How long to you keep your Golf?

[PGS_AUS]

You would need to run a business, and buy cars below the luxury tax threshold I believe. Otherwise, poor bugger salary and wage earners like me can't change every 2-3 years without taking a bath on depreciation as you say. Depreciation is still the biggest killer on cars - 50% in the first 3 years is hard to swallow, even for wealthy guys (which is why many don't buy fancy cars, or buy then 4-5 years old)

The luxury tax threshold doesn't necessarilly make a difference. Depreciation wise the car has a set percentage that it can be written off at per year anyhow and this is further modified by its actual percentage of "for business" use. If you really want to get a maximum write off buy a ute over 1 tonne carrying capacity and you can get a 100% write off over the term of the depreciation schedule without having to keep logs to ascertain actual business related useage. From memory there is also an addittional $5K write off available on qualifying vehciles bought by a company after June this year.

The write down in the assets (the cars) value only really presents as an add back on the EBITA and as an offset against what is presumably going to be the company tax rate so you aren't generating enough write off to even come close to covering the actual value of the depreciation in the cars value.


The thing to remember is that if your business flourishes or fails based on what your depreciation write off on your car is then its probably not in great shape anyhow. If your business is making enough that you can "have a little fun" and can still make use of some write off by buying the car or cars you like then why wouldn't you? It's not like you can take the money with you when you're dead and most sane people work so that they can enjoy their down time more. Its the reason I'm looking at an R as opposed to the "accountant sanctioned" Amarok !

[walbjj]

i thought it was an accountant recommended camry

[jamesatfish]

i was genuinely interested in how swapping new cars so quickly could be a sound business and financial decision, as based on mine and my families experiences of purchasing over a dozen new cars has proven otherwise, even factoring in the tax benefits.
anyway, enjoy the cars people. i know i enjoy driving mine

Personally I think your second sentence answers the first.

Unless you're buying ultra-collectable cars and wrapping them in cotton wool, then you're 100% correct that cars are not an investment, and other than the vehicles I buy for my employees they're not a business decision either. I can't speak for GTi11.5 or anyone else, but for me cars are a great source of enjoyment and buying a new one is about far more than the impact on my bank account or tax return.

[walbjj]

while its true that i may enjoy driving a nice car, the reality is, seeing the value of some high end cars plummet must have some effect for owners when it comes time to sell.
take for instance my brothers b5 rs4, brand new, that car was a shade over $170k, my brother bought it second hand, 1.5 years old, with about 20k km on it, for $125k. holy jesus, no amount of accounting wizardry is gonna hide the $45k blackhole that just occurred there. im guessing the original owner must have went busto.

[jamesatfish]

while its true that i may enjoy driving a nice car, the reality is, seeing the value of some high end cars plummet must have some effect for owners when it comes time to sell.
take for instance my brothers b5 rs4, brand new, that car was a shade over $170k, my brother bought it second hand, 1.5 years old, with about 20k km on it, for $125k. holy jesus, no amount of accounting wizardry is gonna hide the $45k blackhole that just occurred there. im guessing the original owner must have went busto.

For sure your brother got a great deal on the RS4 compared to the new car price, but don't disregard the possibility that for the original owner the $45k loss was insignificant. The numbers might be different to the Golf scenario but the principle is the same - if you get enjoyment out of buying a new car every few months/years then the economic cost can be irrelevant.

[Finance_Analyst]

For sure your brother got a great deal on the RS4 compared to the new car price, but don't disregard the possibility that for the original owner the $45k loss was insignificant. The numbers might be different to the Golf scenario but the principle is the same - if you get enjoyment out of buying a new car every few months/years then the economic cost can be irrelevant.

I think we are forgetting that only a small proportion of the population can actually swallow that kinda of depreciation and walk away without feeling an impact. Given Australia has 22m or so people, how many have that kinda money (the top 3%, which is no more than 660,000 people or so out of 22,000,000?) Most luxury cars have crap loads of finance on it anyway and are on the brink of repossession. They drive their Bentleys and Porsches, look like millionaires when in reality, they are not. But hey, if you can afford it great. It is just that very few out of the whole Australia actually can. And that is the ultimate truth. If you can good luck. As a salary and wage earner, unless you are CEO/CFO/COO of an ASX 100 company, then I doubt you really have that kinda disposal income to throw around and buy a new car every few months and not feel hurt by that massive depreciation a top end luxury car suffers.

[Bel]

Tempted to lease a GTI and get rid of my 118Tsi (which i own out right) - only because of the DSG issues.. its only 16 months old.

[jamesatfish]

I think we are forgetting that only a small proportion of the population can actually swallow that kinda of depreciation and walk away without feeling an impact. Given Australia has 22m or so people, how many have that kinda money (the top 3%, which is no more than 660,000 people or so out of 22,000,000?) Most luxury cars have crap loads of finance on it anyway and are on the brink of repossession. They drive their Bentleys and Porsches, look like millionaires when in reality, they are not. But hey, if you can afford it great. It is just that very few out of the whole Australia actually can. And that is the ultimate truth. If you can good luck. As a salary and wage earner, unless you are CEO/CFO/COO of an ASX 100 company, then I doubt you really have that kinda disposal income to throw around and buy a new car every few months and not feel hurt by that massive depreciation a top end luxury car suffers.

You're right - the group of people who don't need to worry about losing 6 figures when swapping cars isn't huge, but they do exist. Take a look at the car sales sites for the 'hero' cars from each marque, and you'll often see the same contact details coming up again and again as they sell out of a 6-12 month old car because it's no longer the best. Talk to dealers of top-end vehicles and you'll find their best customers are upgrading on an almost annual basis, swapping to something new or different as they get bored with each car.

Sure there are the 'thousandaires' who leverage to the hilt to fund a luxury lifestyle, but there are just as many expensive car buyers who walk into a dealership and pay cash.

My point though isn't about the scale of the financial loss, but that although it is a certainty that swapping new cars every year is financially costly, there are plenty of people who prefer to enjoy their new new car rather than have the extra cash in their bank account. It doesn't matter if they're swapping from VY to VE Commodores, from Mk V to VI GTIs or from a Murcielago SV to an Aventador - the principle is the same: we are car nuts, and like any insanity our gratification does not have a solid founding in logic.

[Racer88]

I kept my mk5 for 4 years, you should think about selling at about 70,000kms as re sale drops big time at 80,000kms! Got an R now with some mods planned so happy for the next few years

---------- Post added at 09:39 AM ---------- Previous post was at 09:37 AM ----------

Tempted to lease a GTI and get rid of my 118Tsi (which i own out right) - only because of the DSG issues.. its only 16 months old.

Hey Bel, leasing ok if you don't want to mod I guess. I've got a 2011 R and still have issues with the DSG and the phantom neutral! Have you taken yours back to the dealer yet?

[tee_off]

What are the problems with the DSG? I'm planning to get a Scirocco DSG to keep for probably 5-10 years and I'm scared now...