To work your way from the position of the very young person to the retired person, you will have to start saving for the next automobile while paying for the first. This may mean that you have to buy a less expensive automobile so you can make the loan payment as well as a partial payment to a savings reserve. You might begin by saving one-third of the calculated annual replacement savings. Then, when purchasing the next automobile, you'll be able to get a loan that's one-third less than the negotiated price of the car.
After you get that next automobile, you should try to save two-thirds of the calculated replacement amount. You can do that because your loan payments will be one-third less, so the net of your payment for the loan and savings deposit will still only be one-third more than you would be paying with a 100 percent loan. By the time you are ready to buy your third automobile, you will be able to pay cash, get a better price and embark on the path to wealth.
How you can do even better
The math assumes that you will keep the car for at least as long as it takes to save the required amount. Of course it would be even better if you keep the car longer. Your reserves for the car will then continue to grow without additional savings. My former boss, T.A. Wilson, then CEO of Boeing, drove his old Chevrolet for many years. That may be because his boss, William M. Allen, drove his old Ford until he retired -- even after the bottom rusted out.
A word of advice: When you go to a dealership to buy a car equipped with cash, start negotiating the price without mentioning that you plan to pay in cash. Often you can get a better price if the dealer assumes he will be able to loan you money since the loan is often the most profitable part of the deal.
For the last 20 years of so of my own career, I only bought secondhand cars for our family's use. I now have enough reserve savings so that I buy new cars, but I keep them a number of years longer than I originally intended. It's a great feeling to be retired and not have to worry about where the money will come from to pay for the next car or to replace my roof.