Are cars overpriced?

[JimKiler]

lol so true

Whatever my next car is (new or used) i want it to have bluetooth.

But our cars now have:

• GPS
• rear backup cameras
• bluetooth
• some sort of infotainment system
• push button start or some sort of wireless key fob
• tailgate lifts
• allow wheels
• brakes (just kidding)
• etc

Also I see more and more compact (or is it sub compact) SUV's like the new Mazda CX-3 and I saw something comparable from honda, the HRV? I am wondering if anyone is going to be buy a non SUV/truck in 10 years.

 

[Pulsar]

Prices have gone up 20%.

So has most every other consumable.

Has your salary increased by 20% over past 10 years?

When repairs are costing as much as a car payment, then replace

Uh.... no.

A normal car payment is $400 - $500. Replacing the brakes, or the tires, or a simple tune up (plugs + ignition wires) will easily top that amount in a lot of vehicles.

If the repair is 3x the payment, consider selling. At that point you're talking things like motor mounts, heads, transmissions, and even drop-in motors.

 

[BurnItDwn]

Cars are "too expensive" relative to peoples incomes yes. But, I do not believe it is because cars are "'overpriced". I believe in general, most cars, you get what you pay for. The problem is that wages have not kept pace with inflation, and so, people in general do not have enough money to save for retirement, go on an annual vacation, pay for home, buy food and pay utilities and still buy a new car every 10 years. Most cars are outside of affordability for most people.

 

[mvbighead]

Uh.... no.

A normal car payment is $400 - $500. Replacing the brakes, or the tires, or a simple tune up (plugs + ignition wires) will easily top that amount in a lot of vehicles.

If the repair is 3x the payment, consider selling. At that point you're talking things like motor mounts, heads, transmissions, and even drop-in motors.

Yeah, I was trying to understand the new being more cost effective than used. Maybe at the earlier price points, but there are a number of vehicles with good reliability ratings that run for damn near ever.

I hear from several people who have bought new or newer vehicles north of 30k and they're constantly talking about getting to that next paycheck. Meanwhile, my wife and I each spent roughly $15k on used vehicles and have plenty left in the bank for any repairs that might pop up.

Me personally... as long as your repairs over the course of a year aren't adding up to 300/month or so and the vehicle is still in good condition, throw in what you need to. And typically, the biggest expenses are by way of a complete engine or transmission failure. If you get to that point, you're going to lose a LOT of value in offloading an immobile vehicle. Otherwise, most repairs if done yourself are 100-300 bucks a pop, usually.

 

[desy]

New cars are not overpriced, they are better than ever and plenty of competition in the market.
If you are talking value, a car 3 yrs old is better due to depreciation being so steep from new.

 

[Zenmervolt]

Uh.... no.

A normal car payment is $400 - $500. Replacing the brakes, or the tires, or a simple tune up (plugs + ignition wires) will easily top that amount in a lot of vehicles.

If the repair is 3x the payment, consider selling. At that point you're talking things like motor mounts, heads, transmissions, and even drop-in motors.

I think the advice refers to the average monthly cost of maintenance, not to the amount of a particular maintenance event. So if you're spending $5,000 to $6,000/year in maintenance then it's time to look at a new car because the maintenance costs are beginning to exceed the costs of payments on a newer car.

It's a matter of looking at the long term trend, not any individual event.

ZV

 

[BoberFett]

i feel the same model has gone up in size moving it to another class and that is why the price has gone up.

Use to have a Maxima from 96 that was 22k out the door. The Altima is now the same size as the old maxima and so you buy the Altima for 22k out the door. While the Maxima has gotten really big.

I'm pretty sure I've seen a diagram of how a particular model continues to go up in size and luxury over time and a new model is introduced to the low end. Toyota has had the same models forever, and Corolla used to be the rinky dink econobox, now it's the Yaris.

But yes, in general cars have gotten more expensive compared to income. While they may be modern marvels of technology and engineering, nobody used to finance cars for 72 months. That's all too common now because people simply couldn't afford the payments if it was only financed 3 to 5 years.

 

[SearchMaster]

I don't think they're overpriced at all. I paid about $26.6K for my Focus ST. It includes leather, a lot of technology (GPS, BT, etc.), push button start, keyless entry, 252hp, and very good fuel economy. I paid about $10K less than that in 1990 for my Eclipse GS Turbo (my last new car purchase), and it had 190hp, decent fuel economy, but none of the rest of it. The seats were cloth and manual. And the new car has a ton more safety features - my Eclipse didn't even have ABS.

According to inflation, $16600 in 1990 is equivalent to $27200 today, so I actually paid less for the ST which offers a lot more.

 

[ultimatebob]

Well... I think that we can all agree that the Tesla Model X is overpriced, anyway. Seriously... $130,000?!?

 

[RGUN]

If anything I'm continuously shocked at how *in*expensive cars are.

Relatively speaking, I can buy a decent NEW car or
~25 higher end cell phones
~16 bicycles
~1 outboard engine (250hp)
~12 televisions

Considering the sheer number of moving parts and assembly required, I am absolutely amazed that vehicles can be made as cheaply as they are.

 

[senseamp]

I think if you include all the safety and entertainment features, as well as improved fuel economy, cars may have gotten cheaper or at least not even kept up with inflation.
Stuff like side airbags and ABS was optional on mid-range cars 10 years ago.

 

[jlee]

If anything I'm continuously shocked at how *in*expensive cars are.

