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.
That is exactly my point. The choice today seems to be (1) spend ~$50k on a new ICE car and sell it in 4 years for 20-30k (or less) or (2) spend ~$70k on a new EV and sell it in 4 years for 60-70k (or more)
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.
If crude oil were to triple in price I think we might have bigger problems. Also I think hitting those price levels is unlikely in any case. Apart from hyper inflation. The consumption would be lower so price would be too.
> Also I think hitting those price levels is unlikely in any case.
Unless we end up with refinery bottlenecks (like we more or less have now) or political incentives (although the odds of that seem alarmingly low at this point).
> The consumption would be lower so price would be too.
Is this expected to hold as oil usage drops over the next century?
Yeah, manufacturing issues might be real. Just think of proper eco-terrorist group attacking multiple refineries... You newer know with people nowadays...
My point is that there is relationship with price and consumption. If the price rises too much people will either look for alternatives or reduce use. Thus prices might not rise that much.
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.
Also EVs are expensive because there is not that much supply on used market. Wait for one or two cycles of leased corporate fleets hitting resale market after this price boom and it likely won't be that great to try to sell even older models.
Plus, some EVs are still getting the $7500 federal credit.
I can buy a luxury Lexus ES Hybrid for $45k, or I can buy a luxury model S for $100k. The only thing the ES is worse in is acceleration but it makes up in build quality.
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.
Do you currently drive an EV? The infrastructure is already there. I don’t ever think about range or charging, even on long trips, there’s always charging somewhere within range.
> 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.
Don't get me started on low-profiles wheels. 3x more expensive tires and poor ride quality, all for just the bling factor. It's getting hard to find new cars that even leave the factory with standard wheels anymore.
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.
Oh come on my '12 Odyssey has all that stuff besides the turbo and is happily approaching 200k miles. I see older Odysseys like '04-'08 on the road approximately all of the time. That stuff does not "all break before 100k". It would be interesting to see MTBF info for these new features, complexity _is_ typically the enemy of reliability, but handwaving based on your feeling isn't it.
I don't think your car from 10 years ago has all this stuff, plus it's a Honda.
It's not my feeling. Just off the top of my head: See GM AFM lifter failure. See Kia/Hyundai engine failures. See direct injection carbon buildup on Lexus IS250. I could probably go on and on with some more research.
I didn't even mention the transmission.. Nissan CVT is one of the worst but the Subaru CVT isn't even proven to 200k.
Prepare for a transmission failure. I have owned two Hondas and both had total transmission failures at that mileage. Neither were as new as '12 though, maybe the clutch packs were improved by then.
Sounds like you were just very unlucky then :( I'm on at least my 3rd 200k+ Honda and only one of them ever had anything close to transmission issues (clutch went out). It could be because they were all manual transmissions however.
Right. One of my points was that things you do once a year are difficult to make a habit. For a long time now synthetic oils have been good for 10 or 15k miles but people still had 3k or 5k intervals drilled into them so maybe once every few months was on their internal clock but once they actually took the time it ended up being twice or even once a year and that was actually fine.. But let's say the interval is now a year and you do it every 18 months? Is that fine? I don't know..
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 started spraying wool wax on the undercarriage of my car. 3 years in midwestern winters with salt and 0 rust on the underbody. Not a complete solution but helps, as I tend to keep cars for 10+ years.
Is it really a desire for "ever-higher fuel economy?"
I would have no problem driving a 10mpg car that had character, didn't look like every other car on the road, or had some sort of unique value to it. But regulations are arbitrarily increasing fuel economy requirements which drives every car to use smaller engines, less powerful engines, and end up looking like a half-used cough drop.
I think if manufacturers didn't have to waste time with that they would be willing to invest more in things people actually care about, rust resistance being one of them.
> 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'm waiting on a Corolla right now. Found a dealer who will sell for MSRP. But ... there are no cars. Every Corolla that you see on Autotrader as new right now, with few exceptions, was sold months ago and they're using the listing as an ad to attract folks like me to go on a waiting list. Crazy.
