Why I Bought a 2017 Audi S3

In the past, I’ve talked about how cars are depreciating assets. From a financial standpoint, it’s better to buy used so somebody else can take the largest depreciation hit up front. Since the value only goes down, it’s also better to minimize how much you spend on a car. So why did I spend $50k on a brand new Audi S3? I can explain.

Hypocrite?

The goal of saving is to reach a financial goal. If you’re in debt, your goal is to get out of debt. If you’re living paycheck to paycheck, you want to build up a savings cushion. Or you’ve reduced your debt and you want to become financially independent. I’ve done all these things. Well, I actually have debt, but only because rates are so low and I can generate a much higher return with this cash. That’s been proven out this year. The S&P 500 is up almost 17% YTD, while I financed my car for a little over 2%. With the entire cost of the car financed, that 15% spread netted me $7,500 this year.

The second reason is I actually did look at used cars. The problem is the Audi S3 isn’t very common, so it was hard to find too many used ones for sale. Also, I was in an accident where my car was totaled, so I only had a limited period of time where insurance would pay for the rental.

Third, what’s the point of having money if you can’t enjoy it?

Why I Picked the 2017 Audi S3

95% of the time, I use my car for commuting, by myself. So I don’t need a large car, but I do need more than 2 seats in case I need to put the whole family in. This was a big downer when my wife informed me of this requirement, because I’m approaching middle age, and a Porsche Cayman would have been perfect. As a compromise, I wanted a sports sedan.

Audi S3 Alternative
The R8 was much more expensive, at half my net worth + the cost of the car.

Having a sedan is good for space but it also helps with insurance. That was my first requirement. The second was that the car had to be automatic. My previous car was stick and my wife hated that she couldn’t drive it. It’s funny because even with my new car, she never drives it. I don’t mention that to her, however, because she’s never wrong.

The third requirement is that it had to be sporty. My rental car was a Chrysler 200. There’s a reason they stopped making this car. It drove like a sofa. That’s fine for some people, but not me. There was no connection with the road. Every time you turned, it felt like the car was going to roll over.

The final requirement was good fuel economy. I drive about 60 miles each day, round-trip. I can’t fill up gas every other day.

The Audi S3 Checked All the Boxes

The S3 checked all these boxes. I can fit 5 people in the car, tightly. It’s automatic (unfortunately). With a 2.0 liter turbo that produces 292 hp, it’s sporty yet very good on gas. When I drive nicely, I can get 32 mpg. Also, I was able to get it for 15% off MSRP! To get the lowest price, I emailed a bunch of dealers, asking them what was the best price they could offer. Then I tried to play the dealers off each other. One sales guy was trying to play hardball though. This how the conversation went:

Salesperson: “I hear you’re interested in the S3. What would it take for you to buy one right now?”

Me: “I don’t know. What’s the best price you can offer?”

Salesperson: “I can’t tell right now. Why don’t you come in and test drive the car, and then we can talk with my manager about it?”

Me: “I’m at the BMW dealership right now. I’m heading to the Lexus dealership afterwards and then I’m supposed to visit the Mercedes one after that. I don’t think I’ll have time to visit Audi today.”

Salesperson: “How about 15% off MSRP?”

Me: “I’m heading over right now.”

What I Love About the S3

The S3 checks all my requirements, but it’s also a great car. I love it, for the following reasons:

1. It’s a turbo. Combustion engines work by igniting fuel and air inside a cylinder to create an explosion. There’s an ideal ratio between air and fuel. You need to right amount of air and fuel to create the maximum amount of power. Within the air, what you really need is the oxygen. What a turbo does is compress the air going into the cylinder. With more air in the cylinder, you have more oxygen. With more oxygen, you can add more fuel. This is why turbo engines have more power than a normally aspirated one, even if both are the same size.

Turbos are great from a fuel efficiency standpoint, which is why almost every car manufacturer develops one now. Another great benefit with a turbo is if the car isn’t fast enough for you, it’s very easy to add more horsepower. All you need to do is increase the boost pressure. The more compressed air you have going into the cylinder, the more power you can generate. Higher pressure will increase the strain on the engine, but again, adding more horsepower in a turbo engine is much cheaper than for a naturally aspirated one.

2. Corners like a beast. The #1 enemy of speed in a car is weight. The S3 weighs 3,500 lbs. It’s not the lightest car out there, but it’s on the lower end of the scale. A lighter car helps with cornering and fuel economy because you need less force to move it. It also helps that it’s all-wheel drive, which means power can be distributed to all the wheels, instead of just the front or the rear, like for most cars. Also, the S3 has magnetic suspension, so it can change from stiff to (relatively) comfortable. Even in the comfiest setting, it doesn’t feel like a sofa.

3. Virtual Cockpit. Where most cars have a speedometer and tachometer, the S3 has a virtual screen. It’s great because I can change how everything looks and it displays all sorts of information, like fuel economy, radio station, and even turn-by-turn directions. When all this information is right in front of you, it’s much less distracting to see vs. over to the side like with most cars. This isn’t a must-have, but I have to admit it looks really cool.

