Indian Billionaire: I Regret Buying A Rolls-Royce
Rolls-Royce cars and SUVs are considered the epitome of luxury. We can find them in many billionaire garages. These show the wealth, power, and success of their respective owners. In a surprising turn of events, we recently came across a video showing the billionaire owner of a Rolls-Royce Ghost regretting his purchase. Hang on, don’t be disappointed yet! This clip isn’t about a defective car or troublesome ownership, but the sheer money game involved...
As it opens, we see Anis Sajan, the vice chairman of Danube Group, with his Rolls-Royce Ghost. He starts by saying that it was his dream car and he was super-excited to bring it home a couple of years ago. The sedan has done a little over 15,000 km in the past two years. He then talks about the ‘money game’. He paid over 2 million dirhams (approx. Rs 4.83 crores) for the brand-new Ghost.
In just two years, the owner says, it has depreciated to 1.5 million dirhams (Rs 3.6 Crores)- a loss of over a crore! Had he invested the money he spent on acquiring the car in property ( a home or building), the value would have only gone up. In his closing remarks, Sajan asks his followers to be wise with their hard-earned money and to ‘not (just) chase luxury’.
‘Depreciation’ refers to a car losing its monetary value over time due to various factors. The speed at which this loss occurs is called ‘depreciation rate’. The make and model are two of the biggest factors defining these. Luxury cars, in general, depreciate faster. These lose their value so rapidly that buying them new can be a terrible financial decision for many! One needs to have a deep pocket and smart financial planning to buy a high-end luxury car (like the Rolls-Royce in this case), new and be at peace.
Even within the luxury spectrum, different brands and models post different rates of depreciation. Some lose around 50% of their original value in the first three years! It could shoot further up if the model is discontinued or is given a massive update that renders the previous vehicle terribly outdated. For regular cars, on the other hand, the depreciation in the first three years is mostly around 30-35%.
Billionaires often stay unaffected by their car’s fast-dropping Insured Declared Value (IDV). They would have multiple income sources and enough money to comfortably compensate for these losses.
Plus, registering the car in the name of the business/firm would enable them to qualify for tax breaks and claim depreciation benefits. Declaring the car as a depreciable asset allows them to reduce taxable profits each year. This is one of the reasons why we see businessmen changing their luxury cars every 2-3 years.
Now, forget multi-crore cars and SUVs like Rolls-Royce and Land Rover Defenders. Luxury cars like a BMW 3 series or the 5-series are still very expensive and beyond the (immediate) reach of most salaried people. But, as automotive enthusiasts, we would all wish to own them someday. Saving up enough to buy them new would just be a terrible move! Buying these from the pre-owned market makes much sense today.
Fuelled by depreciation, these cars will surface in the pre-owned market at significantly lower prices. The user can then acquire these comfortably, and all that’s to be done here is to select the right unit! Choosing a healthy, well-maintained, accident-free used (luxury) car is more rewarding than buying the same new, on debt.
Today, even the rich do this. We have come across several instances of celebrities and wealthy businessmen buying pre-owned cars and SUVs in the past. Virat Kohli, for example, once had not one, but two pre-owned Bentleys in his garage. Actor Prithviraj Sukumaran bought his (current) Lamborghini Urus used.
Taking this route brings significant savings to the table. More importantly, it has made luxury cars accessible to more people. It isn’t tough today for an employee with a good salary package to own cars like a (used) BMW 3 series or a Mini Cooper.