Hacker News Reader

Comment by simonsarris | Hacker News Reader

> PRICE AS TESTED: $43,905 (base price: $37,495)

> can be had for less than the price of the average new car.

Emphasis mine and obviously they are factoring in the $7,500 tax credit which I guess is fine.

I dislike this "price of the average new car" line and it gets repeated a lot. Car manufacturers must love it since it tries to normalize that price as "average" when its not very representative. Grand total "average new car" price that the media is using everywhere is $33,666, but that's only because of the average price of luxury cars and trucks driving the number way, way up. There's a breakdown by sector in KBB's numbers:

http://mediaroom.kbb.com/new-car-transaction-prices-up-2-per...

Scroll down to the second table for more realistic numbers. At any rate the median new car price, if we could get it, would be much more telling. Sadly I can't find it anywhere.

After the tax credit the base model is the average cost of a Mid-size Pickup Truck ($30,045) or average cost of a sports car ($30,712)

But well above the average cost of a mid size car ($25,095) or crossover ($27,056) or subcompact ($17,218)

View on HN

What is amazing to me considering these numbers is that there are enough people buying new cars every year to keep all these car manufacturers around. I'm a pretty decently employed individual, doing better than most my family and I've only bought one new car ten years ago for $15K a Mazda 3. Who are all these people buying new cars all the time?

I think most people are actually leasing and getting a new car when the lease is up.

They're not hard to find. Many people just lease a new vehicle every four or five years.

Which is essentially burning money. It's funny because the people who usually can't afford a new car, will think they can afford it when leasing, while in the end they spend the exact same amount of money (even more since the leasing corp usually wants to make money too).

I have looked at it a few times and the lease payments are pretty well correlated with the expected depreciation over that time period. Cars loose a lot of value in the first three years. If you plan to sell the car after three years, leases are not that bad.

Why is it essentially burning money? Usually leases offer very competitive financial incentives, and are structured so you're paying off the depreciation of the car at an extremely low interest rate. Another way to look at it is you're getting a well priced new car that has a guaranteed buy back price in 3 years, all without putting down any capital (or a small amount).

Because leasing companies make a profit... they know exactly how much a car depreciates and they make sure you pay for that depreciation plus profit for the leasing company.

There are some tax advantages with leases that some people can take advantage of, but for most people, leasing is not going to save them money but it does provide a convenient way to always have a new car.

Many manufacturers operate their own lease. For BMW, you are likely to come out ahead than purchasing the car and selling it yourself after 3 years. Their residual value for lease is artificially high.

For Maserati, some of their models actually carry a negative money factor, so you are being PAID to lease. You can lease an $80k Ghibli for $600/month for 3 years, that's way less depreciation than if you bought and sold the car after 3 years.

Does that depreciation estimate include the up-front payment of 5-7k?

Yes, overall cost of course.

BMW only usually only does about $3k downpayment anyway.

I've done the analysis, and while there are some bad leasing deals out there that represent what you are probably thinking of, the very best ones offer incredible value for money (e.g. https://news.ycombinator.com/item?id=12475939).

Living in a state that charges 6-10% sales tax on selling your car is an incredible reason to lease. (As you only end up paying tax on what you leased for, instead of the purchase price).

Assuming you want to keep driving new cars, that is.

That assumes efficient marketplace for selling the car at the optimal residual value once you're ready to get rid of it.

Between low-balling used-car dealers and Craigslist randos asking if you'd take personal checks, for many people selling a car is more stressful than buying a car.

> Which is essentially burning money.

There's an assumption there about getting higher residual value on a used vehicle than what the dealer has in the lease paperwork.

The marketplace for used cars (before Beepi and Shift) is hardly efficient, and you might extract optimal price if you're willing to drive to multiple used-car dealerships or meet random people off Craigslist at random hours to accommodate test drives.

Some people would rather not deal with that, hence leasing that provides a guarantee a used vehicle will be accepted at pre-negotiated residual value.

>> Who are all these people buying new cars all the time?

I'm not sure where you're from, but this is Hacker News, so I'll just ask - Who are all these people who can afford to live in California? ;-)

It's all relative. Remember, the annual new car market is the number of cars on the road divided by the life of a car. This accounts for the sale of used cars as well.

