The current car market is unsustainable. 96 month loans are becoming common place. It is just a matter of time until people who purchased their cars during chip shortage are massively underwater on their cars. If they have long loans and the cars start having major problems they won't be able to roll negative equity into their next car loan.
People are extremely irresponsible with money and cars with high, long time loans are a great wealth destroying 'vehicle'.
I think the social media helped fuel the 'I want NOW!' culture. This gave life to scalpers and $10k mark up on cars. I'm interested how all this is going to unfold.
My last (used) car shopping experience saw me struggling to get over paying more than $10k for a car, because we really wanted a minivan and they're (IMO) damned expensive. That was a few years ago.
I am... concerned about how painful the next one's going to be, in 3-5 more years. I hate spending money on cars.
EVs don't seem to be helping the price any—quite the opposite, as far as I can tell—even if they're good for TCO. Concerned about what that market's looking like for poor people, these days. No more $2k cars that'll semi-reliably get you to work for the next five years, or to the 50-miles-away grocery store or Wal-Mart for your "big shopping" once every couple weeks, for the rural poor.
> No more $2k cars that'll semi-reliably get you to work for the next five years
They are out there, but definitely getting harder to find. They may need work to be reliable/drivable; if you can do the troubleshooting and work yourself you can still come out money ahead.
I haven't paid over $10k for a car in 20 years. Last time I did, it was one that I bought new. I will never do that again. The key is to look for a 15-20 year old car that hasn't spent its life in the rust belt and has had good maintenance.
> No more $2k cars that'll semi-reliably get you … to the 50-miles-away grocery store or Wal-Mart for your "big shopping" once every couple weeks, for the rural poor.
Recently I saw a video on YouTube about an impoverished depopulated Eastern European town where instead of having a fixed local grocery store, there was a truck that visited weekly. On the one hand, it’s sad to think of people being so remote yet dependent, but on the other it actually seems like an innovative solution to the problem.
Nearly all car loans for all of time have been underwater. It's a depreciating asset that drops a huge amount of value the moment of acquisition. Eventually the principal drops below the trade in value, but all car loans start out under water.
It's possible to buy used cars. Used cars don't drop huge amounts when you buy them, because they've already started to depreciate. Losing that "single owner" badge on a website or carfax might be worth $200, if that.
If you've purchased used cars and put anything more than a pittance, you've likely never been underwater on the loan. In 2019 I purchased a 2016 car for $25k with 10% down. I've made minimum payments on a 5 year loan and it's never been under water. While by their definition I think it qualifies as "very good," the "good" KBB trade-in value is currently $23k (honestly higher than I thought).
At least for cars, most people have to finance them so you would assume there is an interest rate where the monthly payments are too high for enough people to bring prices down. A lot of what has gone on the last couple years were extremely low interest rates coupled with the money supply increase. Can probably handle one or the other but not both.
Higher MSRP would account for inflation. Car prices actually have not raised that much over the years, as improvements have been made to the manufacturing process to keep costs down.
It’s much worse for buyers of ICE vehicles today. We are approaching the inflection point of the S curve of EV adoption, I know this is probably an unpopular opinion but I really think in 5-10 years people are going to have a seriously hard time selling a used ICE vehicle as most people will be looking to the future and would prefer an EV. For EVs I expect an “appreciation” curve for the same period of time, as lithium supply takes a long time to scale to meet demand. I drove my 2019 model 3 for 3 years and sold for a profit recently.
I don't think we're there yet at all. This is a very "silicon valley mindset".
The truck segment only just got the Ford Lightning and are at the start of the adoption curve. The inflection point probably won't be for another 10 years.
And you're likely to be able to sell an ICE vehicle to someone who wants to maintain it because they have all the necessary mechanical tools for a long time. There's a lot of people out there who might not be actual mechanics but know how to debug an ICE vehicle, and even know a machine shop where they can buy a rebuilt engine.
Even after vehicle manufacturers actually stop building and selling ICE vehicles there's going to be an after-market for them. There's probably some cliff that happens where gas stations start to disappear, but you have to age-out the existing ICE fleet pretty significantly, beyond the ability of people to keep their vehicles running.
