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