I think it's a lot of money to spend on a vehicle, but if you look at leasing, lots of vehicles are less than $5000 a year, which is an easier number to wrap your mind around if you figure many of the people paying it aren't super focused on saving.

I used to think the same. We bought a new car 3 years ago with a financing which we still need to pay for 3 more years. However, we had to spend nearly $1000 on a new set of tires and alignment recently, and now I'm thinking it is better to get another brand new car as soon as we get a deal from the manufacturer or the dealer.

Why would that be better ? Deprecation of new cars in the first 3 years is crazy high, they loose 50% value in that time. Buying a new car every 3 years is one of the worst thing s you can do financially.

Boring midsize cars do not depreciate nearly this much. A $22,000 Honda Accord depreciates only $10,500 over five years. Besides, they depreciate this much because those first years of car ownership are worth the most. The car is under warranty and is most trouble-free during the early years. People pay that much for the first years of car ownership because they get more utility from newer cars, not because they are suckers.

A lot of cars coming off lease these days that are two or three years old get certified by the dealer, which gives an extended warranty for the person buying the used car. That's a nice little bonus where you buy the car when it starts hitting linear depreciation and you still have a decent warranty.

I buy a new car every 2 years or so because it makes me happy. Money sitting in the bank earning no interest doesn't make me happy.

Why is spending money on a new car better than $1000 on new tires? That's about three months worth of payments vs years of payments on a car.

I guess it is a good deal if the residual value of the old car pays for the rest of the financing plus the down payment on the new car, and the monthly payment stays the same. Actually it is frustrating for us to have to spend this much on maintenance on a car which is just 3 years old.

What kind of tires did you get for that price?

New Tires is a very strange (and illogical) reason to purchase a new vehicle. How is that any more frustrating than filling your gas tank when it's empty? All vehicles (used, new, gas, electric) need new tires after x amount of miles. This is a regular and expected maintenance item that all vehicle owners must deal with. It would be a different story if a critical component like your transmission unexpectedly went out well before it's life expectancy.

Honestly, if you consider $1,000 on new tires to be a frustrating expense, then you really can't afford to purchase new cars in the first place. A new vehicle is a multiple of the cost of new tires and even more so when the balance of your last vehicle is rolled into the new financing and spread out over payments with interest. I worked at a car dealership while in college. There's a reason the "finance guy" drove a 10+ year old Honda that he paid cash for.

http://www.mrmoneymustache.com/2011/11/28/new-cars-and-auto-...

http://www.financialsamurai.com/the-110th-rule-for-car-buyin...

Your logic uses the faulty assumption that you should always have a monthly payment. You shouldn't. Average live of a car is much longer than even a 7 year loan so at some point you shouldn't be making payments on it any longer. If you just keep rolling into newer cars, you are spending more than you need to.

Sure, but technology always gets better as well, including many safety features in addition to convenience ones. For example things like backup cameras, blind spot monitors, cross-traffic alerts, collision avoidance, adaptive cruise control, might not have been available on most cars 10 years ago.

Also, there is a certain value in having a reliable car with predictable monthly costs. Sure, you can get an extended warranty to cover unexpected expenses, but there is still the hassle factor of having your car constantly in the shop after a certain point.

There's nothing wrong with buying a car and keeping it for 10 years, but there is also nothing wrong with having a new car every X years.

For the most part though, reliability has improved a lot. You have to factor in mileage too of course (and weather--which can lead to rust problems). But a 10 year old car isn't necessarily an unreliable clunker these days.

You're right of course about features, including safety features. Personally, I'm not going to get rid of a reliable running car for most new technology. But then I've always been a drive car until (or a little bit past :-)) the point where it's not reliable transportation any longer.

What makes his comment even weirder is that the top pick all-season tires on consumer reports are about $450 installed at Costco and the stock tires that come on most cars are so bad (road noise, winter handling) that you usually hope to have them gone before the first or second winter. Some people even donate them before driving off the lot.

> about $450 installed at Costco

Really depends on the car. It isn't uncommon for some sets to breach $1000, even at Costco.

Maybe for a specialty tire, but I'm guessing that is pretty rare. My pilot is in at $650(fouth set @ 60k each. Roughly a penny a mile vs 15 for the whole car.)