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.
I was offered $27k in January for a 2016 Odyssey with lowish miles when I got an oil change.
It’s wacky. The guy was legit bummed - he told me they were at the point where legit dealers are buying wrecks and cars that need new engines. At the time, they were ordering new cars with projected delivery dates in August.
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.
It’s been a thing. My car is 20 years old and requires it. Engines with higher compression require higher octane fuel to reduce pre-detonation and pinging. Using low-octane fuel in one of them can cause game-ending physical damage to the engine.
Many more modern cars can sense lower-octane fuel and adjust for it, at the cost of power and efficiency (i.e., mileage).
Some vehicles, especially ones with OEM performance tuning, run high compression ratios or forced induction. Higher octane gas allows for more compression within the piston before ignition. I had a 2003 Toyota Matrix that redlined at 9100 rpm and used their fancy Toyota variant of VTEC that would dynamically swap the camshafts on the engines past a certain RPM. Although the engine was naturally aspirated (no turbo), it had the compression ratio of 11.5:1, which is pretty high for an economy vehicle (1.8L)
The octane rating you see on gas indicates the pressure at which gasoline will combust. Engines tuned to a higher compression to ignite require higher octane level gasoline. Using something other than what the engine is tuned to might put a lot of extra wear or degrade performance of the engine.
The gasoline will ignite before it is supposed to, forcing the piston back down before it has travelled all the way to the top of it's stroke. The engine will destroy itself. You can hear "knocking" coming from the engine when this is happening. It's worse than it sounds.
I know this is definitely true of older engines that aren't controlled by fancy software, but I suspect at least many consumer cars are capable of adjusting to the difference. I could be wildly wrong here though, and wouldn't want to test it myself.
All the comments are giving unequivocal yes’s, I’ll note that some cars (my buddy’s Subaru) will say they require premium but work just fine without. Currently going 240k miles still strong.
A car with knock sensor will detect lower-quality fuel and pull back timing. This will usually limit your power, but not damage your car. My car manual even explicitly states that it won't affect engine lifetime.
Full disclosure, I still use premium anyway because I want to keep the car for a long time and I don't fully believe this disclaimer.
Generally you'll get worse fuel economy due to the ECU and knock sensor detecting the lower grade fuel and pulling ignition timing out. It's unlikely you'd even save money at the pump
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.
Speaking just for NYC, outside of a (relatively speaking) few jobs in investment banking or trading in finance, FAANG tier SWE, and perhaps medical doctors and upper tier lawyers, I don't think Manhattan salaries are high enough to compensate actually living in Manhattan versus the suburbs. This is assuming without roommates.
I've worked 4 SWE jobs in Manhattan in my career. The first 3 were at non-tech companies (investment banks) where SWEs were a cost center and paid like a cost center. Nearly all of my coworkers commuted in from New Jersey, Westchester, less expensive parts of Queens or Long Island.
My current job (FAANG tier company) is the first job where most of my coworkers actually live in Manhattan, or at least Brooklyn.
Manhattan is definitely a painful outlier thanks to the finance industry. In this thread, I think the relevant question is whether that’s something which cars help with - most of the people I’ve known who commuted there were still car-free because transit or biking because of the traffic & the cost of insurance, parking, etc. making the cost higher than those AAA national averages.
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?
Not really a guess: I have in the past lived in DE and have a lot of family in India whom I visit so the comparison is personal observation. But OK, the ABS was a wrong example.
The Asta is indeed a bargain. But the German cars, for example, are really solid. There are enough BMWs and Mercedes on the road in India that you've probably been in one and have seen. But is all that solidity worth it? Nobody is able to drive 220 anywhere in India, even where the roads are quite good. Conversely I doubt that Asta would be considered road worthy anywhere in the EU. Actually I think EU countries like Bulgaria and Romania would benefit from some of these super-cheap vehicles.
