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Old 04-18-2014, 01:11 AM   #1 (permalink)
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How car buying attitudes have changed

How The Recession Changed America's Car-Buying Attitudes - Forbes

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Old 04-18-2014, 05:16 AM   #2 (permalink)
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I'm not going to buy the eBook to read the rest of the story, but I will say I disagree with many points in that article. First, there are still low payment lease deals and 0% interest payments on a regular basis. Honda always has a 0% or 1.9% sale each year, and I see lease payments on new cars from almost every manufacturer for $199 or less on their "volume" cars. Second, there has actually been a movement from auto makers into microcars and very cheap compact cars, such as the Mirage, Fiat 500, etc. There are tons of great quality choices for under $15k brand new. So maybe they are trying to target the rich, but they are also expanding the low end of their lineup to cater to fresh college grads and young adults who they want to buy new cars rather than used.

The author also failed to mention (besides saying that cars were the best quality ever) that cars have become much more reliable in recent decades. A couple decades ago 200k miles was reserved for Japanese imports. Now it seems like with basic maintenance any car can last 150k+ miles. The warranties are longer than ever as well. It's also a fact that the average age of car on the road is at it's oldest ever. So I was surprised the author didn't mention that as a cause of why people are not buying new cars.

I haven't bought a new car because I hate monthly payments. The Civic is at the point where I've put 2 times the money into it as it's worth, but even with that I've spent less than $6k on it (not counting gas/insurance) and it's put up with me for 100k miles. Most new car buyers buy a new car and never put 50k miles on it before they trade it in for another new car. Not only are they hit with taxes and depreciation, they are paying interest for a loan in most cases. I'll drive the Civic until it rusts away, or until I cannot buy parts for it anymore.
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Old 04-18-2014, 07:17 AM   #3 (permalink)
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Interesting to see a general inverse correlation between income and new car purchases. Households with top incomes have a lower proportion of new vs used car purchases, and the lowest end of the income spectrum has a higher proportion of new vs used car purchases.

Perhaps this is further evidence that the rich live as though they were poor, and the poor live as though they are rich.

While cars are still seen as a powerful status symbol, I would imagine the car culture of days past placed a higher priority on owning a cool new car. There are many other things competing with the car as a status symbol now days. It's difficult to own a new car when making payments on the latest iPhone, iMac, iPad, iPod, and ...

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Old 04-18-2014, 09:39 AM   #4 (permalink)
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Nowadays even the compacts and subcompacts have more amenities available, so it makes them feel less unattractive to people who would rather get a bigger and heavier car, either brand-new or used. Traffic jams also can be pointed as a favorable point to the subcompacts due to their improved maneuverability in spaces more constrained. Needless to say anything about the fuel bills...
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Old 04-18-2014, 10:16 AM   #5 (permalink)
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Quote:
Originally Posted by redpoint5 View Post
Households with top incomes have a lower proportion of new vs used car purchases, and the lowest end of the income spectrum has a higher proportion of new vs used car purchases.

Perhaps this is further evidence that the rich live as though they were poor, and the poor live as though they are rich.
I don't think that's so much the case. You could fill the driveway with new low end cars for the price of one pricey CPOV, and that one will be much lower mileage and in much better condition than a low end used car.

If you don't have much money to spend but want a car, new might make sense. I didn't want to spend 15- 17k on a new car, but spending 10 or 12 on one a few years old with maybe 40 or 60k miles doesn't make much sense. The expensive cars' initial owners are more likely to flip them sooner and they've got a lot more room for depreciation- so a highline used car is a much better deal, relatively speaking.

It's not that the poor are making worse purchasing choices, it's that they have worse purchasing options to choose from.

Edit:
Someone at the Fit forum I go to just reported paying 13,250 for a 2012 with 58k.
I paid 14,998 for one with 11 miles on it (and two of them were my test drive).

He paid a couple bucks less, but I got more car for my dollar.
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Old 04-18-2014, 10:49 AM   #6 (permalink)
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We're pushing 18 years without debt. Married 25 years Nov 4th. A big part of that was recycling cars that were damaged and written off by insurance companies. You would be amazed by amount of damage some cars incur and are totalled. My first rebuild was 1973, a 66 Chevy van that had 42 kmiles, bought for $300.