I believe that EVs are actually going to face problems. While ICEs are expensive to produce now thanks to chip crisis, it will eventually fade off and prices will cool down, while raw material shortages for EVs (copper, cobalt, lithium, nickel) are predicted for years into future, probably full decade.
Thus in few years people will have choice to either own inexpensive ICE maybe hybrid or much more expensive BEV. Problem for BEV will be even more compounded by their inflexible charging (majority of people can't charge at home, 50% people in EU lives in apartments) and high electricity prices (especially in EU). Thus people will start switching back to ICE, purely from economical and comfort reasons.
As long as there isn't massive increase in taxation I don't think ICEs will be hard to sell. There is plenty of people who don't want to deal with charging it for example. Or like the long range.
I disagree, your example is just what everyone is experiencing right now.
Nearly all newish used cars are selling for what people paid for them new. The current market does not represent a reasonable market value.
I can assure you EVs of today will depreciate faster than ICE vehicles, as new improvements are made to the tech. So much more money is being poured into batteries and R&D.
I do not expect the infrastructure for EVs to be built up enough in 5-10y for this to be the case. In fact, if the people start buying EVs faster than charging stations appear, then the opposite might happen and people will want ICE cars because they can't rely on being to charge them if on longer trips outside home range. The existing ICE infrastructure (gas stations everywhere) is not a thing that can be replaced quickly.
> It is just a matter of time until people who purchased their cars during chip shortage are massively underwater on their cars.
It's a depreciating asset. You lose 10 to 15 percent when you drive a new car off the lot. Unless it's a classic car, it's expected that you will be underwater.
We haven't really had a significant recession since 2008. The 2020 was too V-shaped to make anyone change their behavior. It has been 14 years worth of people overextending themselves.
I wonder how its going to look when the coming recession (we're clearly not in one yet, just look at the headline title here) really starts to bite and just as one example the "influencers" who are at the margins see their youtube revenue kneecapped by more tightening by Google and then all the shit they've been buying on credit comes back to haunt them.
Even the used market is absolutely bonkers. I was just offered $5k more than I paid for my Accord I bought new 4 years ago. Obviously sounds like a deal I shouldn't pass up, but I'd be lucky to find something to replace it with.
This is no longer true and there seems to be a regression in the length of the lifespan of the car, due to cost of repairs and other factors.
The golden age for reliability was when we had significant manufacturing advancements and improvement in engine building with tighter tolerances but lack of all the tech.
The problem is now with the tech, and average car owner has yet to realize just how expensive that tech is. Windshield replacement used to be $150, this is no longer the case. Now, if you have radar cruise control, it needs calibration. Some cars have acoustic glass, which is more expensive.
The cars have sensors all over, minor crash results in thousands in damage. LED headlights are $2k a piece.
Even Tesla, imagine the car is now 10 years old, worth $10k, is someone going to buy a new battery for $10k? There is going to be better tech out there and faster charging times.
Additionally, look at cost of ownership of something like an S class, those things become cheaper than Accords after few years. The reason is that all that tech is hard to maintain and now some of it trickled down into the main stream cars.
Do they? Modern cars are using 0W-20 or lower weight oils solely for MPG/emissions purposes and pushing service intervals on that oil to 1 year for cost of ownership purposes. Then many people are not in the habit of changing their oil due to such long intervals so make that 2 years. Compounding that modern cars tend to burn a small amount of oil due to low friction rings for MPG purposes. I don't think you get long engine life with that recipe. That's not even counting the type of fancy things they are engineering into their engines like turbos, special valves, selective cylinder ignition (reduce V8 to V6 or V4) All that stuff breaks before 100k. It's a modern miracle a turbo last just 100k miles.
In the aughts and nineties the extra emission equipment (mostly gas tank vapor emissions) would break after 100k miles, but it wouldn't stop the engine from running. Now it's even crazier stuff that definitely will.
Better engineering and a desire for ever-higher fuel economy means that today's cars are made stronger than ever before (when new) but with less metal. Less metal means the frame is compromised more quickly by corrosion.
