense as one can get really good cars at 10-15L budget.
46TheDoctor is offline   Reply With Quote
Old 27th December 2011, 20:56   #132
BHPian
 
saurabhdadhichi's Avatar
 
Join Date: Jul 2009
Location: New Delhi
Posts: 213
Thanked: 68 Times
Default

Comfortable with 10-15 bracket but being a car enthusiast can't stop myself to spend 16-30 % of my in hand salary to get a decent vehicle. With age this spending goes down and that's why won't mind spending a bit extra as of now since later with further more liabilities it would be stupid to spend more on Vehicles with no returns on Investment.
saurabhdadhichi is offline   Reply With Quote
Old 27th December 2011, 21:24   #133
SAS
BHPian
 
SAS's Avatar
 
Join Date: May 2008
Location: Mumbai
Posts: 287
Thanked: 60 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

I spend less than 15% of my income on my car and bike together. Reason is I run on CNG, hence although I travel 70 kms daily, it does not kill me. I feel when you calculate the % spent on your car, you should include depreciation, finance costs, repairs and maintenance, insurance and any modifications into the cost of running the car. All in, I feel I spend less than Rs. 6k per month on it (back of the envelope calculation though).

For reference, I own an Alto, been using it for 7 years now, it runs on CNG, I service every 10k kms, I have a third party insurance and I run around 15k kms per year.
SAS is offline   Reply With Quote
Old 28th December 2011, 15:09   #134
BHPian
 
mohandasnikhil's Avatar
 
Join Date: Aug 2008
Location: Mumbai
Posts: 273
Thanked: 238 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

Well I have a slightly different take on this. I look at my car as some place I spend a lot of time in. I drive around 25,000kms a year, with 90% urban driving in and around Mumbai. Anyone driving in Mumbai would agree that the average speed per km wouldnt exceed 25kmph. The remaining 10% would be long runs, Mumbai to Goa kinds, where I average 55 to 60kmph.
Considering this scenerio I spend approximately 950hrs a year in my car. Driving or being driven around. That is nearly 40 entire days a year.
In such a scenario having a nice, comfortable car is more of a NEED than a WANT.
Most people would purchase a second weekend home and not spend more than 15 to 20days a year in the house. I understand that an asset of this kind does have a capital appreciation. But I spend double that amount of time in my car and I think I can justifiably spend more than 15percent of my Annual Salary on my car for my own well being.
It might not be an asset that appreciates in value but it is definately worth investing in for me.
mohandasnikhil is offline   (2) Thanks Reply With Quote
Old 28th December 2011, 15:18   #135
Senior - BHPian
 
shankar.balan's Avatar
 
Join Date: Apr 2008
Location: BLR
Posts: 8,027
Thanked: 5,326 Times
Default Re: Vitamin M - What percent of your annual income do you spend on your car?

An excellent set of observations! Thanks for sharing this point of view. I can fully appreciate your thoughts on this.

Yes, considering the amount of time we spend in our vehicles on the daily commute, we must invest in a good vehicle which suits us and meets our needs.

But the bottom-line will always be more subjective than objective - based entirely on one's set of priorities at the time.

For many people a car is still a luxury purchase for what is ultimately an utility item - this is why compromises are made all the time by buying the lowest de-specced variants available.

The key words you have used strike a chord with me too - why should I not invest in my own well being? After all, to quote that nice movie title - ZNMD! Might as well enjoy the fruits of your labour while you can do so because anyway you cant take it away with you when you finally shuffle off the mortal coil!

Quote:
Originally Posted by mohandasnikhil View Post
Well I have a slightly different take on this. I look at my car as some place I spend a lot of time in. I drive around 25,000kms a year, with 90% urban driving in and around Mumbai. Anyone driving in Mumbai would agree that the average speed per km wouldnt exceed 25kmph. The remaining 10% would be long runs, Mumbai to Goa kinds, where I average 55 to 60kmph.
Considering this scenerio I spend approximately 950hrs a year in my car. Driving or being driven around. That is nearly 40 entire days a year.
In such a scenario having a nice, comfortable car is more of a NEED than a WANT.
Most people would purchase a second weekend home and not spend more than 15 to 20days a year in the house. I understand that an asset of this kind does have a capital appreciation. But I spend double that amount of time in my car and I think I can justifiably spend more than 15percent of my Annual Salary on my car for my own well being.
It might not be an asset that appreciates in value but it is definately worth investing in for me.
shankar.balan is offline   (2) Thanks Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Cars with "Zero Percent" Interest Rates AbdulRahmanM Indian Car Loans & Insurance 7 25th October 2017 22:24
Hero MotoCorp buys 49.2 percent stake in US based Erik Buell Racing captain.torque Motorbikes 1 2nd July 2013 10:42
How many hours everyday do you spend in your office? naveendhyani Shifting gears 36 26th June 2012 18:01
Ashok Leyland acquires 26 percent equity in UK bus maker fx45 Commercial Vehicles 4 19th September 2010 21:53


All times are GMT +5.5. The time now is 02:33.

Copyright 2000 - 2017, Team-BHP.com
Proudly powered by E2E Networks