> Conversely I doubt that Asta would be considered road worthy anywhere in the EU. Actually I think EU countries like Bulgaria and Romania would benefit from some of these super-cheap vehicles.
Bulgaria and Romania are EU countries — that is, under the same regulations that Germany has. Even if Asta was road worthy there, people from lower GDP EU countries would still prefer continue buying high-mileage, but somewhat well-maintained vehicles from Germany.
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.
Right now is a weird time where buying a used car may be a worse financial decision than buying a new car. Used cars are marked up so high right now that when this corrects later this year, the owner of the used car will have lost so much value from it.
Best bet is to stay away from the market all together for awhile, until it all comes crashing down. Then scoop up the bargains.
I consistently see all of these giant trucks owned by urban portlanders, and all i think is: Wow, what an expensive minivan.
I bought a house recently. People were shocked. How can you afford it?
Easy. I didn't own a car for years. I took the bus an hour each way. I fought off lifestyle creep, and the 80k they spent on fancy cars over the last decade I socked away waiting for the market to be favorable.
I just bought a mid-size SUV new (definitely not a frugal decision) - and if I had gotten the top-tier package with every single accessory possible to buy on that model (which I definitely did not do), I still wouldn't have reached that number!! What are people buying? And why?
I don't know how true this is today, but as recently as a few months ago I knew of some people that were paying $10,000 dealer markups on Kia Telluride, but that particular vehicle seems to be especially notorious for shenanigans like this.
Especially because the chip shortage means the car companies are favoring making more of their highest margin vehicles - you can buy a $60k vanity truck easily because they get way more markup on those compared to their economical choices.
I don't get it. Why is the chip shortage affecting cars more than other smart devices? I have no issues buying anything else. For example, phones, fridges, computers, smart TVs, etc.
4Runner, along with the rest of its related family - Land Cruiser, Tacoma, Sequoia, and Lexus GX/LX, are probably the vehicle of choice for surviving the zombie apocalypse.
Gas is not that expensive. Even in CA, it is a few thousand dollars per year at most. And the 4Runner and other cars can get to a few hundred thousand miles easy, so compared to spending a few extra tens of thousands on a new car, gas is a negligible cost. Plus you’ll have a 4Runner.
500 cents per gallon, 15 miles per gallon, that is 33 cents per mile in fuel costs.
A 35mpg car would be 15 cents per mile.
At 20k miles per year (which is a lot), you’re looking at an extra $3,600 per year. But even after 10 years/200k miles, you will have massive resale value due to their reputation as being indestructible (assuming you live in a place that does not salt).
That’s ignoring the higher purchase cost, though. At the end of those 10 years you’d have a vehicle with a $13-15k KBB estimated value (assuming it’s in very good condition) but will have spent enough extra up front and on gas to buy two new efficient cars even before you consider the greater cost of a heavier vehicle like the 4Runner in parts and tires or insurance.
True, I was only considering the cost of fuel assuming you wanted that size of a car.
Actually, I feel like catalytic converters thefts might make it a uneconomical compared to EVs these days, assuming you live in a state that requires emissions testing.
I would rather have a consistent and predictable gas bill than have erratic mechanical costs and a far shorter car lifespan.
Also gas is dollar cost averaged as you buy it over the lifetime of your car usage.
I'm not saying there isn't a point where gas would outweigh the indestructibility of the Toyota SUVs. I think that point is closer to $8-$10 a gallon like it is in EU.
One could do a proper discounted cash flow analysis but again the problem would he unpredictability of car maintenance on a non Toyota SUV.
And also ask yourself, would you rather a loved one get in a crash driving a Golf or a 4runner?
