[KKatso5]

I just heard a piece about this on NPR (no I don't drive a Subaru) but the crazy part of the lead-in was them interviewing a couple at a car show. They were interviewing them about the $86k Suburban they were looking at and their rationale was they are about to start a family and they "need" a new car. Wow.

The article went on to discuss how the US manufacturers pretty much abandoned the lower end of the market - leaving that to used cars.

 

[KKatso5]

What worries me is that I make a pretty good living and in my opinion I would not buy a $50k car even with my good salary (I haven't had a car payment in 10 years). That means that there are A LOT of people paying $50k without the income to support it so they are either leasing to taking out 7 year loans to keep the costs down but never getting off the monthly payment death-spiral... they roll to the next car in 4-5 years and roll the negative equity into the next loan. Yikes

 

[KKatso5]

I must be the oldest dude here, because I feel like cats were far more expensive at the low end 30 years ago. They’re just more expensive for the high end models now."

@Dave_Car_Guy - OK, we all make typos but that made me LOL.

(I'm a cat owner and agree)

 

[KKatso5]

I would argue it's the customers who are abandoning the lower end of the market and manufacturers are simply responding to customer demands.

I think that's a huge part of it. The car companies will sell what the buyers want...it just so happens that the higher end cars/trucks make them way more margin so they aren't exactly fighting the trend. If small cars were more profitable than trucks, I am sure there would be a marketing push, but since the US buyers, in general, don't want basic cars - the manufacturers double down on the strategy. Plus for the last 10 years, money was relatively cheap so buyers could stretch to the higher end.

 

[KKatso5]

We bought two $50k cars about 8 months apart (one planned, one unplanned) and both were negotiated to 10-15% off and both then had $10k down, and we financed somewhere in the mid-upper $30ks for both at 2%. Both of them are sub-5 year terms and the payments are still north of $700 for each. It's affordable for us, and we both like our cars, but two weeks after I bought mine I finally got told I could WFH permanently and now almost two years later I have 8500 miles on mine, and it's like do I really need a $700+ payment to drive to Target once a week? We have the income to support it but it's pretty insane to think about buying a $50k car, getting a big discount, putting $10k down, and still having $700+ payments, granted they are sub 5 year terms but still.

That's similar to both of us. My 2010 has 87k on it an my wife's 2006 has 8k. Our commute is short even without working from home - so what's the point of a new car FOR US? One of the cars will end up at school with our son in 6 months - not sure if we will try to be 1 car family or look to get something.... but its hard to look at $50k when I go into the office 2x/week and that's only a 7 mile drive each way.