The price of going upscale: New cars are too damn expensive, and Americans aren’t buying them anymore.
Based on new-vehicle sales data this year through November, plus my own estimates for December, for the year 2018, sales of new cars plunged 13% to 5.5 million units; and sales of new trucks (SUVs, compact SUVs, pickups, and vans) surged 8.3% to 11.8 million units. Car sales are now down to 29% of total sales, the lowest share on record in US history. This is the fourth year in a row of declining new-car sales. Since 2014, new-car sales have plunged by 31%; but new-truck sales have soared by 38%:
These are deliveries of new cars and trucks by dealers to their customers, and by automakers directly to large fleet customers. A lease counts as a sale because the dealer sells the vehicle to a leasing company, a lender, or the automaker’s own finance company, which leases it to the customer.
Also note that the dominant buyer of cars are fleets, primarily rental car companies, but also other companies, and governments. And in total, fleet sales were up 7% year-to-date through November. But new-vehicle retail sales were down 1% year-to-date.
The collapse of new-car sales has caused Detroit automakers to shut down assembly plants in the US over the past two years, with GM being only the latest and repeat shutdown-and-layoff announcer [After Wasting $14 billion on Share-Buybacks, GM Prepares for Carmageddon & Shift to EVs, Cuts Employees, Closes 8 Plants].
“The market continues to abandon cars, with no end in sight. Automakers have slowed or stopped production, so inventory is down, and buyers are mostly looking at trucks and SUVs,” said Karl Brauer, executive publisher of Autotrader and Kelley Blue Book, cited by Auto News.
“Every time we think we’ve hit the bottom in car market share, another month passes with trucks and SUVs gaining while cars lose,” he said. “This is the reality that recently drove Ford and GM to announce plans to further reduce car production. Who can blame them?”
But have Americans really given up on cars? Nope.
Obviously, when you look around there are still a lot of cars on the streets. Turns out, where cars are hot is in the used vehicle sector – particularly bread-and-butter cars that people can afford.
In 2018, new-vehicle sales will be a tad over 17 million units, retail and fleet combined. But used-vehicle sales will be about 40 million units, sold by franchised dealers (such as Ford or Toyota dealers), independent used-vehicle dealers, and individuals. The used-vehicle retail market is backed by a large and liquid wholesale market where rental cars, lease-turn-ins, repos, etc. are sold at auction to dealers.
The largest auto-auction company in North America, Manheim – running about 8 million used vehicles through its auctions and online venues a year – points out the demand for basic used cars in its auction report for November:
On a year-over-year basis, most major market segments saw price gains in November; but more affordable vehicles continue to see the greatest increase in values. Compact cars and midsize cars outperformed the overall market, while utility vehicles and pickups underperformed the overall market.
In other words, what’s hot in new vehicle sales (SUVs and pickups) is less than lukewarm in the used vehicle auction market. And what is ice-cold in the new-vehicle market (cars) is red-hot in the used-vehicle market.
J.D. Power in its Used Car and Truck Guide for November, said a similar thing. Year-to-date through November, prices of used vehicles up to five years old rose 2.8% on average. But…
On the mainstream-side of the market (non-luxury), prices this year have been supported by exceptionally strong performance of passenger cars. Compact car prices are expected to end the year about 9% above their position in 2017, while mid-size car prices are forecast to grow by around 7%.
Mainstream SUV prices are also up in 2018, but “not nearly to the same level as their car counterparts,” J.D. Power says. One of the primary reasons for this is “affordability. which favors more competitively priced passenger cars.”
And the luxury side is not doing well in the used-vehicle segment.
Prices are expected to be down for most [luxury] segments [cars or trucks], with some of the worst losses expected in the luxury mid-size car segment, which has seen steady year-over-year declines since 20012. Prices for this segment are expected to decline by over 7%.
What’s hot are affordable used cars.
But they’re growing scarcer as new-car sales, even to fleets, are declining year after year, while “truck” sales (SUVs, compact SUVs, pickups, and vans) are taking over as rental car companies shift more of their fleets over to trucks. Trucks being run through auctions now account for 48.5% of total auction sales, and cars accounting for 51.5%. The share of bread-and-butter cars being run through auction will decline further in the future, following the trend of declining new-car sales to fleets, in favor of trucks.
This shows that many Americans are clamoring for affordable cars, but that automakers have gone upscale on everything – thinking that that’s where the money is – and now people are not buying new care any longer. Even Kia and Hyundai have gone upscale, and their car sales too have collapsed. Americans, to get the cars they want and can afford, end up buying used cars. But even there, the flow of used cars is slowing down, and given the strong demand for them, prices are surging. Clearly, something is out of alignment.
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It’s obvious that most of what the major automakers produce has been designed by committees and focus groups. People truly passionate about product design and performance like engineers have little input. High prices of new vehicles is also the result of federal CAFE standards which is why you see things like turbocharged 4 cylinder engines in pickups (“EcoBoost”), 10 speed transmissions, annoying stop-start systems, elaborate emissions systems, rescue donut spare tires and excessive use of aluminum, plastic and composites. Pay a little less for fuel (maybe) but a whole lot more in vehicle price and maintenance.
“People truly passionate about product design and performance like engineers have little input. ”
You haven’t been paying attention:
http://doubleclutch.ca/2019-ford-mustang-bullitt/
480HP and 420lb/ft not enough? Plenty of aftermarket mods available. And, BTW, the 10-speed transmission available in this car is FASTER 0-60 than me or anybody else can shift by hand (but I prefer to row my own).
