Toyota Millionaires vs. Mercedes Millionaires
| October 29, 2010 | Posted by Roshawn Watson under Uncategorized |
By: Roshawn Watson
In 1996, Dr. Thomas Stanley shocked the advertisers and the general public alike when his research found that the most common car driven by millionaires were Fords. After all, what would someone with a net worth north of a million (or three) want to do with a non-prestige brand like Ford? Such frugal revelations characterized his New York Times bestseller Millionaire Next Door. In his latest book, Stop Acting Rich, Stanley revisits the car buying habits of millionaires and comes up with two new distinct profiles: the Toyota Millionaire and the Mercedes Millionaire. They differ substantially based on income and net worth, and I found some of his results surprising. The critical question is which one do you want to be?
The Toyota Millionaire
Toyota is popular among millionaires. Indeed, Toyota was the number-one make selected among millionaires surveyed (market share of 10.9 percent). You may ask yourself: why Toyota? According to marketing consultant, Gorden Wangers, Toyota is…
“…the ultimate vanilla automobile…it has a silly name. The styling is invisible. It does not give you bragging rights at the valet, to put it mildly.”
While Toyota has had some recent well-publicized mechanical troubles, overall Toyota has a long history of making high-quality vehicles at reasonable prices. This translates into a powerful brand known for its value. This is why they are so popular. Stanley supported Toyota’s popularity by comparing the number of dealerships. For example, there are roughly three times as many Chevrolet dealerships as there are Toyota dealerships in the US, so many must purposefully drive past several Chevrolet dealerships to purchase a Toyota. In fact, the next most common vehicle acquired by millionaires is the Toyota Motor Corporation’s Lexus (typically the entry-levels models).
All this points to a simple fact, if you breakdown the most recently acquired cars by millionaires, you will find that most of them are not luxury vehicles (those with a sticker price of $42,000 or more). Most luxury car purchasers are aspirational, people lacking a high net worth but want to perceived as wealthy and enjoy the “nice things.” Personally, unless I know that a person is wealthy, I instinctively think the opposite. When I see someone driving luxury cars, I typically feel bad for them because all I see are payments (not status). I instantly believe them to be the Phony Rich leasing these vehicles (94% of millionaires do not lease) hoping that someone is impressed.
The Mercedes Millionaire
However, the research also show that’s not a wholly-accurate generalization. Although most people who drive Mercedes are not millionaires, Stanley’s research also shows that millionaires driving Mercedes are actually quite rich. Stanley argues that a very specific type of millionaire purchases these cars (The Mercedes Millionaire): those driven by a nearly uncontrollable desire to succeed. Of all multimillionaires surveyed, Mercedes Millionaires are near the top of “the elitist scale in activities and social characteristics.” They often pay top dollar for many things such as clothes, watches, entertainment, etc. For example, more than three times as many Mercedes Millionaires wear Rolex watches compared to Toyota Millionaires.
Importantly , this group has higher income and wealth than other millionaires. For example, 24% more Mercedes Millionaires make in excess of $200,000 compared to Toyota Millionaires. Additionally, Mercedes Millionaires are also prodigious accumulators of wealth (their net worth is at least 2 times what one would expected based on Stanley’s wealth formula). Typically, they became successful first and then began living high-consumption lifestyles. In essence, buying the Mercedes hardly puts a dent in their financial statements even though many of these vehicles were undoubtedly luxury. Note, three out of four Mercedes sold in 2007 were luxury (sticker price $42,000 or more).
Which Do You Want Be?
My personal opinion is you can’t go wrong in either case: both are very proficient in transforming their income into wealth. Technically, the Toyota Millionaires appear to be somewhat more productive; however, both types of millionaires far outpace most people. The Toyota Millionaires also prove that even if your income is lower, you can still generate phenomenal wealth over the long term. We all have different motivators. If you can use a particular car and lifestyle to motivate you to become more economically productive, more power to you. The most important thing about the Mercedes Millionaires is that their lifestyle didn’t elevate until after they could easily afford it. My bias is that if you have been fiscally responsible, why persecute yourself for liking nice things. That’s part of why we save anyway. That said, you must think carefully about which one you want to emulate (or be) because the answer is affecting your balance sheets whether we acknowledge it or not!