All but one of my previous vehicles had engines and interiors that were perfectly fine at 200k miles but the frames and bodywork were so rusted out that the whole car was essentially a loss.
Car manufacturers COULD design a far more rust-resistant car, and it wouldn't even be that hard or much more expensive. But of course when your business is pumping out millions of a thing, you don't have much incentive to engineer it to last longer.
> Strong luxury share – at 18% of sales – helps push the industry average price higher.
I bet people who would have otherwise bought cheaper options are buying whatever they can get. In years past many of these cars probably sat on the lot for a year and sold at a healthy discount.
Yea, the climate has me concerned if i need to buy. My current is a 2014 Toyota Prius, bought new and drive little. I had wanted to get another 10 years out of it, but now i feel like i need to get another 10 years out of it. This climate is crazy.
I love this car though. $24k with no interest, been fully paid off for a long time - was a great buy and has been rock solid. I hope i can get a deal this good in the future..
I went to every Toyota dealer near me a few months ago. They only had one or two of each model of car in stock. They had random colors and expensive packages (the extra extra ones like random trunk hardware, not just the tech package for sensors) and then after all this up specced with no color choice, they wanted 10-15k USD on top just cause “someone else is ready to buy it if you aren’t”
I feel strongly that you’re likely to get another 10 years out of it if you keep up with regular maintenance. My non-Prius Toyota is 17 years old. The outside looks like a war zone from being a city car but the interior is in great shape and everything works perfectly. A family member has a Prius approaching 300,000 miles. Good cars.
[edit: Regular maintenance is key! I take mine in to my local mechanic for an oil change and inspection 2-3 times a year. For elderly cars, don’t wait for a noise or a light to go off :) ]
Slight tangent, but I bought a 2012 Civic shortly before switching to working at home. It has about 50k miles now.
I've been surprised by the results of simply leaving it outside that long. Weather stripping around the windows has dried out and cracked. And I have actual lichen growing on the car's exterior.
But other stuff has held up great. The paint (ignoring the lichen colonies), the tires, etc. And thanks to the wacky market these past years, its resale value.
I have a 2012 Prius with high mileage going strong. Bought used in 2013 for $17K when gas prices were over $4/gallon. A year later, gas prices plummeted and hybrids lost their value. Now finally they are in high demand again, along with everything else. It is crazy how I see the same car being advertised at around the same price I paid back in 2013.
I think you’re on to something. A colleague got into a car accident and ended up spending way more than he needed to on a luxury car he didn’t want.
He has 4 kids. Getting a minivan or suv is difficult unless you are patient or can buy the “Elite Super Touring Edition with Gold Sprinkles”. Car companies are adverting incentives for ordering cars, so I think this is the new normal. They’ve learned from Tesla’s shenanigans that you can get away with anything.
Current minivan market is batshit crazy. We've had dealerships call us up offering thousands more than we paid for our (used) minivan three or four years ago, with 1/3 the mileage it has now. It's basically gone up in value by about as much as it should have dropped in value, in a normal market. I assume they expect to make a profit, so must be pretty sure they can sell it for even more than that. WTF.
We had the opposite- we had to buy a cheaper trim level than we'd wanted, but even after visiting several dealerships, we ended the day at one that had exactly two new cars available on the lot.
There was no point in buying used, because retail prices on used cars was approaching MSRP on a new car.
I'm in Portugal which has a completely different 'personal economic structure' from the US, so this might not apply:
Transaction values and the luxury segment both keep rising here as well. Loking around me it feels like people disregard savings so much AND are take such large loans to buy homes that spending 50k on a new car feels sensible, possible and not a big deal. This in a country where take-home salaries are routinely under 20k/year (net of taxes and health expenses).
Money's been so cheap and credit so easy that we seem desensitized to total amounts. Who cares what anything costs as long as you can pay the balance at the end of the month?
I like how you say "the dealer made sure not to volunteer any extra info" as if this was a secret and the dealer somehow scammed your friend into buying a brand new car at the height of a chip shortage and record high car prices.
The lifetime difference of premium gas financially is next to nothing.
