Interesting take on auto industry woes/falling new sales

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JExpedition07

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The video summary: Middle class families are being priced out of new vehicles and are switching to used transactions. CBS could not find any new vehicle on Fords lot that is affordable on an average family income after taxes! Truck transaction prices have increased upwards of 50-70% from 2009 to 2019 according to CBS, the biggest increase for autos in modern history.

 
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TobyU

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I've never bought a new car in my life and never will.

If I won the 1.3 BILLION lottery and was firmly set for life, I would still buy a used Hellcat or Demon etc. It might be 3-6 months old and in perfect shape (probably better than new condition) from someone who has to have a new Vette or something.
I would let them eat the loss.
 

Cyclone

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Yet, I see new cars everywhere. Someone is buying them.

I can't watch this video now (I'm at work) but if it was like one that I saw earlier, they had a NJ family making under $50k trying to buy a new car. My thought, was... If money is tight, you don't need to give 10s of thousands to a dealer in depreciation losses. You can't afford it.

Car quality has never been better and used cars give you some much more for the buck.
 

Mean_Dean

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The wife and I can afford the payments on a new Expedition, however when I upgraded from my Explorer last year to an Expy we decided to get a 2 year old (2017 EL Limited) one that was in good condition for less than half the price of a new one. 70K is just not a wise investment for a depreciating asset like a vehicle. My wallet is much happier spending 30K on the used one in great condition and has all the features I wanted/needed.
 
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JExpedition07

JExpedition07

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The video sheds some light on financing. The automakers have set up their own financing firms that offer 7 and 8 year loan terms so that people can afford to buy them....kind of crazy.
 
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Michael Shepherd

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The automakers have set up their own financing firms that offer 7 and 8 year loan terms so that people can afford to buy them
As has often been said in these and other forums, the highest pressure sales tactics happen once you sitting in front of the dealers 'finance' person.

Ford's lending arm generates more profit than ever

Thank goodness for the finance guys.

Ford Motor Credit, the lending arm that's become accustomed to propping up the company in good times and bad, now generates about half of the automaker's profit, up from 15 to 20 percent as recently as 2016.
 

carymccarr

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The video summary: Middle class families are being priced out of new vehicles and are switching to used transactions. CBS could not find any new vehicle on Fords lot that is affordable on an average family income after taxes! Truck transaction prices have increased upwards of 50-70% from 2009 to 2019 according to CBS, the biggest increase for autos in modern history.


Yeah I don’t know. There are lots of vehicles that can be had for $20k or less. A baseline f150 is around $25k and has way more features than an f150 from a decade ago.


https://www.autobytel.com/car-buying-guides/features/10-best-family-cars-under-20k-132101/

That said, reliability is so much better today that a family can buy a used vehicle with low miles (<50k) and have years of warrantied driving ahead of them.
 

Boostedbus

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My take on it is there’s to much extra crap on an automobile nowadays and the consumer has to absorb the extra costs. It’s not all crap that people necessarily want either. There’s the start stop technology (not a fan),backup cameras,blind spot assist, auto park assist, air bags out the ***** ( not saying I’m against airbags),heated/cooled seats and steering wheels, navigation systems, built in DVD players, etc....etc..... just naming a few.... it’s definitely not like the old days when if you had AC , power windows and door locks then you had a loaded optioned out ride.....oh and if you had a power radio antenna and a hood ornament you were the bomb!
 

carymccarr

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And then there’s this...inflation. So a $28k car in 2009 is a $34k car today simply from inflation. That accounts for 20%+ of the 38%.

Then you need to consider that the report is on what people PAID for a car in 2009 which was the height of the recession. Of course people bought much less expensive vehicles during a market/economic crash. Makes sense that people would be willing to pay 18% more during a period of relative economic stability than they would during the worst economic collapse since the depression.

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TobyU

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And then there’s this...inflation. So a $28k car in 2009 is a $34k car today simply from inflation. That accounts for 20%+ of the 38%.

Then you need to consider that the report is on what people PAID for a car in 2009 which was the height of the recession. Of course people bought much less expensive vehicles during a market/economic crash. Makes sense that people would be willing to pay 18% more during a period of relative economic stability than they would during the worst economic collapse since the depression.

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The inflation raising the cost is a valid argument however not everything has gone up with inflation. There are some things, actually quite a few, that due to other reasons or factors, we get for the same price or cheaper then we did even in previous years dollars.

So, since the buying power of the same dollars is less than it used to be due to inflation, that means that these other factors like decrease manufacturing costs, competition, Etc have greatly lowered the prices or cost of production of those products.
 
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