You have to add tax, installation service (and in my case, alignment) to that. I guess you have to put things in perspective. Not everyone can afford to just donate a set of stock tires.

For your car that sounds great, but tires really depend on the vehicle. Costco's price for the tires that came on my vehicle are $250 apiece (5 person SUV).

Purely anecdotal, but my wild-assed guess is that most middle class Americans spend $20-30k on one every 4-5 years. Some people are enthusiasts and will spend more than that on the same timetable, and some people are extra frugal and will spend less, less often.

People with families will probably spend a little more for a minivan or SUV, which will skew it higher. Students (or people in their 20s in the early phases of their careers) will spend less, balancing out the minivan purchasers. Totally guessing though.

most middle class Americans spend $20-30k on one every 4-5 years

As long as most middle class American don't total their cars at the end of 4-5 years, I'd say they probably get 1/2 of that value back as trade-in.

I'd wager it's more like 8-15k every 4 to 5 years in installments of $300/mo for those staying in a perpetual mode of making car payments.

After five years, you get more like a quarter to a third in trade in. For sports cars, you lose half just by driving it off the dealer lot...

And that is assuming you aren't leasing, which a lot of people do. No trade in value there.

There is not a single sports car that you would get hit with a 50% depreciation just for driving off the lot.

For leasing, you aren't paying for the full cost of the car either, in fact, depends on the company you could actually come out ahead when compared to purchasing.

No trade-in, but you're only paying the depreciation and not the full value of the car either.

I've had friends lease recent model cars on 3year/12K terms and get about 60% residual value on their term sheet. I think 1/4 to 1/3 is an extreme case, unless you're choosing really crappy manufacturers that are known to fall in value quickly

You might have just happened to pick an amazingly well-aging car. My friend has a 2006 Mazda3 as well and it runs incredibly well, and it still looks like new cars. It's one of those cars you never feel like you need to upgrade from.

I'm going to do some cocktail napkin math and see if it makes any sense.

The total amount of new vehicles sold in the U.S. in 2015 was 17.5 million [1]. Since the average is $33666, we can assume half are above, and half are below that price. In reality, there are far fewer than half above that price, since an outsized sale price pushes that average up.

Half of 17.5 million is 8.75 million. The U.S. Census estimates the 2015 population was 323,995,528 [2], with 116,211,092 households [3]. With every household replacing their car every five years or so (total guess), that leaves us 23.2 million households that should have been buying a car in 2015. That means that about 37.7% of the eligible U.S. households bought a car worth over $33666.

That is bizarre enough that it leads me to believe there is a serious fault in my methodology or it just so happened that car sales were abnormally high in 2015 due to an enormous rise in consumer confidence. Either way, I'm more confused now than when I started scribbling on my metaphorical cocktail napkin.

[1] https://www.google.com/search?q=site%3Awsj.com+U.S.+Car+Sale...

[2] https://www.census.gov/popclock/

[3] https://www.census.gov/quickfacts/

Does your 17.5 million include cars owned by rental companies. I guess some will be taxis too.

Maybe? It's total car sales, this is cocktail napkin math. Wouldn't the amount owned by taxis and rental companies have to be absorbed by the U.S. population anyway? If anything it takes away the amount of eligible households, making the issue even stranger. This is because utilization of rental cars is going to be lower than purchased cars.

Without looking up the stats, my guess is that this number includes leases. Which artificially inflates the number for "new car sales". Not only that but manufactures have been offering insane financing 72 months .9% apr. Which brings down the cost to own for people who probably shouldn't be buying a new car. Car manufactures remind me more of financial companies then car companies.

They really are (or subsidiaries are). Ally Financial (or Ally Bank until a few years ago) started as the part of GM financing their auto loans. I'd bet Ford and Chrysler have similar groups, and foreign automakers as well.

Leases do not 'artificially' inflate new car sales. They are not really different from regular financing. In both cases the new car is sold and paid for by a financial institution. And the customer can use the car as long as all financial conditions of the deal are met. For instance, in both cases you can pay off your balance earlier to own the car outright. Or you can sell car before the end of the lease/loan terms and use proceeds to payoff the balance.

Rental cars get sold on at fairly low mileage. My point was that "people" don't have to buy new every car that other people buy used. I have bought an ex-rental car in the past that was 1 year old with 10000 miles on the clock.

