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Comment by StevePerkins | Hacker News Reader

> With the average new car priced around $37500

That's absolutely jaw-dropping. I assumed that was a made-up Internet stat, and was going to ask for a cite, but some quick web searching confirms it.

I'm a used car guy, typically buying vehicles 2-3 years old, and would never contemplate paying above $20k. Even a brand new sedan (e.g. Nissan Altima, Honda Accord) is around $23k MSRP. A crossover family vehicle (e.g. Nissan Rogue, Honda CR-V) is around $25k.

What on earth are people purchasing, that the AVERAGE price is a low-to-mid range Mercedes?

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Pickups and SUVs with insane markups and profit margins.

A Ford F150 Raptor's MSRP is something like $60-70k.

>Pickups and SUVs with insane markups and profit margins.

dumb question: why do pickups/suvs have insane markups/profit margins?

There's a demand for them. SUV are quite popular for families who don't want to "drive minivans" but they still want a large vehicle to fit in everyone. Others buy it because of the perceived safety, larger vehicle so they feel more "protected".

Trucks are just what you drive in rural areas. And there are a lot of small towns and rural areas. Companies noticed that people are shelling out $40k for them, so they started selling them for $50k. $50k and they are being bought still? Ok, time to charge $60k, and so on.

> Others buy it because of the perceived safety, larger vehicle so they feel more "protected".

It's not just perceived safety though. Heavier cars are objectively safer when crashing into a lighter car. IIHS did several tests on this. The fact that SUVs are higher means that they have an advantage if crashing head on with a sedan.

It also means less safety for everyone, though. Especially pedestrians and people on motor(bikes) are endangered by heavier, bigger cars. Not counting emissions and climate change from moving a ton of decorative metal around.

I don't disagree. But I don't see a better solution. Why would someone with a family take a risk for instance? I know that Volvo are taking safety very seriously, and want to have 0 fatalities (even pedestrians) sometime this coming decade.

I think emissions can be improved with things like hybrid drive trains and electric motors.

Think about this - the same amount of tech, of engineering, of “stuff” like window regulators, speakers, steering wheel, etc goes into a subcompact 4 door as does a 4 door SUV, minus cheap stuff like body panels interior carpet.

They have them because people are wiling to pay for them. People are willing to pay because they think they are worth it. I would guess that the fact they are bigger make people think they cost a lot more to build, when they do not.

Because that’s where manufacturers need to make money. These things typically have fuel economy numbers at or below CAFE standards, so they’re banking on these and selling more efficient vehicles closer to cost.

At least some part of it, and perhaps a majority of it is due to chicken tax. Trucks in the US enjoy a level of protectionism few other industrial products do. US manufacturers, as a result, can increase their margins without losing market share to foreign competition.

https://en.wikipedia.org/wiki/Chicken_tax

Because they can?

As utility vehicles, they also tend to have really good resale value, so they might not be quite the poor 'investment' you imagine.

Because the resale is good, margins can creep up. There's nothing holding them down.

My brother in law probably makes $80k and my sister about the same. He's got a $50K truck and she's got a $40K SUV and they were bragging to me about the deals they got on them. Granted, their house note is very respectable due to the time they bought the property and built their house, and I'm sure that his parents have helped out given that he's an only child and they both make good money. Even still, they each have 20 minute commutes and are rarely in the vehicles other than grocery shopping otherwise.

STILL... I'm paying about $500 a month on my car when you count insurance and car note, and mine is only $24K. The only way anyone is ever getting me to pay more than $30K for a vehicle in this day and age is if I win the lottery or if I absolutely HAD to have a more expensive vehicle to do my job (such as towing or sales).

Are "house note" and "car note" regional terms? I don't think i've ever heard them before, but then i don't live in the US.

"car note" is a pretty common term, at least in the Southern US, but I haven't heard "house note" before.

House note is also common, at least in the New Orleans area

You should visit Houston then. Almost everyone drives an SUV or pickup..

"What on earth are people purchasing, that the AVERAGE price is a low-to-mid range Mercedes?"

I think that's a classic median vs average situation. The median purchase price is probably a lot lower than $37500, while the average is skewed up by a minority of buyers purchasing very expensive cars.

> Even a brand new sedan (e.g. Nissan Altima, Honda Accord) is around $23k MSRP. A crossover family vehicle (e.g. Nissan Rogue, Honda CR-V) is around $25k.

An accord/ultima start around that price for the base models and the lowest package. I doubt most people buy those models. People like options and get plenty of them.

Also keep in mind you pay a ton of tax and also registration. Registration is insanely expensive in states like CA.

The price of a low mercedes is much higher than that, not sure where you're getting your numbers, but they're off, WAY off.

There's significantly higher demand for used cars than there was a decade ago, which has allowed banks to extend finance terms out to 96 months.

For example, take a look at this depreciation curve for a Ford F-150: http://usedfirst.com/cars/ford/f-150/ There is very little depreciation from 2017 - 2015, meaning that if you keep the truck in good condition, you can basically drive a truck for just its operational costs (fuel, maintenance, etc.) Not a bad deal assuming market demand stays hot for these vehicles.

The auto industry is increasingly regulated and cheap cars are becoming illegal to produce

Average isn't median, but still.

F150 was one of (if not the) most popular vehicle(s) sold in the US for a long time. It's not cheap.

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