Discounted Cars Benefit Buyers, but May Spell Trouble for Industry(nytimes.com)
nytimes.com
Discounted Cars Benefit Buyers, but May Spell Trouble for Industry
https://www.nytimes.com/2017/05/11/automobiles/wheels/car-dealers-discounts-price-cuts.html?ref=business
129 comments
Recent car lessee here. Like most people, I'm not in a position to buy a Tesla, but I agree that I can't stand the games the others play. I recently leased a 2017 Hyundai Sonata. I go in telling them exactly what I want (base model, no money down, 12k miles/year). They come back with an offer for something like $290 month + $1300 down (so effectively $326/month over 36 months). After some very tough negotiating, I got it down to $200/month with nothing down except registration (~$400 for registration, so effectively ~$211/month all-in).
It's outrageous to me that the initial price they give bears no resemblance to reality. But I'm sure they do it because there are some people who just don't like negotiating and will pay it. Or they might even tell them "I'm gonna do you a big favor and knock $25/month off so that you remain a loyal customer" and then the customer comes away actually feeling like they got a deal even though they were actually ripped off.
In the old days (WAY before my time), you might have negotiated for everything (say eggs in a grocery store) so I wouldn't have had an issue with negotiating for cars. But seeing as cars are one of the only remaining things that you can negotiate on price, the dealerships take advantage of the fact that people today just aren't used to negotiating and therefore aren't very good at it.
If there were a car brand with affordable cars that didn't play these games, I'd buy from them happily.
It's outrageous to me that the initial price they give bears no resemblance to reality. But I'm sure they do it because there are some people who just don't like negotiating and will pay it. Or they might even tell them "I'm gonna do you a big favor and knock $25/month off so that you remain a loyal customer" and then the customer comes away actually feeling like they got a deal even though they were actually ripped off.
In the old days (WAY before my time), you might have negotiated for everything (say eggs in a grocery store) so I wouldn't have had an issue with negotiating for cars. But seeing as cars are one of the only remaining things that you can negotiate on price, the dealerships take advantage of the fact that people today just aren't used to negotiating and therefore aren't very good at it.
If there were a car brand with affordable cars that didn't play these games, I'd buy from them happily.
I think the issue goes beyond sleazy sales tactics. There are issues of inventory, sales preferences, model cycles, etc. If you're Volkswagen and just came out with a brand-new Golf, there's excess demand that's been waiting for it to come out and limited supply. So, the vehicle sells close to the sticker price. People want the new thing, it's the most up-to-date vehicle in its class for at least a little while while the Fords and whatnot might have been updated 3-4 years ago.
Now, car companies could lower the sticker price of the vehicle as time goes on. A model that has been around for 5 years and will likely be refreshed in 1-2 years could just have money taken off the sticker. But then when they introduce the new model, there's sticker shock at how much more it is. There's also the perception issue that Volkswagen wouldn't want the Golf to be seen as below a competing vehicle just because it's slightly older - and then when the new model comes out people think it's overpriced because it's now "the same price as the competitor that has always been more expensive".
For most car companies, they're making cars on spec - the idea that if they make it, someone will buy it. If a company has excess inventory at the end of a year, they need to move it. It's a depreciating asset and if no one will buy it for $20k, they need to offer a discount. But that discount often isn't permanent. It's an issue of inventory that might be temporary. They'll even advertise "for $x thousand off!", but they don't want to change the sticker because they want to sell for that price when they don't have an inventory glut.
Likewise, sometimes consumers go off a brand or model. Car companies have scandals and need to discount things to win consumers back. Sometimes they miscalculate what consumers want and the vehicles still have utility, but they aren't what a lot of people want and have to discount them.
Sometimes you make a car that's in the same class as other vehicles, but it's an inferior version. You want your next model to be as good as the competitor so you don't want to lower the sticker and permanently put it in people's consciousness that you make an inferior vehicle to your competitor, but you need to sell these crappier cars. You'll even put it in ads that your discount exists many times.
Tesla doesn't have any of these problems. Their supply is more limited than their demand so they never have excess inventory. Given that they don't have competitors in their space, you're never left thinking, "the Tesla Model S was created in 2012, but this NewElectricCo Model Y was just created in 2017 and I'm getting the new awesome model that no one has and looks new and has the best stuff!"
If Tesla becomes a mass-market company with competitors, they'll face many of these same issues. If Tesla has 5 competitors providing much the same vehicles (in the way that an Audi A4, BMW 3 Series, and Mercedes C-Class are much the same vehicle) and they're building enough units to meet demand, they'll likely have to discount too.
If Tesla builds 100k units and consumers have only bought 70k by December, well, they're going to have to push the 30k units left over with discounts. If Tesla has a Model S from 2012 competing in 2020 against a brand-new NewElectricCo vehicle, they're going to have to discount to push their vehicle. At some point, Tesla is likely to produce a model that is considered not as good as a competitor and they'll have to discount it a bit until the next version comes out.
Tesla is in a great position right now because it has way more demand than supply, but if Tesla is actually looking to change the world, that's going to change.
--
A few closing thoughts: First, GM did experiment with no-haggle pricing. Their Saturn brand had that as a staple of their business. There's something cool about the idea, but when you're trading in a vehicle, you still need to haggle over the trade-in cost. So, any benefit to the non-sleaze of the new car's price can be lost on the trade-in (though you could sell it yourself if you wanted that hassle). Second, this also happens with a lot of products, not through negotiation, but through discounts. When the Galaxy S8 came out, it was new and shiny and there was excess demand and not going to be great discounts. Come January 2018, you'll likely to be able to pick up a discounted phone. The Galaxy S9 won't be out yet, but they'll be looking to clear out inventory and the S8 might look more dated against phones that have come out since making it less attractive at list price.
Now, it's still often a set, non-haggle price. So maybe you would have no problem if Tesla said, "we're offering $8k off all 2017 Model S vehicles" and everyone was getting the same thing. But companies are going to have to manage their inventory, model cycle, consumer preferences, and competitive alternatives. Tesla will have to do that as well. And some of that will be local. Maybe Tesla has some excess units in Florida nearing the end of the year while having sold out in California. It might make more sense for them to try and move the inventory in Florida with a discount. It costs money to move vehicles. Sometimes it makes sense to try and hit a certain critical mass in a market to get word-of-mouth. Maybe you're at risk of losing employees if you're constantly taking inventory away from them.
There's definitely a lot of sleaze in the industry, but Tesla likely won't be able to be a single, stable price forever as they ramp up to meet demand and gain competitors. They'll have to provide discounts - though they might provide up-front, non-sleazy, no-haggle discounts.
Now, car companies could lower the sticker price of the vehicle as time goes on. A model that has been around for 5 years and will likely be refreshed in 1-2 years could just have money taken off the sticker. But then when they introduce the new model, there's sticker shock at how much more it is. There's also the perception issue that Volkswagen wouldn't want the Golf to be seen as below a competing vehicle just because it's slightly older - and then when the new model comes out people think it's overpriced because it's now "the same price as the competitor that has always been more expensive".
For most car companies, they're making cars on spec - the idea that if they make it, someone will buy it. If a company has excess inventory at the end of a year, they need to move it. It's a depreciating asset and if no one will buy it for $20k, they need to offer a discount. But that discount often isn't permanent. It's an issue of inventory that might be temporary. They'll even advertise "for $x thousand off!", but they don't want to change the sticker because they want to sell for that price when they don't have an inventory glut.
Likewise, sometimes consumers go off a brand or model. Car companies have scandals and need to discount things to win consumers back. Sometimes they miscalculate what consumers want and the vehicles still have utility, but they aren't what a lot of people want and have to discount them.