Audi S3 interior
This is an A3 interior, but it looks the same, except for the steering wheel.

Other Cars I Looked At

Lexus IS200t

My previous car was a Lexus. They’re bulletproof, so I was looking at Lexus again. The IS is larger than the S3, more reliable, cheaper, and also has better fuel economy, so why didn’t I get another Lexus? It certainly would have been the fiscally prudent choice (relatively). The problem is the car is slow. Same-sized engine, also a turbo, but only 241 hp.

Also, I didn’t like how Lexus doesn’t allow you to connect your iPhone or Android to the infotainment system. It’s 2017, Lexus. Nobody wants to use your in-car navigation system anymore. Instead of trying to boost your margins, you should just give customers what they want!

There was also something strange about the turn signal. Like it wouldn’t click back after you made a turn. That wasn’t a deal-breaker, but it was annoying.

Tesla Model S

The Model S is a beautiful car. It’s becoming more common now, but it still turns heads when it drives by. Not having to fill up gas would be a nice time saver as well. The problem is I’m not willing to pay $90k for a car, even with the tax credits. The Audi S3 should be the last internal combustion car I buy. I’m fine getting a new car electric car in 2030 at a much lower price.

Lexus RC-F

This car shouldn’t have even been in consideration. Of my four requirements, it checked off two. Sporty and automatic. That’s it. It only fits 4 people, and even then, it’s difficult to get into the back. And it’s a gas guzzler. There’s no such thing as a gas sipping V-8. So why did I look at it? It was a 2016 showroom model, so they were offering big discounts. I think they were offering almost $20k off MSRP. So the price was one factor. Also, my wife fell in love with the car when she first saw it. That, and the growl of the V-8. When you floored it, it was loud enough to scare animals and small children.

Speaking of which, if you decide to get an S3, get the resonator delete option. At first, I thought it was crazy that I was paying to have an item removed (seriously?). Without the resonator, it gives it a nice growl above 3,000 RPM, but isn’t too loud below that range. It’s not a V-8 growl, but still a nice touch.

Another problem with the RC-F is that it’s so slow. For a car with 470 horsepower, you’d expect it to be fast. But 0-60 times are actually a touch slower than the S3. Why? Because the car is a pig, at just under 4,000 lbs. I still don’t understand how a two-door coupe that seats four can weigh that much. The lightest Ford F-150 weighs around that much. Did the Lexus engineers line it with gold inside? Lexus, please let me know when you come out with an RC-F, Weight Watchers Edition™.

BMW 330i/330e

The BMW’s are slow compared to the Audi S3. The 340i can keep up, but it has an inline-6, so it wouldn’t be as good with fuel economy. Another problem with the 3 Series is everybody has one. I was looking at the 330e because of the EV tax credit, but the higher base price basically offsets the benefit from the tax credit.

Mercedes C Class/CLS

I wasn’t a fan of the CLS styling and both were slower than the Audi S3. I also didn’t like how they nickel and dime you for everything. Oh, you want a steering wheel with your car, sir? That’ll be extra. No, the wheels don’t come standard with the $40k base price. You’ll have to pay extra for those too. Rubber valve stems for the tires? That’ll be $500 (Audi charged me $100 for a USB cable which I’m willing to part with it for $80). Porsche owners know what I’m talking about.

Cadillac ATS-v/BMW M3/MB C63

These all start around $60k, which I would have been okay with, but the problem is there’s no way you’ll get out the door with a base model, so you’re looking at closer to $70-80k. At that price, I’m in Tesla territory. I have friends that own an M3 and the C63. These are badass cars. If you want performance and don’t mind shelling out this much money, these are the right cars for you.

I’m not a big fan of Cadillacs, but the ATS-V is a gorgeous car. Especially when you get the carbon package. I probably could have gotten a decent discount on the ATS-V, but that would have been more than offset by the higher fuel consumption and speeding tickets. So many speeding tickets.

Ford Focus RS

2.3 liter engine with 350 horsepower and $10k cheaper than the S3. It’s a hatchback so it also has plenty of room for the family. The only knocks against it are it only comes in manual and it’s too boy racer. I can’t have dinner with a CEO of a Fortune 500 company and have the valet pull up in this car. He’d either think I was 20 (I act 20, but I definitely don’t look 20), or that I was borrowing my son’s car. I’d also have every high school/college kid racing me on my way to/from work.

Audi S4

Basically same performance as the S3, but a little larger and $10k more. If I needed the extra space, sure, but I don’t.

Audi RS3

This one’s hypothetical because the RS3 wasn’t out when I was looking. Would I have spent $10k more for an extra hundred hp and larger brakes? I’d like to think I’d be too rational to do that. But if I were truly rational, I would have gotten a Camry and saved $20k. A shout out to Toyota though – thanks for making the new Camry actually look good!

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