More Than 80 Percent of Americans Can't Afford New Cars | Hacker News Reader

More Than 80 Percent of Americans Can't Afford New Cars

jalopnik.com

56 pointsharambae136 comments

"More than 80% of Americans have an individual income such that if they were the sole earner in their household AND chose to purchase the median cost new car, they would be spending more than a threshold chosen fairly arbitrarily by Market Watch" is the more accurate headline.

> Things get a little better when you look at combined household incomes, with 34.4% of U.S. households making more than $100k each year.

That number is more reasonable; given that they're assuming 5-year loans, and the average car in the U.S. lasts 14 years. 5 years is close to 34% of 14 years.

This seems like a trueism, doesn't it? Isn't this just the pigeonhole principle?

How do journalists get it so wrong? It's got to be intentional, or neglectful to the point of "I'm not even trying to understand; just tell me what to print".

Never attributes to stupidity (or negligence) what can be obviously attributed to incentives.

Yup.

But what is a reasonable percentile for someone to "comfortably" afford the monthly payment for a median new car? Maybe 80 is on the high side. But it certainly isn't 50%.

10% of income as a heuristic for a car payment isn't too terrible.

I’m not even sure it’s median. It only ever says average, and my totally uneducated anecdotal guess is that it’s a mean. There could be a significant disparity between the two, as you can get a new car for $15 K or $18 million.

There are only three cars you can get in the US for less than $20k new, and at least two of them are objectively garbage - the Kia Rio and Mitsubishi Mirage. I don't know anything about the Nissan Versa but it can't be that great.

I don't say this to be pedantic but to point out that cars across the board are more expensive than most people realize, and if you haven't bought a new car in a while, especially post-COVID, it can be a shock to see that a car with terrible infotainment, a cheap plastic interior, and cloth seats will run you $30-35k new. You want nice speakers? Leather (even fake)? A steering wheel that isn't made out of Fisher Price plastic? Let me know if you find something for under $50k new. God forbid you want anything approaching luxury like ventilated seats or rear seat climate control unless you're willing to drop $1k/mo on something.

I think it would be mean, but I don't know if it there would be much skewing. The most expensive make they include is Tata at a $105,708[1] average transaction price. If you just average all the entries you get $54,000, so it looks like they're using average transaction price by make and number of vehicles sold by make to get the overall average price.

https://www.coxautoinc.com/wp-content/uploads/2023/04/March-...

Some time ago automakers decided the most lucrative pivot was into finance lending. The average auto loan is over 60 months because automakers have decided to embrace nothing short of a rental economy where affordable cars are eschewed in favour ofa captive market of perpetual debtors.

The us auto lending bubble is in the trillions and among the most threatening thing anyone can imagine during a recession.

This automaker behavior is enabled by low financial literacy consumers. Here's a pretty dramatic chart of how things have been trending: https://fred.stlouisfed.org/series/MVLOAS

It actually took me a bit to break out of the lease cycle; I leased a nice-but-not-ostentatious Volkswagen right out of school that was quite a bit more than 10% of my take-home. Hedonic treadmilling what it is I wanted to buy something but didn't want to "downgrade" and ended up going through another 3 or 4 leases before I had finally saved up enough to buy something used outright at the end of a lease. And what would you know, because I wasn't leasing something I had all these termination fees I had never had before, pushing $1500.

It's easy to see how if you don't have the income to save and a cheap car lease is already pushing your budget you would get locked into not only leasing, but basically leasing from the same manufacturer or close competitors time and again.

That’s a sobering number even if not surprising given how ludicrously expensive new cars are, with every single item in them milked for price discrimination, floor mats, cargo covers, hooks, elbow rests, driving safety systems, all overpriced, and now subscription schemes as if you were driving an app rather than a real physical object.

My wife could use a new car and we can afford one but we're having a tough time justifying the price. The covid era inflation of vehicle prices hasn't really come back to reality and it feels like dealerships are playing some sort of false inventory scarcity game still. Not sure what to make of it but the market feels heavily manipulated against the consumer right now. More so than in the past.

The prices don't match the value except as a luxury item. Maybe that was a switch to make cars more profitable?

I see little appeal in a new car. Huge money sink, long waiting lists, sketchy dealers, sketchy warranties, software-based without being run by software companies, and all for what? To be able to travel in an unpleasant, dangerous road system.

