I’m thinking a lot about vehicle affordability lately and when, if ever, cars will become affordable again. The numbers are improving, but for various reasons it’s becoming harder and harder to get a good new car at a reasonable price. A few years ago there were numerous cars you could buy under $20,000. Today, there’s only one.
While we’re at it, we’ll take a look at EV demand and why it’s so much more geographic. Plus, we’ll talk about how Lotus is doing way better and Lyft is doing, well, not way better.
God Bless The Mitsubishi Mirage
The little Mitsubishi Mirage is not the nicest new car on the market. It may, in fact, be the least nice. But it is reliable, reasonably efficient, and reasonably safe, with more than two doors and a five-year bumper-to-bumper warranty. Are there better used cars for the same $16,245 starting price? Absolutely. Do some people desire the lack-of-worry that comes with a new car? Yes. [Ed Note: And there can be financing-related reasons to also go new vs used. -DT]. If you’re one of those people and you have less than $20,000 to spend on a car, well, check out the Mitsubishi Mirage.
The massive marketplace site Kelly Blue Book has its monthly market insights report out and there’s a little good news there, with the average transaction price (ATP) down about 0.7% month-over-month to $48,334 and only up 0.4% year-over-year. For reference, the ATP is the price someone actually pays for a vehicle, not what it’s listed for. These numbers are not that surprising given that inventories are rising and we’re into the summer selling months. Here’s the paragraph that knocked me on my seat-warmer this morning, with all the bold my doing:
“[U]nlike five years ago, only one model transacted below $20,000 in July. The Mitsubishi Mirage’s average transaction price in July is reported as $19,205. In July 2018, there were a dozen vehicles with ATPs below the $20,000 barrier. In comparison, many of today’s smallest vehicles, including the Hyundai Venue, Kia Rio, Nissan Versa and Toyota Corolla, are all transacting well over $20,000. Notably, and in stark contrast to the under $20,000 category, there were 32 vehicles in the Kelley Blue Book database transacting on average over $100,000 in July, which excludes super exotics from Ferrari, Lamborghini, Rolls-Royce and the like. In comparison, five years ago in the summer of 2018, there were only 12 vehicles in the over $100,000 category.“
Yikes. Like I said in yesterday’s trimflation article, production has quite clearly shifted towards the higher margin end of the market and this will continue to have impacts on what shows up on dealership lots (and what stays there). My sense is that there’s an opportunity for vehicles like the new Trax and Maverick to continue to pick up market share.
There’s a small indication of this trend in more of the data:
The high-end luxury car segment had the highest incentives in July 2023 at 9.6% of ATP, followed by luxury cars at 8.4%, hybrid vehicles at 7.7%, entry-level luxury cars at 6.9% and electric vehicles at 6.7%. Full-size luxury SUVs, high-performance cars and sports cars had some of the lowest incentives in July.
Unsurprisingly, over the last year Tesla has seen the biggest drop in ATP (-19.9%) and Mercedes had the biggest increase (18.8%).
Is EV Demand Really Softening?
Here’s a fun headline from Automotive News this morning: “EV stockpile is evidence of growing pain, not demand dip, experts say”
We talk and think a lot about where electric car demand really is, but the market is super young and most of the players getting into it who are not Tesla are essentially EV newbs. Perhaps, rather than kvetching about increased inventory, we just accept it as part of the transition and not sweat the inventory?
That seems to be the point of the article and it’s an interesting counterpoint to the prevailing concern that we’ve tapped out demand for EVs or, at least, for $60k EV crossovers. Here’s Tyson Jominy from J.D. Power in that AN article:
EVs are an expanding slice of the overall market but until recently were hindered by short supply. Now, the EV sales share is outpacing the inventory share, said Tyson Jominy, vice president of data and analytics at J.D. Power.
“The story that demand for EVs is slowing is patently false,” Jominy said.
Helped by robust sales related to changing federal zero-emission vehicle sale incentives this year, EVs made up 8.6 percent of retail sales and 6.7 percent of available inventory in June, according to J.D. Power.
The article goes on to talk to dealers in Texas who, yeah, are not finding as many buyers for electric vehicles as dealers in California. This makes sense to me and I do think we probably overestimate the impact of a couple of months of inventory and, in fact, won’t have a real sense of what the market is until we can view it in hindsight.