Sometimes you make a car that's in the same class as other vehicles, but it's an inferior version. You want your next model to be as good as the competitor so you don't want to lower the sticker and permanently put it in people's consciousness that you make an inferior vehicle to your competitor, but you need to sell these crappier cars. You'll even put it in ads that your discount exists many times.
Tesla doesn't have any of these problems. Their supply is more limited than their demand so they never have excess inventory. Given that they don't have competitors in their space, you're never left thinking, "the Tesla Model S was created in 2012, but this NewElectricCo Model Y was just created in 2017 and I'm getting the new awesome model that no one has and looks new and has the best stuff!"
If Tesla becomes a mass-market company with competitors, they'll face many of these same issues. If Tesla has 5 competitors providing much the same vehicles (in the way that an Audi A4, BMW 3 Series, and Mercedes C-Class are much the same vehicle) and they're building enough units to meet demand, they'll likely have to discount too.
If Tesla builds 100k units and consumers have only bought 70k by December, well, they're going to have to push the 30k units left over with discounts. If Tesla has a Model S from 2012 competing in 2020 against a brand-new NewElectricCo vehicle, they're going to have to discount to push their vehicle. At some point, Tesla is likely to produce a model that is considered not as good as a competitor and they'll have to discount it a bit until the next version comes out.
Tesla is in a great position right now because it has way more demand than supply, but if Tesla is actually looking to change the world, that's going to change.
--
A few closing thoughts: First, GM did experiment with no-haggle pricing. Their Saturn brand had that as a staple of their business. There's something cool about the idea, but when you're trading in a vehicle, you still need to haggle over the trade-in cost. So, any benefit to the non-sleaze of the new car's price can be lost on the trade-in (though you could sell it yourself if you wanted that hassle). Second, this also happens with a lot of products, not through negotiation, but through discounts. When the Galaxy S8 came out, it was new and shiny and there was excess demand and not going to be great discounts. Come January 2018, you'll likely to be able to pick up a discounted phone. The Galaxy S9 won't be out yet, but they'll be looking to clear out inventory and the S8 might look more dated against phones that have come out since making it less attractive at list price.
Now, it's still often a set, non-haggle price. So maybe you would have no problem if Tesla said, "we're offering $8k off all 2017 Model S vehicles" and everyone was getting the same thing. But companies are going to have to manage their inventory, model cycle, consumer preferences, and competitive alternatives. Tesla will have to do that as well. And some of that will be local. Maybe Tesla has some excess units in Florida nearing the end of the year while having sold out in California. It might make more sense for them to try and move the inventory in Florida with a discount. It costs money to move vehicles. Sometimes it makes sense to try and hit a certain critical mass in a market to get word-of-mouth. Maybe you're at risk of losing employees if you're constantly taking inventory away from them.
There's definitely a lot of sleaze in the industry, but Tesla likely won't be able to be a single, stable price forever as they ramp up to meet demand and gain competitors. They'll have to provide discounts - though they might provide up-front, non-sleazy, no-haggle discounts.
> If there were a car brand with affordable cars that didn't play these games, I'd buy from them happily.
No you wouldn't. You've already lost the affordable game by insisting on new cars. New car dealerships get away with this crap because their customer base is already not very price-rational. It doesn't matter whether they're discounting you $1000 or $3000 when you've already foregone $10,000 or more in exchange for the abstract feeling of newness. If you don't want to play price games, just get on craigslist, look for a car at a price you like, go check it out and have your mechanic inspect it, then don't negotiate, just pay the price. Or whatever, you can even be sloppy and get screwed by a private party and still probably end up way ahead compared to the stealership's prices.
New cars are a luxury product and it's very strange to see people discussing them as if they're anything else. Luxury products always have wacky economics, since their value is so untied to fundamentals.
No you wouldn't. You've already lost the affordable game by insisting on new cars. New car dealerships get away with this crap because their customer base is already not very price-rational. It doesn't matter whether they're discounting you $1000 or $3000 when you've already foregone $10,000 or more in exchange for the abstract feeling of newness. If you don't want to play price games, just get on craigslist, look for a car at a price you like, go check it out and have your mechanic inspect it, then don't negotiate, just pay the price. Or whatever, you can even be sloppy and get screwed by a private party and still probably end up way ahead compared to the stealership's prices.
New cars are a luxury product and it's very strange to see people discussing them as if they're anything else. Luxury products always have wacky economics, since their value is so untied to fundamentals.
> No you wouldn't.
Yes, I think I would. Or at least that a lot of others would. I understand that used cars are a better deal, but I've already decided that I want the "luxury" of a new car. But within that framework, I still want the best price, just as many others do. It's not illogical to say "I want a new car and I want to pay as little as possible for it without negotiating". In my case, I bought a used car before my current one and it turned out to be a dud. Let's say that you place a premium on having a car that doesn't break down frequently. With a leased car, I'm paying for that luxury. I understand that I can come out ahead with used cars, but I don't want to deal with the hassle of taking it to a mechanic, the possibility of things breaking when the car is out of warranty, and yes, not having the latest features. And as much as people hate negotiating for new cars, negotiating for used cars is even worse.
Yes, I think I would. Or at least that a lot of others would. I understand that used cars are a better deal, but I've already decided that I want the "luxury" of a new car. But within that framework, I still want the best price, just as many others do. It's not illogical to say "I want a new car and I want to pay as little as possible for it without negotiating". In my case, I bought a used car before my current one and it turned out to be a dud. Let's say that you place a premium on having a car that doesn't break down frequently. With a leased car, I'm paying for that luxury. I understand that I can come out ahead with used cars, but I don't want to deal with the hassle of taking it to a mechanic, the possibility of things breaking when the car is out of warranty, and yes, not having the latest features. And as much as people hate negotiating for new cars, negotiating for used cars is even worse.
You're mistakenly legitimitizing the idea that there is some tangible "luxury" available from a truly new car (as opposed to a late model one, a year or two old, in impeccable condition and perhaps some aftermarket accessories).
However, that is a scam idea with no basis in the physical world, invented and maintained by those with a vested interest. Therefore, all a brand new car (as opposed to a good 1 year old car) gets you is a vague feeling of newness and false ideas in your head that the probability of failure is lower. As smart as you think you are, by buying into it you've already bought into their system. They're already selling you a bag of air, and already got you to agree that this has some value, so they have a lot of leverage on the price, since there's no objective way to value something that is useless except because people can be tricked into wanting it.
However, that is a scam idea with no basis in the physical world, invented and maintained by those with a vested interest. Therefore, all a brand new car (as opposed to a good 1 year old car) gets you is a vague feeling of newness and false ideas in your head that the probability of failure is lower. As smart as you think you are, by buying into it you've already bought into their system. They're already selling you a bag of air, and already got you to agree that this has some value, so they have a lot of leverage on the price, since there's no objective way to value something that is useless except because people can be tricked into wanting it.
I should say that I'm otherwise pretty happy with the car. So much so that a few weeks later we leased an Elantra for my wife. If I could go back, I would have gotten that instead. She has a few more gadgets than me (heated seats, sunroof, leather steering wheel) and the car gets better mileage though it is smaller and it's nice for at least one of us to have a roomy back seat. Both cars have Android auto and apple car which are amazing.
We're paying $170 month for hers ($0 down except for registration which was 280 since we transferred from another car).
I'm only putting this here as a baseline for others to use. I didn't sign an NDA on what I'm paying ;) It's easy to get ripped off in this game, so it's good to know what others are paying. I hope this helps someone. And I'd be curious to know if you got a lower price!
We're paying $170 month for hers ($0 down except for registration which was 280 since we transferred from another car).
I'm only putting this here as a baseline for others to use. I didn't sign an NDA on what I'm paying ;) It's easy to get ripped off in this game, so it's good to know what others are paying. I hope this helps someone. And I'd be curious to know if you got a lower price!
