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The $25k car is going extinct?

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Re: The $25k car is going extinct?

#351

Post by gmac »

BLKNSLVR wrote: post #133
snovymgodym wrote: post #7

It's pretty simple (in the US, can't speak for elsewhere). There are 2 big factors at play: 1. Margins. Manufacturers make huge margins on expensive vehicles and very slim margins on cheap vehicles. The numbers differ, but I think even in the lead up to the 2008 crisis automakers had to sell 5-10 "econobox" cars to make the profit they made on one luxury car, SUV, or truck. 2. Normalization of debt. For many American…

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…

Getting a loan for a car seems quite natural to me. A car provides service flows over a long period, so why not pay for it over a similarly long period? In the first year or two the car's value is probably below the outstanding loan amount, but beyond that it's likely to rise above it, so you're free to sell and walk away from the arrangement.

Granted, high interest rates might make this a bad deal, but the principle seems sound. I bought my previous car on a 7-year bank loan at 2.5% and didn't regret it.

Re: The $25k car is going extinct?

#352

Post by OwlsParlay »

dismalaf wrote: post #319
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…

Because a big part of owning a vehicle is summer roadtrips, ski vacations, visiting family, moving stuff. An SUV is simply more convenient. I've also found road maintenance is getting worse where I live, it's almost necessary having an SUV or truck just to navigate the suburbs. Also the (semi) compact crossover has kind of killed the compact car. You get more space, better ground clearance, for a decent price.

That's a big part of it for you perhaps, but not for everyone?

Re: The $25k car is going extinct?

#353

Post by gmac »

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.

Depends. My (UK) house is 125 years old. Its depreciating days are well behind it.

Re: The $25k car is going extinct?

#354

Post by sofixa »

Dig1t wrote: post #300
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 peo…

> 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

Funnily your last point invalidates your first. Most Americans are loaded on debt, which impacts how much actual money they have left over at the end of the month. How many Americans can't stomach a $1000 surprise bill again?

> 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.

No, you're looking at this the wrong way. US regulators make bigger cars more lucrative for manufacturers, so they only do that. EU regulators mostly focus on safety and emissions, which also slightly favours bigger cars (whose bigger price absorbs the safety features better), but not nearly to the same extent. Two of the biggest EU car groups (Stellanti and Renault) both are publicly asking to reduce some of the burden for smaller cars to be able to make cheaper small cars. On the other hand, US manufacturers (even Stellantis' Jeep, Dodge, Ram) don't mind just churning oversized monstrosities.

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

GDP per capita doesn't mean what you think it does. Everything being overpriced in the US, and everything needing to have a middleman inflates GDP figures. Take health insurance, Americans pay multiple times what Europeans pay, to stuff the pockets of multiple for profit institutions and middlemen. GDP figures look better in the US, but really, which way is more efficient? Health outcomes are better across the EU, and the amount of medical bankruptcies is also telling.

Re: The $25k car is going extinct?

#355

Post by otherme123 »

chasd00 wrote: post #53

The sweet spot has always been a 1 year old used car with low miles. There’s lots of those for less than or about $25k. Honda, Toyota, and Mazda have models in those ranges that will easily last a decade.

Why would anyone sell a good car with one year old and low mileage? It's a lottery ticket: it could go well, or the car might be already damaged. I personally know a bunch of people that bought second hand and are "my car is only a couple of years old, and I found the engine / gearbox / frame is damaged. Lets repair it barely and sell it ASAP to recover some money". But weirdly, they go to the second hand market again, thinking they are the only smart ones doing that. They all know a mechanic that ensures the car is OK, just like they did with the first one.

I was very disappointed when searching the used car market for cars with low mileage, only to found they are almost as pricey as new but I don't know how they have been taken care of. A lot of them come from the rental business. I paid a bit premium (2K or so) for my new-zero-kilometer car, and after 6 years is as good as new, as it is cared like a baby.

Re: The $25k car is going extinct?

#357

Post by sofixa »

JKCalhoun wrote: post #54
snovymgodym wrote: post #7

It's pretty simple (in the US, can't speak for elsewhere). There are 2 big factors at play: 1. Margins. Manufacturers make huge margins on expensive vehicles and very slim margins on cheap vehicles. The numbers differ, but I think even in the lead up to the 2008 crisis automakers had to sell 5-10 "econobox" cars to make the profit they made on one luxury car, SUV, or truck. 2. Normalization of debt. For many American…

I think the cost of a car is a huge drag on the upward mobility on the lower income earners in the U.S.

I think the bigger issue is the need for a car. In most of the US, everything is built with the assumption you'll be driving to it (workplaces, stores, facilities, etc).

So everyone has to have a car. So your social mobility is limited by the fact that you need to have the money for the expenses that go with it in the first place.

3-4 cities with decent to good transit are the exception, but the fact that they're so desirable and with such high housing prices means that they aren't really accessible either.

Re: The $25k car is going extinct?

#358

Post by A_D_E_P_T »

gmac wrote: post #345
A_D_E_P_T wrote: post #328

Earlier quoted context omitted.

It's true that affordable European models are disappearing. The average mid-range offering from, say, Volkswagen, has become quite surprisingly expensive. But this is why Chinese cars are taking over in Europe. Half the new cars I see are from Geely, BYD, Chery, etc. These average about 20,000-25,000 EUR new. My own opinion, having looked into the matter a bit, is that you'd have to be insane to buy a Volkswagen or B…

There are cheaper European cars than VW (and why compare with their 'average mid-range offering'?). The new (and widely liked) Renault 5 EV starts at around €21K, for instance. Probably a bit smaller than something made in China for the same money, but not worlds apart. https://www.renault.fr/vehicules-electriques/r5-e-tech-elect...

> why compare with their 'average mid-range offering'?

Because when it comes to features and trim, the average Geely or BYD is essentially on that level (or better). They tend to be quite large and very polished.

It's certainly true that Renault has some inexpensive models -- the Clio is another one that can be had for ~20k EUR -- but they are indeed small.

Re: The $25k car is going extinct?

#359

Post by leansensei »

gmac wrote: post #348
Cthulhu_ wrote: post #343

Earlier quoted context omitted.

VAG cars are weird, I've had both an Audi A1 and a VW Up (short lease for work); they are basically the same car, both had a 3 cylinder, 1 liter engine, similar interiors, etc. But the A1 had the sports look package and generally a fancier feel to it. But VAG uses the same base for a lot of models and brands (VW, Audi, Skoda, SEAT); quality wise there's not much difference between them, but price wise they are, with…

Yep. I think SEAT are the pick of the VAG brands. Their marketing isn't about being cheap, but they're aimed at the youngest market segment, who also have the least money, so in my experience have the best prices. Pre-COVID we got a new Leon ST — essentially a Golf estate/station wagon — for about a third off the list price: £13K instead of £20K (I know: those prices sound semi-mythical now). On the other end you hav…

That's the VAG marketing strategy. Share most parts, have the customer pay for the brand.

Re: The $25k car is going extinct?

#360

Post by jillesvangurp »

999900000999 wrote: post #8

We don't want affordable Chinese EVs. That's the answer here. They can build cars better, cheaper, faster than we can. Instead Ford wants to sell a 80k SUPER F-250 BIG MANN TRUCK. All for what, you to drive 10 minutes to Walmart, buy groceries and drive back. The best car is the one you don't own. No payments, insurance, parking tickets. Unfortunately most American cities are centered around driving. So much money ,…

> We don't want affordable Chinese EVs.

The US wants them so much that it requires 100% tariffs to keep them off the market.

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