Hey guys! I'm a 23 year college student and we have to do research on demographics of a product of our choice. You guys know the deal--Annual household income, age, education, blah, blah, blah. I thought long and hard about what product I would research and then it hit me. Why not pick the car I drool over on a daily basis--the Mercedes Benz S-Class. I live here in Jacksonville and see S550s seemingly as often as Honda Civics. Which brings me to these questions:

1) How many S-Class owners meet the $300,000 annual household income that is so commonly thrown out there. I know its a very personal question but how many of you S-Class drivers actual meet or exceed the demo?

2)When did you decide that your income was enough to buy an S-Class?


I know at the end of the day demographics mean nothing but help a college student (and aspiring S-Class owner) out. I would gladly appreciate any answers you guys give me. Thanks in advance.

OK I'll bite.
I do not meet or exceed the $300,000 mark per year to start with.
I usually buy my MB a few years old so i don't take such a depreciation beating. Don't get me wrong I LOVE depreciation but more so on the real estate and tax level.
When I decided I could "afford" and S class. Well easy when the payments don't cause ANY problems with your everyday life. If you are comfortable financially, feel good about your investments and you can deal with the thought of dropping 5K plus in repairs at any given point. Hope this helps.

Something to remember though is that many many people who make the $300,000 plus mark may still buy a used car because cars are a terrible investment. I have meet some people that could EASILY afford a new S class but chose not to because they are smart with their money.
If I wasn't such a car freak I would buy more real estate instead of driving my S55. I know many people are going to say I am crazy BUT I have been doing real estate for 10 years now and the last few years have been great for me when most people have flunked.

I dont buy new cars period so I dont think I will be of much help here. But if I copied and pasted what DRTYLNDY said it would be pretty accurate about my situation as well.

And unfortunately I abosolutely LOVE LOVE cars so, not spending money on them is not an option for me.

I think you got it all wrong. I didn't buy an S class for any of these reasons, I also agree with the previous post, I rarely buy new, only cars I can't wait for.
But all ( nearly) expensive prestigious cars drop like a stone, after 3 years
a 100k S class might fetch 30k leaving someone else to take the hit whilst you get all that car and goodies for the price of a new normal sedan.

My household annual income meets the demographic, but that had no basis on purchasing my S550. Now days if you have a annual income of 90k and you're smart about managing your debt to income ratio you can purchase or lease at car costing 100k. Not to mention that many S550 owners have purchased their car per-owned/CPO at a significant discount off the original sticker price. You may want to target your research individual that purchased a new S600 or S65 (since both are in excess of 140 to 200K), to get a better idea of who's purchasing based on income.

OK Mr Researcher... I purchased a brand new S600 by trading in a 2.5 year E55 and I paid the rest in cash. I am past wanting a new car every 2 to 3 years with endless recurring leases. I would rather buy the best car there is and run it for 7 to 10 years (or one whole model cycle - perhaps with a tune mid-life to keep it ahead of the curve) so depreciation is less of a factor over that more extended time-span.

If you buy for the long term, large purchases of this type can be quite affordable over time compared to buying/leasing more frequently. So in this situation it is not a matter of what your regular income is. The question is do you have the liquid assets to make an occasional large purchase without impacting your essential savings, retirement, other investments, or going into heavy debt. Though I could afford it, I really hate the thought of huge $2K/month + leases and loans and the interest associated with it. In fact I have no idea what my annual income is as it varies - but I can afford to not need to have any regular monthly car payments.

Chris

The "pink elephant" in the room here is that the $300k number comes from Mercedes, which by its very terms means people who are buying new.

And at those prices, I would suspect $300k per year is low but this might be my personal bias. I'm close enough to that level to realize that even at $300k, I'm still not buying one of these things new. There's just too much else that's more important (e.g., real estate, investments, 2 kids in private school, family vacations, etc.), things that create real life experiences, not just transport the family around.

Of course, the $300k "yearly income" number is probably irrelevant as well. Personal Net Worth is probably a better number. I run across too many millionaires with very low "incomes" but that's something you only learn way after college.

So for all these reasons, the $300k income metric is probably flawed, not to mention the virtues of buying used v. new.

Exactly. Well said.

