Small / economy car deathwatch: we've passed "peak econobox" again

[cRiPpLe_rOoStEr]

Uruguay is full of those small Suzukis made in India.


As it's meant to look like some sort of mini SUV, I guess this makes the "povertry" aspect pertaining to a subcompact become less noticeable for some people who would otherwise reject a subcompact hatchback.

[Isaac Zachary]

I found this interesting. Basically he sums it up saying that the lack of cheap new cars will likely keep used car prices higher.

https://www.youtube.com/watch?v=kpZnkmrLU7o

[JSH]

I think the most important thing is said was earlier in the video. “In the USA subcompact cars are seen as the car you buy out of necessity not desire.” Many if not most car buyers would rather spend their dollar to buy a larger and fancier used car instead of a new subcompact. Manufacturers and dealers would also rather sell a customer a CPO used car than a new subcompact so the subcompacts have ceased to exist.

As to the lack of subcompact cars driving up the cost of used cars – not so much. Of course the more a new car cost the more a used car will cost but the recent skyrocketing cost of used cars was due to new car supply disruptions in 2020 – 2022. The number of vehicles being leased also cratered which has limited the normal steady pipeline of used cars coming into the market.

That said – wholesale prices for used cars are plummeting. They are down 50% from their peak in January 2022.

That drop in wholesale value also means that many people that took out new car sized loans for 3 year old cars are now WAY upside down on loan value vs vehicle value. It will be interesting to see if the number of upside down loans leads to reduced used car inventory and drives wholesale values back up.

[Isaac Zachary]

Originally Posted by JSH

I think the most important thing is said was earlier in the video. “In the USA subcompact cars are seen as the car you buy out of necessity not desire.” Many if not most car buyers would rather spend their dollar to buy a larger and fancier used car instead of a new subcompact. Manufacturers and dealers would also rather sell a customer a CPO used car than a new subcompact so the subcompacts have ceased to exist.

As to the lack of subcompact cars driving up the cost of used cars – not so much. Of course the more a new car cost the more a used car will cost but the recent skyrocketing cost of used cars was due to new car supply disruptions in 2020 – 2022. The number of vehicles being leased also cratered which has limited the normal steady pipeline of used cars coming into the market.

That said – wholesale prices for used cars are plummeting. They are down 50% from their peak in January 2022.

That drop in wholesale value also means that many people that took out new car sized loans for 3 year old cars are now WAY upside down on loan value vs vehicle value. It will be interesting to see if the number of upside down loans leads to reduced used car inventory and drives wholesale values back up.

I guess I might be one of the few who doesn't agree with the current trend. I have fond memories of my econo cars, which were much, much cheaper used than my used Avalon.

So far, I don't see the longevity or maintenance as being any different, except CV axles and door handles on the 1985 Golf. The 1993 Mazda 323 felt pretty much rock solid. I had to change things like the shocks and bushings and such in those cars, and now also in the Avalon, and I had those other cars for longer and more miles than the Avalon.

Fuel mileage hasn't really increased as I'm only getting 35mpg average in the Avalon. It's a bigger car, but for some reason it just doesn't feel that much bigger to me. I pop into my Mom's Sonic and don't feel like I'm at all cramped.

The main thing that I dislike about the Avalon is that it's a pathetically boring car to drive. Well, that and it cost me several times what my other cars cost me, even adjusting for inflation. I guess I could have gotten a Camry Hybrid or something similar. But I guess I just don't see any cars that stand out to me, and for some reason feel strangely attracted to the Nissan Versa.

Maybe it's just the nostalgia of having a small stick shift car again, but if my Avalon were to disappear tomorrow, I'd be hard pressed not to go pick up a Certified Used manual Nissan Versa for some $10,000 with some 25k miles still left on the Manufacture Certified Used car warranty (one that I've been eyeballing in Arizona). If not that car, then what car? I guess whatever makes financial and practical sense, whether or not I like the car. But in the mean time I'm just going to try to get as many miles out of the Avalon as possible. I'm at 150k (doing 20k per year) and need to replace the shocks and should probably replace the hybrid cooling air filters and clean out the EGR cooler this summer at some point.

