What Do The Rich Really Drive?

[TurboDan]

See here:

http://www.forbes.com/sites/joannmuller/2011/12/30/what-the-rich-people-really-drive/

According to this article, only 8 percent of those earning $100K or less buy a luxury brand. Even for $250K or more, it's just 39 percent.

This makes me think the propensity to buy a luxury vehicle has more to do with geography than income. In my area, there is a big mix of incomes, but the prevalence of luxury brands is very, very high. I would argue that 39 percent of people in my area seem to have luxury cars, but it's a limited number of households that earn $250K. The median family income for my county in the 2010 census was $76,000.

I'll always remember the time I met a semi-wealthy girl from the Cincinnati area and the subject at one point turned to cars. She asked me what I drove, and I said a Saab, since that's the car I had at the time. She asked, "what's that?" I said it was a car brand, like Ford, Honda, BMW, etc. Her reply was "Oh, I guess they don't sell those where I'm from. I've never seen one."

Now, obviously, they sell Saabs in Ohio, but I'm wondering if the culture of buying American cars and/or certain kinds of vehicles, such as pickup trucks, pushes down the overall number of luxury vehicles sold in some areas regardless of income.

[Raza]

I don't think they sell Saabs in Ohio.

But I have to say that I'm surprised; I know guys who make quarter million easy, and they drive around in Dodge Rams and Honda Accords.  My director only drives a G37.

[Vinsanity]

This makes me think the propensity to buy a luxury vehicle has more to do with geography than income.

This is true. I wouldn't be surprised if in SoCal, 50%+ of people making under $100k drove a luxury brand. There are too many luxury cars on the road here for the numbers to be as low as the article cites.

As for Ohio, I heard that they like to drive Hondas because it supports the local economy.

[Speed_Racer]

People who want to appear rich (but actually aren't) drive 'rich' cars.

People who want to remain rich (who actually are) drive 'normal' cars.

[Morris Minor]

People who want to appear rich (but actually aren't) drive 'rich' cars.

People who want to remain rich (who actually are) drive 'normal' cars.

[sportyaccordy]

It's definitely geographical. The NE & I imagine the SW are notorious for wealth perpetuation.

[GoCougs]

People who want to appear rich (but actually aren't) drive 'rich' cars.

People who want to remain rich (who actually are) drive 'normal' cars.

Pretty much. I suggest a read of the The Millionaire Next Door. There is statistical correlation between income, net worth, and chosen vehicle:  the truly wealthy statistically tend to own regular cars much more frequently than luxury cars.

The reasoning behind the data is that it has to do with who the truly wealthy are. Contrary to popular notion, the vast majority of the truly wealthy are not celebrities, sports stars, doctors, lawyers, CEOs, etc. They're small business owners and they get wealthy by being frugal, prudent and mindful; activities that are not based on or related to showboating.

While folks are throwing out anecdotes, the wealthiest person I know with whom I deal with on an almost-daily basis (worth $100MM+) drives a MkV Golf TDI.

[Tave]

The wealthiest guy I know drives anything he can get his hands on because his time is so valuable that he can't stand around waiting for anything. He'll literally drive his truck off the side of a cliff if he thinks it'll save time and allow him to get more work done. He lives all over the country and keeps different "normal" cars and trucks at all of his properties. Of course he travels around on private jets and helicopters, which can hardly be described as frugal.

The second wealthiest guy I know drives a GMC Denali. That's partly a regional preference, as he lives on a ranch, and he also owns multiple vehicles (all "normal"). But notice the GMC is very much a "luxury" vehicle in price if not in make and model, although I doubt Forbes defines it as such.

[Madman]

While folks are throwing out anecdotes, the wealthiest person I know with whom I deal with on an almost-daily basis (worth $100MM+) drives a MkV Golf TDI.

I'm assuming this person lives outside the US?  The MK V Golf was sold as the Rabbit in the US and wasn't available with the TDI engine.

[Speed_Racer]

Pretty much. I suggest a read of the The Millionaire Next Door. There is statistical correlation between income, net worth, and chosen vehicle:  the truly wealthy statistically tend to own regular cars much more frequently than luxury cars.

I've read it, it's a really good book. I double recommend it.

[Raza]

People who want to remain rich (who actually are) drive 'normal' cars.

That's not even close to universally true.

[CALL_911]

That's not even close to universally true.

Yeah, seriously. WTF?

[Onslaught]

What is "rich" anyway?

[hotrodalex]

But notice the GMC is very much a "luxury" vehicle in price if not in make and model, although I doubt Forbes defines it as such.

A couple of weeks ago I chuckled a bit when my dad parked his BMW next to an Avalanche LTZ. Chances are that Avalanche cost almost double what that BMW cost, yet it's still a Chevy.

[SVT666]

A couple of weeks ago I chuckled a bit when my dad parked his BMW next to an Avalanche LTZ. Chances are that Avalanche cost almost double what that BMW cost, yet it's still a Chevy.

My sister-in-law makes north of $400,000 a year and she drives a VW EOS while being completely debt free with several million in the bank.  Her husband (2nd marriage) is a successful dentist and he owns a home construction company that his son runs, and everything he has is mortgaged...and he drives a brand new Escalade every 2 years.