Buy a used car. Rental car companies like Hertz are making this easy because they have a business of buying up new cars, then selling them off after a year or two for a discount. You can get a lightly used car that probably still has a couple of years of warranty life on it without having to destroy your savings
Be careful with ex-rental cars. These things have been abused to hell and back; think full throttle on a cold engine, the cheapest fuel available and a lot of unavoided potholes. On the other side, you know they have been maintained, but expect a lot more wear. You can buy one, but you should know why they are as cheap as they are.
The worst part about rentals is that they simply get used more than personal cars. They're always being driven by different drivers, in unfamiliar places, loading and unloading a full load of people and baggage. All the knobs and adjustments repeatedly adjusted. Every threshold scraped and scuffed by repeated shuffling of passengers and bags.
And while they have a policy of maintaining vehicles, nobody who touches the vehicle has any personal investment in it. Due for an oil change, and it's booked out? Out it goes!
I can't imagine how many tires people pop by running into stuff. When I rent with one of the big brands that lets you pick a car off the lot, I usually try to find the car with the best set of tires. It's amazing how many rental vehicles with ~10k miles on them already have 3 or 4 different brands of tire on them. Usually they're the cheapest of cheap brands too.
I went from maybe someday I will buy a car to being fuck it, no reason to buy something so expensive that I clearly don’t really need. This article made cars look even more like a luxury good than they already are.
That's quite flippant. They are a big investment, no question, but they open up a lot of possibilities since you can essentially go anywhere at any time with a large capacity in case you need to take things with you. They can help you to physically reach employers who could pay enough to make the vehicle a small cost, depending on the situation
I can always rent a car if I need one. My commute to work is an important consideration of what employers I’m willing to consider and it is unlikely I would ever work for someone that doesn’t pay me enough to live near my job or in a city that has robust public transit.
A good way around this for people who absolutely want a new car is to buy electric and enjoy the fuel and maintenance savings. Inflation has hit EVs too, but at least the other costs are a lot lower, bringing the TCO to on par or better.
This same song gets sung no matter how much more an EV costs over an ICE vehicle. EVs likely do save $10K~ over the life of the vehicle, but EVs cost $20K more than a similarly sized/styled ICE right now.
For example the Model 3 Vs. Corolla is $20K difference. If you spend $4K extra on the Corolla Hybrid instead the fuel savings advantage for the EV reduces. EV proponents always want to pretend Hybrids and Plug-In Hybrids don't exist.
It is also all predicated on driving a lot. As EV prices continued to increase, proponents just increased the "assumed mileage" to make their arguments. I literally read someone's post about "cost savings" that assumed 30K miles/year. That's almost commercial usage levels.
To be clear, I'm extremely pro-EV but I tire of the "just ignore the sticker" talk vis-à-vis pricing. EVs are darn expensive and the $10K savings don't magically change that and are based on a whole host of assumptions that may not apply.
The next model year Bolt EV and EUV may be significant vehicles, because they're going to be priced low enough to where the $10K lifetime savings may actually make them a little cheaper than their ICE contemporaries.
You start by using insulting language and talking about hybrid vehicles which do not offer the same fuel savings as EVs, do not have the mechanical simplicity and elegance of EVs, and thus do not have the lower maintenance costs of EVs, as well as having a significantly shorter expected lifetime, while also supporting intransigent auto makers and stinking.
Then you agree with me by saying that upcoming EVs will be cheaper than ICE cars. (I think we can agree that in the context what is meant is a cheaper TCO).
And $10k is a very conservative number which doesn’t even account for a lot of benefits, from safety, to externalities like pollution emitted by a hybrid or other ICE car, to the probable much longer lifetime of an EV relative to an ICE car, as well as being able to look at yourself in the mirror.
Also your choice of a Corolla for comparison is surprising. We should compare prices of cars with similar features, not low end cars against high end cars. This pretty much invalidates your comparison which claims a $20k price difference.
And even if you still believe what you think, one way to look at it is that we are all going to be paying for climate change one way or another. If we pay a little up front to save on gas, maintenance, safety, fun, reducing pollution, and supporting companies that give a shit, we will reap even more benefits later.
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.