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Friday, 30 December 2022


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You really should consider (1) used car sales numbers and costs, and (2) medians vs. averages in these analyses.

Yes, the $ numbers will still be high, but they’d support your case somewhat better.

My wife and I have been pretty fortunate with cars. We went from cash purchased, mid to high mileage Japanese cars (under $3000) to new cars at some point, and never looked back. But it took my wife doing a true class jump, going from working class life in a trailer court, to life as a doctor and now dean at a medical school. Cars are just getting more and more complicated, and more expensive. It's pretty much impossible to find the equivalent to the cheap used Corolla we bought in the late eighties, or the almost new 93 Toyota Pickup her parents bought for us ($7000) by dipping into retirement after she was accepted to medical school. This is why I think we need to invest hugely into public transportation, and in most cases make it free, like public school, paid for through taxes.

Cars are funny in how they sometimes reflect their owners' personalities. Some of my most humble friends have Subaru's, usually Outbacks or Foresters, not tricked out WRX's. To most of them, a car is a necessity, like a refrigerator, but they don't choose anything flashy.

I live in a well to do town where Maserati's are common and there are even a few Lamborghini's. Given their reliability records in Consumer Reports, there are a surprising number of Jeeps, very few Cadillac's, tons of Mercedes and BMW's though.

Me? I like red cars.

Yes, folks do tend to pay more than they have to...and especially today, when lower end cars are packed with features that used to be high end.

For us, the sweet spot was/is the Subaru Crosstrek. We got one in 2017 (Volkswagen diesel buyout), our youngest daughter has one, one of my nephews has one---and my oldest daughter has the related Impreza from 2012. Just a great car. Gas mileage could be better, but rain, snow, ice handling is great. And they last. And the parts aren't expensive.

"I wish there were a way to optimize the necessity of car ownership, but it doesn't seem possible"

You can't. The way you optimize the necessity of car ownership is by building cities and towns that obviate the necessity of car ownership.

The problem is that, unlike much of the world, American and Canadian cities are designed in such a way that makes car ownership mandatory. Our cities used to be walkable and even our suburbs were designed along streetcar lines, but after WWII a confluence of the auto and petroleum lobby, racism, anticommunism and a postwar trend towards large public works projects shaped policies that effectively outlawed walkable urban and suburban places, dismantled public transit and ran freeways through Black neighborhoods.

In most of the US, from suburbs to large cities to small farm towns, if you wanted to build an old fashioned downtown from scratch with apartments over shops perched right along the sidewalk, it would be illegal to do so. Most cities have ordinances that were mindlessly copied and pasted during the 20th century that mandate building setbacks, minimum lot sizes by both area and width, maximum lot coverage, minimum off street parking requirements and segregation of uses. Also, DOT standards mandate overbuilt roads, ostensibly for safety but in practice only encourage dangerous driving because the design cues create a false sense of security.

American suburbia isn't practically or safely navigable on foot or by bike. Your doctor's office, grocery store, barber, electronics store and post office are legally mandated to be hours on foot away from where you live and you have to traverse dangerous roads with high speed traffic and cross oceans of parking lots. And the circuitous roads in residential developments make it impractical to be serviced by bus. Where I live it takes 1h20m to get to my favorite bookstore by bus but 20 mins or so to drive. Except I can't drive due to disability. It takes me about 25 mins to walk to the grocery and 40 mins to walk to my bank branch.

If a car costs $10,700/year, then at a 10% conventional fixed mortgage rate, that means that everybody who is forced to own one is losing out $107,000 in home buying power (this is something I picked up from the excellent book Suburban Nation). Many cities around the world are designed around cycling, walking, busses, light rail or subways so residents can live perfectly functional lives without a car.

American urban planning is a rabbit hole you'd probably actually enjoy going down for an afternoon or two. There's a channel on YouTube you should check out called Not Just Bikes which does short educational videos on urban planning concepts. The guy who runs it is a Canadian who moved with his wife to Amsterdam after researching the best place to raise kids. He's not a professional urban planner, just a guy who's traveled a lot and started researching what made places frustrating to live in and what made them nice. The channel is extremely addictive and very much worth binging for a couple afternoons.

Mike wrote, "The conclusion of both these ways of looking at the situation is: the average American can't afford the average new car."

From Harvard Business Review ...

Consider the case of the statistician who drowns while fording a river that he calculates is, on average, three feet deep. If he were alive to tell the tale, he would expound on the “flaw of averages,” which states, simply, that plans based on assumptions about average conditions usually go wrong. This basic but almost always unseen flaw shows up everywhere in business, distorting accounts, undermining forecasts, and dooming apparently well-considered projects to disappointing results.


A roomful of average Americans is a roomful of very different people -- age, gender, skin color, number of children, marital status, medical history, annual income, distance from work, love of automobiles, city or country, education and on and on.