Happy Days For Lotus
There is no objectivity, there’s only disclosure. Full disclosure: I like Lotus. I like the cars. I like the history. I played a lot of the “Lotus Turbo Challenge 2” game for Sega Genesis (see above) and fell in love with the taillights of the Elan.
The history of Lotus is, eh, complicated. It’s always been a questionable business, even as they’ve made sublime cars. It’s why I’m going to revel in a little bit of good news from Lotus from the first half of 2023:
- Order book grew to approximately 17,000 vehicles worldwide for the Eletre, Lotus’ first electric lifestyle hyper-SUV, and Emira, a mid-engine sports car.
- Produced over 2,200 Emiras in its UK sportscar manufacturing facility, which is a 381 percent increase from FY22. The order book for Emira is full for the next two years.
- Production of Lotus’ lifestyle hyper-SUV, Eletre, ramped up this year in its first all-electric vehicle factory. Customer deliveries began in China at the end of March, and Lotus expects to deliver to UK and European customers later this summer.
I don’t want to damn Lotus with faint praise. Getting people to want your cars and then, you know, building them is sort of the essence of being a car company and yet Lotus has not has not been able to pull that off with any regularity. The fact that the company is producing Emiras is a great sign and I’m anxious to see if it can do the same with the Evija.
As a reminder, Lotus is now owned by Chinese carmaker Geely.
Less-Happy Days For Lyft
Uber has continued to dominate the rideshare space, expanding into other forms of delivery (in London there were even Uber boats). Lyft is definitively the numero dos and, while it’s profitable, investors are worried that the company is overly focused on getting market share from Uber and not making profits.
“The major concern we hear from investors is if Lyft is able to achieve significant economic returns as the number 2 player in the U.S. mobility marketplace, and we think the guidance will only intensify those concerns,” Needham analyst Bernie McTernan said.
Where does this end? Analysts that Reuters spoke to seem to think that Lyft might get acquired by someone along the way. I could see that. Perhaps Geely should acquire Lyft and then we can all get picked up from the airport in Eletres.
The Big Question
What is the most you have ever spent on a new car? What is the most you’d spend right now and what would you buy with that money?
“What is the most you have ever spent on a new car?”
About $20k for the only new car I’ve ever bought: A 2006 Honda Accord SE.
“What is the most you’d spend right now and what would you buy with that money?”
Nothing. That Accord is still going strong. If I HAD to replace it maybe a used Civic, Fit or some other sub/compact. The Accord is bigger than I actually need.
I spent about 24 grand on my 2011 sportwagen TDI. Ended up selling back after 5 years for roughly 21 grand with all of VW’s Settlement money. No out of warranty work in 5 years and very little money in fuel. It was a good deal.
My GTI in 2018 was around $30k. Maybe a bit high for me at the time on its own, but also 0.9% financing and a 6 year warranty for something I knew I’d want to try and keep it for a bit (not get the itch after a couple years like most of my last cars), and I had shared rent so that was a lower expense.
Now, maybe up to high 30s for a car and 40-45k for some models of truck/SUV, but also thinking of those numbers with my trade equity in the back of my mind. Without that – nah.
My most expensive car was my Honda Clarity. After markdowns (unpopular model) and federal incentives, it was $23k.
According to Autotrader, the cheapest PHEV within a 200 mile radius is… a Hyundai Tuscon for $39k. Even with incentives, that’s $35k. Fuck. That.
The cheapest new hybrids in that radius are $26k which isn’t the worst, but feels like a lot for a Corolla/Elantra.
Thanks to state incentives, I could get a VW ID.4 (the short range one) for $25k or a Bolt/Leaf for under $19k. These are all a long way from ideal, but damned if they aren’t the most affordable options for me.
Wondering what model you had bought, and whether it was new or used? Right now a 2018 Clarity goes for about $23K.
I bought a new 2018 Clarity (base model, which came with the full HondaSense suite) at the beginning of 2019. I found one that had been on the lot for months, and they were eager to get rid of it. Federal tax credit still applied back then, but no state incentives.
It’s not lost on me how odd it is that my car has basically not depreciated, but I’m not the only one. I know some people (on the forums) got their Clarities for even less. The Chevy Volt was about the same price, and the Bolt was briefly discounted to around $20k when GM’s credits expired. 2019 was a good year to buy a plug-in.
