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> 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, b

> 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?

jstarfish 7y ago
Pickups and SUVs with insane markups and profit margins. A Ford F150 Raptor's MSRP is something like $60-70k.
- deleted 7y ago
  [deleted]
- gruez 7y ago
  >Pickups and SUVs with insane markups and profit margins. dumb question: why do pickups/suvs have insane markups/profit margins?
  - itsaidpens 7y ago
    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.
  - rdtsc 7y ago
    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.
    - apta 7y ago
      > 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.
      - blackbrokkoli 7y ago
        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.
        apta 7y ago
        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.
  - coredog64 7y ago
    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.
  - megaremote 7y ago
    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.
  - rconti 7y ago
    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.
  - smnrchrds 7y ago
    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 https://en.wikipedia.org/wiki/Chicken_tax
- deleted 7y ago
  [deleted]
MisterBastahrd 7y ago
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).
- Bombthecat 7y ago
  You should visit Houston then. Almost everyone drives an SUV or pickup..
- twic 7y ago
  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.
  - kingnothing 7y ago
    "car note" is a pretty common term, at least in the Southern US, but I haven't heard "house note" before.
    - MisterBastahrd 7y ago
      House note is also common, at least in the New Orleans area
timtim51251 7y ago
> 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.
mrb 7y ago
"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.
Donald 7y ago
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/ 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.
pascalxus 7y ago
The auto industry is increasingly regulated and cheap cars are becoming illegal to produce
loeg 7y ago
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.

jstarfish 7y ago

Pickups and SUVs with insane markups and profit margins. A Ford F150 Raptor's MSRP is something like $60-70k.

deleted 7y ago
[deleted]
gruez 7y ago
>Pickups and SUVs with insane markups and profit margins. dumb question: why do pickups/suvs have insane markups/profit margins?
- itsaidpens 7y ago
  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.
- rdtsc 7y ago
  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.
  - apta 7y ago
    > 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.
    - blackbrokkoli 7y ago
      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.
      - apta 7y ago
        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.
- coredog64 7y ago
  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.
- megaremote 7y ago
  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.
- rconti 7y ago
  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.
- smnrchrds 7y ago
  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 https://en.wikipedia.org/wiki/Chicken_tax
deleted 7y ago
[deleted]

MisterBastahrd 7y ago

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).

Bombthecat 7y ago
You should visit Houston then. Almost everyone drives an SUV or pickup..
twic 7y ago
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.
- kingnothing 7y ago
  "car note" is a pretty common term, at least in the Southern US, but I haven't heard "house note" before.
  - MisterBastahrd 7y ago
    House note is also common, at least in the New Orleans area

timtim51251 7y ago

> 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.

mrb 7y ago

"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.

Donald 7y ago

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/ 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.

pascalxus 7y ago

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

loeg 7y ago

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.