This is a classic market sizing question that you would get asked in any consulting interview.

I didn't understand why you split the market into 'above-average' and 'below-average' prices though? I highly doubt the distribution is symmetric -- most of the probability mass is probably in cheaper cars, and there are smaller numbers of very expensive luxury vehicles pulling up the average price [1]. In that case, a much smaller number of households buy the 'above-mean-price' vehicles. Also, wealthy households tend to replace their cars more frequently; luxury car dealerships do much of their business in rolling people over every 3 years into a new vehicle lease.

In any case, 116mm / 17.5mm cars per annum households is 6.6 years per car per household, which seems totally reasonable to me since many households own multiple vehicles, and many vehicles are owned outside of households.

[1] http://fortune.com/2015/02/17/luxury-car-sales/ - 'Top-shelf brands, with cars generally selling for more than $40,000, represent a big and growing slice of the car business. They now account for 11% of total new car sales, when measured by number of units sold'

Thank you! It's a good thing I haven't gone for any business consulting interviews lately.

This context helps to explain what's going on, especially the cars per year metric you added. It would be nice to have more information, but it appears that 11% luxury segment can have an outsized effect on the mean sales price of the vehicle sales.

How does one size a market? I've always been curious about this. Where do you go looking for the data? Are there any biz-dev people that could point me towards some introductory material?

One common technique is to use basic demographic estimates: https://www.preplounge.com/en/bootcamp.php/case-cracking-too...

In a real interview, you normally wouldn't have access to a calculator or a computer. The point is to show you can arrive within a factor of 2-3x of the actual real-life answer just by smart guesstimating and doing arithmetic in your head.

One reason is because consultants often get asked these sorts of on-the-fly questions by clients, and they need to provide reasonable answers without looking them up.

Is testing who can sound the most competent while pulling a number out of their ass really the best test to determine the right candidate? There are good consultants out there, but there are also the horror stories.

For better or worse, consultants are often paid by clients for sounding like the smartest person in the room. Bullshitting convincingly is very much part of the job.

Anyway, if the technique is good enough for Fermi [1] or Drake [2], what's the problem?

[1] https://en.wikipedia.org/wiki/Fermi_problem

[2] https://en.wikipedia.org/wiki/Drake_equation

Fermi questions can be polarizing, especially for precision/accuracy focused individuals. Beware. Drake equation has its criticisms, and ET has yet to phone home.

People also weren't buying new cars in 2008-2011, so there are fewer used cars resulting from that on the market. Plus, interest rates are really low. So a new car bought in 2007 + 5-7 years would be getting replaced.

Over the last 10 years average car and light truck sales were 14.5M/year.

Even in 2008-2010 annual sales never dipped below 10M.

Detailed stats - https://www.bea.gov/national/xls/gap_hist.xlsx

First, households have more than one car. If you assume on average cars last 15 years and the average household has 2 cars that's.

116,211,092 * 2 / 15 ~= 15.5 million new cars per year which is within the ballpark of 17.5 million new cars.

Next, averages tend to be well above median. One BMW might bring the average up relative to 20 Honda Civics. Further, the low end of the market is more likely to buy used than new. So ~1/3 of the market is buying new cars, 15% of that is buying the expensive new cars and your looking at top 5% income earners at $167,000+k/year.

Granted, not everyone making 150k is buying a 50k car, and some people making less than 150k are buying 50k cars. But, if you think in terms of that kind of income then a 50k car is less ridiculous than you might think.

Good analysis. The used car sales aren't captured by this metric so it automatically pushes the mean up. However, it still accounts for an exceptionally high sales year, since none of the used car sales are included in that 17.5 million figure.

Maybe car sales are highly variable from year to year?

The average household has two cars? That seems ridiculous! Do you know anyone with three cars? The two car average implies quite a few!

There are plenty of 3+ car garages in affluent suburbs.

I'd wager there are even more 3+ car less-affluent families.

Having multiple, older vehicles that are 1. fully paid off, 2. dirt cheap to insure, and 3. old enough that you can actually work on them yourself is a good way to make sure you have something usable at any one time, even if the general maintenance needs are higher than average.