Interesting! Thanks for the response.
I bought a new car only once, 07 Camry, only because of a work discount. It was still a hassle, and 3 years later it blew out the water pump and warped the head, so got something used to replace it. Everything before and since has been used, I personally think cars are overpriced, more so these days. I’m sure there are some exceptions, but generally I believe a new car is a WANT, not a NEED.
I’d love to see a scenario where everyone said “screw these prices” and not a single new car sold for the rest of the year, or even longer. Think they’d get the message then?
No, they’d get more government bailouts at taxpayer expense, while the horde of unsold new cars clogging up dealer lots would get sent to the crusher.
Since this is a fantasy let’s add voter uproar terrorizes politicians from even thinking about bailouts and punishing environmental laws are passed to prevent unsold new cars from being crushed or otherwise squandered.
Fantasy sometimes proves itself prophetic. Ever read “Sheep Look Up” by John Brunner, written more than 50 years ago?
Nope. I’ll look for it at my local library though.
Do so, and you’ll be in for a delightfully dark mindfuck of a read. Of all of the hundreds of sci fi novels I’ve read, THIS one tracks most closely with our present day world. It’s prequel “Stand on Zanzibar” was equally prophetic.
How did a 3 y/o Camry factory warranty not cover a water pump repair??
I put on a lot of miles driving to work, so by years it would have been warranty, but I was over on mileage by only 5,000 or so. Even then the best the dealer would do was give me close to a break even price (which wasn’t) to buy it back and give me a “deal” on something used. And I used to work at a dealership in the service department, I know there are goodwill reported repairs they could have worked out.
You know we’re in deep shit when even a fucking Versa is over 20k LOL
The Chinese are ready to step in and undercut ANYBODY they need to. Yeah they play dirty, but the gougers deserve it at this point. They left the window open, and you can’t blame anybody for stepping in when others won’t.
It’s related to the trimflation shit that Hardybird posted the other day. Dropping the cheaper cars to only sell more expensive shit. Forced uptrading is a form of gouging.
Did he have any actual numbers to back that up? Is he claiming that demand is continuing to grow but supply is growing faster? All I see here is a clickbait title and some unsubstantiated claims.
The most I’ve paid for a new car is $46.5k for my truck back in 2015. I found that to be an eye-watering amount and am not looking forward to replacing it in a few years because that amount of money doesn’t get you much these days. A similarly spec’d truck would be around $70k now, I think.
We just spent almost $6K on basically a new front end for our 2014 F-350 because to buy anything newish at this point would have a monthly payment over $1000.
I never bought a new car. In fact I never spent more then 8k on buying the car. (Spent a lot more making the car let’s call unique, such is my life). I did try to buy a new car recently. My business is doing well, and for reason I’m now a Nissan suspension shop for all my drifty bois. So, I was like “ I like Zs, and I think the new Z is cool”. So sell some cars I don’t really use, get some money. Then head to the local Nissan dealer. And I ask for one Z please. Dude, asks for 10k markup plus some add-ons. Like they charged hundreds of dollars to put nitrogen in the tires. I’ve dealt with this dealers parts department kinda a lot. And they are pretty bad, like they carry nothing for the Z33, even though there’s a ton of them on the road. So, I’m no. Dude calls me a week later 7.5k+ add-ons. And this process has repeated for like a month now. I’ve bought so many shitboxes from dudes in backwoods New England. Never has an experience more painful then dealing with a business that’s entire purpose is to sell new cars. And I once bought an Rx-8 from a man with a BAL around 280 and he talked about ufos the entire time.
I have bought exactly one new car in my life, a turbo Dart. I can’t recall what I paid for it but with my trade it wasn’t much, I get WHY those cars got the hate they did but mine was fun and provided everything I needed it to at that point in my life.
As for now, I’d be shopping in the $5-10 range.. not thousand, just $5-10. I’m honestly right now more just on a casual lookout for parts for my ‘73 D100.
The problem with the ‘buy a used car’ argument is that someone needs to buy new cars in the first place for there to be used cars later. And, if all the new cars are $40-50k, there won’t be a supply of very cheap but still decent used cars available. There’s also the sub-group of weirdos who actually like very small and minimalist cars, but that’s another story.