Saying that an average American can or cannot afford the average new car based solely on annual income is wrong.

...a car has an appliance factor along with all its other meanings...

After commuting 100 miles per day round trip in southern California traffic before retirement, a car definitely has no factors to me other than appliance. I've never understood those who would go into debt for any other reason. I always bought brand new cars for cash, drove them until they were "worn out," and then did the same again.

My current ride, a 2003 Honda Accord sedan with more than a quarter million miles on its clock, will be old enough to legally purchase alcohol late next year. It still returns the same 36 mpg on the highway and has suffered only three failures, all small electrical problems I easily fixed. I don't count windshield replacement after a rock strike or new batteries every half dozen years or so. I've no interest in replacing it until reliable autonomous EVs are available. By then I'll probably be too old to drive myself.

Take a look at the Electric Car hype that the administration is pushing.
They stopped the pipeline and guess what happened the price of everything went through the roof! I have a hybrid which combines the best of both worlds yet it isn't pushed by the powers to be.
The problem with electric cars is the lack of charging stations. And if you find you and there is a car charging in it your out of luck.
My hybrid has its own charger. Just my thoughts on how the politicians control the narrative Bill

Motor Trend has a useful feature in their reviews that shows the 5 year cost of ownership. It includes your list, but of course doesn't include saving for your next car.

We always kept our cars forever. Once we paid off a car, we put that monthly payment in a separate savings account so we had a good down payment the next time. We kept our Yukon for 15 years, and most of the others 10 years at least. So if we had a 5 year note, we'd have five years to pay it off and five years to save up for the next one.

Now that we're looking at retirement I am thinking about one of those giant luxe pickup trucks you love so much, Mike. But I do have an excuse - we are already traveling cross country with our little camper, and if we get a mid-size camper I'll need to replace the 4Runner as a tow vehicle. Still undecided on the larger camper. I am starting to understand the folks who sell everything and go full time in an RV. Tempting.

I was very surprised by the used and new car markets in 2022. The chip problem appears to be resolved so new car deliveries should shorten. My daughter ordered last June a new BMW X3 that was supposed to take several months - she had it within 30 days! Is this just pricing manipulation like we see with gasoline? Maybe we will see a used car crash in 2023 similar to the housing market. If so, be ready with cash in hand as the Fed is likely to raise interest rates again.

I am not a car guy. Not really. With one exception, I have only ever bought used cars, and with one other exception only ever paid cash for the whole thing.

Taking out a loan on a depreciating asset is a mug's game in general. But that's the public policy world we live in: drive or starve, as there is little to no public transportation in most of America.

But hey, I grew up in a city, and still think after 25 years that my car ownership is a regrettable and temporary state of affairs. And yeah, due to a variety of factors we will be buying our second new car this year. Can't be helped.

I've always felt like I hit some lucky breaks, financially speaking. I retired from the military at the very beginning of 2000 and bought my house just before the bubble in the housing market. I bought my house for the cost of a high end vehicle, and I paid it off overnight. In just a couple of years for the same house, I'd have a mortgage that I'd still be chipping away at, but it's the same house, just over priced. I had great timing on that purchase.

That said, I have needed a new car since the late twenty-teens, but I kept putting it off. Then Covid, then supply... boy, did I mess up! Every day, I cross my fingers when starting my car. I hear the scraping of my breaks at every stop sign. And I didn't have to put up Christmas lights this year, I just had to look at all the pretty warning lights glowing and blinking on my dashboard. I have the money saved up to pay cash, so intrest rates are not a concern, but choice is limited to what they have, and the pickings are slim.

I'll be buying a new car in 2023, or I'll be walking.

Our 2yr EV Niro lease expires in June, so we shall see what comes. Plan A is to purchase it; we do love sub-$10 overnight fill-ups in the garage!

For some years I sold finance for cars and motorcycles.

Tradies [tradespeople] always paid cash, never needed to borrow... but people with office jobs always needed the loan!

Cars like cameras are sunk costs. You will never get all of your investment back, nor should you try.
If you are worried about supply chains, if it is on the lot - problem solved.
When I have bought cars since the late 80's they are new. I spent too much time and money trying to keep someone else's hand me down running consistently. All of the "new" cars I have bought were/are driven into the ground. Each one of them had well over 120K+ miles. Our last few cars were donated to the local PBS/NPR stations.
My current car is sixteen years old, and it will be around for many more years. The next one just might be a hybrid or maybe I am driving my last one.

With both electric vehicles and self-driving vehicles starting to happen but not yet mainstream...yeah, probably a very bad year to buy a car.

Although...I think my car use is going to stay down, so gas prices don't matter as much, and I don't tink real self-driving will happen in a decade. So maybe it's a great time to buy a slightly used 4WD SUV as other people are unloading them.