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Author Note: Lexus has 10.8% of the market; likely not statistically different from Toyota
Copyright 2012, Roshawn Watson, Pharm.D., Ph.D. All Rights Reserved.
I'm the Honda variety because I'm a dang cheap son of a gun who wants to save money on gas, but doesn't want to pay the Prius premium. I want the best things at a reasonable price and value for the dollars I spend. The high consumption lifestyle sooner or later leads to bankruptcy, and no way in heck am I going to end up there.
I suspect a lot of people either are the Toyota/Ford type: otherwise most people don't every accumulate wealth.
The point Stanley is making (generalization of course) is that the purchasers of the entry level Lexus models certainly differ from the luxury models (i.e. those >$42,000). For example, some Lexus retail for over $100K, given that most millionaires have a net worth of less than $2.5 million, $100K cars (Mr and Misses) could begin to put a dent into their wealth.
My personal bias is that the luxury models (>$42,000) is more about status and that the entry models could be more about value + a little bit of style.
BTW, Lexus purchasers do differ fundamentally (generalization) from the Mercedes purchasers too (3/4 luxury)
My recent post Toyota Millionaires vs Mercedes Millionaires
This is quite amazing…the whole bit about luxury cars being aspirational and more for would-be millionaires. There is no question that Toyota is known for its quality. But so it Mercedes. Great research.
Yeah, I thought about the 42k part and the entry level viewpoint. However, I am guessing that most Lexi are pretty darn loaded, even the standard models.
I agree that Mercedes is usually a 'step above' most other luxury cars. I was just saying that the Lexus is a very nice car. I don't think a Lexus is comparable to a Ford. Well, I guess if you are looking at the Lincoln's it might be.
Anyway, I know the main point is that a Mercedes appears to mostly be purchased for the purpose of status. I couldn't care less about status, and I wouldn't buy a Mercedes if I had 20 billion dollars. But that is just me and my poor upbringing talking.
If I was earning $3M a year, I might have a Mercedes or BMW, but only 1, not a garage full of them. But the odds of me earning $3M a year don't look very good at the moment.
Oh, I don't doubt that Lexus is a nice car. I'm with you there. They are not my personal fancy, but I appreciate the appeal. I think most people share your opinion, which is undoubtedly reflected in Lexi positioning in the auto market!
If you were worth $20 billion and didn't have at least one status car, then my wife and I would take you shopping personally. (just kidding) If they are not your thing, that's fine! My screen saver is a nice car, which costs more than most people homes. I just like looking at it. It's pretty 🙂
My recent post Toyota Millionaires vs Mercedes Millionaires
Believe it or not, despite having a status car, most millionaires also have non-status cars too. The Mercedes Millionaires typically like everything to be premium though (another generalization).
I'm with you. Having one car that some would deem as status would not be a problem provided that I am a prodigious accumulator of wealth and have a high income. Having a garage full of them seems pointless though. I'm not passing judgment (private property is private property); it's just not my thing!
My recent post Toyota Millionaires vs Mercedes Millionaires
It's is sad but true: broke or aspirational people purchase the lion share of luxury cars. The data is irrefutable in my opinion and has been replicated many times. Thanks for the comment!!!
My recent post Toyota Millionaires vs Mercedes Millionaires
I tell you what Shawn, when I have 20 billion dollars, you and your wife can take me shopping and I will buy YOU a status car! (And it will be pretty…)
My recent post Coming Face-To-Face With Debt
"My bias is that if you have been fiscally responsible, why persecute yourself for liking nice things. "
Exactly. By deferring a little consumption now, you get to enjoy that much more down the road. That's much better than trying to fake it.
I'm with you on this one. I don't have any pretense. If Sam Walton can famously drive a common truck and Warren Buffet can live in the same home for decades, why do I need to front?
