New Car Sticker shock

[Calico]

.....Also, Fits are like clown cars, in that they hold a ton of stuff.

Ha! I like the clown car analogy. My friends all thought my Fit was a tiny car, and not good for much, UNTIL I showed them how much it can hold - now I am on their speed dial when they need to pick up anything large.

 

[martyp]

My first reactions was . . . what did you expect after 18 yrs? On the one hand there is the increase in car prices over all that time along with the change in standard features. On the other hand there is the increase in your salary over that time. They are two completely different things. If you are basing the amount you want to spend on a % of your salary then you are shopping based on what you can afford. My general impression is that (of course) car prices have increased but the value for what you spend is as good or better than what you would get a couple of decades ago.

Information about dealer costs, operating costs, and safety are more easily available these days. I have always used the buyer service at my credit union. I've never, in 35 yrs, haggled with a dealer and I've always felt I paid a fair price. The cars I purchase are in the $20-30k price range and I keep them anywhere from 10-15 yrs. I am currently driving and loving my Prius.

We also have a local buyer/seller lot called the Buggy Bank. Private owners display their cars at a lot and pay a monthly fee. Buyers can schedule time with the lot attendant to test drive the cars and bring the cars to their mechanic for inspection. We sold one of our cars through the Buggy Bank and my father-in-law has purchased cars from there too. It's a nice way to buy used.

 

[martyb]

Consumer Reports also has a car-buying service. I don't know how it compares to Costco's though. CR will also send you (for ~$10) the dealer's actual cost for a new car and the individual options so that puts you in a better bargaining position.

Like many here we also keep vehicles "forever" until either reliability or parts availability become issues. We've been stung in the past with used cars so we buy new when replacement time comes. The last time we bought new vehicles was 11 years ago and those replaced vehicles that were 18 and 14 years old.

I used the Consumer Reports service when I bought my 2010 Toyota Camry SE in August of 2009. I was pleased with the information they provided, and would use the service again. The longest we've kept any car was the 16 years wife & I kept her 1990 Honda Accord. We traded it in for a 2007 Toyota Camry in 2006, which we still have. However, that car is probably going to be sold or traded for a new truck for myself. Once I retire later this year, I'll need something to pull a boat (also gonna purchase) with. I'll need SOMETHING to do all day (lol) and fishing's my biggest hobby.

 

[HighRoller]

Seems to me the prices have gone up a good bit in past 10 years, I recently traded in a Nissan 4wd pickup that I paid about 32k for 8 about years ago for a similarly equipped Toyota that was listed at well over 41k. Neither were "top of the line" but both were well equipped.

 

[Midpack]

Hmmmmm...I found this with Google search, from Seeking Alpha in case anyone wants to find the accompanying article.

 

[jon-nyc]

Is that raw data on car prices or adjusted hedonically? And does it factor in any change in the basket-of-goods composition represented by new car purchases?

 

[W2R]

Hmmmmm...I found this with Google search, from Seeking Alpha in case anyone wants to find the accompanying article.

Good point!

I had a rule of thumb, when I was in my teens and early twenties, while just starting out in life. An inexpensive new car such as a VW bug was always about twice what I had saved no matter how much I had accumulated. Not wanting to borrow for a car, I rode the bus.

That is no longer the case, thank goodness! I do think, as you point out, that cars have not gone up in price as much as the CPI, which to me means that they are much more affordable these days.

 

[FUEGO]

Hmmmmm...I found this with Google search, from Seeking Alpha in case anyone wants to find the accompanying article.

+1 on this. In looking at what my 13 year old car (honda civic) would cost now vs when I bought it new way back then, it is only a couple thousand dollars more for the fairly basic model I bought (automatic transmission and that's about it). Except the fairly basic model now has all kinds of bells and whistles mine didn't have. Like something in addition to an am/fm radio (didn't even come with a tape deck...)

 

[TeeRuh]

O.K. first of all I do like nice cars. (My LBYM problem child.) But I do keep them. Replaced one of our two 12 year old vehicles in February. Was able to get more features and actually pay less than I did 12 years ago. Only sacrifice is that it is a little smaller (which I wanted). Went from a 2002 Escalade to a 2013 Cadillac SRX. (Love it by the way.)

t.r.

 

[MichaelB]

Good point!

I had a rule of thumb, when I was in my teens and early twenties, while just starting out in life. An inexpensive new car such as a VW bug was always about twice what I had saved no matter how much I had accumulated. Not wanting to borrow for a car, I rode the bus.

That is no longer the case, thank goodness! I do think, as you point out, that cars have not gone up in price as much as the CPI, which to me means that they are much more affordable these days.

+1

Not to mention the other part of that, which is now, older and with more income and assets, we look at somewhat more expensive options compared with the ultra-inexpensive models most of us looked at years ago.

 

[jon-nyc]

Hmmmmm...I found this with Google search, from Seeking Alpha in case anyone wants to find the accompanying article.

Is that raw data on car prices or adjusted hedonically? And does it factor in any change in the basket-of-goods composition represented by new car purchases?

In looking at the data again, there's no way that's raw data on new car prices, since they've gone up more than 3x since 1955. The average price of a new car today is ~30k, says the National Assn of Auto Dealers. In 1955, a typical car cost less than 3k.


My guess is that number in your graph represents the CPI component for new cars, which will have been adjusted hedonically as well as proportionately based on its representation in the 'typical' basket of goods.

 

[jon-nyc]

Also new car prices being flat-to-down since 1995 would pass no ones sniff test.