Plenty, it's often a work vehicle or for teenage children, sometimes it's a commuter car. RV's are also fairly common as are motorcycles which might not count. Other times, it's just a car waiting to be sold / repaired.

PS: Don't forget all those Verizon van's are part of that 2 average.

My wife and I each have a car. Most married people I know each have a car, so to me that's not ridiculous at all.

My new neighbors, though, are ridiculous in their car ownership (in my opinion). They are a married couple with only a new baby, but for some reason they have three cars. I've never seen them drive the third car, it's just in their garage and they park the two cars they do drive in the driveway.

I own three cars. One is my dad's old Vanagon. I haven't had the heart to sell it, and it is useful a few times a year for camping, scuba diving, or hauling. I probably should replace it with a trailer for those needs, but I haven't yet. It cost me $0, registration for it is about $120/yr, and it doesn't bump up my insurance all that much. Could I save money by just renting a van when I needed one, sure, but not all that much, and it has sentimental value.

Pretty much the same case here. I've a 1979 Honda CVCC ( https://www.reddit.com/r/Honda/comments/1q9tww/just_finished... ) that I don't really need, but it's practically free to register and insure, and it has sentimental value, so why not?

Besides, there have been a couple of times where simply due to bad luck both of our newer cars were in the shop at once. Having the backup of the CVCC for a few days was genuinely useful.

Depends on where you live I suppose, but two of my neighbors on my street have 5 cars each.

Curious: of those 5 cars how many would you say were made in the last 15 years?

Well, for an extreme outlier, Jay Leno has something like 200 cars.

Many suburban empty-nesters I know have three. I don't know why that's popular or makes any sense.

On the other hand most urban twenty-something's I know don't have any, so I'd agree the 2 car average seems possibly high.

> Well, for an extreme outlier, Jay Leno has something like 200 cars.

Ye gods. :|

>I don't know why that's popular or makes any sense

Mom and dad's daily drivers + dad's baby and/or project.

For the people I know, it seems more of an overabundance of caution vibe. A bit more like "Let's have a third SUV, in case one breaks down and we suddenly both need to drive multiple people to different hospitals across snow covered rocky terrain."

Also fairly common for teenager's car to be stored dormant in the driveway while she's in college and then put to use again after graduation.

I know lots of people with 3 or more cars in the household.

If you get outside of urban areas, car ownership is much higher, since you can't get anywhere without them.

I have three.

I have 5 cars.

What is the average household exactly? One of my neighbors are baby boomers whose 30-year-old daughter still lives with them. They have four cars (two for the dad, one for the mom, one for the daughter). Across the street is some kind of flophouse -- a 2-bed 1-bath house, whose occupants have no less than 7 cars. It causes no end of consternation for my wife and I who have merely one car each, and we often can't park in front of our own house because the neighbors are taking up all the spots.

In rural and low-density suburban areas, it's expected (and basically required) that everyone in the house who has a job also has a car.

Take a look at the size of high school and commuter college student parking lots on Google Earth, and then consider that every single one of those cars probably belongs to a household with 3+ cars (mom, dad, teenager).

Very common for parents to upgrade and pass their old car down to their 16-year-old instead of trading in.

We have four, one of my neighbors has at least six (family of three), another about four or five. The guy across the street probably has at least four.

Pretty much all the families I've known have at least two cars.

Me and my wife have 1 car each and plan to buy third.

I have three cars (and two motorcycles), and there's just my wife and I; no kids, but two dogs that have to be planned for. Why three cars? Well, the Scion xB (DogMobile) was purchased new 12 years ago, it's paid off, and it can carry dogs and bicycles. The Nissan Leaf was pre-ordered the day we were able, someone has to kick start that electric car thing. And since a nylon tent isn't going to contain an 80lb. pit bull terrier when it hears a raccoon at 3 a. m., we bought an '81 VW camper van.

Now, we could get rid of the Scion and use the VW as the new DogMobile. But the Scion is long paid off, reliable as a hammer, and we don't put miles on a temperamental old VW that wasn't that reliable to begin with (in comparison to a Toyota-made Scion). The resale value on Leafs is horrible, and we like the car. Long since paid off, too, and since it's our "nice car": no dogs allowed.