The cost of cars goes beyond a family's finances. Look at what cars have done to American cities. We've chopped up our neighborhoods with freeways. We've turned walkable city centers into deserts of parking lots. Car landscape is ugly landscape, yet our imaginations fail to think up any alternative.

All of this car centric infrastructure is also a drag on local government as the tax base cannot keep up with the cost of upkeep. Check out this great series on YouTube about the cost of cars to American towns: https://youtu.be/y_SXXTBypIg

Shiny blingy new pickup trucks in front of shabby houses? Gawd, come on down to Mississippi and you will see such trucks in front of nasty mobile homes in ramshackle mobile home parks. Don't feel sorry for these buyers. No one forced them to overspend on bling and deprive their families of household needs. It was their own choice.

The chip shortage sent used car prices through the roof. I'm glad I bought my last car before that happened. I saved about 30% for the down payment and negotiated via e-mail with the salesman. If his "latest offer" wasn't good enough, I'd wait a day or two to respond. I paid the price I wanted to pay "out the door". No extras, except the paperwork fee and temp tags. The dealer presented it to me with a full tank of gas. I paid off the car in about three years.

I got a nice, full-size car with a top ranking from "that popular consumer's magazine". It's been reliable and has good power. "Combined" fuel economy isn't going to impress anyone (mid 20s), but it is a fairly heavy car thanks to the heavier supporting structure that's supposed to keep the roof from collapsing, even if you roll the car over several times. (How did we ever survive that risk before?) I can easily get around the mid-30s mpg with mostly highway driving.

Great engine: 305 hp with an automatic camshaft adjuster that starts changing when you hit a certain engine speed. Thus a 7,200 rpm redline in a family car. What's not to like?

This will be my last new car. I'll probably start looking for a simple, economical car once the chip shortage abates and the used car prices come back to earth. I'm leaning towards an older Corolla with a stick.

I don't know how the dealers can sell the high-priced new trucks. Remember when pickup trucks were generally cheaper than cars? You can almost get a new Corvette for the money it takes to purchase a fancy 4x4 truck. (Silverado High Country starts at $61,100. Corvette Stingray 1LT coupe starts at $64,500.)

I had a temporary job at a bank in the collections department years ago. (I just had to look over the repayment forms to make sure everything was filled out.) I looked at the detail on the back page once and saw what the people thought were necessities. Every form I looked at that day had Cable TV as a necessary expense! Those "necessities" were probably allowed by the collectors, even at $100 per month when basic cable was around $40-50 per month.

It always makes me chuckle when gas hits $4.00/gallon or so and the drivers of luxury brand SUVs start complaining about the cost of filling the tank. I guess they're not as rich as they want everyone to think they are.

As long as there are buyers for all the excess electronics and other "free" features, car companies will continue to make the cars and trucks that way. There's not much of a chance for a simple car like a Ford Falcon with the necessary modern safety features and pollution controls to find a bunch of ready buyers.

The younger people have to have displays that remind them of their smart phone screens. They'll love the BMW 31" Theater Screen in the 7 Series and i7!

I'm rather pleased with my current car situation. I'm very particular about the styling of cars and my tastes stopped around 2010. I hate the modern melted monsters.

I own three cars, but the thing is, one cost $1250 (2004 Mitsubishi Verada), one cost $3000 (2005 Honda MDX) and one cost $4400 (2006 Peugeot 407 Coupe, V6 twin turbo). These latter two cost in excess of $75,000 when new so I'm not funding their depreciation. The first is out on semi-permanent loan (I'm sure he'll pay me something some day...) The Honda is my carrier of sheets of plywood etc. And the Peugeot is my fun and hey, look at me car.

The thing is, I paid cash and only insure them for third party fire and theft, ie a few hundred a year. I think they are actually appreciating.

I don't need a new car. I can't remember ever buying new. I like oldies and goodies.

You think cars are a bad investment, try boats! The locally favorite acronym is BOAT, break out another thousand.

[My great Uncle Bud had that little sign hanging in his cabin cruiser that said "a boat is a hole in the water surrounded by wood into which you throw money." I know it's a very old joke, but still true! Except now it's Fiberglas not wood. --Mike]

I learned about finance from my Dad. In the mid 1970’s he was a young teacher with 5 kids and no money and I was a 16 year old dreaming about driving a badass ride on a Saturday night. My Dad had a rule of thumb that said a $1000 car (cash) was good enough for his needs (still “reliable”/moderate rust) and sometime around 1976 he bought a sweet 3rd gen Pontiac Le Mans with a 350 cu in engine. I loved that car but unfortunately my older sister wrecked it a few months after Dad brought it home. A few months later Dad bought a second 3rd gen Le Mans and this one came with 50 series tires and chrome wheels but again, the same sister totaled that Le Mans almost immediately.