And, the competitors are doing OK as well:
https://www.caranddriver.com/dodge/challenger-srt-srt-hellcat
https://www.chevrolet.com/performance/camaro-zl1-sports-car
Oh, I forgot to mention:
https://www.caranddriver.com/ford/mustang-shelby-gt350-gt350r
Still think the ‘People truly passionate about product design and performance like engineers have little input?’
Yep. I’m a GM guy, but the Ford performance cars = NICE.
Also, Ford pickups are very good.
I have owned one of those, and my brother drag races vintage Ford muscle. Very good cars…
A nice summation especially the last sentence.
+1
All driven by federal nanny state mandates…
Fuel mileage, safety, rear end collision, child safety…
And they all end up looking pretty much the same… you need sensors since their is so little glass to look through
They are loaded with electronics,,, which work great until they don’t
Almost impossible for the shade tree mechanic to diagnose,, and chasing down a bad connection or loose wire…
I still have my 1984 diesel rabbit 5 spd…. so easy to troubleshoot and repair….
Hot air balloon is also easier to troubleshoot and repair than passenger airplanes. It’s less safe but looks like safety is not something you value much. So maybe that’s something you might want to consider for your next air travel.
As an engineer who works for the auto industry, people complain to me sometimes about their cars. What I tell them is this:
“Who told you that you are the end customer? I am here to tell you that you are not the customer, it is not your wants and needs that are being fulfilled. The true customer is NHTSA, the EPA, CARB, etc… and it is their wants and needs that are being fulfilled, not yours.”
It’s a good thing that we all have to breathe the same air, whether rich or poor, and that our lives depend on it, whether rich or poor. So we as a society have decided that we’re going to try to live as long as possible, rather than cutting our life expectancy short by inhaling toxic fumes and particulates.
You as an individual might think it’s OK for you to pollute the air for everyone else, but we as a society don’t think this is cool.
Do you actually think these government agencies, specifically the EPA, are safeguarding our environment? If so, it makes me question your judgement and discernment…
Kerry,
You bet. It started with “Love Canal.” Look it up. You might actually learn something. That was the reason why the Nixon administration created the EPA. Because of the national efforts to clean up the environment, the US has become a much cleaner place than it had been in the 1970s — even though the population has surged since then. This includes abolishing lead in gasoline, the emission-control regulations for vehicles, the rules on industry, etc. To find out what it is like to live in a city without effective environmental protections, go to New Delhi. That’s what American cities would have turned out to be without environmental rules implemented decades ago that you’re now benefiting from — yes, you! — by being able to breathe cleaner air.
Two different subjects here. Mr. Knoss speaks of who the real boss is that the car companies must heed. It is not the consumer but the government. If the government is not happy with the car, guess what? No car (to sell).
Wolf, your point is well taken and true but I would add that “Diminishing Returns” is very well in play these days. IE at what point do those government folks say Clean Enough? And sure as hell, folks are going to pay for it with each new car purchase — and the high costs of repairing said car, once they obtain a few years use and it breaks.
Mr. Knoss’s comments remind me of my time spent in college (I am 40+ years in the auto trade). We were instructed to see around the Common Knowledge that infiltrates us, and look to the truth – the building blocks of a good mechanic. For example, I remember my first encounter with this “new thinking” when the instructor told us “Brakes don’t stop cars; they only stop the wheels from turning.” Tires, road conditions and a host of other things ultimately determine if the car actually stops when the customer pushes that brake pedal down.
Love your work, Wolf. Thanks. I read it daily.
During the Northern California fires, I started to wear a mask when I went outdoors. It was the worst air quality I had experienced in my 4 decades living in Northern California.
Agree with you 100% Wolf!
There is a big difference between the EPA (at its best- EPA now often behaves as a captured bureaucracy, but that’s a different subject- EPA’s prime is long past), and NHTSA.
Activities which have a public/environmental impact have proven to be manageable mostly by government intervention. However, if you don’t want to wear a seat belt, that’s your business, as long as you pay for your medical care.
If you set up government intervention for everything, you end up with the tepid economy that you see in other parts of the world.
I also have lived for years in other countries, and can tell you about how this impacts the rest of the world. The reason 70-80% (!!!!!!) of the significant innovations come from the US?- more freedom.
Europe is a distant second, which is actually quite bad for the world.
But, they have very “safe” cars.
Wolf,
It seems your posting on Marathon Oil waging a stealth campaign against the CAFE standards has brought out the shit hawks.
I am currently in Central Mexico for the Holidays. The air pollution here is so bad, that it feels like coastal China. I lived here 20 years ago, and the change in air quality is shocking. As more and more people migrate to cities and denser environments, this is a huge problem that impacts the health and therefore the economy. I can understand how folks that live in less dense or rural environments would not see this as an issue – but it most definitely is a problem that must be addressed for future generations.
“The true customer is NHTSA, the EPA, CARB, etc…”
All manufacturers will go under with this model. I am all for emission cutting, but cameras and driving assistance features drive modern vehicle prices out of the buyers budgets.
If the EPA and the rest of the alphabet soup groups don’t start paying for these vehicles there won’t be any manufacturers left to meet their childish standards.
The markup on the technology drives it out of people’s budgets but the hardware itself that powers those technologies is cheaper than ever.
But manufacturers have always marked up that kind of stuff. Pay $2000 for the stereo/navigation that is worth $150 in hardware.