The problem is there are too many brands. Get mad at the GM deal, 3 years latter buy a Ford, then decide it is American cans and replace the Ford with a Honda, Honda is bad buy a Toyota, then onto Volkswagen, Kia... and back to GM because maybe they have gotten better in the last 20 years.
Dealer loyalty is not something you have so they have no incentive to make you want to come back: you probably won't anyway. If you a a buyer for a large company (ie a fleet of plumbers) you will find your dealer is more responsive. Not only does it get the large sale today, but he knows you will be back next year for more if he treats you well because there are advantages to having all one make of vehicle in a fleet.
Dealer loyalty is not something you have so they have no incentive to make you want to come back: you probably won't anyway. If you a a buyer for a large company (ie a fleet of plumbers) you will find your dealer is more responsive. Not only does it get the large sale today, but he knows you will be back next year for more if he treats you well because there are advantages to having all one make of vehicle in a fleet.
Google has a spreadsheet of what dealer, what salesman, what price on ev leases / purchases.
Made negotiations easy. You basically know the lowest the dealers will go.
Made negotiations easy. You basically know the lowest the dealers will go.
>I will drink a toast to the day the last auto dealership goes out of business.
Unfortunately, manufacturers are prohibited from selling directly to consumers in many states. As usual, scratch below the surface of a "market failure", and you're likely to find some regulation getting in the way.
Unfortunately, manufacturers are prohibited from selling directly to consumers in many states. As usual, scratch below the surface of a "market failure", and you're likely to find some regulation getting in the way.
It might be worth asking why the regulations exist. Scratch below the surface of "red tape" and you're likely to find some regulatory capture and incumbents buying laws to stop competition.
^ This. Here is a good Planet Money episode about it.
http://www.npr.org/sections/money/2013/02/12/171814201/episo...
http://www.npr.org/sections/money/2013/02/12/171814201/episo...
Look at that regulation a little closer, and you may find a reason it was created.
Doesn't mean the particular piece of regulation is helpful nowadays, but also doesn't immediately mean it isn't.
Doesn't mean the particular piece of regulation is helpful nowadays, but also doesn't immediately mean it isn't.
And what money funded the writing of those regulations?
It's purely the end-game of capitalism - if not constrained, it will subvert political systems to install it's cronies, capture regulatory agencies and buy legislation.
A government that doesn't regulate money's interaction with politics will end up representing only capital-owners.
It's purely the end-game of capitalism - if not constrained, it will subvert political systems to install it's cronies, capture regulatory agencies and buy legislation.
A government that doesn't regulate money's interaction with politics will end up representing only capital-owners.
Car dealerships are also among the ugliest, least appealing places in urban settings. But then, everything car-related is part of perhaps the majority of what's bad about modern society…
And usually massive wastes of valuable land.
True, but, to be fair, a parking lot filled with cars for sale is only marginally worse than a giant parking lot filled with cars sitting there unused most hours of the day — and we have far more of the latter wasting our valuable land.
What else would you do with it?
How about a park? Or more residential housing? Office buildings?
Can't wait till we can replace our petroleum vehicle economy and it's superfund sites (i.e., any former gas station).
Can't wait till we can replace our petroleum vehicle economy and it's superfund sites (i.e., any former gas station).
In my town, you'd build houses on it. The vacancy rate is under 0% and small, dingy houses sell for about $600,000.
Last time I bought a car, I had a fairly pleasant experience at the dealer. I looked up what I wanted online (CarGuru.com), called the dealer, made sure it was available, and then went over and bought it. Zero stress.
The sales guys are still often idiots. But if you know the cost of the car, don't need financing, and either plan to do a private sale of your current car or it's a donate for $2K vs. trade-in situation, it isn't really all that stressful.
What's stressful is when they start playing games with all the levers. If you're fortunate enough to not be in the position to maybe have to play those games, you basically hold the cards.
What's stressful is when they start playing games with all the levers. If you're fortunate enough to not be in the position to maybe have to play those games, you basically hold the cards.
Being a former certified car sales guy who changed to IT out of passion, I am currently in the process of buying two cars for business and family. I am horrified by the current state of car sales. Cars are presented dirty, salespeople show absolutely no interest in even talking to us while staying around their dealership for a long time looking at specific cars.
Best was this Monday, when I called one dealer and told: I want to buy a (specific) new car. Now. No haggling, I just sign. Had to call them 3 more times, every time I got a new excuse why no salesman is available to me. "Please wait another hour, then he is out of the meeting"... so I just called another more expensive dealer after 8 hours, told them the same thing. The salesman sent me the contract in a second. But as I mailed the signed contract back after business hours, I did not hear anything from it the next day. Called the dealership after waiting half of the next day to hear "Salesman out of office today". I said: no problem, I just resend the contract to another person. "You can do this, but the salesguy needs to get permission from the boss to sell you the car". At the end of the day, they somehow managed to send me the invoice for the car.... but everything took many phonecalls.
Best was this Monday, when I called one dealer and told: I want to buy a (specific) new car. Now. No haggling, I just sign. Had to call them 3 more times, every time I got a new excuse why no salesman is available to me. "Please wait another hour, then he is out of the meeting"... so I just called another more expensive dealer after 8 hours, told them the same thing. The salesman sent me the contract in a second. But as I mailed the signed contract back after business hours, I did not hear anything from it the next day. Called the dealership after waiting half of the next day to hear "Salesman out of office today". I said: no problem, I just resend the contract to another person. "You can do this, but the salesguy needs to get permission from the boss to sell you the car". At the end of the day, they somehow managed to send me the invoice for the car.... but everything took many phonecalls.
Seems that deregulation is sorely needed here. Car dealerships are working with the same enthusiasm as the DMV.
My local DMV is far more enjoyable to go to than my local car lot.
"... don't need financing"
Only this can create problems of its own. Some dealers will refuse to work with you if you are paying with actual money instead of a loan. My parents went through this. They sold some farmland and decided to buy a new car with the profits. A few dealers simply said no. The car they wound up with mostly depended on where would actually sell them the car.
Only this can create problems of its own. Some dealers will refuse to work with you if you are paying with actual money instead of a loan. My parents went through this. They sold some farmland and decided to buy a new car with the profits. A few dealers simply said no. The car they wound up with mostly depended on where would actually sell them the car.
You could also be missing out on incentives from the manufacturer for not using their financing. It's definitely a good idea to have money or financing already lined up, but some manufacturers will give thousands of dollars in incentives to use their financing.
There are probably cases where the current incentives are rolled up in the financing, e.g. 0% interest. But there are also often other fees and, frankly, the available (effectively) risk-free investment options these days have such low rates of return as to be almost indistinguishable from 0%.
They're not giving you deals on the financing because they like you.
If I were buying a car my very strong default is to just pay cash and be done with it.
They're not giving you deals on the financing because they like you.
If I were buying a car my very strong default is to just pay cash and be done with it.
Those incentives come with costs. In their case, it was better to know they didn't have to worry about making a loan payment every month for years when their overall financial future was a little iffy at the time - prudent when the main income earner's health was failing. It wound up being the correct decision, as my father died a couple years later.
My last vehicle I had cash to pay for it. Manufacturer offered a $2k incentive to finance through their own financing arm. I asked, and there was no early payoff penalty. So I financed the car, and sent a check a week later, paying it off completely well before the first payment was due.
I've never encountered this but I'm not shocked. They often don't make a lot of money ($500 is a figure I hear thrown around) on the car itself.
Why wouldn't they take cash then? If they don't have to give the incentives, that's more money in their pocket.
They bank on screwing people over with financing. I didn't tell them how I'd be paying until we were signing paperwork already. He wasn't happy to hear a I will be writing a check. Then I refused to sign the arbitration agreement and he really got mad, but oh well I got the car anyway. However it wasn't a pleasant experience overall.