This makes sense given that I just read dealerships now make more money from loans than from the car itself. This has driven the industry to make more loans to unqualified buyers and are now starting to see them default. This would partly explain the jump in avg selling price as consumers might not be scrutinizing the cost as closely. I can't find the link now, but basically the advice was to wait (until next year?) to purchase a used car as prices will drop.
I bought a car in April 2020 when the dealerships were reeling from closures and there were no shortages yet. I knew I had a good bargaining position as one of the few people buying, and I shopped around and tried to get the best deal I could.
In the end i drove the car away 20% under the sticker price, but despite coming in with all cash I was asked to finance about 33% of the cost through the manufacturer and keep the note open for 6 months before paying it off. We didn’t go into it, but it was obvious the dealership was getting a healthy commission for that loan, enough that they didn’t mind selling me the vehicle at what I presume is close to their own cost.
This could be also due to some (marketing) "target".
The manufacturer might impose to a dealer (say) 1000 loans per year, if they meet the target they get an additional discount or a prize, not unlike the targets imposed for sales.
At least here (Italy) the so-called "km.0"[0] are very common (of course rarely for models that sell well) the dealers have often some convenience to buy a few cars themselves (they are "sold" vehicles to all effects as seen by the manufacturer) and then re-sell them at a discount (the 20%-30% less than sticker price is not unheard of).
Years ago these "internal sales" were driven by fiscal year reports, so you could find the "km.0" only in January/February, nowadays the manufacturers have moved to reports avery 3, 2 or even one month so you can find some discounted cars in every period of the year.
[0] these are cars that were registered but never driven
Obviously. If you CAN wait (like me) then you should wait. What I found interesting was the shifting business model. Just like housing pre-2008 it seems values are being driven up by "easy money".
What places are those where sky-high rent doesn't offset the benefit? I can think of a few places, but rents are $500 more than a mortgage here, let alone rent.
The US public transport is shambolic generally, so you're forced to use cars, and the few places that buck that trend (typically major cities), are too popular for their own good. That isn't really a critique, being too popular is a good thing, but in terms of dollars and cents driving might be cheaper than living in a HCOL.
> What places are those where sky-high rent doesn't offset the benefit? I can think of a few places, but rents are $500 more than a mortgage here, let alone rent.
What are average salaries like, though? Cities are complicated because while rent is higher wages are often massively higher to compensate, although telework has complicated this a bit lately. Since cars aren’t any cheaper in low cost of living areas, that baseline cost is often harder to swing on lower income.
Not spending the U.S. average of $11+k/year to own a car also gives you an extra thousand a month for rent, which goes a long way even in the most expensive cities, and not needing to pay for parking often allows a hefty reduction in housing expenses in many cases, too, especially with more employers offering cash alternatives to their parking spaces.
You're certainly right that there has been major housing inflation in almost all major urban areas with good transit in the US. Still, there are several cities that are still relatively affordable with good transit and walkable neighborhoods.
I live in Eugene Oregon and haven’t needed a car yet. Previously was in Portland and also didn’t need a car even though I lived fairly far from the city center.
This is pretty crazy! New cars are out of reach for most people in the west. I work in DE and am visiting IN for holidays, I was surprised to see that smaller SUVs with decent tech and features are available here for under / around 10K.
There are many reasons for the price differential; two of them are safety and quality in general. Cars in Europe, and DE in particular, have a lot of safety requirements (from antilock braking to Knautschzonen) ignored in India for cost reasons. And the quality of Indian mfg is not up to German standards (few countries are!). There are other factors as well of course, some of which would work fine in Europe. Bt really, how many people would choose a Lada or Trabi today?
It seems like a big guess here. Almost all cars sell a variant with ABS. For e.g., the lowest end of Hyundai i10 (D Lite) is $4500 and has no features other than a 46 mpg. The highest variant (Asta 1.2 Kappa AT) has all the bells and whistles with a more powerful engine for $8500 and has a lower gas mileage at 37 mpg. Still a bargain?
Generally speaking, the cars built for the Indian market are very different than the ones built for the European market. Everything from safety to features to build quality is different.
You must be right, although I could not find any feature lacking (touch screen, Android Auto etc. it is all here). Yes, you will be hard pressed to find an engine above 120bhp but electronically it is all there. But I am no expert and am not sure about the material, build quality etc.
