Monday, April 16, 2012

The "car buyer" metaphor. Killed.

#F35 #Cdnpoli - 

Peter Van Loan told CBC that, we, the people who buy cars worth, oh ... anywhere from $1000 to $50,000 do not work out the life cycle costs of that motor vehicle. I'm not the only one who remembers that line.

Now, when I'm not taking up space on the bridge of a ship, the life cycle costs of which the owners are fully apprised, I'm instructing ships' officers of varying levels from junior watchkeepers to large ship captains.

Today I heard the proof that Peter Van Loan doesn't know what car buyers do.

During a break in training one of my number talked about the cost of travel from his home to the port his ship departed from daily. In the discussion he mentioned that he had given up his totally cool crew-cab truck for a subcompact car.


Life cycle costs.

He had calculated the difference between the vehicles with respect to fuel consumption and future operating costs. The truck lost out to a huge increase in fuel economy in the subcompact. Before he purchased the subcompact, he had calculated the cost of fuel, (based on the local average). He had calculated his five year repair cost, based on the length of warranty. He had estimated its life expectancy, based on the average annual use.

Most of us actually do exactly the same thing. We cannot afford to toss money out the window. Only people who feel they have money to burn would buy a car any other way.

Further, we buy a vehicle which meets our needs. Sure, we'd love to have something sexy, hot and impractical. That, however, does not fit the reality of most Canadian lives. What's the point of having a hot car if you can't afford to take the sexy accountant out for dinner?

Do we put hours, days or weeks into the life cycle of a car?

Most of us don't. But that doesn't mean that we don't assess the life cycle costs at our own level of comfort.

Most of us don't do line by line annual budgets either. (Unless your good life cycle management attracts that sexy accountant permanently).

That doesn't mean we don't keep track of the money. And we expect government to put an enormous amount of work into getting it exactly right and telling us exactly how much of our money they plan to spend. On everything.

Van Loan's line is completely and utterly bogus. By his reasoning and his ridiculous metaphor, his government is suggesting that they only have to budget and keep the books the way a spendthrift would manage household finances.

If he is saying that because you don't work out the life cost of a vehicle you buy that the government doesn't have to do it, he is saying that the typical household financial management methods employed by the average Canadian family are now the standard for the Canadian government.

They tell us how they excel as financial managers.

That's just advertising. The reality is more akin to Van Loan's metaphor.

1 comment:

Pale said...

Bloody hell eh?

Yup. I need a minivan.

I do not have a minivan. Here are my reasons:

Gas costs are higher for a minivan.

Repairs and parts are more expensive for most of them, and they have to be done in a shop. Many of the repairs on my car, have been done at home.

Initial purchase cost on a minivan is way out of whack.

Because my car cost less, I was able to pay off the whole loan sooner, the car is now mine free and clear.

I may not need a minivan for more than a couple more years. This car will fulfill my future needs too.

I have a compact station wagon. It will suffice.
It has a stereo and still looks brand new.

Yup. Many of us do think of those things.
Only those who have more money than sense do not.
This government has no sense, and OUR money.