My recent post Toyota Millionaires vs Mercedes Millionaires
Okay, we have a deal!
My recent post Toyota Millionaires vs Mercedes Millionaires
You can always buy a used Mercedes. 🙂
The real problem with German cars are the repair cost!
Fords and Toyota are much cheaper to maintain and repair.
Brilliant as usual!
I don't see a problem with people wanting nice things either, as long as there is no payment associated with them.
Like you, when I see a Mercedes or expensive car, I tend to think: My goodness how much are they paying for that car per month?
My other aversion to high-end cars (other than the cost), is that I have to be way more careful with them. Making sure I don't hit bumps, drive carefully, etc. I do that already, but with a really nice car, that protectiveness is intensified 10x.
I also get worried people will key the car, break the windshield and so on, just to say "eff you!" (this has happened in the past when my dad bought a used luxury car and people thought he was rich, so they keyed it).
I say Toyota or Mercedes Millionaire, I'd be happy to be either, but I'll probably end up being a Toyota Millionaire when I retire.
I very much agree with not elevating your lifestyle until you can really afford it. At my salary, age and general position, I am nowhere near thinking I can drive a Mercedes. I'd need a million or two banked before I could feel that way.
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That's an interesting and timely point; there is a lot of hatred towards anyone who doesn't appear to be hurting right now. It's sad that someone would be so envious that they would commit vandalism, yet it is a reality nonetheless.
You are so right about being happy independent of the car you drive. It's ironic that people who don't get hung up on materialism have a higher probability of building wealth and actually being able to afford such materials.
Yes, I'm so glad that you are also a fan of delayed gratification. I always hate when people have the "thank God it's Friday, Oh Lord it's Monday mentality." Delayed gratification, moderation, and conscientious consumption are key. I believe you will be driving that Benz guilt-free sooner than you think!
Fabulous points!!!
My recent post Toyota Millionaires vs Mercedes Millionaires
I definitely agree with you on repair costs; unfortunately, repair costs are consistently underestimated, even for Volkwagons and Volvos, which are often not considered in the same class as a Benz or BMW.
Sure you can by a used Mercedes, but then the car may not fulfill the desire for a status symbol; after all, it may not be the best that Mercedes has to offer. LOL!
My recent post Toyota Millionaires vs Mercedes Millionaires
We’re also Honda folk… and Hyundai are getting better in quality as well. My little Hyundai Accent has already lasted longer than we thought it would.
If I were rich, I would go for a Lexus first and foremost!
But since I'm not rich, a Toyota Camry looks pretty darn good to me too!
My third choice would be a Ford pickup truck, then followed by a Chevy silverado.
Say, I heard that neither lexus nor mercedes (especially mercedes) are as reliable as a Toyota Camry!
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Yes, I have been very biased against Hyundai but have been pleasantly surprised by its increased quality rankings as well. I guess it is hard to shake a bad reputation. I am glad that they have made substantial changes in the value of their vehicles instead of merely increasing their PR budget.
My recent post Toyota Millionaires vs Mercedes Millionaires
Yes, both consumer reports and JD Power and Associates typically have more love for Toyota (esp Camry) than Mercedes. I hadn't heard/researched Lexus though (I'm not a Lexus person… but I'll save that gripe for another day).
My recent post Toyota Millionaires vs Mercedes Millionaires
Actually, I view a car as just an instrument to get from point A to point B. I know most people have great passion about their cars, but I never really have…
So while what I posted above is true, it doesn't break my heart that I currently drive a 2003 Chevy malibu (and mainly because I got it at a great price)! I'm hoping the the next car I drive is a used reliable one (like the Camry).
Have a great weekend!!!
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I definitely keep my car fever in check too. Most cars do not impress me (even so called luxury cars). That said, I wouldn't say that I'm impervious to car fever though. Value is key for me too, but I won't pretend that I don't notice style 🙂
Have a great weekend!
My recent post Toyota Millionaires vs Mercedes Millionaires
I don't think I'd ever want to be a mercedes millionaire. I don't like the idea of being a target for people and showing off my wealth. That's the same reason I wouldn't want a giant engagement ring or flashy clothes. I don't want people to think I have money to throw around.
