The Law of Diminishing Returns

[mrdenn1s]

OK,

First up, best you google the thread title if you are not sure what I am on about

Now, let's apply the Law to buying a 4WD or AWD

At the bottom of the cost curve is probably a Jimny or a Grand Vitara. At the top is most likely a Mercedes G-Wagon or similar

Now, assume you are buying to use off road at times, and not just for a Toorak tractor

For under $30k, you can have a petrol 4WD with low range (Grand Vitara). Not your cup of tea? Need diesel? Ok, move up to a Jeep or one of the new AWD's (eg Santa Fe, etc). Still under $50k new. You could even look at a ute or a Challenger for that price. Will do 99% of things you want it to do with a few mods right???

So, I ask the learned people of this forum, why would someone drop $80k on a Landcruiser or even more on a Disco, etc?

Curious to understand if the off road advantages for the cash actually mean something (if they are real) or are we paying for stuff we will never use?

Shoot

[JethroT]

Because they can.   

I spent $20,000 on my 4wd because that's all I could afford, I would love to spend more.

Regards
Geoff

[D4D]

So, I ask the learned people of this forum, why would someone drop $80k on a Landcruiser or even more on a Disco, etc?

Because you can In reality it is probably down to how much you can afford and how much you can justify.

[mrdenn1s]

So are we saying an $80k landcruiser offers not much more than a $45k Challenger apart from a bit of space and 500kg more towing capacity that you will most likely never use?

[GeeTee]

Can we discuss deal makers/breakers such as:
In-field reliability, service/dealer back-up, interior space, seating capacity, air-conditioning performance, driver/operator abuse capability in arduous terrain, aftermarket accessory support and resale, too?

[singo-26]

Why would I buy an $80k+ land cruiser over a challenger, easy once you've driven the cruiser. Not knocking the challenger or any other vehicles but they are in a different market segment and really made for a somewhat different market to the cruisers, power size, weight and towing capacity are completely different. If I had a 3 tonne caravan I know which vehicle I'd rather tow it with.
Outside of that I think we purchase the vehicle we want or need and there is no need for anyone to justify their decision.

Why my land cruiser?
I need the carrying capacity for work (tools and spares), towing capacity (big trailer and forklift/hired machines and dad's 3 tonne caravan occasionally), internal space (3 kids and parents who aren't of the slimline variety) and off road ability to get me where I want to go. That's my reasons, a patrol looses on towing capacity, all utes and mid size vehicles are out on tow capacity, So if it was new for me an 80k+ land cruiser it would be, for my wife would be a different story and a challenger may suit.

[Eski]

When I was looking there was 4 or 5 essentials..   

Reliability
Cost
Rear doors that will open with my camper
Off road ability - low range
Separate Chassis

I was trading from an X-Trail that had done Central Australia and Oodnadatta Track just fine.  Lots of time was spent on forums checking out owners information....

I ended up with my ideal vehicle that ticked 4 of the 5 essentials...  R50 Pathfinder and it hasn't disappointed yet...    Just no separate chassis...

All this goes out the window when the head and the heart disagree - I still want a Discovery 2 TD5....

Remember everyone has different needs and wants so one car does NOT suit everyone..

[Symon]

So are we saying an $80k landcruiser offers not much more than a $45k Challenger apart from a bit of space and 500kg more towing capacity that you will most likely never use?

I'm guessing by this thread, and the "why would anyone buy a manual" thread, that you are either in the market, or are trying to justify to yourself or others the vehicle you just bought was a good call?

Sure if you look at a specification sheet there will be not a lot of difference between a $40k Hilux and a $20k Great Wall. If you do a lot of remote area touring that extra $20k you spend on a brand that is known for reliability and/or good service availability may be money well spent.  See how you go for service and support for your Great Wall at Andamooka.