Buying these feels more like an obligation to avoid, not something fun and worthwhile. Like checking the mail for bills.

We're also unlikely to see future wage gains to outpace the recent increases to cars and houses. We had a brief increase in wages, but inflation and/or the market quickly outpaced that.

I'd like to say things will get messy when so many things become unaffordable, but people said that 10 years (and probably further back), so where's the real incentive to make things affordable so long as businesses stay in business?

Despite owning an (old) car, I do try to take public transit and ride my bike. I would love to see local, state, and federal governments invest more in public transit and bike infrastructure. I don't expect everyone to live car-free, but some people already do, and it would be great to make that lifestyle possible for more people. It would also be great see families that own 2 (or more) cars feel comfortable dropping down to just one car. Safer bike paths and more convenient public transit can do that.

I have access to a “luxury” electric bus that costs $40 return.

Same trip in my EV costs $4 for electricity, $25 for parking and $30 for depreciation.

Bus should be faster because of dedicated lanes, but in practice it’s same.

I've been having this long term ongoing conversation with a buddy.

The theory is that if we were to make some "Life Calculator Spreadsheet" where you take all the various recommendations like this. Save x amount of your income, this 10% car rule, basic costs, taxes, etc. and then put in various lines for different incomes,etc. And see where it all lines up.

Our theory is that it's impossible. It's impossible for even an upper middle class income earner to follow all the rules of thumb, and still exist.

I suspect it is possible, but it really leads to a crash in the "life" spending. Restaurants, vacations, meat consumption, etc go back to the level when the rules were generated.

Both my grandparents were able to do the above, own a home, etc. and eat way more meat every day than I have my entire life. All without college educations, and on a single income.

The best example I've heard of this recently:

Look at the intro to the Simpsons. A blue collar worker, single income household with 2 kids could afford to own their own 2 story home, own two cars, etc. This was considered perfectly average and normal when the series started. It is not average now.

> This was considered perfectly average and normal when the series started

No it wasn't. They made a whole episode where a normal guy visits Springfield and points out the absurdity of Homer's 2 story home, two cars, etc: https://en.wikipedia.org/wiki/Homer%27s_Enemy

It was for my family. We were a single income earning, home owning, two csr owning on a single blue collar income household when the show csme out. Most everyone in our entire community was too.

That's not what they episode is about. That episode is not about blue collar workers wages, etc. It's pointing out Homer's Slothliness and Frank Grimes' work ethic and how it doesn't get him as far as Homer. It had nothing to do with my economic reference.

> This was considered perfectly average and normal when the series started.

No, it wasn’t average or normal or close to those for the time. The Simpson framing wasn’t around the then-present average, it was around a classic, decades older, media image (which wasn’t average for the time it was originally framed, either.)

Fair enough, my point still stands because the decades older from the Simpsons people were my grandparents

No, your point still fails because the decades-older media image wasn't average for its time of origin, either.

It was average.

"The household median income in the U.S. in 1950 was $2,990 — roughly 40% of the median home value of $7,354 at the time, according to census data. By 2010, household median income was $49,445 — or 22% of the $221,800 median home value. The median income in 2021 hovers around the same percentage of median home costs."

https://orchard.com/blog/posts/how-much-the-typical-home-cos...

The median home in 1950 wasn't a two-story detached suburban McMansion.

Neither is it today.

Most homes built in and since the 1950 are still standing and inhabited.

I'll gladly buy one of those, where can I buy one?

But a median home back then was about 1000 sqft.

https://www.newser.com/story/225645/average-size-of-us-homes...

I'll gladly take one of those.

Where can I buy one?

$7,354 in 1950 is $96,080 today. There are $100k homes out there if you don't care about location.

Zoning laws and building permits block anything that's significantly cheaper.

Absolutely. I will say though, if you have enough money coming in to afford a small payment, buying a ~3-5 year old car with a loan vs a much older car with cash could be a very good idea for a huge portion of people out there.

I was told "just buy used cars with cash!" for so long when I was younger. "You don't want a loan!" I was told. I get the idea here, but wow I must have lost over $10k from ages 16 to about 22 years old on multiple "cheap" 5k cars that just absolutely died on me back to back. At a certain point I just said screw it, put down 50% on a 3 year old civic, and I haven't had one mechanical problem in going on 5 years. Paid it off in 2 years. Best decision I ever made.

