US/Canada: The End of the Affordable Car

[MetroMPG]

Some interesting stats from a KBB article about the state of the bottom of the automotive food chain...

Comparing the end of 2017 to the end of 2022:

• In December 2017, automakers produced 36 models priced at $25,000 or less
  
• Five years later, they offered just 10
  
• In 2017, sub-$25,000 cars made up almost 13% of new car sales
• Five years later, less than 4% of new cars fell into that price range
• Only three vehicles left on the market cost less than $20,000 once delivery charges are added: Kia Rio, Nissan Versa, and Mitsubishi Mirage.

(Source: https://www.kbb.com/car-news/america...e-pricey-ones/ )

The problem isn't even mainly the result of rising prices either; most automakers have simply chopped their entry level models out of their lineups.

As a result, buyers at the bottom of the market may have to turn more towards used cars to stay on budget.

Fortunately, used car pricing is continuing to drop from last year's highs:

The average used vehicle carried a list price of $26,510 last month — down $633 from one month before.

UNfortunately, the cheaper end of the used car market is seeing the highest demand:

The Cheaper the Car, the Harder It Is to Find

As with new cars, the lower the price, the tighter the inventory.

• Days’ supply for vehicles priced under $10,000 was 35.
• Day’s supply for vehicles priced between $10,000 and $15,000 was 42;
• between $15,000 and $20,000 was 46;
• $20,000 to $35,000 around 50.
• prices above $35,000 had the highest days’ supply at 53.

(Source: https://getpocket.com/explore/item/w...it-s-necessary )

All this makes me glad I was lucky to snag my current Mirage for a great price (even then) in summer 2021. I'll be keeping it for a good while.

[Fummins]

Ditto, I paid $1000 for my Mirage in 2021 as well. Even after replacing the drivetrain, brakes, windshield, and tires it still holds the title for cheapest cost of ownership for anything I've ever owned for this long.

Prior to the current car I bought the White 2014 Mirage with 36,000kms for $6000 in November or December 2019 and that seemed high to me back then. I basically drove the car for a year for free maybe made $100 when I sold it after installing new tires and front brakes. Months later I regretted letting it go for so cheap lol

[Top_Fuel]

Guess that explains this...

$1000-a-Month (or Higher) Car Payments Are Distressingly Common Right Now

15.7% of buyers who financed a new car in the fourth quarter of 2022 signed on for $1000+ monthly payments

Rising interest rates are part of the reason...along with people who trade in cars with a ton of negative equity.

[Fummins]

If you can afford a $1000/month payment then why not. You can't bring it with you!

[Wallythacker]

Just prior to the financial detonation of 2007/8 all the newsmags were full of articles like, "New cars, fully loaded, with debt" Everyone had negative equity and was forever underwater on a car loan. The detonation seemed to bring about a well needed correction in a lot of consumer goods, cars forefront, but property prices ran amuk.

In case you haven't noticed those are the same conditions we are in now, except with higher interest rates.

[MetroMPG]

Guess that explains this...

$1000-a-Month (or Higher) Car Payments Are Distressingly Common Right Now

WOW, $1k a month!!!

If I had a $1k/month car budget, I'd have 5 or 6 cars in my driveway at the end of the year!

[MetroMPG]

Just prior to the financial detonation of 2007/8...

Yeah, these things go in cycles. Boom & bust.

Also interesting that around '08 there were relatively FEW econoboxes available in Canada/US: Toyota Yaris, Chevy Aveo, Nissan Versa?

Automakers brought back cheaper entry level cars in the years that followed. I wonder if they'll do that again this time.

[Fummins]

Just prior to the financial detonation of 2007/8 all the newsmags were full of articles like, "New cars, fully loaded, with debt" Everyone had negative equity and was forever underwater on a car loan. The detonation seemed to bring about a well needed correction in a lot of consumer goods, cars forefront, but property prices ran amuk.

In case you haven't noticed those are the same conditions we are in now, except with higher interest rates.

I noticed house prices coming down in my area already. Sales in general slowed down, even for winter. My folks were looking for acreages around here last summer and it was a chit show. Every single place they were interested in was sold or had multiple offers within a day. I ended up looking at a bunch of places on their behalf the day they were put on the market. Even then, the realtor would get a call on our way to the showing that there's a pending offer....Bidding wars and offers to buy as is were pretty common. It was like houses were the new toilet paper.

[Cobrajet]

It is going to get worse as we are forced to go electric.

[Wallythacker]

Yeah, these things go in cycles, don't they? Boom & bust.

Also interesting that around '08 there were relatively FEW econoboxes available in Canada/US: Toyota Yaris, Chevy Aveo, Nissan Versa?

Automakers brought back cheaper entry level cars in the years that followed. I wonder if they'll do that again this time.

I think they will have no choice. Right now they had the luxury(?) of supply chain disruptions and shortages allowing them to have bidding wars on what stock they got and selling for WAY over MSRP. So many people who always bought new have been cut out of the cycle for years. There's many people who won't touch a used car, BUT they will come back in droves for properly priced cars only. Why does the average age of the fleet increase every year? Simply economics. There isn't enough credit available for everyone who wants a new car priced at current insane levels. Even when cars were far more affordable and available the fleet average age still went up. If, and until there's a big drop in the average fleet age will I be convinced the automakers are offering products for all segments of the market.