I’d go smaller but I don’t think I can get an Eshelman Adult Sport Car registered here and people want real money for Peels these days.
I want to bid on the Frisky convertible for sale at Pebble Beach, but it’s way more money than I can justify/afford. Maybe Beau will buy it and offer rides to Autopian members…
Frisky FriskySport has long been quite high on my list of favorite car names but in this context it would be a step in the wrong direction for me, as it’s longer, wider, and has a larger engine than my KV (2CV for scale):
https://live.staticflickr.com/5302/5600648065_1cce953440_c.jpg
“The problem with the ‘buy a used car’ argument is that someone needs to buy new cars in the first place for there to be used cars later.”
Rental companies and government agencies buy lots of new cars. After a while they get sold as used cars.
“There’s also the sub-group of weirdos who actually like very small and minimalist car”
What’s so weird about that? What’s weird (and pathetic) is buying a needlessly big, expensive car to impress others.
It’s not really a sub group. There are plenty of folks who will buy cheap new cars, but the car companies don’t want to sell them anymore.
I’m 45, and have never had a new car. The most I’ve ever spent was 22k on my 2013 4Runner, back in early 2019.
I’ve spent way too much money on cars during my life, never new, but always “nice”. My Grand Cherokee and 98 Firebird Formula were both around 20K when I bought them in my 20’s, my 07 Volvo was 14K in 2012.
I’m trying to save for a house, I realize I’m probably screwed there, but I adopted the Dave Ramsey mindset (without the religious-cult stuff) and really can’t see paying over 10k for a vehicle, ever. I’ve told myself the 4Runner is the last vehicle I ever finance.
I just paid $57k for an ID.4 Pro S in January. It’s my wife’s daily and she loves it. Her commute is about 70 miles per day. My beloved commonwealth of Massachusetts already gave me a $3500 credit and I’m banking on the additional federal rebate at the end of the year. Without those incentives, this is about double what I’ve ever paid for a new vehicle. With the incentives I’m thinking it’s not so bad.
But I still feel like an early adopter given news about adoption of the NACS standard and potential of solid state batteries. I did try to convince my wife to get the Bolt EUV, but had to agree that despite being nice, it felt really cramped inside.
I’ve purchased 3 new cars in the last 5 years. In 2018, I bought a new Buick Encore for $22k. I had no cash and no credit so the bank told me what they’d give me a loan for and one stipulation was that it had to be new. That got totaled by a deer so in 2020 I bought a new Hyundai Venue for $19k. At the time the used car market made used not an option, since they cost the same as a new car.
I just bought a new car mid June to replace my wife’s 13 year old Kia, so the question of how much we’d spend was a hotly debated topic. The wife and I wanted to make the jump to an EV, but the ones we liked were in the $60k range. We decided we could afford the monthly payment for that, but didn’t want to. Instead we placed a hold on a Camry Hybrid XLE from the factory for $40k. Still getting insane reliability, comfort, and mileage for $20k less than the EV’s we were looking at felt real good. So I suppose the current answer regarding our maximum is $40k. If money weren’t an issue? $100k. No car amount should be able to be confused for a mortgage though, so probably not higher than that.
I bought a new Kia Rio5 last month for $20,190 and I had to put down a $1000 deposit and wait 2 months for it to be delivered. It would have been under $20k if I did not want the extra 5 door trunk space. The sales guy told me they never order Rios because the margins on them are too small.
I’ve never bought a new car, and have a hard time seeing that changing with new car pricing vs desirability in comparison to used (and that’s despite working for an auto OEM). Maybe when the time comes to replace one or both of the current DD’s, but we’ll have to see what the market looks like at that point since both are currently going strong.
The most I’ve paid for a new-to-me car was $15,000 in 2008 for a 2006 Saab 9-3 sedan (2.0T, manual) with 20k miles, and that lasted me through until 2018 with 220k miles, still going strong. Beyond that, all the other cars have been purchased for <= $5000 (2012 Mazda5 6mt w/110k miles in 2021 – $5000, 2009 Mazda RX-8 w/ 80k miles in 2019 – $4500, 2009 Saab 9-3 wagon w/155k in 2018 – $3800)
The most I’ve ever spent on a new car is my current car and was $27K. I’m still very much stuck in the $20-30K range mentally. I know I’ll probably have to move up to the $30-40K range for my next car and am trying to brace myself for that when it happens. The good news though is that KBB still estimates my current car’s worth at $24K so I’ll only need to save up the other $10-20K.