Completely agree. I buy high end, and I used to almost always buy the most tech laden model of each car, but now it is just absurd.
My last car I bought my wife an MDX with the medium package. 20% more for lane assist, cooled seats, and autonomous braking. Wake me up when the car drives itself, otherwise give me apple Car Play and leave me alone.
I used to agree with you, but now my wife’s 3 row SUV is faster than my 2010 Mustang GT, and gets almost double MPG.
The CAFE standards are way to low.
Between the cancers clusters from all the fracking and the co2 emssions from all the bloated design aborations that are suvs humaity is already dead.
As terrible as the holocaust was we are living in the mother of all … 7 billion people are going to die off.
And you want to take a jab at CAFE standards?!?
“The CAFE standards are way to [sic] low.”
OK, what are appropriate CAFE fuel mileage standards according to zoomev? Is 100mpg the right standard, or heck… why not 200mpg? We all know that if you only change a mileage regulation that new vehicles will automatically conform to them and save all the fuel and pollution with no additional costs.
re: “Obviously, when you look around there are still a lot of cars on the streets.”
Yup. My observation as well (FWIW, I just sprung for a new one; a Mustang Bullitt with a technological marvel of an engine).
California Bob,
I deleted the last line of your comment. Here is why.
What you wrote about JD Power (you alleged the company was a “fraud,” in other words it’s committing crimes on an ongoing basis) has to do with marketing in the auto industry, and with advertising, and awards. There is no fraud in this. It’s just marketing and advertising by automakers of their brands and has been done for decades. It’s just new to you. Your allegation that this is a “fraud” is BS. But more importantly, this discussion about marketing and advertising by automakers IS IRRELEVANT HERE.
What IS relevant here: J.D. Power acquired the “Used Car Guide” business from the NADA (National Automobile Dealer Association) in 2015. Until 2016, it was called the NADA Used Car Guide, which I cited many times during those years. It is based on data that franchised dealers and independent used vehicle dealers contribute to the NADA. The NADA Used Car Guide (now called the JD Power Used Car Guide) is one of the major, if not dominant, guide books (now online) that auto dealers and lenders use to value trade-ins and establish loan values for used cars.
When you take your 5-year-old Mustang to a dealership to trade it in for the newest model, the person who appraises the car for its trade-in value looks up the book value of the car (this includes variables for engine, transmission, the condition of the car, mileage, optional equipment, etc.). That person likely won’t use the Kelley Blue Book (KBB). It’ll be either the JD Power guide (formerly NADA guide) or the Black Book, or maybe both.
These used car guides were little books that sales managers carried in their pocket. They were printed and sent to dealers on a regular basis. Now it’s all online. These are important resources in appraising a car — in addition to running a Carfax to get the title history, inspecting the car visually, taking the car for a spin, checking for mechanical issues, etc.
So be careful with your wild allegations.
The local government uses the NADA price guide to set tax values for vehicles. It’s way out of line of the actual sales price of a vehicle. They taxed me @ $3500+ on a vehicle that was worth $200/$400. My understanding is NADA overprices the values because city governments pay them for the overpriced values. That part seems like a scam to me.
The numbers you list don’t compute with the NADA guide. I have no idea what your local government does or how it comes up with these figures. Maybe it uses a statutory minimum for tax purposes.
But if you have a vehicle that, as you say, is “worth $200/$400,” it’s an old beater ready for the salvage yard. A set of tires would double the value of the vehicle. NADA doesn’t even cover those units.
I bought my first brand new vehicle a year ago. It’s a truck.
Only $50k?
’17 Toyota Tacoma SR 4×4. Year end clearance at $25.5k.
Whew!
I’m old enough to remember when compact trucks were the alternative to bare-bones hatchbacks as inexpensive transportation. Not any more.
After browsing the Internet for late model 4×4 Tacoma pickups you landed yourself an awesome deal. Kudos!
Was shopping for new up to a couple of days ago. IMO, the problem is that the more incentives the factory offers, the less the dealer kicks in. Tried to find “great” end of the year/end of the month deals, only to find dealers dropping MSRP a couple of thousand on a $30k SUV. Dealers then threw all rebates (even those for new college grads, vets, hurricane survivors and loyal customers) into advertised “discounts”-who could possibly qualify for all categories? True bait and switch.
And across all brands-we were looking at 6 different companies.
It was a very frustrating experience. We have now decided to wait a couple of months, and shop used.
We just bought a new car, and found that we needed to contact 10 dealers to find one that responded with low year-end prices. Fortunately, many dealers have Internet sales managers who respond (or don’t) to online inquiries. We got about a 15% reduction, and zero bump-ups in price due to gimmicks.
Great. I just bought another car yesterday. I was intrigued by it’s facial recognition safety feature. We should adopt same in stock trading.
Seeing the size of engines in most US made veichles, things are fun currently when fuel is cheap, but what happens when oil prices someday begin to rise ? It’s fun with that big engine growling, but less fun at the meter.
EVs do need a technological breakthrough in battery technology to be able to replace IC in cars simply due to the availability of lithium and other rare elements needed for current batteries. These minerals are found mainly in China,a couple of not so politically stable places in South America and finally in Northern Europe, not the US. And those coal fired power plants needed to produce the electricity for charging them batteries ….
FLASHBACK, AUTO INDUSTRY BAILOUT: “Who could have guessed that producing ONLY trucks and SUV’s would bite them in the ass! Just like in the 70’s.” END FLASHBACK
Here’s your revolution: Gas @ $4/gal. Stop subsidizing petrol and VOILA! EV is magically good enough! Could it be better? Sure, but I think there’s no excuse for 90% of people.
