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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 main
by craiglittle 3y ago
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/ https://hedgescompany.com/blog/2022/02/how-old-are-cars/
- bkjelden 3y agoThe 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).
- CraigRo 3y agoYou'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.