Although the notion that buying a new car is a terrible investment is a historically accurate piece of advice, it is most definitely not the case here in 2012! I know this because I had to research this problem (and I like cars). During the recession Americans were buying only around 9-10 million cars a year versus the peak of around 16 million a year. This figure did not even meet the replacement rate for automobiles and the country as a whole was actually junking more cars than were being added to the roads. The end result of this was a shortage of used cars and used car prices went up substantially, making them a poor investment. Of course, some savvy customers benefited greatly from this setup. For example, there was a time, I believe in the Spring of 2010 or 2011, where you could have bought a Toyota Prius, driven it for a year, sold it, bought the new model and made money off the transaction! That's how out of whack things have been...they've gotten a little less strange over the past year but the used car market is still way overpriced. My car, after taxes and fees was only about $2-3k more than the same car (older model) that had been driven for a year or two and had well over 12k miles on it. While $2-3k is nothing to sneeze over it's not enough of a discount to justify buying used over new. Just having that extra year under warranty is worth a fair bit.
I would have preferred to not liquidate my savings like I did to buy my car but I thought it was the right move in the long run. Now I have a great car that will cost me very little maintenance, God willing, over my time as a medical student. Furthermore, those first few years are covered by warranty. Yes, I could have bought a clunker for say, $6k, but it might only have lasted me 3-5 years and required several thousand dollars in costly repairs over those years. And after those 3-5 years I would have to buy another car, say for another $6k and repeat the cycle all over again. Perhaps most important you want a reliable car in medical school. When you have to be at an exam or be at the hospital during rotations/residency the last thing you want to worry about in your life is having your jalopy break down on the side of the road.
So in short, although the notion that buying a used car is frugal and financially responsible move may have been the case in the past, the market is different these days. So I disagree with the statement that: "Buying a new car, which financially savvy people will always tell you, is one of the worst investments you can make." Now if you can get a family member/friend to sell you a decent used car at a discount, go for it. Otherwise I'd strongly consider going new. And if you're going new you can find a lot of great compact cars these days that have fantastic fuel economy which will substantially drive down your cost of ownership over the years.