Some simply aren't willing to do the paperwork one must do with transfers over 10k. More importantly, they make more money off of the loans than they do with cash. This is true even if they must repo the car later on - they can often sue you for at least part of the total cost, minus the amount they sell the car for (that last bit might vary by state, though).
I seem to remember some law preventing businesses from refusing cash for a sale.
Also, when people say they're paying "cash" for a car they don't necessarily mean they're walking in with a stack of hundred-dollar bills. "Cash" often means cashier's check, etc. - the idea is that you're not borrowing money to buy the car.
It's a very common misconception in the US that businesses are obligated to accept cash for a sale [1].
[1] https://www.federalreserve.gov/faqs/currency_12772.htm
[1] https://www.federalreserve.gov/faqs/currency_12772.htm
Then take the financing and pay off the loan a month later. At least in this state, there's no penalty for doing so.
>The sales guys are still often idiots.
Ugh. I was test driving a car I knew almost nothing about recently. I'm in the market for a fun weekend driver as a second car, and this one caught my eye on the dealer lot. I was looking at the car when a salesman approached me (I did not approach him, and I did not look at any other cars). I asked him to let me take it for a drive, and while we were driving I was asking him questions about it. "I don't know" was his only response.
I'm sitting here in the drivers seat of a two-seater sports car doing 110mph down the highway and this guy is completely silent. "Does it have a turbo?" I don't know. "How big is the engine?" I don't know. "How many gears does it have?" I don't know. "How fast can I be going while putting the roof down?" Actually on this one his response was "let's give it a shot" and started lowering the roof at highway speeds. Luckily it apparently can handle that.
Turns out the guy just started working there about two months prior and had never even heard of the car we were driving, he'd only sold Jeeps and pickup trucks and sedans up to that point. He just wanted the commission from selling a car he knew nothing about.
I liked the car, but I will not buy from them.
Ugh. I was test driving a car I knew almost nothing about recently. I'm in the market for a fun weekend driver as a second car, and this one caught my eye on the dealer lot. I was looking at the car when a salesman approached me (I did not approach him, and I did not look at any other cars). I asked him to let me take it for a drive, and while we were driving I was asking him questions about it. "I don't know" was his only response.
I'm sitting here in the drivers seat of a two-seater sports car doing 110mph down the highway and this guy is completely silent. "Does it have a turbo?" I don't know. "How big is the engine?" I don't know. "How many gears does it have?" I don't know. "How fast can I be going while putting the roof down?" Actually on this one his response was "let's give it a shot" and started lowering the roof at highway speeds. Luckily it apparently can handle that.
Turns out the guy just started working there about two months prior and had never even heard of the car we were driving, he'd only sold Jeeps and pickup trucks and sedans up to that point. He just wanted the commission from selling a car he knew nothing about.
I liked the car, but I will not buy from them.
I work in the auto finance industry. I totally understand your point of view. There are a lot of games the dealers play to make a profit on each vehicle they sell. It can be really trying on the customer.
I would love to disrupt this auto dealership industry. Tesla business model is compelling but I don't think it needs to be manufacturer driven. I think there is still a place for dealerships but their business model can be upended. Some guys working on this is AutoFi and Carvana. I think there are ideas out there. I would love to be a part of that.
I would love to disrupt this auto dealership industry. Tesla business model is compelling but I don't think it needs to be manufacturer driven. I think there is still a place for dealerships but their business model can be upended. Some guys working on this is AutoFi and Carvana. I think there are ideas out there. I would love to be a part of that.
Did you always negotiate car prices yourself or did you consider using a purchasing service like Costco where there is no negotiation?
Almost every online car purchasing service at major brands is a white labeled truecar. Don't assume that, say, the "AAA" or "Costco" brand is giving you any special treatment. Your lead goes into a lead queue, a price that is better than floor/sticker but not as good as you may have gotten from negotiation is given, and you, saving time and stress instead of money, buy the car.
I was a huge fan of truecar until I did the experience, and now I'm hugely disappointed. I felt like the experience hid information and shepherded me to a dealer to let it take advantage of me; I saved some time and hassle, but I spent more money in the process and at the end, wasn't all that happy. YMMV, so check out the tool (directly or via AAA or Costco etc.), but be realistic over what it can do: it makes money from the dealers, not you, so be aware of biases.
I haven't tried non-online services (personal negotiators, etc.) so can't speak to those.
I was a huge fan of truecar until I did the experience, and now I'm hugely disappointed. I felt like the experience hid information and shepherded me to a dealer to let it take advantage of me; I saved some time and hassle, but I spent more money in the process and at the end, wasn't all that happy. YMMV, so check out the tool (directly or via AAA or Costco etc.), but be realistic over what it can do: it makes money from the dealers, not you, so be aware of biases.
I haven't tried non-online services (personal negotiators, etc.) so can't speak to those.
[deleted]
My friend's recent experience
Before the sale: Gets told her gender affects her ability to drive manual After the sale (different location): Service is non-existent, they argue valid issues aren't real and get downright insulting.
Before the sale: Gets told her gender affects her ability to drive manual After the sale (different location): Service is non-existent, they argue valid issues aren't real and get downright insulting.
I never have had an issue at a new car dealer nor can I recall anyone else doing so. Might be a local thing, I do have many of the same brand to choose from being in the metro Atlanta area.
Now to the article, full loaded vehicles have a lot of cushion when it comes to discounts and so the manufacturer isn't going to suffer a loss of the vehicle but instead losing out on extended profit.
Another area they are giving up profit on is financing. When I bought a new Volt back in March; at discount but nothing stellar; I ended up taking a loan because it was zero percent. Real hard to justify paying cash when they will just give you money.
I did notice that it was mostly sedans they listed as holding the discounts with some SUV but not many if any CUV/ CUV sales are taking off world wide so there isn't much pressure there.
I would wonder how much pressure this puts on used car franchises, those who only sell used. See the low prices benefit manufacturer branded dealers because they can get the trade as well.
Now to the article, full loaded vehicles have a lot of cushion when it comes to discounts and so the manufacturer isn't going to suffer a loss of the vehicle but instead losing out on extended profit.
Another area they are giving up profit on is financing. When I bought a new Volt back in March; at discount but nothing stellar; I ended up taking a loan because it was zero percent. Real hard to justify paying cash when they will just give you money.
I did notice that it was mostly sedans they listed as holding the discounts with some SUV but not many if any CUV/ CUV sales are taking off world wide so there isn't much pressure there.
I would wonder how much pressure this puts on used car franchises, those who only sell used. See the low prices benefit manufacturer branded dealers because they can get the trade as well.
I believe at least part of this is better quality cars that last longer. The 1980s started an era of crap cars that were junk after 100k miles. That's improved, over time, and not equally across all makes and models.
But, we finally seem to be at a point where there are fewer reasons to get rid of a 10 year old car.
Edit: some corraborating figures: http://news.ihsmarkit.com/press-release/automotive/vehicles-...
But, we finally seem to be at a point where there are fewer reasons to get rid of a 10 year old car.
Edit: some corraborating figures: http://news.ihsmarkit.com/press-release/automotive/vehicles-...
Companies like Honda who have been known for reliable cars that last well over 150k have been going the other direction with regards to quality. A lot of their parts are made in China not to the standards they were in Japan.
This will hurt them in the long run. I've bought two Toyotas but then I rented a newer one the other day and was not impressed.
Can you tell me why you weren't impressed?
I have a 2008 Toyota Tundra with ~96k miles on it, no problems except standard maintenance schedule.
I have a 2008 Toyota Highlander Hybrid with ~112k miles on it; again, nothing but scheduled maintenance. I did have to just replace the brakes and rotors for the first time because they rusted out due to disuse; battery regeneration is so effective they're only used in panic stops (mostly).
