I’m thinking a lot about vehicle affordability lately and when, if ever, cars will become affordable again. The numbers are improving, but for various reasons it’s becoming harder and harder to get a good new car at a reasonable price. A few years ago there were numerous cars you could buy under $20,000. Today, there’s only one.
While we’re at it, we’ll take a look at EV demand and why it’s so much more geographic. Plus, we’ll talk about how Lotus is doing way better and Lyft is doing, well, not way better.
God Bless The Mitsubishi Mirage
The little Mitsubishi Mirage is not the nicest new car on the market. It may, in fact, be the least nice. But it is reliable, reasonably efficient, and reasonably safe, with more than two doors and a five-year bumper-to-bumper warranty. Are there better used cars for the same $16,245 starting price? Absolutely. Do some people desire the lack-of-worry that comes with a new car? Yes. [Ed Note: And there can be financing-related reasons to also go new vs used. -DT]. If you’re one of those people and you have less than $20,000 to spend on a car, well, check out the Mitsubishi Mirage.
The massive marketplace site Kelly Blue Book has its monthly market insights report out and there’s a little good news there, with the average transaction price (ATP) down about 0.7% month-over-month to $48,334 and only up 0.4% year-over-year. For reference, the ATP is the price someone actually pays for a vehicle, not what it’s listed for. These numbers are not that surprising given that inventories are rising and we’re into the summer selling months. Here’s the paragraph that knocked me on my seat-warmer this morning, with all the bold my doing:
“[U]nlike five years ago, only one model transacted below $20,000 in July. The Mitsubishi Mirage’s average transaction price in July is reported as $19,205. In July 2018, there were a dozen vehicles with ATPs below the $20,000 barrier. In comparison, many of today’s smallest vehicles, including the Hyundai Venue, Kia Rio, Nissan Versa and Toyota Corolla, are all transacting well over $20,000. Notably, and in stark contrast to the under $20,000 category, there were 32 vehicles in the Kelley Blue Book database transacting on average over $100,000 in July, which excludes super exotics from Ferrari, Lamborghini, Rolls-Royce and the like. In comparison, five years ago in the summer of 2018, there were only 12 vehicles in the over $100,000 category.“
Yikes. Like I said in yesterday’s trimflation article, production has quite clearly shifted towards the higher margin end of the market and this will continue to have impacts on what shows up on dealership lots (and what stays there). My sense is that there’s an opportunity for vehicles like the new Trax and Maverick to continue to pick up market share.
There’s a small indication of this trend in more of the data:
The high-end luxury car segment had the highest incentives in July 2023 at 9.6% of ATP, followed by luxury cars at 8.4%, hybrid vehicles at 7.7%, entry-level luxury cars at 6.9% and electric vehicles at 6.7%. Full-size luxury SUVs, high-performance cars and sports cars had some of the lowest incentives in July.
Unsurprisingly, over the last year Tesla has seen the biggest drop in ATP (-19.9%) and Mercedes had the biggest increase (18.8%).
Is EV Demand Really Softening?
Here’s a fun headline from Automotive News this morning: “EV stockpile is evidence of growing pain, not demand dip, experts say”
We talk and think a lot about where electric car demand really is, but the market is super young and most of the players getting into it who are not Tesla are essentially EV newbs. Perhaps, rather than kvetching about increased inventory, we just accept it as part of the transition and not sweat the inventory?
That seems to be the point of the article and it’s an interesting counterpoint to the prevailing concern that we’ve tapped out demand for EVs or, at least, for $60k EV crossovers. Here’s Tyson Jominy from J.D. Power in that AN article:
EVs are an expanding slice of the overall market but until recently were hindered by short supply. Now, the EV sales share is outpacing the inventory share, said Tyson Jominy, vice president of data and analytics at J.D. Power.
“The story that demand for EVs is slowing is patently false,” Jominy said.
Helped by robust sales related to changing federal zero-emission vehicle sale incentives this year, EVs made up 8.6 percent of retail sales and 6.7 percent of available inventory in June, according to J.D. Power.
The article goes on to talk to dealers in Texas who, yeah, are not finding as many buyers for electric vehicles as dealers in California. This makes sense to me and I do think we probably overestimate the impact of a couple of months of inventory and, in fact, won’t have a real sense of what the market is until we can view it in hindsight.