Also as GeeTee mentioned, you have to take into account if the vehicle suits you.  When I was in the market for a dual cab a few years ago I had to strike the Triton off my list as my 6'1" fat bastard frame just didn't fit in it, which was a shame as it ticked all the other boxes.

From an engineering perspective the primary reason for such a price difference between a Mercedes and a Great Wall, putting aside physical construction and material costs, is quality assurance.  The reason why a Mercedes dash switch costs so much is because a dash switch design is tested for a million operations before being mass produced.  Sure the Great Wall dash switch will perform the same function, but the probability of it lasting as many operations as a Mercedes unit is much less.  It is the quality that you are paying for, not just function.

The law of diminishing returns doesn't really apply here.  You are trying to say that the more you are spending doesn't yield you more rewards.  Like I said before, you are paying for the quality of the product, which is quantifiable and justifiable.

[DannyG]

Because they can.   

I spent $20,000 on my 4wd because that's all I could afford, I would love to spend more.

Regards
Geoff

That pretty much sums up a lot of us I think!

[D4D]

I also think you need to brush up on your economics, as the law of diminishing returns doesn't really apply here.  You are trying to say that the more you are spending doesn't yield you more rewards. 

I think it applies from a pure 4wding perspective, a $20K 80 with $10K of ARB gear vs. an $80K 200 with $10K of ARB gear, both will perform just as well in the bush. As you said it is all the other stuff you need to consider in the decision. I'd buy a 200 tomorrow if it would fit in the car park at work, height and width.

[Symon]

Yes, but one is a 15 year old vehicle and the other is a 2 year old vehicle.  You get a lot more features with the newer vehicle, and you have a much lesser chance of age related failure (metal fatigue etc) with the newer vehicle.

Sure they perform the same function off road, but they aren't the same vehicle.  For the law of diminishing returns to be applied you have to be spending more money for the same product, they aren't, and the newer vehicle has a higher probability of being more reliable.

[Chris F]

Resale value is important to a lot of people too. You may pay more for some vehicles, but if they are still worth a lot when you sell them they have cost you less all up after selling. A friend has a 5 year old Ssanyong Musso. He paid $35,000 for it. He is about to sell it and it's market value is now about $10,000. I have a 5 year old Hilux that cost $45,000 and is now worth about $25,000. Is it worth saving the money up front, or when you sell, and in this case the law of diminishing returns probably doesn't apply.

[D4D]

I love the resale of my Prado, cost me mid 50s 4.5 years ago and I can sell it today for high 40s

[Chris F]

I love the resale of my Prado, cost me mid 50s 4.5 years ago and I can sell it today for high 40s

That makes it a pretty cheap vehicle when it's sold  I think it's funny when people get so worked up about the price of Toyota 4X4's. They usually make up for it when they're sold, and there is a good reason they hold their price.

[D4D]

True, I'd make a killing If I sold it and so would the tax man Today's plan is to keep her as a weekend only vehicle and buy a city car for daily duties. I had thought of selling it and buying a TD 100 but I can't justify it when all I am gettng is a little more space and a tax bill.

[Mrs smith]

If it's tax deductible why would I rather drive a Greatwally  than a 200 other than
I'd prefer to give my hard earned  to the Gov of the day to spend wisely.
Horses for courses, bang for buck or it's what one could afford on the day.   

[mrdenn1s]

Resale value is important to a lot of people too. You may pay more for some vehicles, but if they are still worth a lot when you sell them they have cost you less all up after selling. A friend has a 5 year old Ssanyong Musso. He paid $35,000 for it. He is about to sell it and it's market value is now about $10,000. I have a 5 year old Hilux that cost $45,000 and is now worth about $25,000. Is it worth saving the money up front, or when you sell, and in this case the law of diminishing returns probably doesn't apply.

So the extra interest you paid on the $10k over 5 yrs at 8% is about $4k. You only got $1k more than your mate at sale time. He lost $25k in depreciation. You lost $20k plus $4k extra in interest

[D4D]

You need to also factor in the business tax deduction, mine is about $5K per year and I am at the low end of the scale.

