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The $25k car is going extinct?

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Re: The $25k car is going extinct?

#291

Post by oblio »

xyzzy123 wrote: post #175
BLKNSLVR wrote: post #133

Earlier quoted context omitted.

My reptilian-brain logic prevents me from even considering getting a loan for car. Houses increase in value, therefore it makes a certain amount of sense to get a loan / mortgage for the purchase of a house (but mainly because no-one - in the world in which I live - can afford to buy one cash). Cars decrease in value, very quickly. Getting a loan for a car is throwing more money away than buying a car in the first pl…

I think the way most people rationalise it, it's a pre-requisite for having a job. So it's income-generating and therefore morally ok to take out a loan for it.

Which is just so many degrees of insane that it's even hard to list all of them.

Re: The $25k car is going extinct?

#292

Post by troupo »

puzzlingcaptcha wrote: post #261

You can still buy a new subcompact car (like a Renault Clio or Skoda Fabia) in Europe for under 20k EUR. The more interesting question is why these cars disappeared in the US. And while many of the factors discussed here are true for both EU and US (inflation, interest rates, manufacturer profit margins etc) I am surprised no one mentioned the 'SUV loophole' of US regulations that effectively boosted the SUVs (off-ro…

Small cars are disappearing in the EU as well. E.g. Audi will discontinue (or have already discontinued) their A1 model (and it was the perfect little car).

Re: The $25k car is going extinct?

#293

Post by namdnay »

vel0city wrote: post #171
BLKNSLVR wrote: post #133

Earlier quoted context omitted.

My reptilian-brain logic prevents me from even considering getting a loan for car. Houses increase in value, therefore it makes a certain amount of sense to get a loan / mortgage for the purchase of a house (but mainly because no-one - in the world in which I live - can afford to buy one cash). Cars decrease in value, very quickly. Getting a loan for a car is throwing more money away than buying a car in the first pl…

Lots of loan rates out there for I could pay off my car tomorrow. But I'll have more money in the end keeping that cash in the bank. Why would I pay it off early?

Is the negotiation of these loans separate from the negotiation of the car price? If not I suspect the margin is just being shifted to the asset price

Re: The $25k car is going extinct?

#294

Post by Glyptodon »

socalgal2 wrote: post #260
aorloff wrote: post #74

Nobody else has said it so I guess I will. The reason the US car industry does not want a $25k car is that the financing opportunities are crap for a car of this low cost. In the same way that airlines exist to offer you a miles based credit card, the US car dealerships survive by offering you a loan for the car. Or perhaps, a car to go with your structured finance opportunity.

unless there's illegal collusion, someone will see a market opporunity and step in to fill it. That said, a quick search for new cars under $25k: Chevrolet Trax $20.5k, Nissan Versa $17.2k, Hyundai Venue $20.5k, Kia Soul $20.5k, and Nissan Kicks $22k. Other options include the Toyota Corolla $22.3k, Hyundai Elantra $22.1k, and Volkswagen Jetta $22.5k I think maybe the article is BS?

I strongly agree with a generalization of the article - that cars have increased in price relative to their quality and value to the point that it's nationally problematic. There's a whole pile of cars that have gone from sub $20k to the high $20ks and above. Most of the cars you list will also have essentially non-optional packages, delivery charges, and more costs rolled into their price. At the same time it's not easy to find used cars that don't cost nearly as much as new cars unless they're pretty old and high mileage.

And it seems clear there's no rational reason that cars should subject to a higher rate of inflation than any other good.

It seems very clear that somehow the market is broken. Whether it's because new competition is impossible because only the established can achieve the necessary economies of scale, protectionist regulation,the dealership model, or something else, it's pretty clear something is broken. Just like with much of the rest of things in the US and maybe the world.

Re: The $25k car is going extinct?