Coincidence, we're Toyota/Ford types as well. 2001 Corolla and 2001 Ford F150, both paid for long ago. But my first car was a Mercedes, although not a very good one (1970 200C).
I really liked the appendix in Stanley's first book, where he compares the price per pound of various automobiles. As commodities are mostly bought and sold by weight, it's a valid and basic approach towards value.
I can understand you not want to be a target, but it is kind of sad too Sandy. I think there needs to be more role models of people who build wealth the good old fashion way. More people need to see that one can life "the good life" without being financed up to your eyeballs. I also like that you feel you don't feel a necessary compulsion to be flashy just because you can. I guess you epitomize the Toyota Millionaire
My recent post Toyota Millionaires vs Mercedes Millionaires
Yeah, I found that interesting too. We love our vehicles… perhaps way too much for some of us. Comparing the price per pound objectively shows us how silly we can be with our spending sometimes: if you are almost broke but are spending much more/pound than the typical millionaire, you have found your problem 🙂
My recent post Toyota Millionaires vs Mercedes Millionaires
I can definitely understand why you would have purchased a Mercedes first. Often when we are younger, we care much more about our appearance to others (almost to an impractical degree).
BTW, there is no drive quite as sweet as that of a paid for vehicle!
My recent post Toyota Millionaires vs Mercedes Millionaires
I think there's another issue here; one that I've always found very frustrating. I think it's terrible that a car like the SLS is forced to share a badge with a C300.
Mercedes has made a good business of targeting aspirational consumers, and if they profit from it, I guess I can't fault them. That said, I would never drive a C-class or an E-class. While I like the S550, I'd be worried about explaining to people why that model is different and is driven by actual rich people rather than the aspirational. I love Mercedes, but enough is enough. At this point, it's simply too easy to move over to an uncompromised brand like Maserati.
Absolutely fascinating facts! I'm a Honda guy myself – but can agree with the toyota crowd!
Me thinks some of the Toyota millionnaires are frugal in their lifestyle, but none in the Merc. variety would probably fall under that category.
Jon,
You bring up a very interesting point. This (and more mechanical problems than I would expected in some models) definitely affects why I wouldn't buy a Mercedes. I think Stanley attempted to address this by stratifying the luxury versions of the car by price (above $42,000 equals luxury) from non-exclusive versions. You are right though, the lower end (non-luxury versions) still share the same namesake as the higher end cars. I'm not coming against Mercedes, but so many aspirationals purchase Mercedes their luxury brand is tainted by aspirationals. That's fine and profitable but often the last thing someone wants if they are purchasing a prestige car.
My recent post Toyota Millionaires vs Mercedes Millionaires
Thanks so much @moneycone
In terms of frugality, it really depends on your definition. Compared to the general public both Toyota Millionaires and Mercedes Millionaires are very productive at transforming their income into wealth. Mercedes Millionaires actually have a higher amount of wealth and income, so they feel comfortable spending more on discretionary purchases. The Toyota Millionaires are technically more productive if you look at nominal dollars: it takes less income for them to reach the same financial net worth as the Mercedes Millionaires. This is because the Toyota Millionaires spend less.
Personally, I think the Mercedes Millionaires are frugal too, just a different kind of frugal than most people think. They are conscientious consumers. Prestige just happens to be one of the things they value.
My recent post Toyota Millionaires vs Mercedes Millionaires
Evan,
I would not be surprised if many lawyers, such as yourself, are Mercedes Millionaires. As a Mercedes Millionaire you have greater propensity to have higher net worth and income compared to your Toyota Millionaire counterparts. That right there is enough my friend!
My recent post Financial Backbone Round Up and Uncommon Money News
Well now, those are pretty broad generalizations.
My ex-, who was a corporate lawyer but certainly NOT a millionaire (yet), acquired a Mercedes for us second-hand from one of his partners. It was only a couple of years old. We drove it for 15 years. American cars generally had to be replaced, at that time, about ever four or five years.