As someone who's in the market for a new car but has been put off by "market adjustments" at dealerships, I wish there was better information out there about what sort of price spikes are likely to be transient vs. permanent. Although it seems like the estimates of how transient these price shocks will be have been too optimistic...
I did appreciate that the article at least highlighted the segments of the market where there's less inflation.
Why is it so hard for writers to specify mean average or median average? Why do they never provide distribution information? It would take a negligible amount of effort to list a few percentiles, or even all the deciles to give people the whole picture.
Meanwhile I just bought a new scooter (sit on and ride motorcycle scooter) last week. Gets 90 miles to the gallon. Admittedly, it's not as efficient as an EV, but the $3500 price tag sure beats the $48,043 average new car price, and the insurance is significantly cheaper too. It's also a blast to ride! I was able to pay cash for it so I don't have a loan to repay.
Before everybody starts in on but you can't take it on vacation bit, yeah, of course not. That's what I have my paid-for 2015 Honda Civic that I bought used in 2018 for $10,500 for - and it's now paid-off. The scooter extends the life of the Civic, so I only need to drive the Civic when I actually need a car. I'll now be driving that Civic until gas is no longer sold.
Want more oomph than a scooter? You can get a motorcycle. Heck, you can get a motorcycle and a scooter both brand-new and not pay much more than I did for my Civic in 2018 - right now in 2022 at your local dealer!
In this era of re-thinking transportation, EV's are but one option. Scooters, E-bikes, and motorcycles are other options. Heck even electric motorcycles are starting to appear for under $10K.
You are much more likely to pay with your life when you’re riding two wheels. I quit riding because smartphones have made the roads much more dangerous. For sure, you do you, but there is a cost that you are not recognizing.
Always wear a helmet, don't drink and ride, and don't ride a bike that's too big for you or too powerful for you. Beyond that, continually practice your basic riding skills - especially swerving. If you do that, which granted many riders don't, then your probability of serious injury is vastly diminished.
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People are extremely irresponsible with money and cars with high, long time loans are a great wealth destroying 'vehicle'.
I think the social media helped fuel the 'I want NOW!' culture. This gave life to scalpers and $10k mark up on cars. I'm interested how all this is going to unfold.
I am... concerned about how painful the next one's going to be, in 3-5 more years. I hate spending money on cars.
EVs don't seem to be helping the price any—quite the opposite, as far as I can tell—even if they're good for TCO. Concerned about what that market's looking like for poor people, these days. No more $2k cars that'll semi-reliably get you to work for the next five years, or to the 50-miles-away grocery store or Wal-Mart for your "big shopping" once every couple weeks, for the rural poor.
They are out there, but definitely getting harder to find. They may need work to be reliable/drivable; if you can do the troubleshooting and work yourself you can still come out money ahead.
I haven't paid over $10k for a car in 20 years. Last time I did, it was one that I bought new. I will never do that again. The key is to look for a 15-20 year old car that hasn't spent its life in the rust belt and has had good maintenance.
Recently I saw a video on YouTube about an impoverished depopulated Eastern European town where instead of having a fixed local grocery store, there was a truck that visited weekly. On the one hand, it’s sad to think of people being so remote yet dependent, but on the other it actually seems like an innovative solution to the problem.
https://youtu.be/q37qWA2cL5w?t=7m5s
If you've purchased used cars and put anything more than a pittance, you've likely never been underwater on the loan. In 2019 I purchased a 2016 car for $25k with 10% down. I've made minimum payments on a 5 year loan and it's never been under water. While by their definition I think it qualifies as "very good," the "good" KBB trade-in value is currently $23k (honestly higher than I thought).
https://archive.ph/2022.05.19-151713/https://www.wsj.com/art...
Our money supply was debased by at least 30%. So far inflation hasn't even made up for half of that.
Even if you assume we go into a recession, it's not going to be long before 2019 dollars are worth $0.70.
$30k was the norm 3 years ago. But it's likely in a couple of years that $40k is the new $30k - because money will have lost that much value.
In that case, people won't really be as far underwater.
