[n.devdath]

Originally Posted by Acharya

This guy makes close 1.25Cr as pre tax income and currently drives a 6 year old Safari Storme and his wife drives a 7 year old i10.

I thought, it's worth bringing it up here. What are the thoughts on this pretty predicament.

The situation is simple. Your friend isn't a car person, neither is his wife, and hence, they look at cars ONLY as a mode of commute. Though he told you that he's been a BMW fanboy, and may even have some affinity towards, it, had he been passionate about it, he would have bought one much before his income reached 1.25Cr PA.

Having said that, IF they intend to buy a luxurious car in Bangalore for themselves, it is the Skoda Superb that comes to my mind, if they have a driver, else something like the Innova Crysta or the Endeavour 2.2 AT Titanium.

[2000rpm]

Also, with the pre-owned route both the heart and mind can be brought to a compromise. Bought a Civic when I was just 2 years into my career (even lesser actually), the car was supremely reliable and required only about three services and once AC service during three years of ownership.

The breaker-scrapping was a different type of a heart ache though!

[Acharya]

Originally Posted by n.devdath

Though he told you that he's been a BMW fanboy, and may even have some affinity towards, it, had he been passionate about it, he would have bought one much before his income reached 1.25Cr PA.

Perhaps, you are right.
Or may be he managed to contain his wishes, as we end up talking about cars every time we meet.
Secondly, they managed to have secure financial state today, primarily due to their wise decisions (such as not taking a plunge in BMW earlier )

Originally Posted by 2000rpm

Also, with the pre-owned route both the heart and mind can be brought to a compromise. Bought a Civic when I was just 2 years into my career (even lesser actually), the car was supremely reliable and required only about three services and once AC service during three years of ownership.
The breaker-scrapping was a different type of a heart ache though!

They are not into bikes & pre-owned cars, the guy hasn't touched a two wheeler in last 20 years so it would be quite a challenge for him to re-start riding.

[am1m]

Originally Posted by Acharya

Secondly, they managed to have secure financial state today, primarily due to their wise decisions (such as not taking a plunge in BMW earlier)

A positive trait known as 'delayed gratification' I believe. I think your friends are smart people. Why go for a fancy car if one is not a car-enthusiast, and simply because of some made-up social convention which calls for 'x' number and quality of toys just because one is worth 'y' amount of money.

I wish I had their financial sense!

[Acharya]

Originally Posted by am1m

A positive trait known as 'delayed gratification' I believe. I think your friends are smart people. Why go for a fancy car if one is not a car-enthusiast, and simply because of some made-up social convention which calls for 'x' number and quality of toys just because one is worth 'y' amount of money.

I wish I had their financial sense!

Indeed, 'delayed gratification' not only helped in having good financial stand, it also helped in his career.
How -
He is an EMI free individual for last 2-3 years. He does not fear for job security and according to him, it helps in taking bold decisions at work front.
This fearless behavior has helped him grow his career beyond his own imagination. This would not have been possible if he was stuck with multiple EMIs, fearing for his job and thinking about his finances before making difficult calls at work front.

Sorry for being OT.

[ACM]

Factors to be considered:
1) Salary
2) Salary of Spouse
3) Number of people in household. Nuclear family or not?
4) Number of people driving in household and hence number of cars required.
5) Self owned house? EMIs, staying with parents? Ancestral house? Ancestral wealth? Married? Kids?
5) Car enthusiast or not?
6) Will keep car for how many yrs?
7) Businessman or self employed?
8) Children's education plans?

There can be no simple rule of thumb.

A person passionate for travelling the world may prefer to spend on that rather than on an expensive car.

[PrideRed]

Originally Posted by ACM

Factors to be considered:
1) Salary
2) Salary of Spouse
3) Number of people in household. Nuclear family or not?
4) Number of people driving in household and hence number of cars required.
5) Self owned house? EMIs, staying with parents? Ancestral house? Ancestral wealth? Married? Kids?
5) Car enthusiast or not?
6) Will keep car for how many yrs?
7) Businessman or self employed?
8) Children's education plans?

There can be no simple rule of thumb.

A person passionate for travelling the world may prefer to spend on that rather than on an expensive car.