The U.S. has very substantial Lithium reserves, it’s just so plentiful and cheap in China and S. America that we don’t bother.
Toyota and Honda, maybe others, are selling hydrogen fuel-cell cars now in California where there are hydrogen fill-up stations. EV’s may well be a dead-end soon to be forgotten.
You gotta love paying $50,000-$70,000 for a car that will testify against you in court.
And a vehicle that can probably be shut down via GPS etc. remotely, to aid in “civil disobedience” control.
Yes They Can
My 1995 vehicle is the last model year that did not have a monitoring computer built in. It will be kept operable indefinitely.
“You gotta love paying $50,000-$70,000 for a car that will testify against you in court. ”
Mark,
Excellent comment! I will re-post it shamelessly….
You think only EV’s are recording your actions, location, and other parameters of your vehicle? Think again. That nice screen on your dashboard is likely online whether you are using electricity or petroleum.
OMG, I love this comment.
Yes. This is another reason I look at all new cars sideways. Don’t trust ’em at all.
Here in France, in 2005 Renault introduced a line of basic no-frills cars under the Dacia name. Dacia was originally a Romanian brand, manufacturing old Renault models for the national market before the iron curtain got shredded.
These renewed Dacia cars distinguish themselves by as much as possible going back to the basics of what a car needs to be: transportation. So a Dacia does not have massaging seats, a 30 speaker entertainment system, or an on-board mainframe-equivalent computer system that keeps the car in its lane, avoids tailgating, parks it, looks out for the occupants and informs the authorities of every move you make. Basic, but not spartan.
In return, these cars are very affordable, cheap to run, and turn out to be exceptionally reliable, not in a small measure due to the avoidance of unnecessary electronic gizmos. The brand has posted impressive sales figures since its introduction, topping the 1 million mark in 2018.
I do wonder if there is a lesson here for the American automakers.
Wow… followed the link and was impressed with that station wagon (and its color). How do they rate on mpg and safety? Thanx
Dacia Logan MCV (the stationwagon) owner here.
my 0.9 litre petrol turbocharged engine can get 60MPG on the motorway, 35 MPG around town.
Six months ago I paid £6.5K (~$8.25K) for this 2014 Laureate* tci, with 2 years warranty.
Not sure about safety, haven’t tested that functionality yet.
*Top trim level
And here we go…
And the point of the article: “The price of going upscale: New cars are too damn expensive, and Americans aren’t buying them anymore.” WR
Keep wondering when the basic Chinese-manufactured auto will appear at WalMart. (Its computer will report to China.)
In many respects they already have. Parts and engines, especially from GM, are now Chinese sourced.
Chinese cars were introduced into Australia a few years ago.
They arrived with great fanfare and since have fallen in sales to virtually not making a blip on the market.
Recently auto journalists have been trying to compare the introduction of Korean and Japanese vehicles as against Chinese to the Australian market.
Both of these former countries cars went from a bad reputation to great strength and now cars from there are best sellers.
China has real issues. Crash protection, quality, etc etc. The culture of Chinese production will take years off ironing out and market acceptance to the west. regardless of cost.
As a U.S. citizen, I’ve observed the European auto market has all the good cars. When looking for an affordable, compact, well designed car 6 months back, there was little to chose from here in the U.S.
It’s all this ugly, over priced suv junk. It’s gotta be baby-boomers buying that crap. Bigger-is-better b.s., to go along with their ugly double wide s.steel refrigerators, and bulging waist-line. I expect better.
Those suv things aren’t sustainable. Whenever a trend comes to an end, it tends to go out with a bang, if you will. It’s not hard to see the bang. Auto companies dropping everything to focus on a narrow product line. yeah, how could that go wrong? lol
I’ll take a Peuguot 208 plug-in. ……I’m waiting ! (and won’t be spending money on an ugly, gas guzzling suv).
I don’t know. I’m 6’5″, anything except a very large vehicle is a 3 seater if I’m in the car.
I bought my Dacia here in the UK 4 years ago; £1000 down and £200 a month for 3 years, all paid. Apart from a £60 annual service I’ve not spent a penny on it, not even a tyre. It never goes wrong as the fanciest thing about it is electric windows. It’s the best car I’ve ever owned, and that includes the £55,000 Lexus 430LS Which I bought new back in 2001. I had that for 12 years and never did work out what all the buttons did.
One more anecdote in support of this article… I bought a truck yesterday! Had been without wheels for a couple of years. Used 2018 Nissan Frontier, 4×4, V6, 18K miles, CPO warranty. Not the snazziest truck but should get the job done for a long time. With a 33% discount to buying new, and with the original warranty plus CPO protection, why buy new?
Good truck and they ride nice. Good decision, imho.
I just added to my ‘fleet’ about 1 month ago. I had been looking for a new 4X4 Colorado or Canyon as my son gets a big discount through the company he works for. Still, the prices were insane and I just don’t want the bullshit electronic gimmicks. Instead, I kept my 32 year old Toyota PU and added to it a 38 year old Westfalia owned by a mechanic I know. I have had these vans before and could easily maintain them, myself. Anyway, the day I drove the Westie home I could have sold it for a 25% profit as they are now sought after big time. My wife and I will be using it for short trips all around northern Vancouver Island for fly fishing and kayaking. To replace it with a new Euorovan type product or equivalent would cost 10X what I paid for this little gem. New tires, new engine, struts, hubs, body, paint, etc makes it pretty much new. I had a few other mechanic friends check it out with me and bought it on the spot. It is even repainted with the original flat yellow VW product offered in ’81.