 

[MichaelB]

The source is BLS so it probably has hedonic adjustments. Of course, so does the total CPI number, so it is still apples to apples. Auto CPI below total average CPI seems perfectly reasonable to me. Many of the autos being sold today weren't even available 30 or more years ago.

 

[Bimmerbill]

I love cars too. Cars and motorcycles have been my downfall over the years and I try not to dwell on how much I've spent on them.

A private party car (I always search Craigslist for For Sale by Owner) that's 2 to 5 years old is usually a good buy. Most dealerships or garages will check out a car for you for short money.

The base model Honda Accord, Nissan Altima and Mazda 6 come pretty nicely equipped for around $20K.

 

[FinanceDude]

My 2003 Honda Accord EX sedan had an original sticker price of $22,385. I can buy a 2014 Honda Accord has a sticker price of $24,605. That's over $2000 more than 11 years ago. But what do I get in the 2014 that my 2003 does NOT have?

CVT transmission
Vehicle Stability Assist
Brake Assist (hill assist)
Rear backup camera
Blind spot monitoring
Low tire pressure warning
More horsepower
More torque
Higher gas mileage
Longer wheelbase
More trunk space

 

[Bikerdude]

I guess it depends upon what you are looking for. Plenty of cars in the mid to lower 20's with auto transmission. You may have to go smaller in size and power though. Price them out with options online and then order one just the way you want it.

 

[pixelville]

You already have lots of responses. But wanted to chime in without reading all the other responses. I too am in the market and narrowed down to 2013 Honda Civic LX or 2013 Mazda3 with Skyactiv engine. Both are under 20K incl taxes. Hwy mpg is ~40. High reliability, etc.
Used cars are not great value currently.

 

[Katsmeow]

I personally like bells and whistles -- if they are the bells and whistles I want. That is, I would not buy a new car with a rear camera, for example. But a lot of the cosmetic stuff I don't care about.

We wanted to buy an expensive second car for us a few months ago. We ended up buying a Hyundai Veloster for the low mid 20s but which had the bells and whistles we wanted (backup camera, navigation for example)

I basically made a list of the features that were important to me and narrowed the type of car I wanted (hatchback in this case) and then I did a little research into that and got a list of the cars that might fit the criteria. We then went to the manufacturer web page to see what mix of features were out there and to get an idea of MSRP. We narrowed down to a few cars at this point and went and looked at a few.

The Veloster had many more bells and whistles that we wanted than other similarly priced cars so it was an easy decision to choose it (we've been very happy with it).

 

[ziggy29]

Why not buy a 2-3 year old car with all the bells and whistles? I'm sure there are plenty of those in the $20K range. If you keep a car for 18 years, just buy a two year old one and keep it for 16 years.

This strategy often doesn't save as much money as it used to because it became so popular and increased demand for "almost new" cars.

And for Hondas and Toyotas in particular (especially Hondas), the depreciation is often so close to linear that you might as well buy new, get the full warranty and not worry about inheriting someone else's problems, abused vehicles or inadequate maintenance.

 

[jon-nyc]

The source is BLS so it probably has hedonic adjustments. Of course, so does the total CPI number, so it is still apples to apples. Auto CPI below total average CPI seems perfectly reasonable to me. Many of the autos being sold today weren't even available 30 or more years ago.

Right, but the OP was looking at the prices of actual cars, not hedonically-adjusted transportation units, so I can see why he got the impression prices had gone up quite a bit in the 18 years since he bought a car.

 

[growing_older]

I think there may also be a kind of hedonisticly adjusted expectation downward. I do see that new cars now, compared to 18 years ago have a lot more safety features and luxury touches even in mainstream models. But my own excitement and interest in all things automotive is very different now. I'm not looking to make any kind of statement with my car, or display my sense of style, success or even manhood. I actually do want a transportation unit, although if I can get it with the features I want and not have to pay for the features I don't I would be happier.

So now, I think I have to choose. Do I want to get an okay car that will work for me and satisfy my overdeveloped sense of frugality. Or do I want to get a car that will be really useful for the majority of the first part of my ER, since if I keep it for 18 years, I will be pretty old before I need to trade it again.

 

[samclem]

This strategy often doesn't save as much money as it used to because it became so popular and increased demand for "almost new" cars.

And for Hondas and Toyotas in particular (especially Hondas), the depreciation is often so close to linear that you might as well buy new, get the full warranty and not worry about inheriting someone else's problems, abused vehicles or inadequate maintenance.

+1. That's what we've found. >in general< if it's a car that is capable of giving good service for 15 years, it's not one that depreciates much in the first couple.

We hold onto cars for a long time, so I like knowing that the car was treated well from the start. Two years in the rental fleet or at the hands of a teenage equals about 8 years of "normal" wear and tear.

As my buddy said when we were taking a rental Chevy Impala offroad to a remote drop zone: "What's the difference between a rental sedan and a four-wheel drive? Nuthin."

 

[Texas Proud]

As my buddy said when we were taking a rental Chevy Impala offroad to a remote drop zone: "What's the difference between a rental sedan and a four-wheel drive? Nuthin."

LOL... my comment to my friend when we did the same...


"Just put it in rent-a-car gear"....

 

[brewer12345]

And in case you are planning on financing, there are some really special deals out there: Introducing the 97-Month Car Loan - Yahoo! Finance

 

[jon-nyc]

And in case you are planning on financing, there are some really special deals out there: Introducing the 97-Month Car Loan - Yahoo! Finance

Wow.