Happy Days For Lotus
There is no objectivity, there’s only disclosure. Full disclosure: I like Lotus. I like the cars. I like the history. I played a lot of the “Lotus Turbo Challenge 2” game for Sega Genesis (see above) and fell in love with the taillights of the Elan.
The history of Lotus is, eh, complicated. It’s always been a questionable business, even as they’ve made sublime cars. It’s why I’m going to revel in a little bit of good news from Lotus from the first half of 2023:
- Order book grew to approximately 17,000 vehicles worldwide for the Eletre, Lotus’ first electric lifestyle hyper-SUV, and Emira, a mid-engine sports car.
- Produced over 2,200 Emiras in its UK sportscar manufacturing facility, which is a 381 percent increase from FY22. The order book for Emira is full for the next two years.
- Production of Lotus’ lifestyle hyper-SUV, Eletre, ramped up this year in its first all-electric vehicle factory. Customer deliveries began in China at the end of March, and Lotus expects to deliver to UK and European customers later this summer.
I don’t want to damn Lotus with faint praise. Getting people to want your cars and then, you know, building them is sort of the essence of being a car company and yet Lotus has not has not been able to pull that off with any regularity. The fact that the company is producing Emiras is a great sign and I’m anxious to see if it can do the same with the Evija.
As a reminder, Lotus is now owned by Chinese carmaker Geely.
Less-Happy Days For Lyft
Uber has continued to dominate the rideshare space, expanding into other forms of delivery (in London there were even Uber boats). Lyft is definitively the numero dos and, while it’s profitable, investors are worried that the company is overly focused on getting market share from Uber and not making profits.
“The major concern we hear from investors is if Lyft is able to achieve significant economic returns as the number 2 player in the U.S. mobility marketplace, and we think the guidance will only intensify those concerns,” Needham analyst Bernie McTernan said.
Where does this end? Analysts that Reuters spoke to seem to think that Lyft might get acquired by someone along the way. I could see that. Perhaps Geely should acquire Lyft and then we can all get picked up from the airport in Eletres.
The Big Question
What is the most you have ever spent on a new car? What is the most you’d spend right now and what would you buy with that money?
There are still quite a few vehicles available at or under $20K but for some reason folks are still stupidly agreeing to MSRP+ and dealer add-ons, and usually both for hot models. Why are people willingly agreeing to this?
Young used cars are no bargain either, with this year or last year’s examples clocking 25K or more miles selling at or above their original sticker price. Again, why?
Sure, there are a handful of people who have totaled a car, or had a catastrophic failure not worth fixing, but the majority of buyers have simply taken leave of their senses, treating cars like toilet paper in the early days of the pandemic.
In response to “The Big Question”:
It’d be cool to be able to buy a new car, but if I did, it’s gonna be what the MSRP is or less, to a max of like $40,000 if it ever happens
Definitely won’t buy anything being sold over MSRP, and I can live my life in pretty much anything at 40k or less (sans the Toybaru’s, the wanna-be muscle cars, and the Miata).
> What is the most you have ever spent on a new car?
Nothing. I’ve never owned one and likely never will. Certified preowned Japanese cars with under 20k miles is where it’s at. Let some other idiot take the 20% hit as they drive off the lot.
Plus the new car smell makes me throw up, so a lightly used one is actually preferable regardless of price.
To play along though, my most expensive CPO car was $31k OTD.
What would I spend now? Frankly nothing, because that car will outlast me. I’m not old but drive very little anymore post pandemic and I don’t think I have another 200k miles left in my driving life to where I’d be pushing up against the car’s useful lifespan and need a new one.
I did buy one new car, a 2003 Mazda Protégé5 in silver and with a manual. Sold it 18 months later for about ten percent less than I bought it for, because the specs were perfect. It was a great experience but I will never buy a new car again for those reasons you give.
Although I am living on the edge, as I only buy +25-year-old JDM cars nowadays. Not cool ones like GT-Rs, but the kind that otherwise end up in Kenya or Central Asia or the Caribbean as basic transportation.
most I’ve spent on a new car, $11k for a 2009 Honda Fit, using the Cash for Clunkers deal..
most I’ve spent on a used car, $16k twice – once for a 4-year old Toyota Sienna with 60k, then for a 8-year old MDX with 68k..