I just returned from Edmonton and while there was met at the airport by a son’s friend who drove a new Dodge Rebel PU. A $70,000 Cdn truck. Say that slowly…..”seventy thousand dollars”. I’m shooting for another 20 years with the Westie, and will probably give it away to my daughter again like my last one. In twenty years it will still be in new condition and I wil still have my money.
Keeping a vehicle for decades is actually quite easy. Change the oil often and use the specified oil by manufacturer (see shop manual). Do preventative maintenance. Fix rust spots before they get away from you. All of this sounds expensive but it’s way way cheaper than replacement.
$70,000.00 for vanity wheels !! That’s a tidy sum …
I’ll tell you what’s out of alignment ..it’s called the human ego !
I owned a ’73 Westphalia many moons ago. Terrific vehicle, though underpowered, and crawled up hills.
I replaced the (poor) front seats with (then) state-of-the-art Volvo seats scavenged from a recently wrecked car. Best $400 I ever spent!
” Terrific vehicle, though underpowered, and crawled up hills.”
Exactly so was my 1959 Saab Model 93. It had 3 on the tree with reverse gear lower than first. It was a front-drive and the owner’s manual said if a hill is too steep to go up in first gear, turn around and back up the hill!
” …fly fishing …” Wish I was young enough to do that anymore, Paulo!
Me, the wife and my ’95 Dodge Ram diesel pickup with camper atop went to Alaska and back three times for Dolly Vardens and Sockeye Salmon, ending twenty years ago …
@RD
Nice country and great fishing for sure. I worked there for 3 years and lived on wild game and fish for the most part the entire time I was there. I have thought about returning to show my wife everything but then I think of the distances and driving. The same for visiting the east coast.
Regarding Wolf’s comments above about ICE pollution etc. I agree, and worry about operating older vehicles in these crowded times. Then I evaluate how little we drive compared to other people and how we stay close to home for the most part. (The bus has a 2.0 L engine and we don’t operate above 3,000 RPM) This is a concious decision. My aircraft trip to Edmonton was the first flight I have taken in 20 years, and upon my return I vowed it was my last. It was one of those ‘family’ events I felt was important and it would have required 4 days of driving to get both there and return. No trains available.
One point I would like to make about IC Engines and possible declines of fossil fuel use. On the approaches into Edmonton, Calgary, and Vancouver my nose was glued to the window as I knew this would be my last flight. For miles in all directions all I could see were ring roads and major freeways. Flying over the Alberta Prarries was a network of rural roads linking up every section, farm, ranch, and town. That country helps feed the rest of Canada and exports grain to the World. BC was mainly empty mountains with a few enroute cities in a few major valleys. Everything linked by roads. When we landed in Edmonton it was -12 C. The cars, busses, taxis, etc were all idling out front to stay warm. People locked their cars and let them idle. EVs won’t work in these cold climates and minus a pandemic people aren’t going anywhere anytime soon. It will be an interesting few decades coming upon us as we continue to impact climate with our very presence. All of us.
regards (and off to the woodpile) as I am processing windfalls at my neighbours this sunny day.
I’ve been buying CPO Mercedes and BMW for years. Typically about half the price of new with a great warranty. Once done its easy to find a shade tree BMW mechanic. People LOVE BMW and small foreign car shops are easy to find and repair prices are reasonable.
Its not just cars, its everything. Way to expensive. Manufactures are out of touch with reality when it comes to cost. New cars used to cost 3000 dollars. I could have bought 15 cars then for the price of 1 car now. This is the 70s. Gas was 30 cents a gallon. Greed is killing the market.all across the board.
I remember when cars were being sold for less than $5000 each, and when you compare them pound for pound, and technology for technology with a washing machine (they are both made on the same type assembly line) one has to wonder why the price is so out of line for autos, don’t they.
The washer is an appliance, the car is an appliance. Both are typical appliances that have been made millions of times. There is nothing special about a car or a front load washer.
They both have computers, a motor, safety features…. one weighs about 250 pounds, the other about 2500 pounds. The washer might cost $600. The car then should cost about ten times more =$6000 is what a typical car should cost.
Nicholas Weldon,
“… the car is an appliance.”
Oh boy. I don’t think you understand the American soul — or at least American marketing of that soul :-]
If Americans on average treated vehicles as an appliance, the industry would be dead, along with automakers such as BMW, Porsche, Ford, GM…. They’d be replaced by appliance makers in China.
As a nearly 52 y.o. “American”, born and raised, citizen I’ve seen and yawned at and rolled my eyes at my fair share of pathetic “american” marketing schemes.
I think we can agree, the car is in FACT an appliance. An unspecial, non-unique, mass-produced device that many people have benefitted from.
If there is a small niche of people (over the age of 65) who put more into that appliance and (are fools) will throw money in the toilet because they think their social status depends on that……. It’s still JUST an appliance.
“They’d be replaced by appliance makers in China.” = GOALS
Or lights-out factories on any shore.
The car is a status symbol foremost. Going from A to B is secondary.
Wolf,
Your article precisely defines the split economy we have in the US. The “haves” (or think they are) buy the shiny new SUV’s, trucks,and crossovers (can’t be bothered with used vehicles and often in denial about the true costs of buying new) and the “have-nots” who absolutely have to have basic, low cost transportation and buy economical used cars.
