I tried to point stuff out like this while teaching school. Getting flamed doesn’t describe what happened next.
I personally think cars have stayed in quite a good range of prices for a while now. The life-saving devices alone make it worthwhile to buy one of these instead of some used piece of trash. People who can’t afford something and buy it anyway are idiots. We are conservatives here. We don’t blame others. We blame ourselves when we do something stupid.
I swear my old ‘02’ Ford P/U gets purtier every day.
Reality TV and the celebrity culture have not helped things. Instead of people aspiring to be like their richer neighbors, today it’s aspirational debt on steroids.
IMHO, vehicles specifically have become more feature-laden and complicated (and thus expensive) primarily to comply with emissions and fuel economy regulations.
The manufacturers realize few consumers want to pay a fortune to comply with the latest regulations, but if they can tack on enough do-dads, then it effectively masks the cost of the regulatory compliance with bling.
There’s no technical reason why vehicles couldn’t be made more cheaply and have better longevity, and I’m not convinced all of the “innovations” are market-driven. Many are a result of market distortion through regulation.
Further, the major manufacturers are insulated from other potential market innovations by the high barriers to entry, some of which are intrinsic but many others are, again, the result of regulation. Some of those have been recently relaxed (small manufacturer exemptions to crash testing, for example), but most are still in place.
Just my observations as a gearhead...
I call BS on this article as far as car pricing goes.
Yes they could be made less expensive. But mandated safety equipment, emissions, insurance and all the paperwork involved with compliance coupled with environmental and employee costs (pensions, healthcare) make it impossible to sell cars for less than about $20,000 per. Low end cars sold today are subsidized by the $50K sales.
A big part of the cost is government required features. Some of them a good idea I suppose but some like smog controls for people who live in the middle of nowhere.
Also modern cars come with far more extras than they used to. I recall when Daddy would only add two extras. A heater and a radio. He eventually got AC which was uncommon back then.
Hard to read article - it was like broken English. I agree with the societal stigma to live below one's means. On the flip side, what do you care what others think?
I remember when standard auto loans were financed for 24 months. My first new car, a 1972 Camaro cost a little over $4,000 and my monthly payment was about $100. Of course, I made $2.00 an hour.
Now car loans can be for 72 months. Insane.
My wife and I were born during the depression era. The only monthly debt payment we have is our monthly mortgage payment as per our CPA’s advice.
Our paid off 12 year old Lexus and my 7 year Honda Ridgeline have about 50,000 miles on each vehicle. We spend maybe $500 to $1000 maintenance per year to keep them rolling. Both of them drive like new vehicles.
If one becomes too much of a maintenance cost problem, we will lease a vehicle to replace it.
“...You are promising to pay with money you haven’t earned yet...”
Exactly, nice to pay cash if you can for real estate too but....
And then there’s Student Loans.
Yep. Just traded in my 2002 basic, manual, no bells and whistles, lock the hubs myself 4WD for an AWD 2013 Rogue with “some” automatic stuff, like the windows and a few other things. Not real snazzy but newer. Boy, 15 or 20k doesn’t buy a whole lot these days. Nice basic little car that should handle Colorado winter driving okay.
Trying to live within my means. Hadn’t had a car payment in years. Will pay this one off ASAP.
“You could replace almost any consumer item in place of an auto in this article.”
You could! I LOVE my 2000 VW Golf; just over 40K miles, LOL! Been paid for for-ever.
I also love my 2008 Ford Escape. Paid for, about 70K in miles, now.
Repairs and general upkeep are SO much more desirable than a monthly car payment. :)
YMMV <—— LOL! See what I did there? *SMIRK*
So, there are people anxious to lend 10s of thousands of dollars to a 70 year old man who recently had a 90 degree blockage in his left descending artery stented. Not even talking a car loan. Talking pure uncollateralized personal loan to a person with a zero traceable net worth. Who’s crazier, the guy who takes it or the people who lend it.
Emotion drivin choices add to the problem.
Most buy a car they will look cool in rather than focusing on the fact it’s is just transportation.
Some cars hold their value better than others, have less maintenance cost, higher resale.
Even with financing you can buy right if you research.and have the patience to wait for the right deal
Here is a little exercise for you ... go and price out a new base model car with; manual transmission, manual windows/locks, basic interior (no carpet, std cloth seats), basic AM/FM radio (and maybe a single basic CD player ... nothing more), basic A/C.
You virtually can not even find that setup at the online car/truck build sites. And when you go into the dealership and ask for it ... you are looked at like you just dropped in from the planet Neptune.
I did that for my Ram 4500 in 2008 and it was a SPECIAL ORDER that took 12 weeks to get!
Virtually the same for when I bought my 2016 Honda Accord LX with manual transmission ... there were like 3 in all of New England and I got it for 19K and the dealer was glad to sell it since no one wanted it (19K for a new Accord is a gooooood price).
We are in the “roll it into the loan” society with cars these days.
Cars, for example, have become hugely expensive (even on the low end) relative to what people can afford
A 1964 Malibu SS, brand new, cost $3290 sticker price.
I know because I bought one for that.
The average income for 1964 was $4576. So the car cost 72% of a year’s wages.
Average income in 2015 was $55,775. The average car price in April 2015, per Kelley Blue Book, was $33,560. That’s 60% of annual income.
The average car today is 17% cheaper to buy than in 1964. The article starts out, then, with a lot of hooey.
If the author is wrong in his opening statements, there’s not much point in assigning veracity to anything else in the article.
Today a Crank Positioning Sensor can leave you sitting and although the tow cost more than the part unless you have access to the computer coding and a computer to diagnose it you are guessing and part replacing until you find out what is wrong. In my teens the breaker points did this sensors task and a stuck set of points could be repaired or even replaced in minutes. Men kept emery boards in the dash of the car for that purpose.
It was the imports {mostly European} which were very poorly built. The worst of them being the Renault. If one made it to 50K without a new tran-saxle or engine it was a miracle. My new cars were 10 plus year old cars I could afford usually costing no more than a months wages and I could repair myself. Anyone remember when you could sit inside the engine compartment of a Ford F-100 and work on the engine? I do.
My Mom drives a 2004 Chevy Tahoe. It is astounding at the gadgets it came with as well as the complex electrical system. She's had it six years and it's been reliable but if anything at all goes wrong it's a trip to the garage. Even getting the spare tire out is a major undertaking and far more complicated and time consuming than it ever should have been.
Sounds like a business opportunity.
Produce this low-end but quality car and sell them for cash only. Order online.
Were I an investor with the funds I’d start it up.
A couple of years ago, circumstances required me to buy a used car and borrow money for it. I recently paid off that loan and am now debt free.
It feels pretty good to be debt free.