Vehicles under $15k are 1.6% of the market, and their share of the market has dropped over 90% since 2019. The old advice that you can get a beater and drive it in to the ground for $5k hasn’t been true for years but it still seems pervasive in personal finance spaces.
Going car free is getting more affordable.
Either way, as someone stated above, they are price gouging. Covid taught them that fake shortage works and we will pay so they are milking us.
Housing, food, car, health care…
My partner took her 2022 Toyota for service and the dealership offered to buy it off her. The price was only $1k less than she paid new. That’s a year and a half of heavy use for $1k if she opts to take it.
I bought used in December 2020. 6 months later, the dealership called me with an offer $3k higher than the sticker price I saw. It was madness for a while!
Yup. My wife and I both own Subarus, we get “please let us buy your car!” letters from local dealerships on a monthly basis and have been since we bought hers in 2018.
That was definitely my experience buying a car a few months ago. My car was totaled so I had to buy a replacement unexpectedly. I was seeing used cars with 30,000-50,000 miles selling for more than MSRP and new cars were very hard to find. I ended up buying a new car that was less expensive than the used cars I was looking at and ended up getting a much lower APR due to the fact that it was a new car.
A beater for 5k? Ive bought 500$ beaters less than 6 years ago!
500$ nowadays will not even get you a junker with its engine and transmission removed.
Cash for clunkers and other programs killed the used market.
Increased safety features on recent car models are a factor here as well. In the decade before I drove, airbags became standard, and weren’t even required until I’d been driving for a bit.
And over the last 10 years, NHTSA has pushed for stability control, 5 star crash test ratings, etc…
Then the whirlwind of safety over the last 5 years where back up cameras became required, and blind spot monitoring, brake assist, lane keep assist, adaptive cruise control all became available features.
You can still buy a car without those, for sure, and unfortunately that still costs $12k unless you want 200k miles or rebuilt titles.
But as I’m shopping for my kids first car, I find it hard to draw the line on what safety features she can have vs not have, and suddenly a few safety features later, used cars cost $20k. A far cry from my first car that I bought for $1k and drove in to the ground.
suddenly a few safety features later
I’m curious what safety features in particular you consider necessary? I ask because all of the modern stuff you list (blind spot monitoring, brake assist, lane keep assist, adaptive cruise control) I’d argue are hardly necessary for anyone. Blind spot monitoring can be replaced by a $10 pair of blind spot mirrors and everything else is more of a convenience feature or something that can be replaced by instilling good habits into your teen about keeping attention on the road and not getting distracted with her phone or fiddling with the radio.
For sure a 10-year-old used car in 2023 is massively safer than a 10-year-old used car in 2003. I don’t know if that can possibly explain how that 10yo used car in 2003 was $1000 (5% of 20ish k MSRP) and an equivalent 10yo used car in 2023 is $20k (75% of 30ish k MSRP - 20k inflation adjusted from 1993 to 2013). Of course these numbers are
vibes basedapproximations and anecdotal, but it’s kind of my impression.I would think the safety argument is already generally accounted for by inflation - Euro NCAP, NHTSA, etc. has been going pretty strong since the 90s. I don’t know if I buy that backup cameras and blind spot monitoring becoming standard in the late 2010s suddenly made cars retain all their value, because new cars got those features but the MSRPs of those cars was basically just increasing at ~the rate of inflation. Also while these cars are getting safer, they’re getting much more expensive to maintain, which you would expect to drive down used car prices. It’s strange for sure. The pandemic can’t bear the entire blame either though, since it was a trend that started before it. 2020 just supercharged it.
Probably not the point of the post, but I’ve found the economics of owning a car in general has changed for me. It actually stopped making financial sense for me to own a car in 2017-18. The pandemic drove it home. We still have one car for the house, but I wouldnt be surprised if it isn’t the last car we buy…
The used car market is so terrible where I live that I bought a 1999 Subaru Forester L with a completely trashed engine that could barely make it a block without overheating. I got it for around $200 in “scrap material” (Luckily the title wasn’t a salvage yet).