[Speed_Racer]

That's not even close to universally true.

??
Wise rich people don't waste uneccessary amounts of $ on depreciating assets. That's why they're wise, and rich.
Stupid rich are the ones who win the lottery, buy crap, and are broke in 3 years.

[shp4man]

The ones I know that are in the top 1% have several vehicles for different purposes. An unassuming Camry to drive to the office, a new 1 ton truck to tow the boat, wife's Mercedes, son's Mustang, daughter's New Beetle. What the hell, they've got a 5 car garage, right? 

[Vinsanity]

??
Wise rich people don't waste uneccessary amounts of $ on depreciating assets. That's why they're wise, and rich.
Stupid rich are the ones who win the lottery, buy crap, and are broke in 3 years.

Keyword being "universal". My dad's worked with business owners who by anyone's definition are high-income individuals, and they drive anything from 5-year-old Tauruses to leased Porsches and S-classes every 2 years.

[dazzleman]

??
Wise rich people don't waste uneccessary amounts of $ on depreciating assets. That's why they're wise, and rich.
Stupid rich are the ones who win the lottery, buy crap, and are broke in 3 years.

You're partly right.  But some rich people do drive really nice cars, because they can afford to and because a really nice car doesn't make much of a dent in their wealth.

I'd say it's more accurate to say that wealthy people who are smart about things will tolerate a much lower percentage of their income/wealth going to a car than a poser who doesn't have much money but wants to appear as if he does.

[Raza]

??
Wise rich people don't waste uneccessary amounts of $ on depreciating assets. That's why they're wise, and rich.
Stupid rich are the ones who win the lottery, buy crap, and are broke in 3 years.

Right, because all the S classes, 7ers, Rolls Royces, and Bentleys, as well as all the other multibillion dollar luxury industries are entirely funded by poor people attempt to appear rich, whereas rich people all drive Accords, wear Walmart jeans, and eat their meals out of dumpsters. 

[Speed_Racer]

Right, because all the S classes, 7ers, Rolls Royces, and Bentleys, as well as all the other multibillion dollar luxury industries are entirely funded by poor people attempt to appear rich, whereas rich people all drive Accords, wear Walmart jeans, and eat their meals out of dumpsters. 

Yes. Any other questions?

[dazzleman]

Yes. Any other questions?

Seriously though, since credit became too loose, it has become harder to judge people's level of wealth by the normal criteria.  A nice house no longer means wealth, unless you know how big the mortgage is.  And a nice car could be leased.  The person could give the appearance of great prosperity, and be drowning in debt.

OTOH, you can't take that too far.  Many people with money act like it -- drive nice cars, live in big houses, etc.

[Onslaught]

I know people with money who show it. Big time.
I also know people with money and you'd never know it by looking at them.

[GoCougs]

What is "rich" anyway?

In that book I mentioned, The Millionaire Next Door, he defines it as a function of income and age, and a minimum net worth (I think $2MM but that was back in the mid '90s so equivalent to probably ~$4-5MM today). I can't remember the formula, but for example, a 40-year-old guy making $750,000 who has a $1MM net worth is not rich. However, a 49 year-old-guy making $200,000 who has $4MM net worth is rich. He uses celebrities, and rock and sports starts as notoriously non-rich high income earners. He even beats up on doctors, saying they're the worst amongst working stiffs. At the end of it, his statstical study (he does this as a profession as a college professor) is that conspicuous consumption is a hallmark of a lack of wealth (or at least the proper level of wealth).

[Onslaught]

(he does this as a profession as a college professor)

So he's a liberal elite? 

[Byteme]

Most of the monied people I know drive regular cars, SUVs and pickup trucks as daily drivers.  Their toys, on the other hand, feature leaping cats and prancing horses on the body work. 

[TBR]

??
Wise rich people don't waste uneccessary amounts of $ on depreciating assets. That's why they're wise, and rich.
Stupid rich are the ones who win the lottery, buy crap, and are broke in 3 years.

I would say anyone would works their ass off to become rich and then doesn't enjoy the fruits of his/her labor isn't all that wise. If someone doesn't value cars that's different, but if I ever become properly rich I will drive a nice car (probably not a Ferrari etc, but still nice).

Can't take it with you...

[Raza]

I would say anyone would works their ass off to become rich and then doesn't enjoy the fruits of his/her labor isn't all that wise. If someone doesn't value cars that's different, but if I ever become properly rich I will drive a nice car (probably not a Ferrari etc, but still nice).

Can't take it with you...

Agreed, completely.  One guy who often works at my office (but he's based in another office) used to drive his Maserati to work everyday.  Until he replaced it with a Continental GT.  I mean, I thought he had more taste than that, but he works hard, why shouldn't he enjoy some since things?  Of course, he probably clears half a million a year before bonus, so it's not like he's driving a $200K car on a $200K salary.

[giant_mtb]

People who want to appear rich (but actually aren't) drive 'rich' cars.

People who want to remain rich (who actually are) drive 'normal' cars.

So people makin' $73k a year are the ones buyin' those damn Veyrons???   

[Speed_Racer]

So people makin' $73k a year are the ones buyin' those damn Veyrons???   

Yes. And thank you for bring some much needed hyperbole to the discussion.