[Mrs smith]

So the extra interest you paid on the $10k over 5 yrs at 8% is about $4k. You only got $1k more than your mate at sale time. He lost $25k in depreciation. You lost $20k plus $4k extra in interest

This is where a lot of people go wrong, not realizing the real cost of buying a car.
Interest + depreciation= real dollar cost.
Because of this.
MOI, the only ones that can really afford to buy new are Business
and those that have payed there house off.

[Swannie]

This is where a lot of people go wrong, not realizing the real cost of buying a car.
Interest + depreciation= real dollar cost.
Because of this.
MOI, the only ones that can really afford to buy new are Business
and those that have payed there house off.

This is true, but depending on salary etc, many  can also effectively novate a vehicle, this ensures a late model vehicle is possible. It needs to be within 7 years old and 100,000klm, at start of lease I believe.

Regards
Greg

[schmik]

Oddly enough Suzuki may be near the bottom of the market in price but not near the bottom for reliability.... 4th form the top!
http://www.whatcar.com/car-news/what-car-reliability-survey-2012/results-by-brand--1st-6th/263555

[McGirr]

My cruiser cost me $17,000 being a 2000 model with 120k on the clock. I am slowly adding bits and pieces. Why a cruiser, I have had landcruisers for years and am happy with the reliability, available parts in remote areas and the quality of build.

Would I buy an $80,000 4wd, if I had the money maybe but I don't look at resale value as naturally the more you spend on a car the better your resale value.

I intend to hold onto my cruiser for a long time.

Mark

[GeeTee]

Resale value is important to a lot of people too. You may pay more for some vehicles, but if they are still worth a lot when you sell them they have cost you less all up after selling. A friend has a 5 year old Ssanyong Musso. He paid $35,000 for it. He is about to sell it and it's market value is now about $10,000. I have a 5 year old Hilux that cost $45,000 and is now worth about $25,000. Is it worth saving the money up front, or when you sell, and in this case the law of diminishing returns probably doesn't apply.

Interesting!
Your mate has spent $25K
You have spent $20K
Who spent more on service etc?
And..ummm.. Who got the better vehicle for five years?   

[Chris F]

Interesting!
Your mate has spent $25K
You have spent $20K
Who spent more on service etc?
And..ummm.. Who got the better vehicle for five years?

My Hilux is a work vehicle that is regularly used as a tractor and for towing. The Musso was used a couple of times at work but being privately owned and not quite up to the task we stopped using it. Toyota services the Hilux so it probably costs more, but has been as reliable as the Musso even though it has done twice the mileage. The Hilux has had a new starter motor and water pump, and the Musso has been plagued by small problems like electric switches and the EGT valve which never seems to last more than a few months before it starts leaking again. I'd say the Hilux wins hands down with durability, off road capability and build quality but my friend likes the soft ride of the Musso as it is used solely as a family car these days. My friend is my business partner and he will at last be replacing the Musso with a new Isuzu D-Max next month. At last he'll be able to do some work with his car again  .

So the extra interest you paid on the $10k over 5 yrs at 8% is about $4k. You only got $1k more than your mate at sale time. He lost $25k in depreciation. You lost $20k plus $4k extra in interest

1k less for a new Hilux is a pretty good deal if you ask me  It comes down to what you can afford when you buy. I'm just saying that you don't find out the real price you pay until you sell.

[fuji]

So are we saying an $80k landcruiser offers not much more than a $45k Challenger apart from a bit of space and 500kg more towing capacity that you will most likely never use?

Yes, I paid nearly 70k for my 76 as that is my retirement vehicle. Not that I am retired but will in a couple of years. That will last me for at least ten years. And that was the vehicle I wanted. Now I'm broke. I nw have a vehicle that will tow a CT without any problems. Go the v8
Wayne