used car price so high

[KrisZ]

Originally Posted By: Miller88
It's not uncommon for 10 year old cars around here to go for $10K. And the dealers don't even have to try to sell you the car. If you try to haggle on the price, they will just sell the car to someone else.


Dealers will treat you that way, especially a cash buyer because they know that most will be financing that 10 year old POS and all they care is monthly payment, not the final price.

I think this is pretty much the main reason why used cars at dealers are priced so high. With the economic downturn most people cannot afford cars and turn to high interest, long term loans to get into a set of wheels. They want a low monthly payment and don't care what the final price is.

Incidentally, if one looks for private sells they can find much more reasonable offerings which only get better with some good negotiating skills, cash on hand and willingness to buy on the spot.

 

[supton]

I hate negotiating. It's hard to know what is a good price when everyone lists what they have at inflated prices--makes the inflated price look correct.

 

[eljefino]

Originally Posted By: NHGUY
Cash for clunkers killed S10 Blazer/Jimmy.Astro/Safari,E-vans/B-Vans/G-Vans,Explorers,Durangos,and some full size pickups.They had to be a set age and got below a certain mpg (18?).They didnt kill Camry,Accord,Lumina,Concorde/300,Intrepid...etc.


Yeah but "Jane Buy-here Pay-here" is now competing with me for Saturn IONs, Focuses, and other cars which used to depreciate like rocks.

I'm talking the kind of idiot too lazy to mount snow tires, so she'll buy a midsize 4x4 because she likes the color.

Part of me is happy-- our petroleum imports have shrunk a lot in five years and the dollar is doing better. But on a personal scale, I'm cheap. And I'm rubbing shoulders with other "neuveau-cheap" who are out-competing me in my world of thrift. I have to stay another step ahead of them, zagging when they zig!

C4C's somewhat unpublished goal was to take reliable transportation and destroy it, forcing buying of new even if it's a couple of intermediate used-car transactions away from that goal. Everyone on the hand-me-down curve has had to pay more. I guess this would be good news for someone leasing a Corolla as the resale value is even more fantastic. If one had equity in their present car they owned since before C4C the numbers should be somewhat of a wash, provided they didn't 100% ruin it.

 

[SatinSilver]

Originally Posted By: supton
I hate negotiating. It's hard to know what is a good price when everyone lists what they have at inflated prices--makes the inflated price look correct.


There are some dealers albeit very few that are fine to deal with. What a difference it makes. Esp when they sell Toyotas. I think our family may have a few Hondas/Fords/Chryslers/Buicks if the dealer experience was better. My dad bought a 1997 Camry and has been going back every 5 years for a new one. He will shop other makes but the poor dealer experience keeps him coming back to his place. Same sales person each time. It's kind of fun wheeling and dealing with a place that really wants to do business each time.

 

[wag123]

The reason that used car prices are so high is because there is a used car supply shortage. Supply and demand dictates price (Economics 101).
The reason that there is a used vehicle supply shortage is because there was a "BLOOD BATH" in the new car industry from 2008 to 2011. Vehicles have to be built and sold new to begin with in order for them to be 4 or 5 year old used vehicles in 4 or 5 years. In 2008, new vehicle production and sales were down 45% from 2007, this means that there is a 45% smaller pool of 2008 used vehicles available today. Take away 45% of the supply of ANY commodity and there will be a shortage of that commodity! 2009 new vehicle sales were down yet another 20% from 2008 sales, and the industry only produced and sold just over 8 million new vehicles (down from just under 19 million in 2007, the lowest total number of vehicles produced and sold since the late 1940's). 2009 is when GM and Chrysler filed for bankruptcy and several auto manufacturers/brands ceased to exist. 2010 new vehicle sales rebounded a little, up about 20% over 2009 sales, but still WAY DOWN from 2007 and earlier sales levels. 2011 new vehicle sales went back down to 2009 levels because of the Japanese and Thailand disasters. Some auto manufacturers like Toyota and Honda did not produce ANY vehicles for up to 6 months in 2011, and even some US manufacturers were shut down for a while for lack of parts (US manufacturers also get parts from Japan and Thailand).
Because of the shortage of 2008 through 2011 used vehicles, the prices for them have gone way up. Because of these higher prices some people have been forced down into 2007 and earlier models, creating a shortage of the nicer and lower mileage 2007 and earlier models as well (and driving up their prices). Also, because of the high gas prices, the better quality 4-cylinder used cars (like Toyotas, Hondas, and Nissans) are disproportionately higher in price relative to the overall used car market due to their higher demand.