My next vehicle is a Tesla, but I'd buy a Toyota again (used, from Carmax) if I needed a vehicle sooner.
I have a 2008 Toyota Tundra with ~96k miles on it, no problems except standard maintenance schedule.
I have a 2008 Toyota Highlander Hybrid with ~112k miles on it; again, nothing but scheduled maintenance. I did have to just replace the brakes and rotors for the first time because they rusted out due to disuse; battery regeneration is so effective they're only used in panic stops (mostly).
My next vehicle is a Tesla, but I'd buy a Toyota again (used, from Carmax) if I needed a vehicle sooner.
I'm curios as to how it would hurt the manufacturer. As a consumer, yes I'm not getting the amazing reliability. But if their cars don't last forever, people will buy more cars right?
But if they're told their Honda will last forever and it breaks down at 90k, how likely are they to buy another Honda?
In states with a lot of snow, body rust used to be a real limiting factor as well. Growing up in the 60s-70s, I doubt if any of our cars got much past 50K miles over ~5 years.
Rust is still taking cars in the northern states. It takes longer, but if you make it to around 15 years rust will start reaching important things like brakes and suspension.
Yeah, I have a ~20yo Honda Del Sol that I bought in the last model year. I haven't driven it in winter for a while. (I have another vehicle.) At this point it creates something of a sensation at the local Honda dealer when I bring it in because there aren't many on the roads any longer (because of rusting out) and it was a somewhat unique vehicle.
Still, this is 15-20 years vs. 5 years.
Still, this is 15-20 years vs. 5 years.
Same here in Northern Europe, but those are commodity parts and relatively easy to replace (although can be labour intensive). I just replaced the calipers and springs (half destroyed by rust and half by potholes) on my 2002 Lexus IS200 and it's as good as new after 210,000km.
When I was young my parents had a Renault and after around 12 years the bodywork started going rusty under the passenger footwell. They had it patched up, but eventually the rust spread. Nowadays something like that is pretty uncommon.
When I was young my parents had a Renault and after around 12 years the bodywork started going rusty under the passenger footwell. They had it patched up, but eventually the rust spread. Nowadays something like that is pretty uncommon.
I've also had all the brake lines and power steering lines rust out in a Ford Explorer though. That's probably my one really big failure of not getting rid of a vehicle when it had the first of those expensive repairs.
Most American cars fail after 10 years and look quite beaten up. Japanese cars used to last 20-30 years but I think Toyota and Honda are the only brands that have kept up this reputation, and even then not all that well.
All this has to do with the fact that people don't have money to upgrade to the latest lease.
All this has to do with the fact that people don't have money to upgrade to the latest lease.
My 1979 Honda CVCC is going as strong as ever. I swapped the engine/transmission out once, but the engine was still running fine, I just wanted the 5-speed. A cheap repaint in 2013, and AFAIC it's good for another 20.
https://www.reddit.com/r/Honda/comments/1q9tww/just_finished...
https://www.reddit.com/r/Honda/comments/1q9tww/just_finished...
Wow. I'm impressed. There's something about completely ordinary old cars that look so pristine after a few decades. I saw a Datsun B210 the other day that was similarly cared for and it impresses me more than most classic muscle cars. Everyone expects a '68 Camaro to look awesome; nobody expects the same from a '79 Honda.
My father had a Datsun B210 in California (no snow or road salt) and the body rusted badly after a few years.
California in general is pretty easy on cars, but if you live close to the ocean, salt air is still an issue. The majority of the rust my CVCC got was during the few years I lived near the beach.
Thanks! And you're right. Many years ago, I used to feel a little silly about maintaining what was essentially an inexpensive economy car. But it was the first car I bought with my own money in college (for the princely sum of $500 in 1992), and I just really enjoy driving it around town. It's so small I can park anywhere, and it gets 30-40 MPG.
And nowadays, it gets lots of positive comments. Turns out the muscle car/classic car guys like seeing the old stuff no matter what it is.
And nowadays, it gets lots of positive comments. Turns out the muscle car/classic car guys like seeing the old stuff no matter what it is.
Wow that car looks really really nice, with a stylish flat. It really tells me that the owner loves him/her/it :)
It looks great -- however, how safe is a model made in '79 compared to a modern model?
Compared to a modern car? Not even the same scale.
It is 'safe' for the time, in that it's a unibody steel shell, which is more resilient than the body-on-frame style that was common in the era. It would probably handle a rollover OK. The bumpers are solid. There is an anti-whiplash head restraint, and the seatbelts work as expected.
But there are no reinforced bars to prevent cabin intrusion from a side impact, and crumple zones are nonexistent. No airbags.
So I don't really drive it on the freeway. It's an around-town runabout. On the 35mph-and-lower roads it spends 99% of its time, It's fine. It is undoubtedly safer than the motorcycle I would likely otherwise be riding.
For distance driving, I use my 'new' car, a '98 Jeep Grand Cherokee. Which is probably still bad compared to a truly modern vehicle, but is much safer (and more comfortable) than the CVCC. And the ZJs were great years for Cherokees. The straight-6 is practically indestructible, and the transmission will last forever. If I keep maintaining it as well, it should last for easily another 10-20.
(Not having a car payment, and having insurance payments of <$100/month for both, is nice.)
It is 'safe' for the time, in that it's a unibody steel shell, which is more resilient than the body-on-frame style that was common in the era. It would probably handle a rollover OK. The bumpers are solid. There is an anti-whiplash head restraint, and the seatbelts work as expected.
But there are no reinforced bars to prevent cabin intrusion from a side impact, and crumple zones are nonexistent. No airbags.
So I don't really drive it on the freeway. It's an around-town runabout. On the 35mph-and-lower roads it spends 99% of its time, It's fine. It is undoubtedly safer than the motorcycle I would likely otherwise be riding.
For distance driving, I use my 'new' car, a '98 Jeep Grand Cherokee. Which is probably still bad compared to a truly modern vehicle, but is much safer (and more comfortable) than the CVCC. And the ZJs were great years for Cherokees. The straight-6 is practically indestructible, and the transmission will last forever. If I keep maintaining it as well, it should last for easily another 10-20.
(Not having a car payment, and having insurance payments of <$100/month for both, is nice.)
"All this has to do with the fact that people don't have money to upgrade to the latest lease."
1. A lot of folks still find leasing cars to be a bad money decision due to restrictions on miles, messes that families make, and never actually owning the car.
2. I truly think this is more that many don't have the money to properly care for the car. I've seen folks that do all the maintenance and fix problems as they arrive. 500,000 miles (800,000km) later, their cars are still running, though they look worse for wear.
1. A lot of folks still find leasing cars to be a bad money decision due to restrictions on miles, messes that families make, and never actually owning the car.
2. I truly think this is more that many don't have the money to properly care for the car. I've seen folks that do all the maintenance and fix problems as they arrive. 500,000 miles (800,000km) later, their cars are still running, though they look worse for wear.
[deleted]
Honda mechanicals, absolutely. Honda paint, on the other hand, just doesn't seem to hold up as well as other brands.
Meanwhile whatever godforsaken toxic chemical Mercedes Benz was putting in their paints in the 70s and 80s seems to have left those cars impervious to dulling and fading.
Meanwhile whatever godforsaken toxic chemical Mercedes Benz was putting in their paints in the 70s and 80s seems to have left those cars impervious to dulling and fading.
Honda mechanicals, absolutely. Honda paint, on the other hand, just doesn't seem to hold up as well as other brands.
The 1980s started an era of crap cars that were junk after 100k miles.
I would qualify that by saying "American compact cars". Japanese cars were fine, and a Chevy Caprice would still give you a few hundred thousand trouble-free miles.