But when it comes time to buy a car we'll see what happens then. I still think that if people with $20,000 budget for a car can only buy used that it might increase used car prices and keep them there, at least to a degree. I know one thing for sure, that I'd rather spend as little on my next car as possible. They're a waste of money, not a lot of difference between a $150 car and a $150,000 car in terms of practicallity. If my next car has to be some stupid hybrid crossover, then so be it.

[redpoint5]

Originally Posted by JSH

That drop in wholesale value also means that many people that took out new car sized loans for 3 year old cars are now WAY upside down on loan value vs vehicle value. It will be interesting to see if the number of upside down loans leads to reduced used car inventory and drives wholesale values back up.

Maybe upside down loans will cause a glut of inventory as the cars get repossessed.

About 5 years ago someone was predicting a used car "bubble" that would burst as people defaulted on payments. Don't recall that happening.

...not exactly a small car, but a 2021 Pacifica hybrid for $24k seems somewhat affordable.

[Isaac Zachary]

Originally Posted by redpoint5

Maybe upside down loans will cause a glut of inventory as the cars get repossessed.

About 5 years ago someone was predicting a used car "bubble" that would burst as people defaulted on payments. Don't recall that happening.

...not exactly a small car, but a 2021 Pacifica hybrid for $24k seems somewhat affordable.

Have you seen the price of used Ford F150 Lightnings? They're going for half the price or even less than their MSRP's!

Sadly it's the more expensive cars that are getting cheaper. Used economy cars seem to stay right next to their MSRP's many years and tens of thousands of miles later.

[JSH]

Originally Posted by Isaac Zachary

Have you seen the price of used Ford F150 Lightnings? They're going for half the price or even less than their MSRP's!

Sadly it's the more expensive cars that are getting cheaper. Used economy cars seem to stay right next to their MSRP's many years and tens of thousands of miles later.

I've heard about these mythical F-150 Lightnings going for 1/2 of MSRP but I can't seem to find any. On a nationwide Car Guru search the cheapest Lightning is $38K for a base Pro trim that starts at $50K. Of course that is incentives and rebates so the real price for that new Pro is only $42,500.

The Platinum trims seem to be the best "Deal" if someone thinks paying $65K for a truck with an original MSRP of $95K is a good deal.

[redpoint5]

New prices for EVs are attractive right now. I'm taking a hard look at a new Model Y, especially since the Oregon $2,500 subsidy will have funding next month. If used prices are near new, you might as well buy new.

My parents are low income, so they qualify for the Oregon $2,500 used EV credit. Thinking to have them purchase a used Pacifica hybrid to get that.

So, a minivan and Tesla are somewhat likely in my future. I haven't purchased a vehicle since 2015, and that Prius is gone. Before that my most recent purchase was in 2010... for a 2006.

[Isaac Zachary]

Originally Posted by redpoint5

If used prices are near new, you might as well buy new.

I have a young adult friend who's looking for her first car and move out on her own. She want's something some 5 years old, without a lot of miles, no salvage title, prefers a stick shift, but also wants good fuel mileage and doesn't want to go over $10,000. But a lot of the models she's been looking at used (Honda Fit, Toyota Yaris and Nissan Versa) are all in the $15,000 and up range around here, yet a brand new Nissan Versa is $17,000.

Searching other cars that fit her criteria, in a 500 mile radius there are a few Mitsubishi Mirages and Ford Fiestas starting at around $8,000 and up. Or she'd have to out-of-state. There's a certified used stick shift Versa in North Carolina for $10,000. Maybe her criteria is too strict for her budget?

Hopefully prices will keep coming down.

[Piotrsko]

Bet it's the stick shift requirement. They don't make a lot anymore, perhaps 10,000 a year. Here in Reno, if I want a stick it's either a suburu ( sometimes) or special order. Can't test drive one, they aint got one.