 

[accent2012]

Originally Posted By: eljefino

C4C's somewhat unpublished goal was to take reliable transportation and destroy it, forcing buying of new even if it's a couple of intermediate used-car transactions away from that goal. Everyone on the hand-me-down curve has had to pay more. I guess this would be good news for someone leasing a Corolla as the resale value is even more fantastic. If one had equity in their present car they owned since before C4C the numbers should be somewhat of a wash, provided they didn't 100% ruin it.


Which is the wallstreet & government's grand scheme to get everybody on the hook with a loan. C4C helped fuel the lease market and force more people into long term car loans and mortgages. 50-year mortgages are growing in the housing sector because average joe can't compete with cash investors from wall street buying city blocks of foreclosed homes. More and more people are taking 60+month car loans to buy an entry-level car, and I'm one of them. Indentured servitude - to keep the poor, poor by strapping them with long term loans[/conspiracy rant]

 

[Silverado12]

I doubt CFC would have anything to do with it at this point, as the program happened 5 years ago and I seriously doubt many of those vehicles would be on the road anyways. Also, what the dealer wants and what he gets is 2 different stories. I paid $2500 less for my used Challenger with 6K miles than the asking price and it was well below KBB.

 

[nepadriver]

No one dumped a 10 thousand dollar Camry during CFC, however 40-50% less Camry's were built/sold 4 and 5 years ago compared to 2007 and earlier.

Used car Supply crushed!

Additionally more people are budget buyers with poor credit or less income today compared to 2007.

Demand for used up!

Not sure why people do not understand simple supply and demand.

Without CFC the supply of 5 year old used cars would be around 0.

 

[threeputtpar]

Originally Posted By: ram_man
So in a bloated market how do you guys decide what to pay for a car. Since kbb seems to be consistently pretty low.


ram-man, I found your problem. KBB is the last place for useful information for buying a car. They are usually 30% or more over reality on used car prices, in my experience. My theory is that they use asking prices to come up with their values instead of actual sales prices.

They are only relevant when you are selling a car, and only if your buyer doesn't know how useless they really are.

 

[SteveSRT8]

Originally Posted By: accent2012
Originally Posted By: eljefino

C4C's somewhat unpublished goal was to take reliable transportation and destroy it, forcing buying of new even if it's a couple of intermediate used-car transactions away from that goal. Everyone on the hand-me-down curve has had to pay more. I guess this would be good news for someone leasing a Corolla as the resale value is even more fantastic. If one had equity in their present car they owned since before C4C the numbers should be somewhat of a wash, provided they didn't 100% ruin it.


Which is the wallstreet & government's grand scheme to get everybody on the hook with a loan. C4C helped fuel the lease market and force more people into long term car loans and mortgages. 50-year mortgages are growing in the housing sector because average joe can't compete with cash investors from wall street buying city blocks of foreclosed homes. More and more people are taking 60+month car loans to buy an entry-level car, and I'm one of them. Indentured servitude - to keep the poor, poor by strapping them with long term loans[/conspiracy rant]


haha, so true. Imagining that C4C had zero effect is a bit unrealistic, as it did indeed take running used cars off the market in droves.

But I would agree that supply is simply not in line with demand. Used car prices are NUTS around here...

 

[grampi]

My daughter wanted to replace her '94 Corolla with a Prius. Her budget allows for about a $7000 vehicle...none of the Prius' I found for sale for $7000 or less had less than 149K miles on them, and some even had over 200K...that's just ridiculous! She's now looking for something else...

 

[SteveSRT8]

^^^That's ridiculously high!

I can't believe how younger folks these days buy used cars with such high mileages.

My son routinely purchases cars with way over 100k miles and sometimes 200k!!! Somehow he makes it work, I would be terrified...

 

[friendly_jacek]

Originally Posted By: wag123
The reason that used car prices are so high is because there is a used car supply shortage. Supply and demand dictates price (Economics 101).


What Economics 101 should teach you is when you debase currency, prices go up. Actually history teaches us this, look up Weimar Republic.

And there is also this how government lies on inflation:

Quote:
New cars may be among the best examples of how government adjustments distort the true impact of inflation. According to the Consumer Price Index (CPI), the cost of a new car has increased by 46 percent since 1983.

The U.S. Department of Energy also provides information about the costs of new cars, and their data show a much different picture. According to this government source, the price of a new car has increased by 188 percent in the past 30 years.


http://www.moneynews.com/MichaelCarr/CPI-inflation-car-govt/2013/07/10/id/514246

 

[Coprolite]

It is actually both. So you can both be right.

