Tuesday, February 19, 2013

Is This A Consequence of Cash For Clunkers?

My son is about to get his first job after graduating (cum laude, let me mention) and wow!  Chevrolet's base sedan used to have an MSRP just under (barely under) $10,000.  Not now.  And the situation with Nissan, Suzuki, and the other slightly better but more expensive cars has also gone up dramatically.  A few years ago you could buy a year or two old car, still under factory warranty, and save a couple thousand dollars.  Not any more!

You would almost think that the car makers aren't hurting.


Billy Oblivion said...

There's a second side of this--cars last a *lot* longer today than they did when you and I were learning to drive and learning about cars. Even 10 years ago I had a guy tell me "don't EVER buy a car with more than 60K on the clock". This was an era where Hondas, Toyotas and Subbarus routinely got over 150k when well maintained.

Of course, he drove a Ford Mustang, so maybe that's why.

I wouldn't hesitate to buy a 10 year old car for commuting, if it looked clean and had any sort of maintenance records.

Dave said...

It's been quite a while since the MSRP of Chevy's base sedan was under $10K. I'm pretty sure that last happened before Cash For Clunkers. A higher price for used vehicles could certainly be a side effect of Cash for Clunkers.

SJ said...

Last time I saw a GM sedan with less-than-$10000 MSRP was the first year that the Saturn was offered.

Probably '96, if I remember right.

Of course, I wasn't car-buying at the time. I was a teen.

And I haven't been following the base price of new automobiles very closely since then.

From my perch in the Auto Biz, I noticed that all charts about sales of new cars in the U.S. have a huge drop during 2008-2009 time period. The trend shows a significant increase from that low point to present, but an almost-flat trend from 2005 to present.

Interesting thought: people who are in the market for approximately-5-year-old used cars are now seeing that decline in new car sales.

Still, there's been more volatility in the used car market after Cash-for-Clunkers than in the new car market. And the used market changed from the 90s to the present. Mostly because the Detroit 3 manufacturers pushed hard on product quality and longevity. (See Billy's comment above about expected durability.)