I’ve never bought a brand new car. Used cars are so expensive now that I figure my next purchase might be a new one. I don’t feel like I should pay over $30K, I could but I shouldn’t.
The most I’ve ever spent on a new (to me) car was $11,500 on a 2012 Volt with 40K miles on it I found on Craigslist in 2016. It looked and felt brand new at the time. Probably the best deal/value I’ve ever gotten on a vehicle – I still have it, now with 114,000, and the ownership experience has been near flawless.
The newest (to me) car I’ve ever bought was a 2014 Chevy Spark with 47,000 miles that I purchased off of FB marketplace in 2018 for the princely sum of $3500. I really miss those days. I still have that car as well – it’s great for the winter when the fun cars are in the shed and has been used to teach both wife and daughter how to drive a manual transmission. The 40mpg offsets the 12mpg in my ’71 Cadillac rather nicely as well.
Right now I’ve finally reached a point where I thought I’d be comfortable spending around $20K for something new, but that’s going to have to take a hard pause as the estimate for some much needed roof-work recently came in right around $33K. At least that includes two garages.
most I spent on a new car was $15k. the most now for the cars I’m actually looking at are like $33k
One thing to keep in mind, is that new cars in the 15 to $20,000 range have almost no profit margins for dealers. I saw the order sheet for a Honda Fit once and the price between invoice and MSRP was only about 500 bucks, so there’s no wiggle room or deals to be had
I purchased my son’s “loaded” 2017 Chevy Spark in 2018 brand new for $11.6k. The lot had about a dozen of last year’s Sparks for sale, including one that was bare bones with crank windows for only $9k. If I had known about the coming Covidpocalypse, I would have bought them all as an investment and made a killing!
I think there is a major distinction between vehicles used as transportation appliances and vehicles that are bought because they are fun or interesting. I would have a hard time spending more than $20,000 on a transportation appliance. However, I had no problem paying $65,000 for my new F250 a few years ago since I have always wanted a huge diesel pickup truck (it is a dream car for me, even if that may sound weird to some people). It doubles as a transportation appliance, but that isn’t why I bought it.
I am not sure what my upper limit would be for a dream car/toy vehicle, assuming I could buy it without causing a financial hardship. My biggest limitation is a preference for quantity over quality. A $150,000 Lamborghini Gallardo sounds like a lot of fun, but I think I would prefer a fleet of 20-footer classic pickup trucks and air-cooled Volkswagens over one Lamborghini.
The modern Super Duty is about as close to a perfect truck as has ever existed IMO. It’s not weird to me at all that someone would see it as a dream vehicle.
I live out West in the US. Premium Diesel truck as a dream is pretty much half the people I know. Nothing at all odd about that dream
Premium diesel trucks are also very common here in Florida. However, I have met a lot of people who think it is odd that I aspired to own one since I don’t need one. The same people don’t think twice when others spend $80,000+ on a Porsche or a Tesla, though. An F250 diesel is my Porsche equivalent.
Only brand new car I’ve bought was a decently equipped (1.4L Turbo, LT Trim) Chevy Cruze in 2015 for about $21,500 after discounts. Probably the most I’d be willing to spend for a new car (granted, for a larger and more capable vehicle) is about $40K, but even that has me wondering whether I should go CPO and save 20-25%. Anyway, sub-$20K new cars are dead. That market was already in critical condition before COVID and this was just the final nail in the coffin. They’re not coming back, whether people like it or not.
China has entered the chat 😛
I’ve never paid more than $7k out the door for a new car, because the first/last/only new car I’ve ever bought was a stripped out 1989 Dodge Omni.
I’m so sorry to hear that! 😉
(speaking as a former Dodge Omni owner, (1979.) It was a Sh*tpile!
!980 024 here. 30 years after selling it, still feel the pain.
What is with the readership here always bringing up the Omni/Horizon?
My Grand Cherokee 4xE stickered at about $64k, but with the incentives I paid about $45k. Its leased- still not comfortable buying something at these prices as the payments get insane.
I think the TLX I had before I paid about $49k for, again leased.
If I wasn’t in the business and getting deals from friends or my employer I probably would be driving used cars.