300TTto545

Premium prices in California peaked out somewhere in the $2.80/gal range last year, which is still considerably less than the price in Europe. That being said, the oil embargo in the 1970s ended the then ongoing horsepower wars of the 1960s (anybody remember the Ford Pinto engine being used in the Mustang II??).

History may repeat itself (with respect not only to higher horsepower engines, but also SUVs) now if gasoline prices rise above $3.00/gal for regular unleaded in the continental US for any sustained period of time. With just the short rise in mid-2004, SUV sales suffered badly.

I do not believe that the existing hp race will last very much longer -- if gov't does not get involved to regulate hp (as gov'ts have done in most of Asia with displacement taxes to extract agreements not to exceed certain hp from the manufacturers), then insurance premiums will increase disproportionately for high hp cars making the cost of ownership unreasonably high and unacceptable (even for those glorified auto renters who lease). Thus, BMW and other manufacturers will have to consider innovations other than increased hp to improve the driving experience and performance of its vehicles.
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I don't agree. I think HP wars are here to stay for another 5 years or so. The HP wars of the 60s was a different world. Groupthink dominated the big three and imports mattered little. Also the international climate would not allow an oil embargo again - in so much as Saudi Arabia would probably collapse if they crossed the US. Saudi Arabia might be part of Iraq right now if not for the US.

Most pundits don't expect much car buying behavior change unless gas goes above $4.00 a gallon. Besides my 545 does better than the average US fleet (given all the trucks) with 325 hp. I suspect the M5 would be just 20% worse. Still a small amount to pay. With fairly conservative estimates - $2/gall, 20 mpg, 12,000 miles per year = $1200 for 545. Same at 15 mpg = $1600. So $30 per month - sounds like the increase in my lease payment for NAV/HUD ....
At $3/gall - the difference is about $50 a month. Wouldn't keep me out of an M5.

The gas guzzler tax might because that would add about another $50 per month to a 3 year lease. And just the principle of it all.... I picked the 545 over the S4, partly over the gas guzzler tax.

heezy545i

It seems like mercedes is in a hp war all by itself. Though BMW is raising numbers, they seem to be coming back to basics and focusing on power/weight ratio.

And it looks like audi has dropped out all together.
http://www.autocar.co.uk/news_article.asp?na_id=211153

ISUK

American readers may be interested to note that 80% or our fuel price in the UK is tax. Our government attempts to justify this by saying it is part of their policy on attempting to reduce emissions in line with the Kyoto agreement (that little treaty to reduce global warming that the Whitehouse refuses to sign up to ).

The European parliament has also introduced some of the toughest emissions standards in the world to reduce harmful exhaust emissions. We are currently on Euro 4 level (having already passed through stages 1, 2 & 3 which were increasingly tough for auto manufacturers to meet). The EC is now looking to bring forward the date of Euro 5 which is extremely tough and will require a lot of cars to be fitted with particulate traps. These regulations are very costly to engineer solutions for and US engine manufacturer Cummins are pulling out of the European heavy truck market as they cannot make a commercial case for making their heavy truck engines meet the regulations.

It is precisely because of the high cost of fuel that diesel is becoming the power source of choice in Europe due to better MPG figures. Diesel costs more per litre than petrol as well.

Guest

I don't agree. I think HP wars are here to stay for another 5 years or so. The HP wars of the 60s was a different world. Groupthink dominated the big three and imports mattered little. Also the international climate would not allow an oil embargo again - in so much as Saudi Arabia would probably collapse if they crossed the US. Saudi Arabia might be part of Iraq right now if not for the US.

Most pundits don't expect much car buying behavior change unless gas goes above $4.00 a gallon. Besides my 545 does better than the average US fleet (given all the trucks) with 325 hp. I suspect the M5 would be just 20% worse. Still a small amount to pay. With fairly conservative estimates - $2/gall, 20 mpg, 12,000 miles per year = $1200 for 545. Same at 15 mpg = $1600. So $30 per month - sounds like the increase in my lease payment for NAV/HUD ....
At $3/gall - the difference is about $50 a month. Wouldn't keep me out of an M5.

The gas guzzler tax might because that would add about another $50 per month to a 3 year lease. And just the principle of it all.... I picked the 545 over the S4, partly over the gas guzzler tax.
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You have focused only on one presumably "market driven" factor of fuel cost and ignored at least two other important factors -- insurance cost and government regulation. In the example above, you were unwilling to pay $50/month over a 3 year lease to get the S4 due to the gas guzzler tax == what would you do if your insurance cost doubled due to high horsepower?? More importantly, what would you do if the government imposed a displacement/horsepower tax (similar to those in most of Asia) that would increase the cost of the car by 50% or more??

The US government generally avoids trying to tell private companies what to build and sell to consumers, but they can influence conduct by heavily taxing things they don't want promoted (such as high horsepower, which is an easy sell to Congress, which needs the tax revenue for all of its programs/entitlements, and can see no reasonable justification for such high horsepower). Increases in the gasoline taxes (which, including federal taxes and CA taxes, are in the neighborhood of $0.50/gal) is very unfavorable because of the disproportionate effect on lower income people, who must buy gas to get to work (i.e., it will create political turmoil as the Democrats in Congress will thereafter push to raise the minimum wage to absorb the increase in gasoline taxes).

As the link from Heezy545i shows, even certain auto manufacturers see little merit (perhaps because they don't want to incur the development costs/expenses to develop higher hp engines) to adding greater hp to a rear drive only vehicle. The politicians could have a field day with it as they point out that we don't need commercial equivalents of top fuel dragsters on the road (among other reasons they will cite safety concerns and medical costs paid by the gov't in the event of accidents) and those who want them will simply have to pay the new taxes to get them.

Hormazd

The glorified renters invest their cash in appreciating assets. Many own businesses and can deduct the entire annual cost as an expense making leasing a fiscally sound decision. Ownership (of a depreciating asset) is a state of mind. Driving is not.

Guest

The glorified renters invest their cash in appreciating assets. Many own businesses and can deduct the entire annual cost as an expense making leasing a fiscally sound decision. Ownership (of a depreciating asset) is a state of mind. Driving is not.
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Kudos for taking advantage of applicable tax incentives to expense your use of the e60. There may still be a window of opportunity for Section 179 depreciation of an e60 purchase if this is more favorable than expensing the lease cost. From your comment above, one can infer that your business is at least cash flow positive (if not outright profitable) so that you are indeed appreciating the capital that you elected not to invest in a depreciating asset, such as an automobile.

Whether or not the cost of the lease can be taken as a favorable tax expense in connection with your business does not change the nature of any auto lease as merely an extended multi-year rental of the car (i.e., a "glorified rental"), even for those who are unable to expense their e60 lease cost.