Originally Posted By: friendly_jacek
Originally Posted By: wag123
The reason that used car prices are so high is because there is a used car supply shortage. Supply and demand dictates price (Economics 101).


What Economics 101 should teach you is when you debase currency, prices go up. Actually history teaches us this, look up Weimar Republic.

And there is also this how government lies on inflation:

Quote:
New cars may be among the best examples of how government adjustments distort the true impact of inflation. According to the Consumer Price Index (CPI), the cost of a new car has increased by 46 percent since 1983.

The U.S. Department of Energy also provides information about the costs of new cars, and their data show a much different picture. According to this government source, the price of a new car has increased by 188 percent in the past 30 years.


http://www.moneynews.com/MichaelCarr/CPI-inflation-car-govt/2013/07/10/id/514246

 

[friendly_jacek]

Originally Posted By: grampi
My daughter wanted to replace her '94 Corolla with a Prius. Her budget allows for about a $7000 vehicle...none of the Prius' I found for sale for $7000 or less had less than 149K miles on them, and some even had over 200K...that's just ridiculous! She's now looking for something else...


I jest went through a similar process as my daughter totaled a 2003 Corolla. I also started with $7000 budget and could not afford a prius, unless I settled for salvage title.

I ended up buying base 2007 Yaris with 66,000 miles for $6,500. Shockingly, the insurance paid $7,800 for the 2003 Corolla (fairly loaded), so I should not be complaining.

As much as I love my own 2010 Prius and like the high resale value, clearly there is a dramatic shortage of used Prius cars on the market. I think people like them like I like it and no one is selling.

Turns out Prius is #3 best selling Toyota in USA (#1 in Japan).

 

[eljefino]

Originally Posted By: Silverado12
I doubt CFC would have anything to do with it at this point, as the program happened 5 years ago and I seriously doubt many of those vehicles would be on the road anyways. Also, what the dealer wants and what he gets is 2 different stories. I paid $2500 less for my used Challenger with 6K miles than the asking price and it was well below KBB.


C4C will have been a factor until the 2008-2010 models rot out of existence. It'll diminish over time but last until the crop of "carpocalypse" vehicles get out of the fleet.

Just take a look at how many late 90s volvos are still on the road. The economy was great, people wanted near-luxury makes, which sold in droves. The cars are solid enough to keep moving, even if a GearHeadTool type eventually buys them, ignoring 1/2 dozen dash warning lights. Now imagine an opposite scenario... few cars up for sale, and junky ones at that. Flood cars. Electrical nightmares (low lead solder). Tons of miles on surprisingly durable machinery. That's pretty close to today's reality.

 

[HM12460]

Used car price's are high, until you want to trade one in. Not worth squat then.

 

[fdcg27]

C4C took quite a few serviceable vehicles out of the market.
They were thirsty?
So what?
If all you could afford was something thirsty that would run for a few more years, then a thristy vehicle beat no affordable transportation.
It's not as though public transportation is a realistic alternative in very many areas of our country.
We've chosen personal vehicles as our tranportation in most of our country.
Sharply lower production for several years after the crash of '08 has also limited the supply of used cars.
If they aren't sold new, they won't be available used.
New cars are probably the best bet in the current market for those who need a primary vehicle and can afford the price.
New cars are offered at great prices and cheap (or free) financing is widely available.
The price break on a late model used car isn't enough in most cases, unless you're talking about off-lease flash cars, but that brings a whole additonal set of potentially expensive pitfalls.
Most people lack much (or any) DIY ability as well.
Bottom line is that the current market supports relatively high prices for desirable used cars.
As the new car market continues to operate at higher volumes, those cars will cycle into the used car market and prices for decent cars will decline.
Meanwhile, demand is sufficient to support used cars prices that would have seemed insane a decade ago.

 

[eljefino]

^ Yup, which is why my sister, as cheap as me, got a new nissan versa. She lives across country which mitigates my DIY help.

There was a nice spread of 1987-1997 used cars in the era of 1997-2008. Fuel injected, quality up. Domestic names sold for pennies and were cheap and easy to fix, and surprisingly reliable. "Old rules" were still in effect, like "dump at 100k". We got spoiled.

 

[silverrat]

Originally Posted By: eljefino
Ram-man, didn't you sell a honda civic in preperation to buy something else? Are you surprised with how fast someone had decent (I assume) money for a clean car with a great name?


I would like to see this addressed. Maybe you sold your car too low