Oh, and my Dad just texted me this weekend asking if I wanted his 1963 Austin-Healey 3000. As much as it pains me, I'm probably going to turn him down and let him sell it. Too many vehicles the way it is, and nowhere to put the Healey except a storage unit. But until I give a definitive "no", there's the possibility that we could be a four car family.

Ridiculous, yes. But for some the vehicles just kind of pile up.

A household across the street from me has five residents: mother, father, employed daughter, twin sons in high school. They have at least three cars now, and I'm pretty sure I've seen four (one, to be pedantic, a pickup truck).

A household next to me has within the last five years had three residents: mother, father, son then about twenty. They had three cars.

A household down the street: mother, father, employed daughter, employed son (the last there part time). All have their own vehicles:sports ute, truck, sedan, truck.

It is possible that a household at the end of the block, mother, father, daughter in high school, has three cars; but I'm not sure whether father and daughter use the same car or a different one.

We are in a city, close to public transportation. I suspect that as one gets farther out into the suburbs, one finds more households with three or more cars.

3 person household with 2 drivers. 3 cars, FMV totalling about $5000. I keep an extra car to get to work when one of the others is broken down. One of the vehicles is a compact pickup with a canopy for diversifying utility, if needed.

We're well below median household income; but we must have transportation at all times.

I have found the sweet spot for used cars to be about $4000. Won't need too much work for a couple years, and I refuse to take the depreciation on more expensive cars. Cash-and-carry, I will not have a car loan, either - not paying interest.

My ego is not in my ride.

People, not households, buy and use cars so that's a weird way to calculate. You're also not counting any work vehicles which are very numerous and often expensive vans or trucks.

A quick search shows there were 260,350,938 registered highway vehicles in 2014. The truth is US auto fleet age is older than it has ever been so car sales are not abnormally high and could actually accelerate (assuming robots don't drive them all!).

http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/pub...

Enormous respect for someone rolling up their sleeves, showing their back of napkin math, and ending with, "Huh, that's weird (and very possibly wrong)."

> With every household replacing their car every five years or so (total guess)

I think the issue is here. Yes, most households don't hold onto a car for longer than 5 years, but not all households upgrade to a brand new car every time. (Heck, I've never owned a brand new vehicle ever.) So one new car sale could result in 2-3 households upgrading their vehicle, as cars are passed down the line.

> Since the average is $33666, we can assume half are above, and half are below that price

Maybe you're not stating a symmetry assumption about the distribution of prices about this mean, but in general you can't actually assume that.

I know a few people who buy new cars, but they're very well-off and can afford it. I bought a new car once in my life (when I was young and dumb and my first paycheck made me think I was some kind of millionaire), but realized my mistake and ended up selling it pretty much right away. Now it's purely used from here on out.

Or, buy a new car and expect to own it for a decade or more. It's just as economically viable. And to some the knowledge that you are the single owner and have taken excellent care of it is valuable. (As opposed to the unknowns of a used car.)

Think of it this way. It sounds like you're surprised by the number of new cars being purchased, but presumably you're not surprised that people are constantly buying used cars. And yet, roughly every used car that's purchased corresponds to a new car being purchased, unless you're expecting total car ownership to decline.

The lifespan of the average car sold today is significantly longer than in the past. A new car can be sold as a used car several times before it ends up being recycled. I don't think it follows that there is a 1:1 ratio of used to new car sales.

http://press.ihs.com/press-release/automotive/average-age-li...

There are a lot of factors at work here.

How much do you drive?

What kind of vehicle do you want?

How long do you plan on keeping the car?

Etc...

Here's one case: I just bought a new Tundra a couple months ago (cash because I don't like debt). I could have saved $5K (15%) and gotten one 3 years old with 40K miles on it.

That's the problem with some models. The resale value is SO good that the value proposition for buying used is almost nil.

Since my trade-in Tundra was 10 years old with 178K miles, let's assume that's the life of the new vehicle too. I don't think saving 15% to buy a vehicle that's 20% through its life span is a good deal.

Should have kept it :) I bought my Tacoma with 178k miles on the clock. I just surpassed 280k with no major repairs.

I would have love to keep it. But the repair bill was 8k which still didn't fix some things like the rust in the truck bed.

With unlimited resources you can keep anything on the road. But 8k is about 25% the cost of a new truck, so you'd have to be bonkers to put that much into something that old.