You have to do the leg work of researching the make/model and getting it checked out by a mechanic or be mechanically inclined yourself to know whether you are buying a lemon. Did you do any of these things?

This may have changed now with used prices what they are, but back when you could get used vehicles for $5-10k it simply wasn't worth the time. Yeah you can save a few thousand dollars but when you're looking at something that's $10k and has a 20% chance of being a lemon, or a $15,000 certified Civic/Corolla/whatever, like you said unless you're already mechanically inclined you're better off just buying the newer, nicer, and more stable car.

Perhaps. Scotty Kilmer the wild expert mechanic on YT disagrees generally that new cars are any good due to the over-reliance on cheap plastic components, especially on "luxury" cars like Lexus, where there is more planned obsolescence. Ancient Toyota Corollas tend to last for a very long time. If someone flips their car for a new model every few years and doesn't care about money, then they can ignore long-term durability. Most people are better off finding a vehicle for the long-term for their needs (preferably an EV) while minimizing the TCO.

This is the correct answer. Carfax isn't enough. Deep due-diligence of a particular vehicle is essential, and also checking the repair history of the make x model x year in Consumer Reports.

In general, older people's final cars (if regularly driven at least some) tend to be in excellent condition.

Most durable goods tend to (but not always) result in a lower TCO when purchased used.

I always took the cars to mechanic and got the okay in each case, but either the mechanics I took the cars to were not looking for the right stuff, or I was just unlucky with whatever came up.

If I had a good mechanic in my family I’m sure I would have been good.

That's a bummer I think you got unlucky with your mechanic/car combo. Its tough!

Daddy always said that only a sucker buys a new car. Let some other fool take the depreciation on it.

I usually buy them at 10 years old, usually paying 1/3 of new, and run them for another 10 years then sell them for roughly 1/2 of what I bought them for.

Sure, I'm the fool taking the second decade of depreciation but that's far less than the first decade and the vehicles I choose are generally very reliable out to 20 years with little maintenance. After 20 years, I've found they generally start to nickel and dime you or leave you on the side of the road.

New cars are for suckers, but used cars aren't the deal they once were. https://site.manheim.com/en/services/consulting/used-vehicle...

I used to hear this wisdom when I was a kid. But, it hasn't been my experience. I'm not too picky, so I just buy the last year's model of the 3rd best car in its class with the lowest APR deal. I drive it until the warranty is up and sell it to Car Max, and on average it only costs me $2-3k a year. I'm sure dealing with used cars saves slightly more than that, but is it worth the hassle?

We spent a decent amount of time discussing this is one of my econ classes in college, and while I can't speak to this person's experience, statistically speaking, your best bet strictly from a financial standpoint is to buy a 2-3 year old vehicle and run it until it is about 10 years old, then sell it. Beyond that you start running into mechanical issues that will wipe out any savings over time.

Unless it is a Toyota eg Corolla which last much longer than 10 years.

This makes sense to me. The average age of cars on the road has increased by 10% (~1.5 years) in the last decade, reducing the number of new cars needed to maintain equilibrium.[1] Wealthier people buy new cars (and pay the absurd premium) which then trickle down to the rest of the market through secondary sales.

The reality is that a five-year-old car today is most likely more reliable than a new car built 25 years ago. A similar dynamic can be observed in the cell phone market.

1: https://hedgescompany.com/blog/2022/02/how-old-are-cars/

The premium isn't really absurd the way it used to be.

Across a number of segments, a 3 yr old used car with 30-50k miles will still bring close to 90% of its original MSRP on the used market.

Gone are the days where a car lost a third of its value when you drove it off the lot (for most segments).

You've had extremely high inflation over the past 3 years, along with a shortage of used cars. I had one totaled during peak insanity and got 7% more than I bought it for (used) 6 years earlier. But real (inflation adjusted) depreciation curves are still in existence, if slightly flatter as the cars have become more durable.

If true, at what point do they start accepting they should push for government policies that would reduce levels of car dependency in their towns and cities, and realistically enable alternative forms of transport?

In the US? Never. It is sadly embedded in the fabric of society, just like personal weapon policies.

And yet in that most famous of US cities - Manhattan - car ownership is barely above 20%...

