New Cars Cost Way Too Much!

By Jeffrey Bellant September 16, 2021 300

I’ve mentioned before the first new-car I ever owned was a 1993 Geo Metro. Just out of college, I basically bought the car with no money down and I had a temp job at the time.

Granted, it was, as I have written, the greatest loss leader in the history of car dealerships. It had a stick shift, no stereo at all and the only options were floor mats and a rear defroster.

Still, if I remember correctly, the car was just over $5,700 out the door. My car payment was $119.

Less than 30 years after I bought that Geo, an average new car is more than $40,000, according to Experian.

$40,000!

To be fair, with huge SUVs and trucks dominating the market, it’s natural that prices would rise so much.

I remember at the time of my first car, the Chevy S-10 was still around. It would probably fit in the bed of a “mid-size” Colorado today.

But …. $40,000?

It’s funny, I cover the used-car market, so that’s my focus. But I remember years ago going into a franchise dealership for a story and seeing a new Ford Fusion. It was over $30,000, which was the average new-car price back then.

I got back to the office and mentioned it to our hip graphics employee – all the graphics employees are hip artsy folks – and he laughed at me.

“How much do you think a new car should cost? he asked.

“Less than $30,000,” I said.

Today, a dealer would murder someone and bury them in a shallow grave to find a $30,000 new car.

In fact, I’ve heard anecdotes of wholesalers buying new cars and taking them straight to auction and making a profit!

You folks have seen this, I know. But it still blows me away.

It also shows why used cars are so important.

I drive a 2012 Ford Fusion, purchased from my dad and I’m not buying a new car anytime soon. I’d have to get one of those 84-month loans to afford the payment. I can’t imagine making a car payment on a six-year-old car.

My point in all this is to say there are a lot of people like me out there in the marketplace.

People who need a car for work or for life who don’t want to break the bank.

People who don’t want seven-year car contracts with $500 monthly payments.

Maybe that explains why there are nearly 40 million used-car sales every year.

It’s also why I’d bet on the used-car dealer every day.

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Last modified on Thursday, 07 October 2021 04:16