"Since my trade-in Tundra was 10 years old with 178K miles, let's assume that's the life of the new vehicle too." That's a terribly faulty assumption. The average age of all cars on the road in the US is 11 years old. Yes that is mean not median, but even the median is likely to be >8 years old. Your 10 year old truck probably was at the midpoint of it's life.

> That's a terribly faulty assumption. The average age of all cars on the road in the US is 11 years old.

No, my assumption is fine. Oddly, yours is flawed. My assumption doesn't use national averages that include southern states and non-coastal states where cars last forever. In my unique living conditions, my assumption is fine.

Again, there are more factors at work here. The trucks practical life was over, not because it couldn't be repaired, but because it didn't make sense. When a repair bill becomes greater than the value of the car, you stop repairing it.

Leases drive these numbers up. I get a new lease every 3 years and on paper it would look like a new car purchase every 3 years.

I buy a car every ~2 years because I like technology. Driving a Tesla Model S now, and looking forward to the company releasing self-driving software before I upgrade to the new version.

They are the old. Median age of brand-new-car-buyers are over 50 in several countries.

The average consumer is awash in debt. The guy next to me just bought some truck for around $40k with a 72mo loan. His wife leases some BMW 3 series, and can't drive on the weekend.

They eyeroll at my 2002 Honda, and I eyeroll at their $1000/mo payments.

Not just households buy cars...companies, fleet vehicles, rental car companies. People lease cars and need to get a new car every 3-5 years.

Also, I'd like to think your average developer is more financially literate/savvy than your average American. Otherwise, the housing crash wouldn't have happened. You know, people with no money buying expensive houses. People carrying credit card balance and rolling them over.

Those people exist, and they are many.

I'd like to think your average developer is more financially literate/savvy than your average American

You may like to think so, but I have seen absolutely no evidence of that...

Back of envelope math.

Out of 330M people even if 5% of population is buying a new car in the given year that is whooping 15M cars per year. USA sells around 17M cars year +-2M. One simple proxy to arrive at the 5% figure is the number of people in 16-19 age group where they might get parent's old car and the parent might buy a new one. That population is around 20M in USA.

Of course I have not accounted for taxi fleets, car rental fleets, corporate purchases etc. In fact go to think of it 17M cars per year does look like a very low number.

Availability of cheap credit combined with dealer incentives (an offer like 0% for 72 months is not that rare nowadays) moves the conversation from "can you afford a $40,000 car?" to "can you afford a $556 monthly payment?"

To top it off, when you're financing, used car loans are rarely as attractive as manufacturer/dealer incentives - BankRate says they average about 3% annually nowadays, so an 18% mark-up to the value of the used vehicle over the 6-year ownership period.

> At any rate the median new car price, if we could get it, would be much more telling. Sadly I can't find it anywhere.

The best I can find is $24000 [1], which sounds believable. But that's not referenced. There's a lot of articles stating that most people actually can't afford new cars [2]. Those articles, and studies they're talking about, are comparing median income and average car price, though.

[1] http://www.financialsamurai.com/the-110th-rule-for-car-buyin... [2] http://www.nytimes.com/2016/07/02/your-money/new-cars-are-to...

I did an analysis on this a while ago since no one publishes median figures [1]. Average base price of the top 20 best selling cars in the US is a good proxy, and that amounts to a bit over $23k. Bolt is obviously way higher than that. Of course, then people go and add several grand worth of upgrades so that base price doesn't reflect the true transaction price very well. Average transaction price in the mass market segment is around $31.5k

[1] https://www.linkedin.com/pulse/how-much-does-typical-america...

> There's a breakdown by sector in KBB's numbers:

> *Kelley Blue Book Average Transaction Prices do not include applied consumer incentives

Trucks make up the top 3 best selling vehicles in the US by a large margin -- accounting for 42% of the top 10 best selling vehicles in the US. They are also the most heavily discounted because their margins are so high. And KBB intentionally leaves that information out of their figures.

So all those $8-12k discounts on Ford/GM/Dodge pickup-trucks are not even taken into account for that average. Meaning KBB's numbers are complete trash.

I wonder if such statements are taking total cost of ownership into account? After subsidies it's more expensive to purchase than similar models and trim lines of gasoline powered cars, but electricity is much cheaper than fuel and you have much less maintenance to do as well.

