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Cars are getting more expensive, and people are keeping them longer. The average transaction price in the USA is $36,000. Even a base model economy car with fin

by AmVess 7y ago

Cars are getting more expensive, and people are keeping them longer. The average transaction price in the USA is $36,000. Even a base model economy car with financing is $25k. A nicely configured economy car will be $30k with financing. This is a lot of money for many households, and the sales prove that; fewer cars were sold last year than during the worst part of the last recession. In GM's case, not only are they going though a national downturn in sales, but their management is keen to outsource engineering to far cheaper companies overseas.

dragandj 7y ago
The other side of the coin is that what is considered a “a base economy car” in US would be seen as luxury house on wheels in most of the world. In Europe, most people drive 10-15K eur (including very high taxes and VAT) city cars which can carry 4-5 people quite comfortably at 120km/h. US always seemed to me quite exorbant when it comes to cars....
- dillonmckay 7y ago
  Not even other parts of the world. These US economy cars are very nice in terms of quality and features, so luxury cars are really competing for status now, not experience (except for dealership amenities). Combine that with a large used-car market, and unupgradeable infotainment systems, and it could be a tough sell.
  - Retric 7y ago
    The lines get a little blurry. The cheapest Acura (Honda’s luxury brand) starts at $25,900 which is easy to hit with any options on a Honda. Lexus starts at a more traditional 34k, but again it’s easy to get low 30’s with a few options on a Toyota.
  - bluGill 7y ago
    That is a natural progression. We could make a model T with only safety and emissions changes for pretty, lets say $5000 to give it a number. However if you buy a 7 year old car for $5000 it will have electric start, a heater (not to mention AC), a radio, likely heated seats and other luxury cars. So you are likely to not buy the base model new car. Thus all new cars need to provide luxury items, any luxury that turns out to be popular with customers quickly gets added to the base model (unless it is expensive even at scale)

by AmVess 7y ago

dragandj 7y ago

The other side of the coin is that what is considered a “a base economy car” in US would be seen as luxury house on wheels in most of the world. In Europe, most people drive 10-15K eur (including very high taxes and VAT) city cars which can carry 4-5 people quite comfortably at 120km/h. US always seemed to me quite exorbant when it comes to cars....

dillonmckay 7y ago
Not even other parts of the world. These US economy cars are very nice in terms of quality and features, so luxury cars are really competing for status now, not experience (except for dealership amenities). Combine that with a large used-car market, and unupgradeable infotainment systems, and it could be a tough sell.
- Retric 7y ago
  The lines get a little blurry. The cheapest Acura (Honda’s luxury brand) starts at $25,900 which is easy to hit with any options on a Honda. Lexus starts at a more traditional 34k, but again it’s easy to get low 30’s with a few options on a Toyota.
- bluGill 7y ago
  That is a natural progression. We could make a model T with only safety and emissions changes for pretty, lets say $5000 to give it a number. However if you buy a 7 year old car for $5000 it will have electric start, a heater (not to mention AC), a radio, likely heated seats and other luxury cars. So you are likely to not buy the base model new car. Thus all new cars need to provide luxury items, any luxury that turns out to be popular with customers quickly gets added to the base model (unless it is expensive even at scale)