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When I walk out to my car during my lunch break, I often survey all the cars in the parking lot. There is always a mix of what I consider commuter cars (Civics, Corollas, and Priuses) and then luxury cars like Tesla, Mercedes and Lexus. I have to admit, there are times that I wonder how some of these people can afford these luxury cars. Sometimes I even experience a twinge of jealousy. Thankfully that emotion quickly passes when I think about reaching FIRE in a few years.
Jeep Car Show
The best part of this parking lot is there is essentially a Jeep Wrangler row. For whatever reason, each of these Jeep owners all back into their spots and park next to each other. It feels like I’m walking through a Jeep car show. I figure one of these days, a judge will show up to award Best in Show.
What’s even more unbelievable to me is the amount of money that these owners put into their Jeeps. The only upgrade that I’ve ever done to a vehicle was when I replaced my car stereo after the original died. Needless to say, spending money accessorizing a car is a bit foreign to me. But there they are with winches on them, jacking them high up in the air, showing off their colorful upgraded suspension, rollover bars, etc. It really must be a Jeep thing.
As some of you may know, I have always wanted a Jeep. I thought they were the coolest SUVs, and I wanted one in high school so badly. For whatever reason, I have never been a speed guy, so Porsches and BMWs were never my thing. However, driving around in a Jeep always seemed like fun, and I thought off-roading would be a blast.
However, with an 18-month-old and another on the way, it’s probably not the most practical vehicle for us to own at this point, much to my disappointment.
Top Selling Vehicles of 2016
Recently, I came across an article about the top selling vehicles in the U.S. during 2016. You might probably recall gas prices at the time by looking at the top vehicles purchased that year.
10. Nissan Rogue
9. Honda Accord
8. Toyota RAV-4
7. Honda CR-V
6. Honda Civic
5. Toyota Corolla
4. Toyota Camry
3. Ram Truck
2. Chevrolet Silverado
1. Ford F-Series
As you can see from the list, gas prices must have been low since the top three vehicles were all trucks that advertise 18-21 miles per gallon. Most of the other vehicles on the list are pretty familiar: Camry, Corolla, Civic, Accord.
But it got me thinking, if these are the best-selling vehicles in the U.S., what do rich people drive?
Recently, a study was done by MaritzCX of the car buying habits of wealthy Americans. They defined “wealthy” as incomes exceeding $200,000 in 2016. Do you know what the #1 best selling vehicle was among the rich?
A Ford F-150.
The same vehicle that the average person drives. In fact, it seems like the rich really enjoy their trucks and SUVs. The next three vehicles on the list are all SUVs:
- Jeep Grand Cherokee
- Honda Pilot
- Jeep Wrangler — I didn’t realize until now that I must work with many rich people!
Now rounding out the top five was the most shocking of all.
- Honda Civic
I tried to look into why a Honda Civic checked in at #5 for rich people. Through my research, it was a bit unclear. Some rich people have their Civic for their teenage driver to use, while others prefer it in crowded cities with tight parking. Here’s looking at you San Francisco. Whatever the reason, I was surprised that it made it on the top 10 list.
Rounding out the top 10
- Honda Accord
- Lexus RX350
- BMW X5
- Ford Explorer
- Acura MDX
While I thought it was interesting to see what the rich were driving, I also thought it’d be fun to highlight some billionaires and what they drive.
- Bill Gates use to drive a Ford Focus to the Microsoft Offices.
- Ingvar Kamprad, founder of Ikea, drives a 1993 Volvo 240
- Alice Watson, daughter of Wal-Mart founder Sam Walton, drives a Ford F-150
- Mark Zuckerberg, founder of Facebook, drives an Acura TSX
- Steve Ballmer, owner of the L.A. Clippers, drives a Ford Fusion Hybrid
- Eric Schmidt, executive chairman of Google, drives a Toyota Prius
- Warren Buffett, legendary investor, drives a Cadillac XTS.
So why are all these rich people driving fairly modest cars?
“Some people, like the actively-employed wealthy, are too busy working to think about luxury cars,” says Robert Ross, auto editor for Robb Report, a luxury-lifestyle magazine. “For them, a car becomes an appliance.”
According to MaritzCX’s senior director of automotive research Shawn St. Clair, “In the past, if you wanted the latest technology like parking assist or a backup camera, that would only appear in the luxury vehicles,” he said.
Now it seems like any car can include bluetooth, back up cameras, and blind spot detection.
I do, however, wonder if a luxury car maker introduces driverless technology for the masses if we will see the rich gravitate towards these pricy vehicles.
The aforementioned billionaires all exhibit stealth wealth by the vehicles they regularly drive. Stealth wealth, for those of you that may not know, is concealing one’s wealth even though they could easily flaunt it. A lot of athletes and entertainers like to be ostentatious with their money, although according to most studies, these individuals will probably end up bankrupt within 3-5 years of their careers ending.
To me, stealth wealth is rooted in a place of confidence and security in one’s self, such that there isn’t a need to prove one’s own wealth to others. I think it’s commendable when rich folk de-emphasis their wealth by living modestly.
Income Groups and Luxury Vehicles
Experian recently did a study to see which vehicles car owners were likely to buy across three different income groups: $250,000 or above; $100,000 to $249,000; and less than $100,000.
While this shouldn’t be shocking, the richest people were the most likely to buy luxury vehicles (39% for people with household income above $250,000 vs. 8% for people who earn less than $100,000 a year).
What really stands out is that 61% of people who earn $250,000 or more are not buying these luxury brands at all. But the scary part is 8% of the population making less than $100,000 are buying luxury vehicles.
Pretending to be Rich
According to Thomas Stanley, author of the book Stop Acting Rich, “In America, 86% of all prestige luxury makes of motor vehicles are driven by non-millionaires. Why do people who are not wealthy drive luxury makes of cars? For some, it’s about acting rich ahead of the game. For others, it’s about seeking to enhance their self-esteem and overall satisfaction with life by driving prestige makes of cars.”
Stanley continues by saying, “It does not mean that those driving expensive newer models are, in fact, wealthy people. Many of those BMW drivers are only acting rich. They are substituting a car for real wealth. They drive new models of prestige makes of cars in an effort to enhance their status. In reality, they substitute “driving rich” for actually being rich.”
“That the pseudo-affluent are insecure about how they rank among the Jones and the Smiths. Often their self-esteem rests on quicksand. In their mind, it is closely tied to how long they can pay to purchase the trappings of wealth. They strongly believe all economically successful people display their success through prestige products.”
Most of us in the PF community do not define success by our material possessions. But, we all know how advertisers can still pull at our heartstrings to desire something that we know that we don’t need.
While I would love to be included in the rich-and-driving-a-Jeep-Wrangler category, I’ll be content driving my Volkswagen Jetta for now. No sense in me pretending to be rich, right?