WaPo -- New cars out of reach for many

[Anonymous]

I'm a little aggravated by this article (or at least the headline). Yes, a new car was part of the American "dream" -- but by definition that meant it was always out of reach for many. I remember the first time my parents bought a new car (in the 1970s) and how thrilled they were -- they were almost 50 and had decent jobs. People in the 1960s, and 70s bought used cars and fixed them up or made do. Then everything got exported to cheaper countries, and financing became ridiculously cheap, and all of a sudden you had new cars become the norm for teenagers and 20-somethings. Unfortunately, during that time period, people became really snotty about cars, so now it's considered failing not to have a nice new car. I recall in the 70s, it was not uncommon for someone to have a car up on blocks in their driveway, even in a middle class neighborhood. Now that's the kind of thing that would have you on the HOA list.
I'm 50, so I guess that's old to some people, but I have a recurring pet peeve that people seem to not realize that the consumer opulence of the past several decades was an anomaly and probably due for a course correction.

(And none of this takes away from the fact that the depression of American wages for the working and middle class over the past several decades is an awful thing for our country. But the two are rather connected -- we exported good manufacturing jobs to cheaper countries in order to get cheap consumer goods, but in the process hollowed out our working/middle class.)

[Anonymous]

I'm close to your age and get where you're coming from. Same is true for large homes where all bedrooms have an en-suite bathroom. AFAICT, that, too, was a result of incredibly low interest rates. Interest rates put a limit on how much borrowers can buy and the past two decades have skewed people's expectations - esp among younger people who have really only experienced this low interest rate environment.

[Anonymous]

hey, i get everything that you're saying. i really do.

one caveat to remember: back in the old days, you could save a lot of money by only buying used cars. there was that whole "the moment you drive it off the lot..." thing, and it was largely true.

a big difference today is that used cars don't depreciate more than linearly. at all. at least not the reliable ones. the German luxury ones, sure, but you're going to pay through the nose when those go out of warranty.

But a good Camry or RAV4 or something, what I mean is that if you can reasonably expect 250k miles out of it, then a RAV4 with 125k miles will sell used for about half of what it sold for new. That's not really saving anything.

[Anonymous]

This article depressed me. The big takeaway for me is that car manufacturers are doing away with entry level models. DD is graduating college and will need to purchase a car. She’s been saving for a down payment but she will never be able to afford something new at these prices and interest rates. DH has spent months looking for a safe and reliable used car for her but those prices are insane and forget about financing it.

[Anonymous]

Anonymous wrote:This article depressed me. The big takeaway for me is that car manufacturers are doing away with entry level models. DD is graduating college and will need to purchase a car. She’s been saving for a down payment but she will never be able to afford something new at these prices and interest rates. DH has spent months looking for a safe and reliable used car for her but those prices are insane and forget about financing it.

They're not doing away with entry level models. However, while supply chains remain constrained, and they can only manufacture a certain number, they need to focus on the most profitable ones for now.

[Anonymous]

You're blaming the wrong thing. The real reason that cars are unaffordable is that there aren't any entry level models. They all have tons of $$$ gadgets, back up cams, leather, computer systems in the dash, etc.

We just don't have the cheap, basic cars like the rest of the world has available.

[Anonymous]

Anonymous wrote:You're blaming the wrong thing. The real reason that cars are unaffordable is that there aren't any entry level models. They all have tons of $$$ gadgets, back up cams, leather, computer systems in the dash, etc.

We just don't have the cheap, basic cars like the rest of the world has available.

Back up cameras and their screens are mandatory by federal law, and the same screen integrates Apple Car Play and Android Auto. Also, that doesn't cost much. Less than an iPad probably.

What people think is leather is almost never real leather any more, at least not below $60k or more. BMW pioneered the "Leatherette," and everyone else has followed. It's fake stuff. But it's not a bad thing because it's a lot more durable. What you might see -- MAYBE -- is "leather trimmed seating," in other words, a touch of real leather around the edges of vinyl. The plus side is that you don't need to recondition it every month in order to prevent it from cracking and looking like hell in five years. I worked at a car wash when I was a kid; I know what becomes of real leather.

The article was interesting. Basically, we're still suffering from chip shortages, at the same time, we've got models that manufacturers thought people wanted based on how they were spending during COVID with all their extra cash (the $115k Grand Wagoneer) and now people have less money, interest rates are higher, and it's just going to take a little bit to shift again.

It's not permamanent.

[Anonymous]

I think this I need to have a nice car is so yesterday. I have a Robinhood account is more the new thing.

[Anonymous]

I didn’t own a car or have anything resembling regular access to one until the age of 23.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This article depressed me. The big takeaway for me is that car manufacturers are doing away with entry level models. DD is graduating college and will need to purchase a car. She’s been saving for a down payment but she will never be able to afford something new at these prices and interest rates. DH has spent months looking for a safe and reliable used car for her but those prices are insane and forget about financing it.

They're not doing away with entry level models. However, while supply chains remain constrained, and they can only manufacture a certain number, they need to focus on the most profitable ones for now.