I drive about 800km per month and I'd pay $10/mo in electricity to do that in a Bolt, versus $150/mo in gasoline for my current car.

> I drive about 800km per month and I'd pay $10/mo in electricity to do that in a Bolt, versus $150/mo in gasoline for my current car.

I don't get those figures at all... 800km (500 miles) is approx two-three recharges on the Bolt or about one tank of gas (depending on vehicle). Ignoring how incredibly cheap you are claiming electricity is ($5/full charge), there's nowhere on earth where a full tank of gas costs $150 (or even two full tanks).

Something went badly wrong when you came up with these figures.

The cost of petrol in Canada meets the figures quoted in the parent post. Gasoline is about $1.30/liter around major metros in Canada; a Toyota Corolla gets about 5.7 km per liter (highway). 800km would consume about 140 liters of petrol, about CAD182.

According to the US EPA, a Corolla gets about 30mpg, which Google tells me is 12.75 kpl.

> a Toyota Corolla gets about 5.7 km per liter (highway).

This article lists it as[0]: 4.9 L/100 km on the highway.

That's $52 Canadian, not $182 Canadia. I'm pretty sure that 5.77 km/liter figure you're quoting is 100 km/liter making your figure off by a huge amount.

[0] http://driving.ca/toyota/corolla/reviews/road-test/road-test...

Indeed, I just grabbed the first search engine result, which must have been wrong.

Here's the Toyota source: http://www.toyota.ca/toyota/en/vehicles/corolla/specificatio...

For the lowest model, for highway mileage, it's 6.5L/100km. CAD67 for an 800km highway trip. That is great gas mileage!

I'm still wrong. Even for a Ford F150, which gets 9.6L/100km, it's still only about CAD100 for the trip.

You won't get 200 km per charge in Canadian winter. Merely half of that.

My car gets 8km/L real-world, so 800km is about 100L of gasoline. At $1.50/L for its required 91 octane gas, that's $150.

Electricity is $0.08/kwh for the low tier where I live (Vancouver, Canada), so $4.80 to charge the 60kwh battery from zero.

The Bolt has an EPA range of 380 km. So, I was figuring that it would require two (and a bit) charges to hit the same 800km number.

8km/L is 2.35 miles per gallon. That's hilariously abysmal. Are you driving the space shuttle crawler?

Chevy Tahoe is the epitome of enormous gas guzzling SUV and it gets 8x that, at 16mpg.

Check your units. 8km/l is 19 mpg.

They probably confused l/100km with km/l. 8l/100km is quite a common fuel consumption figure (~30mpg).

I don't know how they didn't notice this though, because most people have a general idea of how often they fill their car and how much it costs.

there's nowhere on earth where a full tank of gas costs $150 (or even two full tanks).

Ever been to Australia?

AU$1.50 / litre, 60 litre tank, $90 per fill, two full tanks AU$180.

60 Liters == 15.8503 Gal $1 AUD == $0.76 USD $180 AUD == $136.8 USD

So it costs you $137 USD to fill up your large tank twice.

That's pricy, but not as bad as it sounds without unit conversion.

Ah, yeah, didn't even realise I was cheating a bit there.

> there's nowhere on earth where a full tank of gas costs $150 (or even two full tanks).

My vehicle holds 30+ US gallons. Filling up once is USD$75 at Costco (yesterday). Figure $90 at a regular station. (depending on the price of gasoline.) Filling up twice will probably exceed $150.

The 30+ gallons get me about 500-540 miles typically.

What ? Even in Germany with it's high fuel prices i will get 800km with 50-70 EUR of fuel. Charging that 60kWh battery would be around 16 EUR worth of electricity here but only results in half the range. So still cheaper, but nowhere near your numbers.

There are a ton of systemic subsidies for gasoline powered cars. It isn't irrational or unfair to subsidize a new technology until it has proliferated enough to challenge such an ingrained technology as hydrocarbon fuels. Costs will come down as volume goes up, and early state R&D gets paid down.

I tried to specifically point out that the tax credit accounting of "cost" is fine by me and that I am including its benefit in my numbers for comparison. My post is not about that.

Reply on news.ycombinator.com