Thanks for the insight in this major area of our economy.
I drive a lot of miles each year, I love my 2006 VW Jetta diesel, 48 mpg. I put over 400,000 miles before having to do a head job on it. Just bought another used one, with 130,000 miles on it for $4,000.00, only needed to replace a brake line. Will drive this one for another 300,000 miles. Southern car, no rust. Excellent buy!
You just have to be willing to look for them. Had to fly to Florida from Canada to drive it home.
Loved the drive home.
After air fare, exchange rate and fuel you lose a lot of your savings. Any low mileage 4 cylinder car can compete with the VW now.
Wolf: is a cross-over a reskinned “car” or is it truly a different platform?
I ask because when I look at cross-overs they resemble the dimensions and specs of their maker’s cousin sedan. For example a Camry and a Highlander seem like they were built around the same exact engine/suspension/frame
Yes, crossovers are based on a car chassis and drive train. I call them the modern version of a station wagon.
In the sales data, are crossovers listed as cars or as trucks?
Trucks — but on both, the new-vehicle side and the used-vehicle side. So as far as this report is concerned (new-car sales v used-car sales), it cancels out and doesn’t impact the equation.
In my opinion, to be considered a ‘truck’ a vehicle would need to have at least full body-on-frame construction and rear wheel drive, preferably with a solid rear axle and rear leaf spring suspension. All unit body vehicles are essentially ‘cars,’ regardless of their shape and size. Crossovers are cars in my book, with fully independent suspension, unit body construction, and front or all wheel drive.
Yes, should be that way. Many people agree.
But the industry has a reason. When automakers downsized their SUVs (really, upsized cars) to create the crossover (a new type of vehicle), they didn’t want to call them “cars” because cars were dying as a marketing category. See above chart. So they called this type of vehicle a “truck” because “trucks” are hot. It’s a marketing ploy that has become universal in the industry.
Why do I get a big ad for a new truck on the bottom of this article when I have never shopped for a truck before?
As to the premise of this article, perhaps Americans have become a nation of DIY and/or employed in the construction industry and are just not going to buy a car when a truck can do the job with cheap gas.
Used cars are just too good to consider new. My 2004 has 230K and still runs and operates fine. When I look at new SUVs, there simply hasn’t been that much improvement other than the integrated nav and Apple carplay. So I bought a $300 head unit and now my beater works perfectly with my iphone.
One of the big affordability issues of trucks and SUV’s are the cost of replacing the tires. I just replaced the all season tires on my wife’s rig at just shy of 40,000 miles and the entire bill for name brand tires plus labor and a bit of alignment was just shy of $1000. Last time I replaced the tires on my 1993 Mercedes diesel passenger car it only cost $300. I shopped all the tire brands and even the cheapest Korean tires would have saved less than $100 for her SUV. The size, pressure monitor gizmos, and specialized aspect ratios seem to be contributing to this. No wonder the frugal folks are bidding up the price of used sedans.
I think the top high end SUV’s and Trucks are the automotive equivalent of the McMansion. Many purchased by those who can’t afford them and will decline in sales as our relentless rentier cost of living goes on.
YES ! exactly ! Or shopping malls. Remember when that FAT trend came to an end. The last mall built was the Mega-Mall of america. Now look at that industry. REITs are scrambling to get rid of them. lol
It’s true, when we look at history, when a trend comes to an end, especially high profile ones that have no basis in common sense, they go out with a big party. A big BANG.
Mcmansions burst in 2007 and the country is still dealing with thousands of unfinished and never completed subdivisions still waiting a mcmansion to arrive on a truck.
Did Video tape rental evolve into DVDs? NOPE. Block buster was too smug, thought the party would last forever. lol
Kmart and Sears apparently thought bigger was better. Hows that playing out?
Now we’ve got auto companies that, I’ve never known, focusing their product line narrowly on ugly, tacky, bulbous, suv junk. And who’s buying that junk? aged 70+ baby boomers and their parents, who have little time left behind the wheel.
Hello Tesla, car sharing, cheap cars from China, and self-driving cars, bye-bye ugly noisy “American” made junk.
When the ‘average’ price of a new sedan is now over $30k, none of this surprises anyone. The government should not have bailed out either GM or Chrysler. Ultimately, after a LOT of PAIN, and more car manufacturer failures, sedans will make a huge comeback. Prices will still dictate, and consumers will speak with their wallets saying ‘no more.’
The automotive industry is enormous, e.g., the manufacturers, the labor unions, auto financing, new tires, secondary auto parts, etc., together constitute a “too big to fail” juggernaut. The executive branch and the fed will never fully expose them to the vagaries of the free market.
I remember when the only pickups that had double sized cabs and 4 doors were driven by loggers and they were called “crummys”.I think when the ongoing collapse in the financial markets runs its course and lays waste to the cash burning fracking industry oil prices will skyrocket and people will once again call such vehicles “crummy”, but for a different reason.
I own a mid-90’s Ford Ranger (bought used w 136,000 mi.) in the mid 00’s .. still running strong a decade and a half later ( a caveat : I only put a couple of thou miles on it yearly) ‘:]
It creaks and squeaks when driven, especially on potholed surfaces. It’s paint is scratched, with a few small dents here and there, grows moss on the weather-stripping annually here in the PNW. But I do get my use out of it .. from hauling furniture, to mulch, manure, and gravel, to yard/prunings to the local transfer station .. no spotless vanity behemoth truck here ! It may look kindy crummy to the undiscerning eye, but it’s a gem in the rough, with more utility than any ‘car’.
