from Hacker News

Americans can no longer afford their cars

by jbrins1 on 1/15/24, 8:32 PM with 84 comments

• by jedberg on 1/15/24, 9:00 PM

  There is a conflation of factors that have lead to this.

  1. Stricter safety and emissions regulations that make new cars more expensive to make.

  2. Supply chain issues making new cars more expensive.

  3. New cars are expensive so people are holding onto their used cars longer, shrinking that market.

  4. Cars are much more computerized than before, so it's hard to fix up old cars and make them work again.

  5. Teens used to be able to take auto-shop and learn enough to fix up an old shitbox to use for their first few working years.

  6. It's hard to find an old shitbox anymore, even one that is easy to fix, because people are holding onto them until they die.

  I'm not sure what the solution is here. The safety and emissions regs are there for a reason, but those are what lead to all the other problems.

  We just need to design our society for fewer cars, but that change will take a while.

• by taylodl on 1/15/24, 9:23 PM

  FTA: "In November 2019, the average transaction price for a new vehicle was $38,500."

  Let's be real, that was unaffordable to most Americans at the time. But, people are also buying what they want, not what they need. You need basic transportation? A used Honda Civic is a great bet. There are lots of used ones, less than 5 years old and many with fewer than 30K miles, available in my area for under $20K.

• by georgeburdell on 1/15/24, 8:55 PM

  Used market is also bananas. I bought a 2013 Corolla in 2016 for $16k, inclusive of taxes and fees. Carvana took it off my hands early last year for $12.5k

• by ExMachina73 on 1/15/24, 9:08 PM

  The problem is that most Americans view cars as status symbols and want them to be as luxurious as if they're buying a second home. Ironically according to AAA the average American spends about 300hrs a year behind the wheel. In other words about 3.5% of your time is spent actually driving while 96.5% it's garaged or parked. Spend money on a better a bed where you spend 33% of your life and buy a used 2009-2019 Toyota Yaris, agreed to be one of the most reliable commuter cars Toyota has ever made.

• by solarpunk on 1/15/24, 8:56 PM

  I've given up my car for over a year now. I put roughly 200 miles on my bike every month, and I utilize transit when unwilling/unable to bike. It's very stress-free not needing to park/store, insure, and maintain a machine that largely sits idle. I can do most bike maintenance myself, and for anything I can't manage myself, there's a half-dozen bike mechanics within a 10 minute bus ride of my apartment.

  I've also never been healthier.

• by MattGaiser on 1/15/24, 8:51 PM

  > at least if they're following standard budgeting advice

  Well, many don't. I would be curious what percentage Americans are actually spending on their cars and whether it is actually as little car as they truly need. Monthly payments might be that low if they are spread out enough.

  > That means that more than 60 percent of American households currently cannot afford to buy a new car, based on Census data.

  Would be curious what the car dealer financing agents have to say about that, as there are 120 month car notes now.

• by davkan on 1/15/24, 9:26 PM

  Just sold my 22 Tacoma for what I bought it for and picked up an 89 hilux with almost 300k on it. I wanted out from the loan and cash on hand for a down payment on a condo. I had planned on gettin a 10 year old Tacoma with moderate miles but the market was so terrible I decided to just buy a truck that was older than me.

• by vdaea on 1/15/24, 8:50 PM

  Neither can Europeans - even the cheapest cars are around 15k€, which is like a year of salary in some countries of the EU.

  You can't buy cheaper, older cars because they don't let you in the city with them. Fuck poor people.

  So basically they are telling you to fuck off and stay at home or something.

• by AlbertCory on 1/15/24, 9:27 PM

  > That means that more than 60 percent of American households currently cannot afford to buy a new car, based on Census data. For individuals, the numbers are even worse, with 82 percent of people below the $100,000 line.

  Did I miss the actual sales figures in this article? Here are some:

  https://tradingeconomics.com/united-states/total-vehicle-sal...

  https://www.goodcarbadcar.net/usa-auto-industry-total-sales-...

  You don't see a pronounced long-term decline here. It looks like people are buying them anyway.

• by xnx on 1/15/24, 8:57 PM

  With modern cars regularly lasting into 300,000 miles, it makes sense that we would see fewer people buying new cars. There are a lot of used cars with plenty of life left in them. Most people also buy used homes instead of new.

• by johnea on 1/15/24, 11:26 PM

  "But car buyers' preferences have also shifted dramatically to larger trucks and SUVs in the past 10 years or so, and even more towards high-tech and comfort amenities in the form of cameras, sensors, radars and large infotainment screens,"

  Which buyers? Everyone in my circle does NOT want this exact list of features.

  Where is the $5000 electric city car? Oh, in China. No wonder we need trade embargos...

• by pasttense01 on 1/15/24, 9:09 PM

  "while used car prices fell by only 2 percent to an average of $31,030."

  This is simply not true--average used car prices are well under $31,030. They get these high numbers from car dealers who only deal in fairly new used cars as that is what is profitable for them.

  There are a huge number of much cheaper, older used cars available directly from private parties--on venues like Craigslist.

• by xnx on 1/15/24, 9:00 PM

  Car prices have been falling regularly for the past ~2 years: https://site.manheim.com/en/services/consulting/used-vehicle...

• by nine_zeros on 1/15/24, 8:50 PM

  It is time for companies to bring prices down or for competitors to enter the market with lower prices. Enough is enough. The current set of executives and shareholders need to take a cut.

• by incomingpain on 1/16/24, 12:40 PM

  The car industry went through an inflection point going on 10 years now.

  Ford and GM got on board with the changes but changes to a big high momentum corp like that came at a cost. So they have a market cap around $40 billion. Stellantis decided against existing and are dinosaurs.

  Tesla obviously is the disruptor whose marketcap is >500 billion for sure, probably more legitimately around a trillion. Tesla could issue some new stock and effectively buy both ford and gm.

  So obviously the car industry is having its pain points.

  'afford' is the other side of this equation. Lets compare the USA and Canada.

  GDP per capita

  USA: 62,000

  Canada: 44,000

  That's practically a 50% difference... That's crazy.

  Households Debt to GDP

  USA: 70%

  Canada: 170%

  That's a huge difference. Greater then 50%.

  Interest rates are about the same. 5.5% vs 5%. But arguably sky high given we're in a boomer retirement phase and we ought to be negative interest rates.

  Private Debt to GDP

  USA: 215%

  Canada: 270%

  North Americans cant afford ANYTHING. Not just their cars. Canada's debt to income is 180%. The soft limit of 100% matters a ton. North America is broke...