Lightsaber

I saw this interesting article in the Road and Track magazine, where Bob talked about longer financing, price inversion, cancerous proliferation, and their effect on public's loss of interest in car ownership. Worth a read.

Jonno99

Most of the capital cities in the AU states are so unplanned and with population growth there is constant traffic congestion. The new generation just want to live in apartments and commute to work on trains

RS200

iTrader: (1)

The "new" generation is also broke. Young people struggle to find decent jobs, and even older workers can be a couple months of unemployment from insolvency. Wages haven't kept up to life expenses (housing in particular), so cars are non-essential luxuries. Cars themselves are just the beginning of the investment - if you're spending the $400 on the German car, as Lutz says, that assumes you already have good credit and adequate means to pay just that $400. However, as a car buyer, you're also paying a lot in gas (say $50 per week), maintenance, parking (both at home and work), and car insurance, which is out-of-control for young car buyers - sometimes the same as the car payment itself. So that $400 buy-in can easily turn into $800 per month.

As an example, if you live in say, Maryland, making $40,000 per year (which is a reasonable amount for someone in their mid 20s), you take home $31,056 after tax. If you calculate the following:

-Car: $400 x 12 = $4800
-Gas: $200 x 12 = $2400
-Insurance: $200 x 12 = $2400
-Home parking: $25 x 12 = $250
-Work parking: $100 x 12 = $1200
-Maintenance: $250 per year on a new car

That's an estimated $11,300 total, of the $31,056 you take home. Buying a cheaper car doesn't fix this, because all of the ancillary costs are still there. That's one THIRD of your income that you use just to get around quicker and more conveniently.
Got your own apartment? Take another $12,000 off for rent, utilities, etc.
Gotta eat too, right? Another $5,000 off. Entertainment? $2,000. Cell phone? Maybe another $1,000.
Add those together, and suddenly you're broke. No room for anything else at all. The car provides very little value compared to health insurance, the ability to travel, having some small investments, maybe saving for a home. Car manufacturers can pretty much forget about trying to sell a new car to someone with four years' worth of student debt; servicing that debt will cost more than the car.

If the car industry wants to be so concerned about falling sales, maybe they shouldn't have helped trash the labor market by sending those jobs overseas and contributing to the decline of the value of labor. They made their bed, they can sleep in it.

kyoo

iTrader: (29)

i don't think it's that political - the us population is becoming more and more urban, in areas with good public transport & uber & lyft... most of the younger people i know, wealthier & poorer, just don't need a car

LetsGetThisDone

iTrader: (1)

There was nothing political about what he said, he didn't even mention anything about government. It's simple economics.

RS200

iTrader: (1)

Exactly, it's simple economics.

https://www.apartmentlist.com/renton...th-since-1960/

Housing is the biggest investment people make, cars are usually second. Wages aren't rising to cover rising housing costs, so there is less money for cars. It's dead simple.

LetsGetThisDone

iTrader: (1)

And cars aren't even an investment, they are a constantly depreciating liability lol. They mostly just make life more convenient for people who aren't enthusiasts. I know a few people with badass homes in the close to $1mil range and they drive a paid off 10-15yr old vehicle because it "still does its job" and that's all they care about, they could easily afford to daily drive a $100k car and replace it every 3-4yrs, but they just don't care.

RS200

iTrader: (1)

People also don't want to be burdened with the expense of repairs of an off-warranty car, which is why they lease. You can't take a modern car to the corner garage to do complex diagnostic work, you're essentially at the mercy of the dealer, who charges you $100 just to tell you what's wrong, and charges $100+ per hour to fix it. I would think that people would be worried about a 5+ year investment since they don't know what their economic situation will be like in 5 years, or whether they will need a bigger vehicle. You can bet they aren't excited about paying the huge depreciation on multiple vehicles.
Lutz does have a point that there is no excitement in cars anymore, which is partially due to crash standards and fuel economy regulations. Automakers usually design cars by committee opinion and focus group opinion, which produces bland and predictable cars that are difficult to get excited about. Cars do all look the same.

Also, lol @ "nowhere in the United States is there a 14-year-old boy with tears in his eyes, saying "Please Dad, buy a Lumina". No ****. If you design trash cars for decades, don't expect kids to be excited about your brand, or have faith in their longevity.

I think people also tend to ignore things they don't think they can afford. If you keep car ownership out of reach long enough, a person is probably less likely to buy one when they finally have the financial freedom to do it. The lifestyle is already set, there is no appeal to car ownership.

Edit: forgot to add - Hybrids. Who wants to own a hybrid or electric car long enough to pay for a new battery? Nooooope!

Noize

iTrader: (24)

barneyb

My Evo is a good example of "still does the job". After 16 years no issues whatsoever. My wife doesn't drive it, she can be rough on vehicles and has her own car she uses for rearranging parking stops. The way the Evo is holding up I figure its got another 16 years of service life in it. I don't visit car lots anymore.

moparfan

You need the illusion of some "danger". Sure we all know cars are a lot safer, but they don't need to be such a boring drive.

moparfan

Have you done any significant mods to it?

barneyb

No, its the secret of cheap, nothing breaks at stock power.

RS200

iTrader: (1)

Yeah, being old helps massively, and having $10,000+ for a downpayment changes the ballgame too. Most first-time car buyers in their 20s can't do that, and could pay double for insurance.
In my own case, I pay around $2000 CAD per year in gas for my guzzler G37. Insurance is around $1500 CAD for a comprehensive plan, and probably going up (I'm not in my 20s either). Parking, $1,380 CAD. With some maintenance kicked in, that's around $425 CAD ($325 US) per month, without the price of a car on top. The most basic of Civics in Canada starts at $321 monthly for a lease, not sure about the US. Using my example above, it's difficult to get out of this situation as a person in their 20s without spending at least 20% of take-home income on vehicle-related expenses, just for a basic Civic.

kaj

iTrader: (60)

I have two paid off cars and will pay cash for an.old truck. I will never by new. Ever. I can buy a car or truck that's even 1yr old for a deep discount.
I bought one new truck back in the day. Depreciation killed me, so I decided to never do that again LOL.
I don't know anyone that buys new any more. Kind of a bummer. It was exciting, driving away in a vehicle with about 3mi on it.