So I completely took the engine apart myself and put in new head gaskets, pumps, belts, electronics and all that noise. I took it as a challenge to myself since my old cars’ engine had completely stopped starting and absolutely nothing got it working again, and I had wanted to prove that I could fix a fucked up car. It took 2 months, but I saved so much money not buying an overpriced piece of trash that seems to saturate the used market right now. (Seriously? $6,000 for a beat up 30 year old sedan? Is everyone selling these cars insane?).
And the best part is that the total cost of this Subaru + all the parts needed was 1,700!
To put it in perspective I had found someone selling a 2002 Subaru Forester L for 3,000 on the side of the road. I could probably make a business out of this if I wasn’t so slow…
Never did figure out what was wrong with the old car, we just ended up scrapping it because it was a complete lost cause. But if this were pre-pandemic I wouldn’t have had to do that at all. I would’ve just slapped over 2,000 for a piece of garbage that needs some maintenance, and be on my way, no need for scrap diving, brain rotting and time wasting.
I bought a new car in 2018 for 19K. Everyone I know flipped at me for ‘wasting money’ and not buying a 5yo+ 10K car that looked like shit with 100K miles.
It’s now worth 21K, after 50K miles.
I’m looking at trading it in for a 35K car in the next two years, and watching the value on that car never go down either.
If you expect that to continue happening you’re in for a surprise.
dude, everyone says the housing market will crash for 15+ year now.
We have to accept the old rules of economy are out the window. govt will bail and stimulate to no need the second the market slows down.
this is the new normal. truth is our inflated economy can’t ever allow housing values to go down anymore without causing a depression so the govt won’t allow it.
They definitely shouldn’t have flipped out at you about it, but that doesn’t mean they were wrong. Vehicles almost never appreciate in value; it just so happens that you accidentally timed the used car market perfectly.
I grew up hearing all sorts of addages about vehicles. “New cars lose tons of value as soon as you drive off the lot, so you’re much better off buying used”.
Once I grew up and started buying my own cars, I learned that the best miles a car has are usually right out of the factory. The sound dampening wears over time. The foam in the seats wears out. Scratches accumulate, colors fade, odors accumulate. Hoses leak, mechanicals fail.
A lot of this can be fixed, or mitigated with proper maintenance. But the ultimate lesson I learned is that the resale value only matters if you actually intend to sell the car while there is still meat left on the bone. I’m fine driving a car into the ground until it’s scrapped, so I don’t factor resale value into my purchasing decisions.
Even back in 2018 I noticed the price gap between new and used cars wasn’t as wide as I remembered it being back in 2011. I ended up with an Impreza with ~12k miles for $17k, but a new one would have been just over $20k. I was strapped for cash at the time, but I wonder if a new car would have been a better value even back then.
This was exactly the calculus I was doing with my wife in 2017~2018. Her car was a fourth-hand 2003 Hyundai Elantra which had been run in to the ground before she ever even got it (but to be fair, it was both free and better than what she was driving before). I was looking at used car prices and thinking, is it really worth it to save less than $5k when I get a car that’s 5 years newer with 50,000 fewer miles and all of its warranty in-tact? The PF advice I was seeing at that time was maddening, and mirrored a lot of what you’re saying - “cars lose half their value off the lot, buy a used civic for $5k and drive the wheels off” - but that had already not existed for years. And then the pandemic supercharged used car prices and they just sort of never came back down. And then rates went up and they still won’t come down.
We ended up buying a brand new 2019 Impreza in an undesirable color for $19k, financed with nothing down and 0.9%. Now it’s paid off, I feel like in retrospect it was very much the right call.
The used car market is being strongly manipulated by the banks. Their inventory of repossessions has skyrocketed over the past few years, but they are limiting how many are going to auction so not to destroy the market and their margins. I’ve heard rumblings that with the push for EVs and their costs, carmakers are going to make them a service. You pay a monthly fee to use them and every few years you will get a new one. You will never own one outright. Who knows if this is true or not.