Car culture wasn't embedded into society before WWII. Before then, the USA had an incredible network of railways, and many cities had pretty decent tram systems. Those were abandoned or ripped out as car manufacturers and policy makers pushed a pro-car agenda. Car manufacturers became extremely wealthy as a result.

I don't disagree with you that it feels embedded (and indeed, the American suburbs are particularly dependent on cars), but I do disagree that it could never happen. The USA has made big dramatic changes in society before, and big changes are possible again. In fact, I will say such changes are inevitable! It just depends on whether we are intentional in making those changes ourselves or if they are forced upon us by hitting the limits of an unsustainable arrangement.

I have always wondered who buys new cars anyway.

I am fortunate to be a high earner in the UK relatively speaking (top 2 or 3%) yet the idea of spending £15-20k on what is essentially a "starter car" (e.g. Toyota Yaris) let alone £30-35k on a normal petrol family car (e.g. ford focus) is just crazy to me. What a waste of cash. EVs start at more like £40-50k for bottom-of-thr-barrel brands like Kia or Hyundai, let alone a premium marque. Prices seem very high.

Who are buying these new?!

Someone must be as they end up on the used market. I presume they are leased as company cars or something first.

European cities are outstanding in terms of public transportation. A significant portion of the developed world has to deal with long, frequent commutes, or less-dense, less-reliable public transportation.

In the aggregate, Americans, Aussies, Russians, Chinese, South Africans, Brazilians, etc need cars in a way that English, French, German and Italian generally don't.

>European cities are outstanding in terms of public transportation.

The UK isn't. I mean it's better than the US but way behind the rest of Western Europe.

You're missing my point. On a world scale, the UK has outstanding public transportation.

Corollary: much of the world needs a car in a way that you don't.

Well you lumped the UK in with France, Germany and Italy. I'm not sure about Italy but the UK is way behind France and Germany.

>Corollary: much of the world needs a car in a way that you don't.

I live without a car in the UK and can tell you it isn't easy. I manage because I'm prepared to ride a bike on reasonably busy roads and I'm time rich. The public transport is irregular, indirect and unreliable. The only exception is London.

Yes, I’m speaking in generalities. Your specific case isn’t terribly relevant.

I don't know about UK, but among people I know in CA it seems like the poorest are the ones buying fancy new cars with huge, long-term, high interest loans. The people in my circle who seem to have their feet under them financially are driving cheap used cars.

I have historically bought used, but I bought a new car during the pandemic.

Trade in values were good, financing rates were still good (at that point), I got to skip the mental load of evaluating the condition of the vehicle, it was a treat to have new features, and the fuel economy was superior.

I would consider both new and used vehicles for my next purchase. There are tradeoffs either way.

In my experience, a majority of new car "purchases" are people barely able to afford them, financing them at an extra $300 - $800 / month. Housing purchases have ended up so unreachable in the west coast that a new car is the next big item for a status boost.

Nobody is paying $800 extra every month on their car.

Yes, there are many people who have leases or financing at $800/mth for just a car, instead of a paid off $5k econo-box. Extra, meaning it's additional on top of their fixed survival expenses.

Is this the fringe r/personalfinance opinion that you should buy some 15 year old car in cash and never ever have any sort of car payment? Having an $800/mo car payment and "paying $800 extra every for a car" are objectively very different things.

And implying that you can get any sort of reliable used vehicle for $5k just shows that you haven't done this in 15-20 years or so. I'm not even sure you can get one for $10k now and if I was in the market I'd be budgeting $20-25k at an absolute minimum.

> reliable used vehicle for $5k just shows that you haven't done this in 15-20 years or so

I purchased an '07 Prius for $5k just a few years ago. They go for ~$7k now. These cars are low registration cost, very low insurance cost, fuel efficient (45mpg), very low maintenance, and high longevity (I've personally witnessed them hit 550k miles).

That is the baseline in which, yes, an $800/mth payment is mostly financially excessive; a luxury. Especially at 6 - 15% car loan interest these days.

We bought a new Honda Fit for $18.5k in 2014. It was a full redesign with nice improvements compared to previous model years (reverse camera, bluetooth audio, etc). Since then we've averaged 33 mpg with zero garage visits outside of routine maintenance. We probably could have saved some money by buying used instead, but over a decade of ownership I doubt that it would amount to more than a few hundred dollars per year.