You are spot on. Spending, responsibilities, commitments etc. of two people cannot be same at any given point of time. Even if they are, one's interest will be different. What car @ what age? might be more relevant.

[bhavik.1991]

Originally Posted by ACM

Factors to be considered:
1) Salary
2) Salary of Spouse
3) Number of people in household. Nuclear family or not?
4) Number of people driving in household and hence number of cars required.
5) Self owned house? EMIs, staying with parents? Ancestral house? Ancestral wealth? Married? Kids?
5) Car enthusiast or not?
6) Will keep car for how many yrs?
7) Businessman or self employed?
8) Children's education plans?

That's a very good compilation. I would like to add one.
9) Annual usage of the car.

For a person like me who does not get a chance to spend more than half n hour inside the car during work days (~245 days a year), putting money on a luxurious car doesn't make sense.

[procrastinator]

For a salaried person, a car costing 50-100% of annual income is in reach.
Anything beyond 100% is either termed as passion or insanity on the perspective.

What %age you allocate solely depends on the priorities and commitments.

IMHO, 75% of annual income seems like the best bet for a good car.

[vishnurp99]

Just wanted to put my POV too.

if both you and your wife are salaried and in the private sector (no other major source of income), it's best to buy a car within 25% of the combined annual pre-tax income. Anything beyond this is flirting with danger.

if both you and your wife are salaried and in the govt sector (no other major source of income), it's best to buy a car within 40% of the combined annual pre-tax income. Anything beyond this is flirting with danger.

if you are business person/professional who can expense out a car purchase, you can go for 40% of the your annual pre-tax income.

Just based on my experience and what I see fairly successful people doing.

[neeravnaik]

In my opinion you should probably not relate this issue to the salary but rather your savings or wealth.

Finally you are earning and saving to reach certain life goals (retirement, house, education for kids). You should buy a car that does not set you back from achieving some of these bigger goals (saving enough funds for your retirement being the biggest one of these)

A rule of thumb is how much will it pinch/hurts to replace the car with the same one if it unfortunately becomes unusable (floods, accidents etc.)

Current Salary is a transient number and does not account for how long have you been earning this salary or more importantly how much you have saved so far. Also it is a folly to assume current salary can be easily maintained and you will increase it constantly. Careers are more uncertain and due to various reasons people have to stop working also from time to time (health, family etc.)

[libranof1987]

Originally Posted by ACM

Factors to be considered:

Another one that I see playing a big factor is: likelihood of a stint abroad. The opportunity to travel comes up often without notice, along with the uncertainty on the duration.

I know several people with an individual salary upwards of 50-60 lakhs driving a sub-10 lakh car. Purely to limit their financial exposure if they need to travel abroad, and one that can be easily given to a family member (parents/siblings) as a stop-gap.

[Dry Ice]

Going by the recent trends*, in a few years, it might become - NO car @ ANY salary!

* Reducing average speeds in cities/congestion, NGT vs Diesels, autonomous cars, Parking problems, improving public transport, cabs availability (Uber/Ola/Lyft etc), rentals (Zoom/Voler etc)

[am1m]

Love this post!

Originally Posted by Dry Ice

Going by the recent trends*, in a few years, it might become - NO car @ ANY salary!

At the risk of inviting the ire of all members here, after all this IS an auto enthusiast's forum - I sure hope so, at least in our cities.

But alas, 'what car I have' is still too big a status symbol in India, the public transport/cycling-walking infrastructure still has a long way to go, and Uber and Ola drivers are showing their true colours these days.

So more than a few years to go I'd say.

[procrastinator]

Originally Posted by Dry Ice

Going by the recent trends*, in a few years, it might become - NO car @ ANY salary!

* Reducing average speeds in cities/congestion, NGT vs Diesels, autonomous cars, Parking problems, improving public transport, cabs availability (Uber/Ola/Lyft etc), rentals (Zoom/Voler etc)

True that!

1. City: Already Uber/Ola is cheaper considering owned car's Fuel + Insurance + Maintenance + Depreciation

2. Highways: Self Driven cars are great option.

Indeed they are great giving car as a service(CAAS ) and forget the ownership.
The only reason to get the car is ease and flexibility.

In the nutshell it boils to down to priority of owning a it or not.