#295

Post by rmnwski »

puzzlingcaptcha wrote: post #261

You can still buy a new subcompact car (like a Renault Clio or Skoda Fabia) in Europe for under 20k EUR. The more interesting question is why these cars disappeared in the US. And while many of the factors discussed here are true for both EU and US (inflation, interest rates, manufacturer profit margins etc) I am surprised no one mentioned the 'SUV loophole' of US regulations that effectively boosted the SUVs (off-ro…

Also, the more SUVs are driven, the less safe people feel (and arguably are), accelerating the need to buy an SUV for safety reasons.

Re: The $25k car is going extinct?

#296

Post by Propelloni »

radicaldreamer wrote: post #287
puzzlingcaptcha wrote: post #261

You can still buy a new subcompact car (like a Renault Clio or Skoda Fabia) in Europe for under 20k EUR. The more interesting question is why these cars disappeared in the US. And while many of the factors discussed here are true for both EU and US (inflation, interest rates, manufacturer profit margins etc) I am surprised no one mentioned the 'SUV loophole' of US regulations that effectively boosted the SUVs (off-ro…

Spot on. most cars sold in the US are actually light trucks.

Not to mention that those subcompacts of today are as large as a compact car of 30 years ago.

Re: The $25k car is going extinct?

#297

Post by ganarajpr »

Dont know if this is available in US and Europe markets but I would consider Mahindra XEV 9e, BE 6E and BE 9E to be in the $25k segment and afaik, they are the best in the class for that price point ( in terms of looks and maybe even features ). I dont know if these are being exported out of India right now, but they definitely should be hitting the US and UK markets sometime soon.

Re: The $25k car is going extinct?

#298

Post by eloisant »

qznc wrote: post #231
BLKNSLVR wrote: post #133

Earlier quoted context omitted.

My reptilian-brain logic prevents me from even considering getting a loan for car. Houses increase in value, therefore it makes a certain amount of sense to get a loan / mortgage for the purchase of a house (but mainly because no-one - in the world in which I live - can afford to buy one cash). Cars decrease in value, very quickly. Getting a loan for a car is throwing more money away than buying a car in the first pl…

Houses do not increase in value. Land property does (usually). Houses decrease.

You don't sell the house without land anyway. What matters is that the set of land+house increases in value.

Re: The $25k car is going extinct?

#299

Post by leakycap »

mlyle wrote: post #276
leakycap wrote: post #165

Earlier quoted context omitted.

The issue you'll face is when you go to sell it – any noticeable hail damage means you are getting 1/2 the resale value if you can even find an interested buyer.

Yes, but you also paid half the cost to acquire the car. You're just paying less in depreciation for the time you use it.

My last car got minor hail damage across many panels, it was a difficult PDR for some reason - when I traded it in it was worth 1/4 what KBB would have been for a similar year and mileage without dents

Even trying to sell it myself for around 1/3 KBB "good" value took 2 months because the next buyer can't get financing on a car worth very little, so you have to find a cash buyer who doesn't care how their new ride looks. It's rare for anything other than $2,500 cars

Re: The $25k car is going extinct?

#300

Post by Dig1t »

puzzlingcaptcha wrote: post #261

You can still buy a new subcompact car (like a Renault Clio or Skoda Fabia) in Europe for under 20k EUR. The more interesting question is why these cars disappeared in the US. And while many of the factors discussed here are true for both EU and US (inflation, interest rates, manufacturer profit margins etc) I am surprised no one mentioned the 'SUV loophole' of US regulations that effectively boosted the SUVs (off-ro…

Isn’t your argument basically saying that people choose to buy larger cars when the government doesn’t step in and penalize people for doing so? European regulators basically just forcing people to buy smaller cars is what that sounds like.

Also Europeans make less money, pay more taxes, and have less access to credit, so they can’t afford more expensive cars like many Americans. Hence the market catering more to people less willing to spend a lot of money on a car.

The poorest American state, Mississippi, is richer per-capita than most European countries, including France.

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