Maybe you haven’t paid attention in the last couple of years. They are actually doing away with entry level models.
Ford and GM used to sell small and cheap entry level cars like the Ford Focus or Chevy Cruze. They have been discontinued.
The entry level Ford is now the Ford Escape, an SUV.
Japanese brands will soon follow. The Honda Civic and Toyota Corolla will be discontinued in the US and replaced with their SUV-like versions.
Manufacturers figure that they can take a car, make it slightly bigger and raise the ground clearance, and sell if for $10k more.

[Anonymous]

Is it better to buy a car in cash now since interest rates are higher?

[Anonymous]

Anonymous wrote:Is it better to buy a car in cash now since interest rates are higher?

yeah, it's not a bad idea. I'm about to buy a car with a loan because I have no cash, despite having $3M+ in index funds. I'm not going to sell them and incur capital gains tax liabilities, but I will pay off the 5% loan at a much accelerated rate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You're blaming the wrong thing. The real reason that cars are unaffordable is that there aren't any entry level models. They all have tons of $$$ gadgets, back up cams, leather, computer systems in the dash, etc.

We just don't have the cheap, basic cars like the rest of the world has available.

Back up cameras and their screens are mandatory by federal law, and the same screen integrates Apple Car Play and Android Auto. Also, that doesn't cost much. Less than an iPad probably.

What people think is leather is almost never real leather any more, at least not below $60k or more. BMW pioneered the "Leatherette," and everyone else has followed. It's fake stuff. But it's not a bad thing because it's a lot more durable. What you might see -- MAYBE -- is "leather trimmed seating," in other words, a touch of real leather around the edges of vinyl. The plus side is that you don't need to recondition it every month in order to prevent it from cracking and looking like hell in five years. I worked at a car wash when I was a kid; I know what becomes of real leather.

The article was interesting. Basically, we're still suffering from chip shortages, at the same time, we've got models that manufacturers thought people wanted based on how they were spending during COVID with all their extra cash (the $115k Grand Wagoneer) and now people have less money, interest rates are higher, and it's just going to take a little bit to shift again.

It's not permamanent.

After market backup cameras and screens are $200. So it probably costs the manufacturer less than $50 for these mandated features. That's not driving up the cost significantly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This article depressed me. The big takeaway for me is that car manufacturers are doing away with entry level models. DD is graduating college and will need to purchase a car. She’s been saving for a down payment but she will never be able to afford something new at these prices and interest rates. DH has spent months looking for a safe and reliable used car for her but those prices are insane and forget about financing it.

They're not doing away with entry level models. However, while supply chains remain constrained, and they can only manufacture a certain number, they need to focus on the most profitable ones for now.

Maybe you haven’t paid attention in the last couple of years. They are actually doing away with entry level models.
Ford and GM used to sell small and cheap entry level cars like the Ford Focus or Chevy Cruze. They have been discontinued.
The entry level Ford is now the Ford Escape, an SUV.
Japanese brands will soon follow. The Honda Civic and Toyota Corolla will be discontinued in the US and replaced with their SUV-like versions.
Manufacturers figure that they can take a car, make it slightly bigger and raise the ground clearance, and sell if for $10k more.

Volkswagen Jetta $20k
Hyundai Elantra $20k
Nissan Kicks $20k
Nissan Sentra $19k
Kia Soul $19k
Subaru Impreza $19k
Kia Forte $19k
Hyundai Venue $19k
Kia Rio $16k
Mitsubishi Mirage $16k
Hyundai Accent $16k
Nissan Versa $15k

https://cars.usnews.com/cars-trucks/advice/cheapest-cars-on-the-market?slide=3

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You're blaming the wrong thing. The real reason that cars are unaffordable is that there aren't any entry level models. They all have tons of $$$ gadgets, back up cams, leather, computer systems in the dash, etc.

We just don't have the cheap, basic cars like the rest of the world has available.

Back up cameras and their screens are mandatory by federal law, and the same screen integrates Apple Car Play and Android Auto. Also, that doesn't cost much. Less than an iPad probably.

What people think is leather is almost never real leather any more, at least not below $60k or more. BMW pioneered the "Leatherette," and everyone else has followed. It's fake stuff. But it's not a bad thing because it's a lot more durable. What you might see -- MAYBE -- is "leather trimmed seating," in other words, a touch of real leather around the edges of vinyl. The plus side is that you don't need to recondition it every month in order to prevent it from cracking and looking like hell in five years. I worked at a car wash when I was a kid; I know what becomes of real leather.

The article was interesting. Basically, we're still suffering from chip shortages, at the same time, we've got models that manufacturers thought people wanted based on how they were spending during COVID with all their extra cash (the $115k Grand Wagoneer) and now people have less money, interest rates are higher, and it's just going to take a little bit to shift again.

It's not permamanent.

After market backup cameras and screens are $200. So it probably costs the manufacturer less than $50 for these mandated features. That's not driving up the cost significantly.

that was my point exactly.