Higher MSRP would account for inflation. Car prices actually have not raised that much over the years, as improvements have been made to the manufacturing process to keep costs down.
The truck segment only just got the Ford Lightning and are at the start of the adoption curve. The inflection point probably won't be for another 10 years.
And you're likely to be able to sell an ICE vehicle to someone who wants to maintain it because they have all the necessary mechanical tools for a long time. There's a lot of people out there who might not be actual mechanics but know how to debug an ICE vehicle, and even know a machine shop where they can buy a rebuilt engine.
Even after vehicle manufacturers actually stop building and selling ICE vehicles there's going to be an after-market for them. There's probably some cliff that happens where gas stations start to disappear, but you have to age-out the existing ICE fleet pretty significantly, beyond the ability of people to keep their vehicles running.
Thus in few years people will have choice to either own inexpensive ICE maybe hybrid or much more expensive BEV. Problem for BEV will be even more compounded by their inflexible charging (majority of people can't charge at home, 50% people in EU lives in apartments) and high electricity prices (especially in EU). Thus people will start switching back to ICE, purely from economical and comfort reasons.
Nearly all newish used cars are selling for what people paid for them new. The current market does not represent a reasonable market value.
I can assure you EVs of today will depreciate faster than ICE vehicles, as new improvements are made to the tech. So much more money is being poured into batteries and R&D.
It's a depreciating asset. You lose 10 to 15 percent when you drive a new car off the lot. Unless it's a classic car, it's expected that you will be underwater.
When you pay $33k for a $23K MSRP car something is really wrong.
I wonder how its going to look when the coming recession (we're clearly not in one yet, just look at the headline title here) really starts to bite and just as one example the "influencers" who are at the margins see their youtube revenue kneecapped by more tightening by Google and then all the shit they've been buying on credit comes back to haunt them.
The golden age for reliability was when we had significant manufacturing advancements and improvement in engine building with tighter tolerances but lack of all the tech.
The problem is now with the tech, and average car owner has yet to realize just how expensive that tech is. Windshield replacement used to be $150, this is no longer the case. Now, if you have radar cruise control, it needs calibration. Some cars have acoustic glass, which is more expensive.
The cars have sensors all over, minor crash results in thousands in damage. LED headlights are $2k a piece.
Even Tesla, imagine the car is now 10 years old, worth $10k, is someone going to buy a new battery for $10k? There is going to be better tech out there and faster charging times.
Additionally, look at cost of ownership of something like an S class, those things become cheaper than Accords after few years. The reason is that all that tech is hard to maintain and now some of it trickled down into the main stream cars.
In the aughts and nineties the extra emission equipment (mostly gas tank vapor emissions) would break after 100k miles, but it wouldn't stop the engine from running. Now it's even crazier stuff that definitely will.
Better engineering and a desire for ever-higher fuel economy means that today's cars are made stronger than ever before (when new) but with less metal. Less metal means the frame is compromised more quickly by corrosion.
All but one of my previous vehicles had engines and interiors that were perfectly fine at 200k miles but the frames and bodywork were so rusted out that the whole car was essentially a loss.
Car manufacturers COULD design a far more rust-resistant car, and it wouldn't even be that hard or much more expensive. But of course when your business is pumping out millions of a thing, you don't have much incentive to engineer it to last longer.
I bet people who would have otherwise bought cheaper options are buying whatever they can get. In years past many of these cars probably sat on the lot for a year and sold at a healthy discount.
I love this car though. $24k with no interest, been fully paid off for a long time - was a great buy and has been rock solid. I hope i can get a deal this good in the future..
[edit: Regular maintenance is key! I take mine in to my local mechanic for an oil change and inspection 2-3 times a year. For elderly cars, don’t wait for a noise or a light to go off :) ]
I've been surprised by the results of simply leaving it outside that long. Weather stripping around the windows has dried out and cracked. And I have actual lichen growing on the car's exterior.
But other stuff has held up great. The paint (ignoring the lichen colonies), the tires, etc. And thanks to the wacky market these past years, its resale value.
