What Millionaires Drive

January 7, 2005

If you have a million dollars in your bank, what car would you drive? A Ferrari? A Lamborghini? A Bentley?

Well, most people who don't have a million dollars in their bank will say they want a car with a six-figure price tag. But many people who do have a million dollars stashed away somewhere have something else on their minds.

At least that's what Stanley and Danko, authors of "The Millionaire Next Door" discovered in their many years of research. In their book, they explained that many millionaires who worked hard for their money would prefer to be on the practical side when choosing their cars. In fact, most of these millionaires would rather buy used automobiles, even if they can clearly afford brand-new ones.

So what car would a typical millionaire buy for his garage? Well, according to "The Millionaire Next Door", it would unlikely be a Rolls Royce. It will more likely be a used one, somewhere between 1 to 3 years old. It will not have a fancy brand or model, and will not denote 'exclusivity.' It will, in all likelihood, be locally manufactured. It will, however, be robust and reliable. Lastly, our millionaire will probably not spend more than $25,000 for the purchase.

We're talking about millionaires here, so there's solid business savvy involved in these decisions. Let's try to analyze why these affluent car buyers would prefer to purchase such a vehicle.

Bulk of a brand new car's early depreciation cost occurs the moment it rolls out the showroom. Thus, our typical millionaire is making the first owner of the car shoulder the bulk of the automobile's depreciation. He believes that brand-new cars are already overpriced even at the manufacturer's or wholesaler's level, and he knows why. They want him to pay dearly for that fresh dashboard smell and the pride of owning a new car, something that he isn't really inclined to do.

By the third year or so, the car would have depreciated reasonably, and its market value becomes worthy of its use to our millionaire. Also, our typical millionaire is wary about buying something older, because after the car's fourth year it will start showing age symptoms. This is the reason why our typical millionaire would also sell his newly purchased car in two to three years' time, for almost the same amount of money that he paid for it.

Millionaires like to have good, simple fun too, like fishing. Buying a brand-new, high-end Mercedes for this purpose is not on their to-do list, because they'd hate throwing their slimy fish onto the backseat of such a car. They'd prefer a used pick-up (like a Ford F-150) to accompany them to the lake. This will also take them to the 'crummy' restaurants that they enjoy without turning heads in the parking lot.

Buying a car that will give you headaches and melt your checkbook is not something that millionaires do. Thus, our typical millionaire still prefers a vehicle of sturdy built and with a good reputation when scouting for his used car. This will ensure that he won't worry about breakdowns until he sells the car again.

As it turns out, our typical millionaire can satisfy all these car-buying requirements for less than $25,000. Spending more than this makes him less average of the millionaire next door.

So that's the story, I guess, of what millionaires drive and what they don't. Thus, the next time you hear a millionaire say that 'you are not what you drive,' believe him. He really means it.

A Typical Millionaire's Home; Economic Outpatient Care

HOME