Consumer Financial Wellness Portal

It is always interesting to hear the rationale of people for buying cars as to why they buy the car they buy and so forth. While this ultimately boils down to the car you want, like and identify with at that point in time, I would like to bring some perspective to the whole thing. This I think is helpful when one gets over the impulse and actually gets to the nitty grittys of owning the car.

While I admit that this is not the definitive answer, I mean come on one article is not enough to give definitive advice into this venture, this in my mind is perhaps the beginning of a series of articles to assist is with the car buying process. I picked up an article on AA’s “traveler magazine” by Malcolm Kinsey, which is an annual advisory / research on cars on the market. This really is a study which looks at “value for money” according to Kinsey’s scorecard.

Before I begin, I would like to state one thing, which is how I absolutely hate *understatement* how articles begin with stating that a car is one’s second most valuable ASSET, because it is NOT!! Getting into this “Kinsey’s report”, what it / he does is break this down to a few categories, four (4) to be exact. These are price bands up to a certain price bracket, which I think is okay as beyond that car price band those who buy at those prices “have the dough” and / or you are dealing with even more variables which we shall not dare to get into here.

Kinsey looks at a car’s retail selling price (criterion 1) and the parts basket percentage (criterion 2). The parts basket percentage is the cost of replacement parts divided by the retail selling price(1) of the vehicle. Perhaps if you had an economist’s mind you could call this a cost of ownership (used loosely). So I would take that criterion and put it aside as criterion 2.

So which replacement parts are these you ask? Well, simply the parts you would generally need replaced for servicing a car e.g. air filter, clutch plate, fuel filter, spark plugs, etc, etc. These are broken down into category A, B and C.

Category A being your most frequent replacements, fuel filter, wipers, brake pads, and so forth. Category B would be your higher mileage replacement part like clutch kits, water pumps, shock absorbers, etc. Now C is a bit of a funny one maybe extreme, yet worthwhile to consider depending on how you drive or which town you drive. Category C is the body parts like the fenders, rims, headlights, windscreen, bonnet, you get the drift. Category C as you would imagine, speaks to those who are most likely to crash of which I know a few… The cost of category C replacement parts has a correlation to how much your insurance premiums will be increased should you have a car accident.

Time for some Maths:
Heck, if you can follow this article to this point and maintain some sanity I’m sure you can do your own mathematics right? But I will give you 3 high-level examples “stolen” from the AA report, one per price category.

Category A (Under R110 000)
Take the “winner”, the VW CITI Chico 1.4. Kinsey’s replacement parts add up to R13 183.52 and the selling price of the car is R69 950.00. This gives you the price parts basket percentage of 18.87% compared to the “looser” Citroen C1 1.0i at 51.57% (selling price @ R89 995.00).

Category B (R110 000 - R140 000)
Kinsey’s winner here is the Hyundai Getz 1.6 HS at a selling price of R126 900 and a parts baskets percentage @ 21.94%. His looser is the Renault clio3 1.6, R134 000 vs. 36.55% (surely you’ve got the drift by now).

Category C (R150 000 - R180 000)
The winner of this class is the none but the NISSAN Tida 1.6 VISA 4 door(yeah I know). At a whooping R153 150.00 selling price and 17.07%(no surprise here) parts basket percentage. The Opel is my disappointment here as it is the leewhzer @ a selling price of R163 550.00 vs. a parts basket percentage of 26.98%.

Now this I would say is one of the helpful ways to determine worthwhile car spend BUT I maintain you might have to add a few things to the equation. One has to also look at things like a brand new car comes with (not all) a maintenance plan, therefore service parts replacements do not count AS MUCH in that scenario. BUT arguably the heaviest factor which is immeasurable, as it where, is what tickles one’s fancy because at the end of the day what it boils down to is do I like the car or not!

Click here to checkout the Automobile Associations’ Malcolm Kinsey Report for yourself, and compare the cars you would like against price, your own foreseeable expenses i.e. maintenance plan and / or service, and, and, and… Once you have done that, look at your affordability then get on with it. But for me I maintain, the Audi RS4 awaits me. Only it has got to make sense for moi…
You can also download the Kinsey Report from here.

Do enlighten us with your qualification criteria for purchasing a car, post your comment below.