We took it and and we kept it because at the time, American cars were unsafe at any speed. That turn of phrase was not an exaggeration. You could not buy an American car that had decent seatbelts, and if you were rear-ended in a Mustang or a Corvair you were likely to be incinerated. The Ford Fairlane I had, which was less than a year old at the time we married, spent more time at the repair shop than it did in our carport — mercifully, our apartment was within walking distance of the Ford dealership.
Because of that Fairlane, I wouldn't own a Ford if you gave me the thing, no matter what Consumer Reports says.
Eventually, when we were forced to buy a new car, we traded the Mercedes in on…yes! A Toyota!
It was a wonderful car. Like the Mercedes, it also ran trouble-free year after year after year, and it also had decent seatbelts and was safer than most cars on the road. By and large, millionaires are not stupid. They buy for value, not for show.
I'm sure my ex- is now a millionaire, probably several times over. The house I left when I ran away with the harmonica player is worth $750,000, despite the depressed real-estate values (we paid $170,00 for it). Today he drives a Ford SUV. And it is, if I may say (having ridden in it), a gas-guzzler and a rattletrap.
My next car will be a Hyundai Sonata, assuming something better isn't on the market by the time my 11-year-old Toyota falls apart like the Minister's One-Hoss Shay.
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Yes, these are broad generalizations about a under-represented population of millionaires. Most millionaires that I know are Toyota millionaires, yet I do know a few Mercedes Millionaires. They are vastly more financially conservative than the general population when you take into account their means. At the end of the day, that's what's key to me!
Cheers,
Shawn
My recent post Is Money Your God Round Up
My car is limousine and that’s really my favorite. Quality is number one in choosing the right car. It’s not about the price it’s all about the quality.
Toyota is really a good brand too..
[…] Not only was I unimpressed, I offered my sympathy. It’s been years since I even considered BMW or Mercedes true luxury brands (gasp). Sure, they can be pricey, and millionaires sometimes drive them (not […]
[…] The Toyota is popular for it’s quality versus price (this includes the Lexus) according to Watson Inc. Forbes Magazine says that for people earning over $250,000 per year the top ten cars purchased […]
Wonderful blog! Do you have any suggestions for aspiring writers?
I’m hoping to start my own website soon but I’m a little lost on
everything. Would you propose starting with a free platform like WordPress or go
for a paid option? There are so many options out there that I’m completely confused .. Any recommendations? Many thanks!
I would agree that most people who drive Mercedes are not millionaires, just pretentious individuals with a desire to impress others with material things…
It is simple; Mercedes make a much better car than anything in Detroit. No wonder everyone is clamoring for them…
It is a good achievement of Toyota. To create an image in high rank at automobile sector is really a hard tax which is done by Toyota. Toyota is basically an Indian reputed brand car but now it is spread all over the world by its high quality, new looks models with advanced technology. Toyota Piru is a good electric car which will be accepted by many of us.
Toyota brand is one of the delicate brands among the cars. Mostly the achievement of Toyota 86 is very unique that received the honor. Mostly people always need such cars those are very famous brand and their look should be very attractive. Mostly people like to go for the branded companies like Honda, Toyota and all. From my own experience I bought a car but i didn’t collect any information about the car before going to the showroom. I faced lots of problem in the showroom to choose the model.
This is a great results regarding Toyota. To make a picture with large list on automobile sector can be a hard place a burden on that's carried out simply by Toyota. Toyota is basically the Native indian well-known brand automobile however currently it really is distributed around the globe simply by its high quality, brand-new seems types together with state-of-the-art engineering. Toyota Piru is an effective electric powered automobile which will be acknowledged simply by many of us.
This is really funny for me that Toyota vs Mercedes. Actually I like both these vehicles because these both are too luxurious but when style come Mercedes is far better than Toyota. So to maintain our stylish Mercedes car we have to repair it from good repair centers whenever required and also have to wash it to maintain its look. .
Good articles. Good Comments. Both great cars. I think I want an exotic though…
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