Here are my thoughts....
I am 24. I have owned a few AMGs, Range Rover, Jaguar, etc.
I typically buy about 1-2 years old, 15-30k miles.
I make less than 100k a year here, and spend around 60-75k on a car every couple years.

Now, I also have NO kids, no vices (i.e. Gambling, Drinking, Smoking, etc)
-- Only traveling LOL -- I do not have a "large" house, although have a tastefully decorated one but I am a minimalist.
So a $1400 car payment works fine for me.

On the comparison, some people I have met that buy a Continental Bentley, S65, Cayenne Turbo S, F430, Aston DB9, Superleggera.... Have a 3 million dollar home, wife that doesn't work (i.e. Shopping sprees), two children, private schooling, all while being sole bread winner....
Well if you are paying 15k a month for mortgage + feeding a family, you need to make more than 300k to even go buy that new S550.

I actually get a laugh when I see silly vanity plates - one the other day, something to the effect of "lots of fun" on an 09+ SL550.... Well for that same 100k I would have gladly bought a three year old SL65 or DB9 Volante here. And guess what - they still look like a 200k car, and most won't know that you didn't buy it brand new ! Because after all, that brand new SL550 won't be worth much soon.... But I'm glad for those people, because my SL65 (if that were the case) would look so much better next to theirs at the stop light - not saying perception/outward appearance is the most important thing in the world either.

It's about more than just income.... (as in - expenses)

I don't see how anyone with an income of "just" $300K can justify the purchase of a new S-Class.
What would you rather do with your $110K? Put it into a car, or let it make you money every month instead?

Stats 101: self-reported (on optional marketing surveys) income "data" is worthless; need past 3yrs tax return data (and even then need to know liquid net worth to judge)

Those who "know" money tend to understand needs vs wants and what they can safely afford

Driving is one's riskiest daily activity; would argue it is irresponsible to not commute via safest car one can afford

Far more costly luxuries, not needs, of life include wife, divorce, kids, pets, traveling vacations, vaca houses, live sports/entertainment events, etc etc

New 65s are relatively cheap daily health insurance (and transportation); money can never buy back one's diminished health/earnings capability post any collision

Yes I agree. Here is an additional perspective. I regard my car as an extension of my home environment, an extension of my house in effect. And like my house, I want to spend time in a place that is as safe and comfortable as possible, somewhere I want to be when I have to be, where I feel "at home" and can relax as soon as I finish work. The reality is that as we get older we spend aggregated months and even years of our lives in our cars.

In my area an average house costs well in excess of $1M. A car (even an S-Class) costs much less than the cost of purchasing, maintaining, and furnishing a home, and yet it is as much a part of your life and personal environment. Yes, I know cars depreciate and houses appreciate, yes you could invest that money but as long as you are not compromising your core savings and family obligations, "understand your needs versus your wants" as WSH states, so what? What value to you assign to emotional satisfaction? Wherever you put your money you will still need a car of some kind. I know many see cars as a means of merely getting from A to B. Well if I am to waste accumulated months and years of what to me is my valuable life in a car, I at least want it to be somewhere I want to be. (And will be as safe as possible in)

Chris

Since University I've split my time working in investment planning and the mortgage business so see pretty much the entire financial picture of my clients. It surprises me how much people think they make (or made) versus the true figures, particularly self employed, and if anything people tend to overestimate how much they make, often in quite comical means.

I wouldn't be surprised if the true income for the new S Class owner would be around 20-25% less than the $300k/yr Mercedes tell us.

I'd say buying a base model 2007 S550 would give you 99% of the "health insurance" of a 2010 S65. Yes, the extra oomph can get you out of trouble...

My ma always comes in and gives the best advice in this tricky situation:

Spend only a max 2% of your current TOTAL NET WORTH in completely "worthless and always depreciating" (hey, not my words, I am just quoting my ma) things like cars then you will be safe so.....

I think most S Class especially the big engine versions are chauffeur driven
here in England. Many companies use the S320 has hire cars, then there are
the enthusiasts like me who buy the most powerful when they drop to a sensible price.