Relatively speaking, I can buy a decent NEW car or
~25 higher end cell phones
~16 bicycles
~1 outboard engine (250hp)
~12 televisions

Considering the sheer number of moving parts and assembly required, I am absolutely amazed that vehicles can be made as cheaply as they are.

What decent new cars are you finding for $12,475?

 

[RGUN]

What decent new cars are you finding for $12,475?

Welcome to Canada, home of the $1000 smartphone.

 

[ElFenix]

Also I see more and more compact (or is it sub compact) SUV's hatchbacks like the new Mazda CX-3 and I saw something comparable from honda, the HRV?

ftfy

 

[smackababy]

Prices have gone up 20%.

So has most every other consumable.

Has your salary increased by 20% over past 10 years?

When repairs are costing as much as a car payment, then replace

If you got a 3% raise yearly, you'd be just over 34% more than 10 years ago.

 

[Yuriman]

New cars only look bad compared to used cars.

I'm surprised cars aren't considerably more expensive, considering how much BIGGER they've become. I find it funny when I see a modern sedan next to an old minivan on the highway, and the sedan is bigger in nearly every dimension.

 

[jlee]

Yes, but that's only because I changed jobs. Over the past five years, it wasn't really budged. I'll bet that many other people are in the same boat.

The oldest tax return I could find was from 2007, but I'm making 270%+ more than I was then. Granted, I drove a $3000 car at the time.

 

[Blanky]

To me cars are cheaper than ever. If you have good credit and lease and are okay with a fairly utilitarian car (camry, altima, etc.) you can lease these new for under $250/month with nothing down at signing. Then you drive it hard, never pay for anything but maybe a set of tires, and give it back. You get the amenities (electronics, safety features) of new cars plus their better gas economy. I keep trying to find a reason to buy a car and not lease and keep coming up empty. Lease-haters, go!

 

[mvbighead]

To me cars are cheaper than ever. If you have good credit and lease and are okay with a fairly utilitarian car (camry, altima, etc.) you can lease these new for under $250/month with nothing down at signing. Then you drive it hard, never pay for anything but maybe a set of tires, and give it back. You get the amenities (electronics, safety features) of new cars plus their better gas economy. I keep trying to find a reason to buy a car and not lease and keep coming up empty. Lease-haters, go!

The only argument against this is not having a payment, period. Granted, $250 is pretty doable for just about any budget, and it is really what I try to keep any payment under just because it's insignificant enough that it doesn't hurt the budget. $500 payments are where people see their day to day funds deplete much more quickly.

 

[thomsbrain]

Really depends on the car. Most sub $20K cars are actually very good deals considering the amount it cost to engineer and build them. Profit margins are extremely thin.

Most full-size trucks and SUVs, however, are mind-boggingly overpriced compared to engineering and manufacturing cost. The initial mark-up even on the base models and the highly profitable, extensive options lists are basically cash printers for Detroit. They make Porsche's sales model look conservative.

 

[BurnItDwn]

Having a payment sucks.

I had "payments" on my car, but in 2 years I paid it off. Now, for the last 2 years, I have had a $0 payment. I may spend some $$$ here and there on repairs, but, having a payment is MUCH more expensive then infrequently repairing a reliable car.

 

[BoberFett]

Everyone seems to be focusing on how much nicer cars are now, and how amazing they are for the money.

None of that matters however. Affordability is a pretty simple calculation. Extending payments out for 6 years, zero down deals, special leases* and all of that doesn't make them more affordable, it just stretches out the payments, like Americans have been doing for decades with credit cards.

http://www.interest.com/auto/news/car-prices-outpace-median-income/

http://www.interest.com/auto/news/car-affordability-study/?MSA=5120

Edit: Yikes, I see 7 year auto loans are becoming a thing.

* All of those special lease deals "$199/mo!" assume rather large down payments. If you look at the total cost of ownership for leasing, it's not much different than buying.

 

[jlee]

Everyone seems to be focusing on how much nicer cars are now, and how amazing they are for the money.

None of that matters however. Affordability is a pretty simple calculation. Extending payments out for 6 years, zero down deals, special leases* and all of that doesn't make them more affordable, it just stretches out the payments, like Americans have been doing for decades with credit cards.

http://www.interest.com/auto/news/car-prices-outpace-median-income/

http://www.interest.com/auto/news/car-affordability-study/?MSA=5120

Edit: Yikes, I see 7 year auto loans are becoming a thing.

* All of those special lease deals "$199/mo!" assume rather large down payments. If you look at the total cost of ownership for leasing, it's not much different than buying.

There's so many awesome used cars on the market right now I'd have a hard time convincing myself new (or lease) was worth it.

 

[desy]

Cars are not only nicer they are more reliable and last much longer.
Avg life expectancy of a car in the 70's was 5 yrs, now even in the worst conditions they last much longer, my dad thought it was a miracle his 60's Ford made it to 100k miles.
So you are financing a car for 7 you could/should keep for 15

 

[Pulsar]

Well... I think that we can all agree that the Tesla Model X is overpriced, anyway. Seriously... $130,000?!?

Except it's not.

Cars are insanely expensive and difficult to make profitably. Just ask Fiskar. If you look at the per-model-profit that car companies make, you'd be shocked. It's not very much. In many cases (small cars mainly) they are sold nearly at cost, and the profit is made on larger 'premium' vehicles. We'd all agree that an F-150 has a lot of content, but when you sell hundreds of thousands of them each year then economy of scale really kicks in. Tesla really doesn't have that economy of scale. Compare the Tesla to a hand-made exotic vehicle.

Car prices reflect component and manufacturing prices. Everything is substantially more expensive than it used to be. Hell, look at the insanity in the housing market.