Over 4 decades I have rebuilt, or had rebuilt, over 150 cars. My Fiesta is the latest one. It had no broken glass, no air bags deployed and no significant suspension or structural damage. The only parts available were OEM. It took my buddies shop 6 months to fix the car.

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Old 04-18-2014, 10:58 AM   #7 (permalink)
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When I sold my shop I built a house. It took 16 months to finish. We lived in it for 3.5 years and sold it for $335K. It cost me $160k (even including the cost of a truck). At one point it was appreciating at $500 a week and when we sold it the gain ($165K) was tax free, no Fed, state or social security. We used the gain from the first house to build the second house. 10 years living in house #2.

The wife buys a new car when she wants one and pays cash. Her combined income is much higher than mine, which can cause problems at times but overall it works out OK.

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Old 04-18-2014, 01:19 PM   #8 (permalink)
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Quote:
Originally Posted by Fat Charlie View Post
If you don't have much money to spend but want a car, new might make sense. I didn't want to spend 15- 17k on a new car, but spending 10 or 12 on one a few years old with maybe 40 or 60k miles doesn't make much sense.
Seems as though our reference points for 'poor' are quite a ways apart. To me, being able/willing to spend that much on a car means you're not poor - or at least you weren't until you went and spent all your money on a car :-)
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Old 04-18-2014, 02:20 PM   #9 (permalink)
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Quote:
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If you don't have much money to spend but want a car, new might make sense...

It's not that the poor are making worse purchasing choices, it's that they have worse purchasing options to choose from.

Someone at the Fit forum I go to just reported paying 13,250 for a 2012 with 58k.
I paid 14,998 for one with 11 miles on it (and two of them were my test drive).
You bring up good points, but I still disagree with your assessment that there are not good purchasing options for those with little money.

The guy that bought the used Fit for nearly what you paid new, probably did so at a stealership and didn't negotiate the price. He likely allowed the Con Artist to pull out a sheet of paper and draw the absurdly stupid 4-square and then convince him that the monthly payment amount is the only thing that matters.

Hypocritically, I did purchase my TSX from a sealership because the exact car I was looking for was very difficult to find on the private market. The slimy salesman drew the 4-square and started asking me questions. His initial offer for the 4 year old, 36,000 mile car was $24k. I laughed incredulously. The new MSRP was $30k.

I told him the only thing that matters is the sale price, and he can put the 4-square away. I operate on a 1-square. When asked what I thought was a fair price, I responded, "17."

He countered a few times, going lower and lower, and I maintained my $17k price. I had no intention of buying the car when I went to look at it anyhow, and hadn't even done much research concerning the price. At the end of the negotiation, the stealership had come down to $17,500 but was unwilling to go down to $17k. I walked out.

Several phone calls by the stealership, and 2 weeks later, they accepted my $17k price and I drove the car home.

If I had taken the initial offer on the car, I would have lost $7,000.

I once also had a girlfriend that had bought a new Chevy Aveo. I believe it was the cheapest car sold in the U.S. at the time. 2 years later, she traded her Aveo in for... a new Aveo because she wanted AC and liked the color of the new car better.

Both cars were easily the crappiest cars I've ever been in. She could have saved money and driven a much better car, but she allowed someone else do the thinking for her. Needless to say, she is an ex-girlfriend.

My point is that anecdotes are not worth much. My experience is easily countered by the story of your experience, but the fact is that there are plenty of good and affordable used cars to choose from in most markets.


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Seems as though our reference points for 'poor' are quite a ways apart. To me, being able/willing to spend that much on a car means you're not poor - or at least you weren't until you went and spent all your money on a car :-)
My definition of poor is being up to your eyeballs in debt, but not owning any appreciating assets. Buying a new car is among the poor investment decisions.

I know plenty of people that make much more money than I do, and they are poor. They are the people that come to me for a (free) loan so they can make their rent.
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Old 04-18-2014, 11:37 PM   #10 (permalink)
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I know plenty of people that make much more money than I do, and they are poor. They are the people that come to me for a (free) loan so they can make their rent.
I am a student and not even a very good one. My only actual income is the National Guard, and one weekend a month and two weeks each summer do not account to much.

My elder sister just borrowed money from me. I have an old Civic.

She has a Lexus. However, she bought it used, and I was surprised when she told us about purchasing it, she had planned on spending more, but realized that she did not need to. Still, she is making payments. I only needed to do that once, my car was totaled, and since I only had comprehensive on it, I did not receive much for scrap.

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