I agree with you a lot of the comments especially cjf_moraga. My daily roundtrip commute to and from work is about 1.5 hours. Probably 3-5 days a month I have to drive longer than that to meet clients (I am not counting trips where I have to fly places). Furthermore, on weekends I usually go places to meet friends and run errands. I would say that it is safe to say that on average I spend 1.5 hours a day in my car. In a year, that is about 21 full days that I spend in my car. So yes, I want to be comfortable and I want to be relaxed. To be honest, I am not married and I have plenty of hobbies, so I probably spend no more than 1.5 hours per week day at home.

And I hear the comments about investing this and that, but frankly, if that is all you want to do, then you should probably live in a small 1 br. apartment, drive a pinto, and put all your money to work for you. And if that does it for you – then that’s all that matters. And don’t get me wrong, I am by no means suggesting that one should not invest or be smart with their money, but I see people that buy $2M homes and then preach that one shouldn’t be spending $30k on a car. If you are truly looking to make your money work for you a $2M home is probably not the smartest way of doing that.

Yes, the only people who make money selling cars are dealers, buy cheap, sell expensive. If your an enthusiast expect to loose thousands over the years.

I think what you're seeing here is the following: (1) only the rich (in Net Worth terms) buy new; (2) Net Worth, not Income, is a better demographic; and finally (3) the "smarts" demographic is really what defines S-Class owners.

True. But how much money do you need before you actually start enjoying some of it? By no means am I saying go out and buy a new Benz every two years, but I think some people use money as a security blanket instead of enjoying their lives. Having a lot of money is a blessing, not a burden. I know its the worst cliche ever but, you can't take it with you when you die.

I agree. I started this thread purely for research purposes but you guys have given great feedback. I will apply the things I've learned in this thread to my daily life once I'm established. Let's keep this discussion going!

I don't own an S class, but I do have an 06 E55, that, when new sold for a little more than the base S430. I exceed the demographics of making over $300,000 annual income. Most people that don't understand this demographic can't fathom spending $60,000 or more on a vehicle, but what they don't understand that I actually spend a lesser percentage of my income on my vehicle than someone that earns $40,000/year does on a $12,000 vehicle.

Although I could easily afford it, I will no longer purchase a new vehicle. I was very fortunate and had a father that taught me about handling my finances responsibly from an early age (I purchased my first, and only, brand new vehicle when I was 18 and had it paid off before I turned 19). New cars, in my opinion, simply aren't worth it. I would much rather wait for a few years while the vehicle depreciates and use the money that I would have spent if I had purchased the vehicle new toward expanding my businesses that I started at age 22. The only way I could justify purchasing a vehicle brand new is if it was guaranteed to increase in value and I never planned on driving it. Since I consider myself an enthusiast, rather than a collector, that will never happen. There is no way I could let a vehicle sit, no matter the worth of the vehicle or my net worth. That would be like owning my $3 million dollar home and never living in it.

And here's another thing that people don't always understand. Not all people that drive a MB, BMW, Porsche, etc. cant truly afford the vehicle they have. I am in a very fortunate situation (through very hard work) that I am able to put into savings/investments on a monthly basis more than the average person makes per year. There are some people that I know that drive Porsche's, etc., that don't even have $1,000 in their bank accounts...

I totally agree with this sentiment! And money, truly cannot buy you happiness! It can; however, be used to buy a lot of toys that can make you happy for a moment, but true happiness is much different. I work hard, but I also play hard. But at the end of the day, I am not GM and if my businesses fail, the government won't bail me out; therefore, I do keep a security blanket that would cover my personal/business expenses for over two years, should the need ever arise.

Only poor people say that.

Trust me, I am not poor by any stretch of the imagination! However, I am humble enough to realize that money truly cannot buy you happiness. It is merely a vehicle used to purchase goods/services that fulfill needs or wants. Before I was married and had children, I used to think that money could indeed buy happiness, but this, to me, is not true happiness. My all-time happiest moment was when I married my wife and the second all-time happiest moment was the day my son was born. Both of those things could have been achieved whether or not I was a millionaire or poor.

Only poor/materialistic/egocentric people think it can buy you happiness!

I'm 23!!! Also a student at CSUS. I don't make 300,000 but I'm an accountant major employed by Siemens. My ride: 2003 S55.