When Sis recovered, Dad helped her buy her own car (Nova) and after that she never wrecked another car. I imagine being invested in her new car had something to do with that. As for me…I learned a lot from Dad and still follow his financial lead to this day….but I fear I was permanently scarred by the wreck of that second Le Mans. I was drooling over that car but never got the chance to drive it. I’m not sure I could buy a vintage 3rd gen Le Mans today if the opportunity presented itself.

Once I hit my 40’s I finally got around to buying a quality new vehicle (Toyota Tacoma) and I drove that truck for 20 years. For the first 15 years I did nothing but replace fluids, tires, and batteries. I still have the truck as a backup for hauling/towing and it’s easily the best vehicle I have ever owned.

We own a 2-year old VW Golf, on which we have so far put 9,500 miles. Many of the places we go are out in the country and not easily reachable, if at all, without a car. A 5-minute drive at 30mph is almost an hour’s walk - in both directions. And we live in on the edge of a UK city with pretty good public transport.

I remember visiting DC and then Virginia a few years ago. Washington was full of cars I recognised - Hondas, Toyotas, even the occasional VW. But Front Royal, just 50 or 60 miles away, was full of pickups and full-size sedans. An odd experience

In aviation, we have a unit called AMU (aviation maintenance unit). 1 AMU = $1000. So we talk in shorthand: How many AMUs did you pay for your annual inspection?

Hmmm. 2021 Subaru Forester here. Bought the most basic model I could (all engines and transmissions in that model line are the same) because I despise sunroofs or their bastard sibling, the moon roof. All the better trims come standard with gaping holes in the roof which one never uses but all of which eventually leak. I had the dealer upgrade the wheels and tires. I paid $26,800 plus TTL. It was cheap enough to allow me to write a check and pay cash. My financial mentors, mostly bankers on my dad's side and attorneys on my mom's side (grandparents, uncles, etc.) pounded into my head that if you have to buy something other than a house or real estate by getting a loan you simply cannot afford it. No matter what the financial institutions tell you about percentages of your income. Lose a job and then what is the percentage the car costs in relation to your new income? I'm 67 years old. I have never paid more than $28K for a brand new car. It just doesn't make sense unless you are a professional driver and it is your business tool.

As my ancient great, great uncle Amos Tuck might have said: Compound Interest is Your Best friend or your Worst Enemy. Be advised.

Same goes for camera purchases, etc.

And great, great, great uncle Amos Tuck seemed to know what he was talking about. He bequeathed a business school to some small, out of the way university back east.... it's become moderately respectable.

The hard thing about advice is taking it. A lesson I learned very early on in business....painfully.

I do like sporty, go-kart type cars. In the past, I have owned a Triumph Spitfire, an MGB and a Fiat X1-9 (never had a Miata). When I turned 60. I picked up a used Volvo C30, sort of an updated version of the old Volvo 1800 hatchback (don't recall the exact designation). I purchased it used for less than the cost of a new Honda Fit and less than 20% of my gross income. A decade later I am still driving it (112,000+ miles on the odometer), and I am still delighted every time I get behind the wheel. Both my Volvo and my wife's Soul Red Mazda are paid for.

If only I could be so frugal with camera equipment.

We will be buying a car in 2023 despite all foreboding.

We will retire our beloved 2004 Toyota Echo hatchback (stick, no power locks, no power windows) which is in great condition and will run forever. So fun to drive, superb gas mileage, and roomy enough for hauling most building materials --really!

Why are we letting it go? Because it's time to get with the program and get an EV. Well past time. The state of the climate demands it.

We can't in good conscience wait any longer for electric car tech to mature to some more optimal, affordable point. We've waited for years for government and business leadership on the energy transition, and since both are still slow-walking this, we're going to do our bit and move forward on our own.

Sure, there are sizeable rebates for low emission vehicles in Canada, but they're scaled for hybrid vehicles not EVs. The rebates are not high enough to offset higher cost of pure EVs (the aforementioned slow-walk) but we're going full EV for zero-emissions (BC is lucky to have hydro-generated electricity) and for lower maintenance costs in the long-run.

Sadly, as previous commenters have mentioned, like all new cars today, all EVs are overloaded with extra electronic features. No budget model for us. It will be tight to squeeze the costs of the new car into 20% of our take-home income, but the very low 'fueling' cost will help!

CR Marshall--I bought my Volvo C30 used (a 2008 in 2012) with 110K miles on it. It now has 320K on it. The clutch is getting on (it's original), but otherwise it's in remarkably good shape. In my youth I owned a Triumph Spitfire as well--the Volvo is built a slight bit better...

Good driving to you!

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