We don't buy. We lease and change for a new car every 3-4 years. I consider vehicle the same type of expense as Netflix. More expensive of course but it just goes to the same 'expense' category as other subscriptions.

At least in the UK leasing seems like a real waste of money?

So that ford focus is £300/month for 4 years of use, plus an initial fee of £2k. So after 4 years you've spent £16k and then have no car. Why not spend that 16k on a used car?

My last car I bought used was £7k and 3 years old and I've had it for 11 years now - it still has about £1k of value left in it, so it so far has cost me about £500-600 a year with only basic maintenance costs.

I figure the most leases are taken out by businesses.

Chevrolet once had the slogan "Basic Transportation". What went wrong?

If some American company doesn't get auto prices down, cars will come from BYD or Kia.

What went wrong is what went right. Cars last a lot longer now. The market for basic transportation in the US is met by the pre-owned market and a few cheap new models like the Mirage and Versa.

That's what US auto companies said before Japanese imports showed up and started killing Detroit.

That's why the used market is 3x as big as the new car market, and cars are staying on the road for 20+ years.

The cynic in me feels that's part of the reason why the push for 100% EV's is so strong. They come with much shorter effective lifespans, subscriptions, repair restrictions, etc.

Aren't electric vehicles much cheaper per mile over their lifespan? This report claims electric cars are half as expensive: https://advocacy.consumerreports.org/wp-content/uploads/2020... It doesn't seem to include purchase price or fuel costs which might push it even more in electric vehicles' favor.

It definitely seems plausible that BEVs are a better value overall, but I wonder how many EVs have gotten to 200k to make a comparison, and if the comparison is just EVs in general vs gas cars in general which you would figure is somewhat skewed. The note at the bottom about PHEVs coming out to a slightly lower amount is interesting as well, and makes me think there might be more at play than just ICE vs BEV.

Automakers have put plenty of subscription features on other cars for 20+ years. There's plenty of OEM-only parts and proprietary tooling needed for traditional vehicles, automakers don't need EVs for that. EVs need fewer parts thrown at them generally speaking... and automakers known for making vehicles with shorter lifespans do not have a good track record for financial success.

Besides, I'm not sure there even was much of a push for EVs among traditional automakers. Most have been very hesitant to offer EVs and those that do have only done so lately after seeing Tesla eat away at their market share.

Responsibly afford

I came in here to say this, the title on the article itself is clickbait.

Regardless, someone has to buy the brand new car first before you can buy it used.

Imagine that people were more responsible in their spending habits. The demand for new cars would drop like a rock, and we would have to transform the way urban planning and transportation is done in this country.

No. The types of care that get manufactured would change.

Scroll down in the comments in the article for a table of affordable cars. The shocker headline is based on cars costing more than I would ever consider, with my 200K+ household income.

That's decades worth of wage stagnation for ya.

No surprise that the car companies have all sought their luck in China, as the domestic markets have all but dried up.

You got downvoted but wage stagnation is real, for example:

https://www.pewresearch.org/short-reads/2018/08/07/for-most-...

Also:

  After adjusting for inflation, wages are only 10 percent higher in 2017 than they were in 1973, with annual real wage growth just below 0.2 percent. The U.S. economy has experienced long-term real wage stagnation and a persistent lack of economic progress for many workers.

https://www.brookings.edu/articles/thirteen-facts-about-wage...

Thank the gods that the Fed has done an outstanding job stabilizing the dollar. I can't imagine what the country would be like if the Fed was never created and we still used shiny chunks of metal for money. /s

I think it's less about the Fed and more about the erosion of workers' bargaining power in the form of declining union membership and maybe more large employers who can push wages down due to labor market monopsony.

Since the creation of the Fed the dollar purchasing power (real value) has eroded to 98% of its pre-Fed value. Wage value wouldn't be decreasing if it weren't for the Fed. There wouldn't be an argument about "real wages" decreasing. Without the Fed every person would tangibly feel a decrease in the weight of their wages and resist it at every turn. The Fed allows you to be paid the same amount of dollars so you don't notice the decrease in the value you are being paid.

Any talk about real wages decreasing without addressing the impact of the Fed on the economy is missing the mark.

Wages would go down in dollar amount, rather than purchasing power if the dollar wasn't devalued.