I would qualify that by saying "American compact cars". Japanese cars were fine, and a Chevy Caprice would still give you a few hundred thousand trouble-free miles.
Full sized cars like the Monte Carlo we're junk too. Owned a 1980. 88-92 saw the first mass consumer computer controlled fuel injection. That is when cars really got reliable. Removing carburators was a game change. My parents had a Ford Tempo (1990) and drove that thing into the ground (250k miles) running a paper route. The auto transmissions sucked in that era though.
You could get 200k miles on my 90 Ford mustang manual. Auto tranny would always bust 40-50k miles on that era Mustang though. Repairs were simply less expensive in that early car computer era. I actually knew how the whole computer system worked. Difference in th 6502 and modern assembly. Yet, cars don't need much more than a 6502 for most things. Oh well.
You could get 200k miles on my 90 Ford mustang manual. Auto tranny would always bust 40-50k miles on that era Mustang though. Repairs were simply less expensive in that early car computer era. I actually knew how the whole computer system worked. Difference in th 6502 and modern assembly. Yet, cars don't need much more than a 6502 for most things. Oh well.
I agree that replacing carburetors with electronic fuel injection made a huge improvement. Another step was replacing the distributor and points with electronic ignition. When was the last time anyone replaced a spark plug?
Uhh, maybe you should go inspect the spark plugs on your car right now. Spark plugs are very cheap and not worth economizing on.
Huh? I've replaced tons of them. Before they went to platinum/iridium plugs, you still needed to change them at 20-50k. The platinum or iridium ones will last 100k I think, but any car these days lasts longer than that, so they still need to be replaced once or twice. But on modern inline engines they're generally really easy to replace.
Maybe you meant to ask when the last time someone replaced a distributor or adjusted points was? A lot of cars still had distributors up until around 2000 or so, so they're not completely gone yet. But points, thankfully, have been gone since the 70s.
Maybe you meant to ask when the last time someone replaced a distributor or adjusted points was? A lot of cars still had distributors up until around 2000 or so, so they're not completely gone yet. But points, thankfully, have been gone since the 70s.
> But on modern inline engines they're generally really easy to replace.
The last two pickups I've owned, 2006 and 2010 F150s, it entails disassembling half the engine head to get at the spark plugs - and I have some experience, the 2006 had the garbage 5.4 V8, that has coil problems and blows plugs regularly after 100k miles... Other modern vehicles I've looked under the hood of don't look to be designed for any more ease of access or repair, either.
The last two pickups I've owned, 2006 and 2010 F150s, it entails disassembling half the engine head to get at the spark plugs - and I have some experience, the 2006 had the garbage 5.4 V8, that has coil problems and blows plugs regularly after 100k miles... Other modern vehicles I've looked under the hood of don't look to be designed for any more ease of access or repair, either.
I guess you're looking at crappy vehicles then. Go look at some 4-cylinder Japanese cars. They're all super easy to work on and last forever. Well, the Hondas, Toyotas, and Mazdas anyway. I always steer clear of American cars; those give you all kinds of wacky crap like putting the battery inside the wheelwell so you have to remove the wheel to remove it, aside from horrible reliability and interiors that fall apart quickly.
Yeah, the Tempo referenced way on up was falling apart. Interior was garbage, but it kept rolling.
Yeah, from what I hear, that's pretty normal with American cars (particularly GM and Ford): the drivetrains are usually very reliable, but the interiors are terrible and fall apart quickly, and the rest of the car looks like crap before long too. But the thing never quits running so it keeps getting used even though it looks awful.
I honestly have no idea why anyone buys American cars, unless they don't know this. Probably they're a little cheaper than imports.
I honestly have no idea why anyone buys American cars, unless they don't know this. Probably they're a little cheaper than imports.
I have a Chrysler product that needs new plugs every 30k. Luckily they're super easy to replace.
So the tl;dr of this article is that lower prices are good for consumers, but manufacturers cannot sustain selling below cost (what a surprise).
I wonder what is driving demand lower. Has supply simply finally caught up to pent-up demand from the crisis? Is some other expenditure (housing, healthcare) sucking up discretionary spending that would otherwise go towards new cars? Is this a leading indicator of a drop in consumer confidence/spending that more traditional indicators haven't picked up on yet? Are people driving fewer miles (I don't know the exact numbers off-hand, but I believe the data doesn't support this)? Are longer-lasting cars hurting new car sales?
I wonder what is driving demand lower. Has supply simply finally caught up to pent-up demand from the crisis? Is some other expenditure (housing, healthcare) sucking up discretionary spending that would otherwise go towards new cars? Is this a leading indicator of a drop in consumer confidence/spending that more traditional indicators haven't picked up on yet? Are people driving fewer miles (I don't know the exact numbers off-hand, but I believe the data doesn't support this)? Are longer-lasting cars hurting new car sales?
It seems the last sentence rings true for me an my social circle. I have a 15 year old car that costs me almost nothing because it's paid for and worth so little that I only carry liability insurance.
Sure, I could get an awesome new car, but there is absolutely no rational economic reason to do so.
Other than missing lane assist and adaptive cruise, I see no useful features that have emerged in cars for nearly 20 years.
Electric cars are about it, but the environmental impact of effectively throwing away a perfectly good car to get a new electric car defeats the purpose.
Sure, I could get an awesome new car, but there is absolutely no rational economic reason to do so.
Other than missing lane assist and adaptive cruise, I see no useful features that have emerged in cars for nearly 20 years.
Electric cars are about it, but the environmental impact of effectively throwing away a perfectly good car to get a new electric car defeats the purpose.
The safety improvements in the past 20 years have been huge. In particular crash structures are better at handling side impact and front offset crashes. And front crash technology can now prevent many collisions.
http://www.iihs.org/iihs/topics/t/automation-and-crash-avoid...
http://www.iihs.org/iihs/topics/t/automation-and-crash-avoid...
Many of these same safety "improvements" have also made safety worse for users of other, less expensive vehicles, for cyclists, and for pedestrians, by mandating much higher vehicle weights and larger A pillars that make it harder to see other road users during turns, especially left turns. All this just to avoid crashes that wouldn't happen without the inattention caused by gadgets like automatic transmissions, cruise control, and smartphones.
The rich eat the poor.
The rich eat the poor.
>Other than missing lane assist and adaptive cruise, I see no useful features that have emerged in cars for nearly 20 years.
You're forgetting fuel economy and crashworthiness. Fuel economy has improved greatly in the last 20 years; I drive a car that 20 years ago with this much power and weight would probably have gotten less than 30mpg on the highway, this one gets 40. Of course, gas prices are low so you might not care about this. But crash protection has also gotten far better in the last 15-20 years. You can walk away from a crash in a modern car that would have maimed or killed you in your 15yo one (even for a car of the same rough size).
>Electric cars are about it, but the environmental impact of effectively throwing away a perfectly good car to get a new electric car defeats the purpose.
Wrong. You're not "throwing away a perfectly good car", you're reselling that car on the used market to someone else, and in the end (assuming the market doesn't expand) this results eventually in some really old POS car somewhere being junked, which is good because it's pouring out emissions and wasting fuel. More people buying new cars increases the supply of newer cars on the used market, which helps push the oldest and crappiest cars out of usage. Of course, there's limits to this, but the point is: don't feel bad about getting rid of a "perfectly good car"; it's going to continue getting used, just not by you, and theoretically results in another car that really isn't "perfectly good" getting finally retired.
The thing that really sucks here is that, in some states at least, you're highly penalized for buying a new or newer car because of personal property taxes. They should just eliminate these taxes for all but luxury vehicles maybe, to encourage people to buy newer cars to improve safety and emissions. There's already a disincentive in higher insurance rates; we don't need to add to that with pointless taxes.