Why knock the “fracking industry”, it’s a bit off topic. The oil and gas business is not a new kid on the block nor is most of the tech that is responsible for the shale revolution. If you dig deeper you will find there is much more to the story and companies may come and go but the industry will not.
With continued building of the electric vehicle market, the oil companies will continue to shrink. That’s certainly a good thing.
Are cars too expensive? Or is our money worth less?
I am not sure what is what.
Both.
The latter. It’s a point that never gets the attention it deserves.
More than that, when technology makes things more affordable, the generated wealth is appropriated by the money printers in the form of “hedonic adjustments.”
Maybe a bit off topic but does do with cars;
What does your “constituency” think about mandatory front and rear cameras on all vehicles?
Family has them on all their company vehicles; personal one useful just prior to Christmas. Rear-ended (nobody hurt) by another driver who turned out to have no insurance etc……surface damage to family car; trunk, bumper, and internal electronics. Perfect view with the rear camera. And their insurance company gave them very good service and allowances (in rental car) for the “proof” by video.
In Russia the insurance companies require dashcams as a condition of coverage, which is why we see so many nutty in-car videos from that country. As we become a less trusting and more corrupt and scam-pulling society like Russia I could see them becoming a requirement here.
Excellent comment, Mike G. In terms of national zeitgeist makes one wonder who really ‘won’ the Cold War… . May we all have a better day.
Because “Robots Can’t Cook”, is why there are so many cooking shows on TV. And if you watch “Let’s Make A Deal”, “The Price Is Right”, and “Wheel of Fortune”, you’ll quickly see they give away one, two, or three brand new cars on every show, every day !!! (not respectively)
I’m old enough to remember the VW adverts when I was in high school: “It’s ugly but it gets you there” — for the famous VW Beetle (then the “Super Beetle” IIRC). For a while it was $1995. My, how styles and tastes (and prices!) have changed! That was a simple, utilitarian car. I remember our neighbours at the time (a German scientist and his physician wife) had one along with two small children.
I agree with the comment upstream that the new SUVs and trucks are like McMansions. That Beetle and its US counterparts (Ford Pinto and Chevy Vega) would be dwarfed by most cars on the road now.
My father had a (second-hand) Alfa Romeo back in the early ’70s… I only drove it once in our backyard (didn’t have a proper license at the time) but I remember the transmission was like butter. We were reminiscing the other day and he confided that when he drove it “all the girls admired him”. Now that was a car!
Sigh…
I want my 1995 Honda Civic CX 5 speed back. lol.
46 MPG and smo-o-o-o-oth shifting.
Pavel, check!-i learned stick in a ’66 Giulia Super (that ‘like-buttah’ 5-speed and twin cam 1600 made me feel that I was in the 24of Le Mans)-it didn’t have the most elegant of profiles, but what a joy to drive. A better day to all.
Having personally seen what happened to a Corolla that was rear-ended by a mid-sized SUV at speed delta of 50 mph, I’ll probably never buy a smaller sedan in my life. Historically, most accidents were of the front-end variety, but now because of texting, I think we’ll see a lot more rear-end collisions.
Yeah I have a big 4WD with a V6 – 3L engine that I bought used. Gas guzzler galore. Cheap to buy, not so cheap to run, but it would take a lot more costly gasoline to make any difference between buying used and new.
Was on the way way to work one morning and stopped at a red light – 5:45 am. Only me at the stop light.
Next thing I know I’m smacked in the back. Lady gets out of the car holding her big Apple or Samsung phone and walks up to my door………..
Starts some bs song and dance “Why did you back up into my car…”
Got out of the car and took a look – her entire front end is smashed and fluid leaking all over the road………..
Called the cops and as soon as the Highway Patrol Officer got out of the police car she runs up to him and starts the same thing.
The cop took one look at the accident and told her: “Lady, you ran into the back of his car………….”
No doubt she was using her phone while driving – probably texting, and then looked up too late to stop – smacked into me.
Got to work and called my insurance company – never did hear from hers. A few scratches on my car was all – a little paint from her car on my bumper.
Had I been in a small car no doubt the entire back end would have been destroyed – exactly what happened to my daughter about 6 months later – and yes, she was smacked in the rear by a car a stop light – same story, and she was in fact driving a Corolla too.
The Corolla was 17 years old (Bought it new) and the only repair that it needed in that entire time was to replace one washer in the A/C unit. Perfect condition and the car had around 70,000 miles on it. It probably had at least another 10 years left in it.
Car was written off.
With so many big cars and ‘trucks’ on the road, it is better to be safe and be one of the people with a big vehicle.
I was on the interstate that runs through town, driving to work in the morning. Watched a young lady in front of me gradually veer off the highway into the business end of the guard rail. Her car bound off that and then did a 360 or two on the highway going 60 mph. I stopped fast and ran up to her car to see if she was OK, and I was surprised to see she was still talking on the phone.
These people that cell phone while driving need to be locked up.
“I call them the modern version of a station wagon.”
GMTA. People will pay a hefty premium for a station wagon that doesn’t look like one.
Exploitable personal details happily volunteered on social media sites clearly show that US consumer tastes are largely driven by sheer desperation for status, the phonier the better. Hence the popularity of living paycheck to paycheck.
Bread and butter cars? Are they tasty? Do they melt during the summer? Do pidgeons eat the wheels?
