Vehicles under $15k are 1.6% of the market, and their share of the market has dropped over 90% since 2019. The old advice that you can get a beater and drive it in to the ground for $5k hasn’t been true for years but it still seems pervasive in personal finance spaces.
I can tell by your writing that you’re a rational person and you’ve obviously thought about things. But…I’m not sure we’re arguing about the same thing.
The point is that you would previously be able to buy a new car for say $20k or a used one for $5k. The used one might drive nearly as well as the new one, if properly maintained. So you were “saving” $15k.
The idea that brand new items can lose value to their “steady-state” value (imagine a graph that sharply descends in the first year) isn’t an absurd one.
That said, I understand that some people might value that “new feeling” and want to pay that $15k difference. Or might value their time and troubles in potentially dealing with the issues of a used car.
Of course, people are raising the issue that the market might have changed recently. I don’t really follow the pricing of new cars. I remember a few years ago hearing that the car industry was in trouble because essentially cars were lasting longer and longer and so they were unable to keep on selling the new models to suckers.
I don’t know how long ago, if ever, a $20k new car was comparable to a $5k used car.
My first car purchase was in 2009: I got a 2005 Cavalier with ~40k miles for $8k. Cars cheaper than $7k were basically a couple months away from the scrap yard (unless you’re able to fix up a project car yourself, but I think that’s outside of the scope of this conversation). And even then: a $20k car in 2009 was a completely different class of car. A comparable car, the Cobalt, had a sticker price of about $16k. So, anecdotally, that’s a 50% discount in exchange for a car being 4 years old with 40k miles. Even that cavalier was a pretty terrible car that was both a bad experience to drive and costly to repair and operate.
I don’t think today you are ever seeing a $20k car being even remotely comparable to a $5k car. It’s not a $15k difference.
If the % was the same: of the choice was between a $20k new car and a comparable $10k used car, I think thats a close decision. The problem is that comparable used car is costing $17k or more. I think the conventional wisdom of buying used has swung too far and driven up the demand for used cars. I think the average buyer does not adequately factor in both the diminishing driving experience over time/miles and the increased repair costs into purchasing decisions. I also think that resale value is overvalued.
Of course, there’s other economic factors. Some people don’t have the luxury of choosing $20k vs $17k: they’ll take the $17k every time. I’m just talking about the decision making process for those who can make it.