Noticing that you're being paid less doesn't mean you're paid more, or even the same

If you showed up for work and your boss said they were going to pay you 2% less today how would you respond? That is a broken contract.

Wages before the Fed were weights of gold or silver that were called dollars. If I agreed to work for an ounce of silver a day I'm not going back if the company decided they were just going to pay me 3/4 an ounce instead.

You will go back if you have no other company who would pay you more than 3/4. And that’s what you get when there is no inflation but the employer side of the labor market becomes more concentrated or employers collude to only ever pay 3/4.

You have a very different model of human behavior than I do. Businesses don't fuck over their employees if they want to continue having employees. Also, in this scenario my savings doesn't also depreciate. When the employer decides to pay less I still have the full value of what I have already earned.

With inflation, my current earnings are reduced and any dollar savings I have are reduced.

I’m not talking about human behavior so much as about market structure. You go with the best offer that you get. If 3/4 is the best offer because your employer has driven labor-market competition out of town or because there wasn’t much competition in town to begin with (think Walmart or Amazon warehouses), then you need to take 3/4 or else be unemployed.

Savings help you for a while but if you’re like most workers, eventually you’ll need a job again.

But I think you’re also right in that inflation helps employers lower wages without being upfront about it.

And shockingly, that is despite a long-term trend in worker productivity of ~2% YoY [1].

All these productivity gains were siphoned off by the ultra-rich elites instead of going to the workers.

[1] https://www.mckinsey.com/mgi/our-research/rekindling-us-prod...

This is bad news. I guess we will have to work towards funding public transit now. Dang!

Basically total cost of ownership has gone up! If you add up, Purchase Price + Repair Cost + Gasoline Cost. Not to mention, sale tax on each of the above (Higher the cost, Higher the tax).

Having no car, or maximum 1 car per family is probably a best option.

I bought two new cars 10-11 years ago.Both Toyotas. Neither has ever needed a repair that wasn’t my fault or normal wear (batteries, oil, tires). When washed and cleaned, they almost feel like new again and I wouldn’t be surprised if they are still in great condition years from now. I believe my experience is fairly typical.

Both were purchased with 72 month loans at negligible interest rates.

So for years now, my marginal cost of driving has been basic maintenance, insurance, and gas. The only fixed cost are government taxes.

I’ve thought about buying a new car over the years. But every time I look, it just doesn’t make sense to do it. They have less space inside, touchscreens, privacy invading sensors, high price tags, higher interest rates, higher taxes, and higher insurance rates.

Base models of affordable cars are cheaper than ever, especially for how much car and quality you get. Its the options that ruin the affordability. I'm talking Corolla LE, Maverick XL, etc.

100% of americans shouldn't buy new cars when "certified pre-owned" (<5k milage) is available

How exactly are the cars becoming “certified used” if 0% of people are buying them new..?

Corporate fleet vehicles (rental cars, 'company cars') are the main source.

About 25% of car sales are new cars.

https://www.statista.com/statistics/183713/value-of-us-passe...

So?

Not always the case recently. Shopping this year I found that <2 year old used cars were often more expensive than new cars due to lack of dealer incentives and concessions on financing. A similar dynamic is emerging for houses [1] as homebuilders have more reasons to sell their inventory than existing homeowners do.

[1] https://www.cbsnews.com/news/real-estate-old-homes-now-cost-...

Even that is debatable. My newest car is a 2006 model year. I bought it a couple of years ago. It's perfectly reliable, I paid $4,000 for it.

Have you tried shopping for a car in the last 3 years? Because if you had I’d expect you wouldn’t be making this statement. In my area many used models are MORE expensive than new ones due to onerous wait times and dealer shenanigans.

The new car our hypothetical American is buying in the articles is a whopping $48k. That's an insane amount of money, and you can get a very, very nice new car for half that price. How about the Honda Civic, MSRP $24k?

Two questions spring to mind. What on earth are Americans buying that the median car price is so high? What percentage of Americans can afford a new car if Jalopnik picked an affordable new car?

They're buying trucks and SUVs. The average non luxury new car purchase in the US is pushing $50k.

Most people don't need trucks, they just want them for whatever reason. Even SUVs, most people I know who have one don't need it

Yeah, my 2020 Subaru Impreza is great and cost under $24k.