Joking aside, isn’t people prefering used cars a aign of troubled times?
While Winter is not yet comming, the Fall is here for the Car market.
But hey, new trucks are still selling, right?
Some people prefer used cars. Other people prefer NEW trucks. Division of society: people with very constrained budgets, and people with tons of money to burn.
Automakers have gone upscale all around and have lost touch with the people who have constrained budgets.
Ford might make $20,000 profit on a fully decked out F150, and Wall Street applauds this. But trying to sell a new compact car for $15,000 at a razor-thin margin is not what Wall Street wants Ford to do.
I have a 1985 Chevy Silverado I bought in 1997 for 3600. I also have my 1st & only new car 1989 Camaro RS with 100K I paid 13K for. And lastly a 2010 Ford Focus bought used in 2013 for 13K. I also have a 1984 HD-FXRSDG bought new for 8K which I still have. If I live to 100, I will NEVER buy anything other than US made (not counting internal parts). My truck can haul anything the 70K trucks can, & I don’t care if it rusts, gets a dingy or uses a little more gas. What people spend on their vehicles (egos) is absolutely ridiculous & suspect the rest of their life purchases are equally ridiculous. One day, they will pay the price fr their decisions of not living within their means.
This year I located and bought (for $5800) a 1998 Ford F150 Lariat extended cab pickup with 45,000 original miles on it. It’s been garaged all its life in Texas and looks and runs like new. No new truck for me and I am keeping this beauty for 15 more years.
Our other car is a 2002 BMW 325 Ci roadster. That’s staying too.
Wolf, your site’s a fave of mine but I really perk up when you put up car industry articles like this one. They’re great because of your insight of having actually worked there.
I’m a car guy and have owned 35 cars in my lifetime. Newest car I’ve owned is the Porsche 911 I bought a year ago. Wife loves her ‘07 MB C230 and my daily’s an ‘08 Ford Sport Trac. No way I’m ever buying new. They’re just too damn expensive. Oh wait – maybe it’s destruction of the value of our currency.
Ditto. Camageddon articles are awesome.
The hottes-selling car these days would be one with only basic electric components. You can always buy a GPS later…
Just donated my 2005 Nissan Sentra to a VA charity. Had 175K miles on it. Not worth fixing all the things wrong with it. Will miss the simplicity of the car for urban driving, good visibility, and great gas mileage (30+MPG). I rented cars while it was in the shop and would not buy a single one of them.
I have noticed more and more parents mentioning their kids (Gen Zers) have little to no interest in learning to drive. They grew up in an era of Uber/Lyft and the sharing economy, along with the ability to order pretty much anything you need online.
I have a feeling that, unless automakers are willing to make bare bones vehicles that get you from point A to point B (a la Kia/Hyundai), the marketing forces from Generation Z will have a profound negative effect on the car industry as these kids enter the age of driving. If they have no interest in driving, then they certainly will not have any interest in driving something “nice”. They simply want to get where they want to go.
Perhaps they don’t see themselves as being able to afford it? They just write that out of the equation for their future.
When I realize the last time I bought myself a car was back in 2005 (used 2002 Mercury Grand Marquis LSE – salesman told me I was the youngest guy he ever sold a Grand Marquis), I think maybe it is time to replace it.
Then I go look at new cars, sit in them, drive them, etc., and after looking at their price, I think, “What I would really like is an updated Mercury Grand Marquis”. It can be looked at as the equivalent of a pick-up truck with a sedan body.
One thing I did find out – you can still get a front bench seat in a Tahoe or Suburban LS, so if I ever had money to burn, a base Tahoe could be first on the list.
Some years back when I had a brief work assignment and had to rent a car, it had some funky manual mode that the car was in but did not indicate it anywhere on the dash. I could hear the engine straining on the freeway so I got off to get something to eat and read through the manual – thankfully it had the manual, lots of times rentals dont. Anyway, probably 2/3 of the manual was operating the stereo and A/C – very little about the operation of the car itself.
A few years later I rented a car like the one I currently own, just the latest model. Touchscreen that would go into the twilight zone, weird ebrake procedure. Basically they “fixed” a bunch of things that werent broken in the first place. Getting tired of all this “progress”.
Upscale, fully loaded, cars are the only ones dealers have been selling here in my area of NJ for decades. Just try and buy a new car with no options and you get laughed out of the dealership.
The result is that I walk out of the dealership, go back home and repair the old car another time. I’ve saved hundred’s of thousands of dollars over the years.
This money I did not hand over the the stealerships (typo) enables me to live a better lifestyle with less money. I am also now able to repair just about anything on any car I own in less time than I would be sitting at the dealer and for a tiny fraction of the cost.
There are many people like me who do this. Just read the forums for the various car makes and models.
Build a small bare bones solid axle truck with 4×4 under $20k and I will buy it. V6 would be great. I don’t need an entertainment filled vehicle. My full size truck gets plenty of work. I just want something to run around the farm and to town and up the forest service roads around NC.
http://www.thedrive.com/news/25700/suzuki-jimny-pickup-truck-and-overland-concepts-headed-to-2019-tokyo-auto-salon
You can still get a relatively reasonably-priced new car. I bought my 2016 VW Jetta SE new for $17K. It had a sticker price of $23,500. I think it’s a nice car; but then again I’m not too extravagant. It rides very smoothly, has peppy acceleration and gets 40 mpg on the highway, with a turbocharged 4-cylinder engine.
They’re also heavily discounting new Chevy’s, Ford’s, Hyundais, etc.