He has 4 kids. Getting a minivan or suv is difficult unless you are patient or can buy the “Elite Super Touring Edition with Gold Sprinkles”. Car companies are adverting incentives for ordering cars, so I think this is the new normal. They’ve learned from Tesla’s shenanigans that you can get away with anything.
There was no point in buying used, because retail prices on used cars was approaching MSRP on a new car.
Transaction values and the luxury segment both keep rising here as well. Loking around me it feels like people disregard savings so much AND are take such large loans to buy homes that spending 50k on a new car feels sensible, possible and not a big deal. This in a country where take-home salaries are routinely under 20k/year (net of taxes and health expenses).
Money's been so cheap and credit so easy that we seem desensitized to total amounts. Who cares what anything costs as long as you can pay the balance at the end of the month?
Here’s the catch.. it requires premium. He didn’t know that. The dealer made sure not to volunteer any extra info. He’s keeping those miles low.
The lifetime difference of premium gas financially is next to nothing.
Is that a thing?
edit: Thanks for the info. Did not know that. I've always had piece of shit cars that could probably run on McDonald's french fry oil. :)
Deleted Comment
In the end i drove the car away 20% under the sticker price, but despite coming in with all cash I was asked to finance about 33% of the cost through the manufacturer and keep the note open for 6 months before paying it off. We didn’t go into it, but it was obvious the dealership was getting a healthy commission for that loan, enough that they didn’t mind selling me the vehicle at what I presume is close to their own cost.
The manufacturer might impose to a dealer (say) 1000 loans per year, if they meet the target they get an additional discount or a prize, not unlike the targets imposed for sales.
At least here (Italy) the so-called "km.0"[0] are very common (of course rarely for models that sell well) the dealers have often some convenience to buy a few cars themselves (they are "sold" vehicles to all effects as seen by the manufacturer) and then re-sell them at a discount (the 20%-30% less than sticker price is not unheard of).
Years ago these "internal sales" were driven by fiscal year reports, so you could find the "km.0" only in January/February, nowadays the manufacturers have moved to reports avery 3, 2 or even one month so you can find some discounted cars in every period of the year.
[0] these are cars that were registered but never driven
The US public transport is shambolic generally, so you're forced to use cars, and the few places that buck that trend (typically major cities), are too popular for their own good. That isn't really a critique, being too popular is a good thing, but in terms of dollars and cents driving might be cheaper than living in a HCOL.
What are average salaries like, though? Cities are complicated because while rent is higher wages are often massively higher to compensate, although telework has complicated this a bit lately. Since cars aren’t any cheaper in low cost of living areas, that baseline cost is often harder to swing on lower income.
Not spending the U.S. average of $11+k/year to own a car also gives you an extra thousand a month for rent, which goes a long way even in the most expensive cities, and not needing to pay for parking often allows a hefty reduction in housing expenses in many cases, too, especially with more employers offering cash alternatives to their parking spaces.
Chicago. Philadelphia. Portland. Pittsburgh.
In DE, I could not even get a decent 3 year old second-hand hatchback under 10K. Something just seems off. (e.g. - https://www.hyundai.com/in/en/click-to-buy/prices?prod=VENUE, same for Renault Kiger)
I did appreciate that the article at least highlighted the segments of the market where there's less inflation.
Why is it so hard for writers to specify mean average or median average? Why do they never provide distribution information? It would take a negligible amount of effort to list a few percentiles, or even all the deciles to give people the whole picture.
Before everybody starts in on but you can't take it on vacation bit, yeah, of course not. That's what I have my paid-for 2015 Honda Civic that I bought used in 2018 for $10,500 for - and it's now paid-off. The scooter extends the life of the Civic, so I only need to drive the Civic when I actually need a car. I'll now be driving that Civic until gas is no longer sold.
Want more oomph than a scooter? You can get a motorcycle. Heck, you can get a motorcycle and a scooter both brand-new and not pay much more than I did for my Civic in 2018 - right now in 2022 at your local dealer!
In this era of re-thinking transportation, EV's are but one option. Scooters, E-bikes, and motorcycles are other options. Heck even electric motorcycles are starting to appear for under $10K.
Edit: Add link to Ryvid Anthem - https://ryvid.com