The median new car price sounds so high because it only includes people who buy new cars. At the lower end of the new car market, those cars are competing with used cars. People often choose to buy a more up-market used vehicle than to buy cheaper new cars.

Still, for the median income American that would mean working almost half a year to solely pay a Civic (not considering gas, services, etc) sounds insane.

You probably are not aware of car prices in the USA. In the old times (let's say 10 years ago), you could still buy a reasonable car for 24K. Over time these cars were been progressively replaced by more expensive models, and nowadays you probably cannot find a good car for that price anymore (except for basic entry level models). The pandemic and the carmakers decision to move to EVs has consolidated this price change.

I don't know anyone who has been able to buy a vehicle for MSRP in the last three years.

With dealer markup, tax, and title, that $24k figure is more like $30k.

I can't quite figure out what the average transaction price measure KBB is using here is. going by their tables by category (for example, an average of $26,379 for compacts)[1] and that the price is now below sticker[2], it looks like they're not using the OTD/TTL cost and just the portion related to the vehicle.

[1]https://www.coxautoinc.com/wp-content/uploads/2023/04/March-...

[2]https://mediaroom.kbb.com/2023-04-11-After-Nearly-Two-Years,...

What’s the number for houses?

3x that (30% instead of 10%) -- but in general, nobody making minimum wage can afford a studio apartment anywhere in the US.

https://www.thebalancemoney.com/how-much-rent-can-i-afford-o...

and

https://www.realestatewitch.com/house-price-to-income-ratio-...

Rough math:

13.2 M new cars sold last year in the US; 66 M people can afford new cars in the US if 80% is accurate. The market still holds then as corporate buyers are also in there.

I understand the argument is about affordability of goods but I don't see the numbers coming down.

The solution is clear. We have to ban the production of luxury cars. It should be illegal to build any car that costs more than $15k

Or just tax the hell out of large, non-commercial passenger vehicles (SUVs, pickups) like every other reasonable country on Earth.

The heads of US people might explode even if a politician suggests that.

We have to? Because people make unwise decisions, we have to have the government prevent them for their own good?

Yes, they're making unwise decisions. No, you do not get to make that decision for them, no matter how right you think you are.

Ok, government should then let people sell fake products and food at your doorstep.

False dichotomy. I can be against letting people sell fake products and be against forcing people to not buy the kind of car they want.

In fact, that's so uncoupled of a false dichotomy, it's more like a non sequitur. I wonder how you got there.

Buying fake products is an unwise decision, in your belief system it is wrong to stop people from making unwise decisions after all it is their money and they should be allowed to use it for whatever reason.

>No, you do not get to make that decision for them

Sorry to tell you this but governments regulate huge parts of your life for the sake of the common good.

Kia captured the affordable, no-frills shitbox market pretty well. They were then declared culpable for not including anti-theft options because West Coast cities can't keep their criminal car theives on a leash.

It was Milwaukee originally (the Kia boys) although it probably spread to the west coast.

I agree they probably should’ve spent the $200 on an immobilizer. In fact even that amount to add it seems a little high but it’s the number that’s been tossed around a lot.

People don't have to buy premium cars or EVs.

There are still Civics and Corollas.

Bells and Whistles and EVs have driven up the average price for a new car ridiculously.

Civics and Corollas have gone up quite a lot.

Minimum price on a new Corolla is $23K. New Civic: $24K. Source: just checked the respective websites.

That implies a $50K annual income, by the article's method.

Check the prices at the dealership(s) not the MSRP on the manufacturers website.

As the other poster said, the price on the website is FALSE. With few exceptions you cannot buy a new car for the price listed in the website, it is always several thousands more.

A lot of the bells and whistles are regulatory requirements.

I'd love to be able to buy the equivalent of a new 1980's Corolla, or a MKII VW Golf. Can't because it's impossible to sell such a car new today.

A brand new base trim Corolla is still something like $25k.

Even a yaris costs 15k new, a civic is almost 25k

Min wage will net you about 15k per year, if you don't spend a cent on anything

As a teen earning min wage-ish, we aimed to get 10-15 yr old beaters, not new cars.

Interestingly, in late 2005, a base 2005 Infiniti G35 6MT Sport Coupe was $31,625 while a loaded 2005 Honda Accord EX was $34,565. That was the only vehicle I bought new. I have an '85 VW Westfalia now where most parts are NLA. :]

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