You're forgetting fuel economy and crashworthiness. Fuel economy has improved greatly in the last 20 years; I drive a car that 20 years ago with this much power and weight would probably have gotten less than 30mpg on the highway, this one gets 40. Of course, gas prices are low so you might not care about this. But crash protection has also gotten far better in the last 15-20 years. You can walk away from a crash in a modern car that would have maimed or killed you in your 15yo one (even for a car of the same rough size).
>Electric cars are about it, but the environmental impact of effectively throwing away a perfectly good car to get a new electric car defeats the purpose.
Wrong. You're not "throwing away a perfectly good car", you're reselling that car on the used market to someone else, and in the end (assuming the market doesn't expand) this results eventually in some really old POS car somewhere being junked, which is good because it's pouring out emissions and wasting fuel. More people buying new cars increases the supply of newer cars on the used market, which helps push the oldest and crappiest cars out of usage. Of course, there's limits to this, but the point is: don't feel bad about getting rid of a "perfectly good car"; it's going to continue getting used, just not by you, and theoretically results in another car that really isn't "perfectly good" getting finally retired.
The thing that really sucks here is that, in some states at least, you're highly penalized for buying a new or newer car because of personal property taxes. They should just eliminate these taxes for all but luxury vehicles maybe, to encourage people to buy newer cars to improve safety and emissions. There's already a disincentive in higher insurance rates; we don't need to add to that with pointless taxes.
There was fuel economic cars 15-20 years ago, if you've forgotten. My car is 17 years old and gets 35 mpg mixed city/highway.
Some got even more (civic HX).
Some got even more (civic HX).
The Civic HX would be illegal to sell now because it won't meet crash safety standards. That's the point: you can get a car now that weighs quite a bit more than that HX, performs far better in a crash, has significantly lower emissions, has much more passenger space, and still gets the same fuel economy roughly (i.e. a larger/heavier class of car is getting the same economy as an econocar that's now too small and unsafe to be sold).
Relatively safe 2002 cars to now is not actually that big a jump in safty. There are some surpingly minor improvemts such as VSA being slightly better at preventing rollover, but that's very much an edge case and generally speaking a rounding error in terms of safety.
The only significant new safty feature is automatic breaking but that generally has fairly minimal impact. On the other hand I think many people are more or less waiting for self driving cars, which may not be out soon but make minor improvements seem less relevant.
The only significant new safty feature is automatic breaking but that generally has fairly minimal impact. On the other hand I think many people are more or less waiting for self driving cars, which may not be out soon but make minor improvements seem less relevant.
This is just plain wrong. Car chassis are much better designed now with better grades of steel and better design for managing crash energy. Crash-safety standards have also gone way up in that time. See here:
https://www.wired.com/2017/02/watch-terrifyingly-bad-car-saf...
http://www.popularmechanics.com/cars/a11201/why-cars-are-saf...
https://www.wired.com/2017/02/watch-terrifyingly-bad-car-saf...
http://www.popularmechanics.com/cars/a11201/why-cars-are-saf...
>Wrong. You're not "throwing away a perfectly good car", you're reselling that car on the used market to someone else
You're overestimating the market for cars with >150k miles with lots of quirks that don't bother me (bad speakers, etc). There is a strong chance the car would not sell and would be parted out.
The manufacturing of a new car has a large impact on the environment that I'm not sure is offset by the improved efficiency improvement to my relatively little driving (<10k yearly).
You're overestimating the market for cars with >150k miles with lots of quirks that don't bother me (bad speakers, etc). There is a strong chance the car would not sell and would be parted out.
The manufacturing of a new car has a large impact on the environment that I'm not sure is offset by the improved efficiency improvement to my relatively little driving (<10k yearly).
Motors have gotten more efficient, but new cars weigh more. Those things just about cancel out.
No, they don't. Look at the fuel economy numbers (and then adjust because the testing methodology has gotten more stringent two times, one just recently and one in 2008 IIRC). New cars are a little heavier, and they still get significantly better economy.
The last car I drove was built in the early nineties and used about 5l/100km gasoline in the city. There aren't many cars that use less fuel today.
From my perspective, newer vehicles are almost strictly worse than models from 20 years ago. There's a lot of complexity and bells and whistles and shoddy construction that I don't appreciate.
If I could find a warehouse filled with mint vehicles from, say, 1985, when bodywork was heavy guage steel, and computers were few and far between...
If I could find a warehouse filled with mint vehicles from, say, 1985, when bodywork was heavy guage steel, and computers were few and far between...
I'm not sure I agree with the shoddy construction part, but I'm with you on the complexity and bells and whistles. Cars from this era will be super big headaches for classic car guys in 30-40 years. The electronics are so customized that no one will be able to find parts that work.
Original restorations will be next to impossible I think, and you already have weird EPA requirements like if you replace the engine in a modern car, you have to replace it with something as good or better emissions wise.
Original restorations will be next to impossible I think, and you already have weird EPA requirements like if you replace the engine in a modern car, you have to replace it with something as good or better emissions wise.
There was a real slowdown in car sales during the Great Recession. That shortage and the ripple effects are finally coming to an end.
Manufacturers are cranking out too many cars for the US market.
Manufacturers are cranking out too many cars for the US market.
"Automakers have also turned more heavily to leasing, and longer loans of 72 or 84 months, which keep the customer’s monthly payment affordable."
This is how they will make money. You have to lower credit scores but extend the payment. That justifies the higher price on average.
Still... I guess it is not enough. And the people that take advantage of this at 0% keep the car longer..
This is how they will make money. You have to lower credit scores but extend the payment. That justifies the higher price on average.
Still... I guess it is not enough. And the people that take advantage of this at 0% keep the car longer..
Leasing is an absolutely horrible deal nowadays.
Almost every lease includes something along the lines of "we expect this car to be worth $X at the end of lease term, and, if it's not, we charge you for it".
At that point, why lease? The leasing payments are a significant chunk of the loan payments anyway.
You're better off just buying a used car.
Almost every lease includes something along the lines of "we expect this car to be worth $X at the end of lease term, and, if it's not, we charge you for it".
At that point, why lease? The leasing payments are a significant chunk of the loan payments anyway.
You're better off just buying a used car.
Used car market is pretty great if you have weeks available to find a good one that has been used well and maintained properly.
Anectodal as it might be I drive a stupid unreliable car from 2004... that has been going faultless twelve years in my hands.
Luck is also involved, but some research into engine tech and model build quality goes a long way in restricting the research and it's way better than those statistic collecting websites that don't account, for example, years of mehanical abuse that some brand gets more than other because of the segment they appeal.
Anectodal as it might be I drive a stupid unreliable car from 2004... that has been going faultless twelve years in my hands.
Luck is also involved, but some research into engine tech and model build quality goes a long way in restricting the research and it's way better than those statistic collecting websites that don't account, for example, years of mehanical abuse that some brand gets more than other because of the segment they appeal.
What's your information source for those sorts of specifics?
I'm kind of a petrolhead, but a friendly mechanic can give you the right tip if you feed him enough info about what needs you have. you need to be flexible tho, some good model are ugly or may not fit your personal style
I don't think they "charge" your for it at the end of the lease.
Leases have a "residual value" which is what they expect the car to be worth at the end of the lease, assuming it was kept in good running condition.
They can charge you for excess mileage, extreme wear and tear, and faulty/lack of maintenance - but all of these have been true for a long time.
My parents have leased several cars and in each case they were over by a few thousand miles. They paid the 10 or 15 cents per mile penalty ($150-300) and washed their hands of the car when they were done. Then the leasing company sent a truck to pick it up.
Leases have a "residual value" which is what they expect the car to be worth at the end of the lease, assuming it was kept in good running condition.
They can charge you for excess mileage, extreme wear and tear, and faulty/lack of maintenance - but all of these have been true for a long time.
My parents have leased several cars and in each case they were over by a few thousand miles. They paid the 10 or 15 cents per mile penalty ($150-300) and washed their hands of the car when they were done. Then the leasing company sent a truck to pick it up.
We lease 1 car because it will be under warranty. All scheduled maintenance is included - oil changes, tire rotations, etc. That's probably a few hundred over 3 years. Tires and brakes aren't so we have to keep an eye on those towards lease end.
Some things to consider:
When we were pricing out the options, the higher end model actually worked out with lower payments because the residual value (price they think it will be at end of lease) was higher for the higher end car.
It is a good way to "try" a vehicle/brand and if it turns out to not be super reliable/has issues or you just don't like it but can deal with it for 2-3 years, then you are done and walk away.
If you are looking long term - buying a used car is the better option. Financing a used car means monthly payments and if you are looking at things from a monthly cash flow perspective, leasing can be cheaper monthly - but pay more long term. Usually the rates for auto loans are much cheaper than credit cards so if you have CC debt, leasing can get you a lower monthly than buying and you can put the extra money per month towards debt.
Some things to consider:
When we were pricing out the options, the higher end model actually worked out with lower payments because the residual value (price they think it will be at end of lease) was higher for the higher end car.
It is a good way to "try" a vehicle/brand and if it turns out to not be super reliable/has issues or you just don't like it but can deal with it for 2-3 years, then you are done and walk away.
If you are looking long term - buying a used car is the better option. Financing a used car means monthly payments and if you are looking at things from a monthly cash flow perspective, leasing can be cheaper monthly - but pay more long term. Usually the rates for auto loans are much cheaper than credit cards so if you have CC debt, leasing can get you a lower monthly than buying and you can put the extra money per month towards debt.
I had a co-worker who wanted to drive an Audi but didn't want to be on the hook for keeping it fixed (or getting rid of it) once the warranty ran out. I'm thinking that most current German cars are like that.
I think it appeals to businesses where they can simply roll the lease over to a new car every the years, so it's basically just a cheap long-term rental. If you're happy to drive a 5+ year old car it makes far more sense to just buy it, pay it off and keep it.
Seems like a great recipe for another loan bubble.
People owing more on their cars then they are worth, then defaulting.
People owing more on their cars then they are worth, then defaulting.
> People owing more on their cars then they are worth, then defaulting.
I read somewhere that car loans are some of the safest secured loans for lenders. People will skimp on food, rent, and everything else before they default on their car.
I read somewhere that car loans are some of the safest secured loans for lenders. People will skimp on food, rent, and everything else before they default on their car.
House loans were also pretty secure at some point and we all know how that story went
It's not really comparable. Most people need a car to get to work, or even look for work. You can sleep in your car but you can't drive your house. So they really will default on the car payment last.
Car loans are safe for lenders (and therefore pretty cheap) largely because repossession is simple and easy, in both a practical and legal sense.
It's definitely a dynamical system. There is a limit to the new car's price due to used cars (both availability as a function of increased reliability, exchangeability and the economy), leases [a bet on the future], the competition, as well as transactional costs and don't forget interest rates.
So if you own a car manufacturer what do you do? :)
So if you own a car manufacturer what do you do? :)
I think there needs to be some other factor to really drive a bubble, like a subsidy or a government that absorbs all the risk without watching it.
This just seems like a cycle. The traditional car industry is in a slump. Defaults will happen. All normal.
This just seems like a cycle. The traditional car industry is in a slump. Defaults will happen. All normal.
Cash for clunkers was a subsidy of sorts.
Cars are lasting longer on average than they used to, so stretching a loan from 48-60 months to 72-84 months seems completely reasonable to me.
(This assumes a good interest rate. The 10-20%+ APR loans are a disaster at any length).
(This assumes a good interest rate. The 10-20%+ APR loans are a disaster at any length).
You are stuck with it for that whole term though. You'll be upside down on it immediately, and your loan principal won't catch up to the residual value of the car for 5-6 years with a loan that long. That means you can't easily trade it in for another one, and any kind of financial hardship is more likely to result in repossession.
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But the automaker isn't making much money with a 0% loan rate, because the bank isn't taking the hit on that (the automaker is paying them somehow), so it basically means the automaker isn't getting the full price that was paid.
it's because of the experience these dealerships offer. I was in the market for a car, I just moved to DMV area from Michigan. I've had nothing but terrible experiences. I ended up just putting the money into repairing my current 8 year old car.
Over 400,000 Tesla Model 3 reservation holders who are putting off their next car purchase until the car is out - and industry expecting a ~300k decline in sales this year. Coincidence? I have to imagine 400k people committed to a car coming out in the next year is a bunch of people who might otherwise be in the market staying on the sidelines. I'm certainly one of them.
This entire comments section is like reading a news article and realizing the journalist is running on nothing but conjecture and stereotypes.
So, start of a recession? Is housing next?
Millions of good vehicles were taken off the road after the 2008 fiasco (program to trade in). This left the used car market decimated. You could practically buy a new car for the price of a used car since there was no used inventory to speak of. Leasing was also hit very hard.
What we are seeing now is the used car and leasing markets recover back to where they were pre 2008. This has created some much needed competition in the Auto market.
Vehicles are lasting longer these days. In the 80's most vehicles already had rust on them from the factory (inside doors, pillars, etc). Since the very late 80's they started waxing and using galvanized metals. Engine tolerances were improved along with Fluid technology (Oil, Coolants, Grease, etc).
My advice is never buy new. Buy something either coming off lease or something about 5 + years old. If it is a Toyota there is still at least 10 years left in the vehicle. Honda's quality over the last 5 years has really suffered in my opinion. German cars should only be leased, stay away from used German cars unless you have a lot of money or can repair them yourself. Korean cars are throwaways after a few years. If you're someone who keeps a car for a long time make sure you do a lot of research because these days a lot of newer models have some serious problems like DI and CVT Transmissions that will cost more to fix or replace in a few years than the vehicle is worth.
What we are seeing now is the used car and leasing markets recover back to where they were pre 2008. This has created some much needed competition in the Auto market.
Vehicles are lasting longer these days. In the 80's most vehicles already had rust on them from the factory (inside doors, pillars, etc). Since the very late 80's they started waxing and using galvanized metals. Engine tolerances were improved along with Fluid technology (Oil, Coolants, Grease, etc).
My advice is never buy new. Buy something either coming off lease or something about 5 + years old. If it is a Toyota there is still at least 10 years left in the vehicle. Honda's quality over the last 5 years has really suffered in my opinion. German cars should only be leased, stay away from used German cars unless you have a lot of money or can repair them yourself. Korean cars are throwaways after a few years. If you're someone who keeps a car for a long time make sure you do a lot of research because these days a lot of newer models have some serious problems like DI and CVT Transmissions that will cost more to fix or replace in a few years than the vehicle is worth.
There's no evidence for anything in your first paragraph.. I know it was a popular conspiracy theory on the auto forums but it doesn't remotely pass the sniff test.. Cash for clunkers only turned in 690k cars, not 'millions' and they had to get terrible mileage to qualify in the first place so the list of trade-in was almost entirely 90s era SUVs. In any case, in the preceding 15 years there were something like 200 million vehicles sold in the US. Removing under half a percent of those couldn't possibly have had a half-decade impact on the used car market.
> You could practically buy a new car for the price of a used car since there was no used inventory to speak of. Leasing was also hit very hard
That was probably the Great Recession and not Cash for Clunkers! People were buying used instead of new due to financial uncertainty and not wanting a large monthly payment.
That was probably the Great Recession and not Cash for Clunkers! People were buying used instead of new due to financial uncertainty and not wanting a large monthly payment.
I will drink a toast to the day the last auto dealership goes out of business.