We’ve bought my wife a series of F-150s (2011, 2019, 2022) and watched the MSRP go from $48K (we paid $41K OTD), to $64K (we paid $55K OTD), and finally $72K for the 2022 PowerBoost (but we paid $61K OTD).
Most expensive is my 2021 Mach-E GT Performance Edition, for which we paid exactly sticker: $70,040.
I’d push to $80K right now if I had to, and it’d be between another Mach-E GTPE (it’s my favorite vehicle I’ve ever owned, and it’s not close) or a Cadillac Lyriq.
2015 Fit EX @$20k. My only new car. There’s nothing on the American market I want to replace it. I love it.
Am a cheap bastard here. $10K on a new 1991 Toyota truck.
Well i doubt the numbers on new cars reflects the facts. For every overpriced new car sold in a city you get a relatively new one that much under average. Thats how math works. However not paying more than the Mirage ask but probably for a better car. But hey i like my DD more than anything new now so f it.
I saw an EV article saying they are less than $5,000 over an ICE car this article says $10k. So yeah less demand for the prixey ones.
Doesnt matter strike is coming because Fain thinks he has the cards so he wants it. The big 3 can weather it offer no discounts or even charge more because demand. Start hiring the type of worker you need to build EVs and use the strike to bust the union and get rid of no show union humps because they are the highest paid and useless. Only way this country goes all in on EV is if everyone can afford an EV and that mrans no money wasted on worthless jobs, programs equipment. You cant legislate or protest your way out of an economic quandry.
I’ve only bought two new cars: a 2021 Ranger that was around $28k after taxes, and a 2019 Frontier that was $18,200 out the door. I got $21.5k trade in on the Frontier when I got the Ranger.
“What is the most you have ever spent on a new car?”
CAD$5000 plus tax. I’ve only ever bought used.
“What is the most you’d spend right now”
CAD$40,000
“and what would you buy with that money?”
A used Tesla Model S… Either the 75, 75D, 85, 85D, 90, or 90D. The 100D is out of my price range.
As of right now, my 2015 Nissan Frontier SV V6 4×4 for about $27K after taxes (I lived in an unincorporated area at the time, so low sales tax). Most I’ve spent. I will spend more on the Maverick I have on order, whenever that comes in because I want some options.
42 years old. Swore I’d never buy new but bought my first new car last year. 2022 Kia EV6. Paid $55k at the end of May 2022. Got $2500 oregon EV rebate off at the signing table and the full $7500 fed rebate back on my ’22 taxes. Unofficially I paid ~$45k I guess. I like it, don’t love it. Great commuting appliance. Was trying to get a rav4 prime at the time but that wasn’t in the cards. Stumbled onto the EV6 as an option sort of by accident. Newly out and getting rave reviews nearly everywhere. Wasn’t in love with the idea of full EV but took a chance. I can charge for free at work and I drive a lot. Between the free charging credits at Electrify America when I bought the car and free level 2 at work, I’ve spent a max of $20-$30 total charging it at home so far and passed 37k miles this morning on the way to the office.
Previous high marks were $30k for a 2006 F350 in 2008. Crew cab, long bed, lariat, power stroke. Still have it. Still love it. 40k miles when I bought it, has about 160k miles now. Window sticker (still have it) shows $52k. Believe replacement would be all of $80k+ now. It sits a lot, but great for camping/hunting/supply run/boat puller. Its a 6 seater so my wife’s Hood to Coast team used it as a support rig one year. More versatile than they’re given credit for. Like another had posted, it was my dream rig for years before I bought it. It’d be pretty unusual circumstances before I’d ever sell it.
Second place: I slightly overpaid for a 2012 G37S sedan with a manual at the end of 2016. It was immaculate, 16k miles and came with some uninstalled extras. Paid $23k. Loved that car but switched from a work from home situation to commuting long distance in crap traffic about a year after I bought it. Did it for about a year before I bought a 2013 Prius and my wife took the Infiniti. She drove it for a couple years but I ended up selling it when we found out she was pregnant and bought a two year old Rogue. Still miss that G. If I could store four cars, I would’ve figured out how to keep it. They seem to have a polarizing effect on people that I don’t understand. I still think they look sharp today and it was a rock solid, fun car. Sold that Prius when I got the EV6. Funny story about the Prius. Bought in 2019 with 60k miles for $13.3k. Kept it three years and one week and put ~95k miles on it. Sold it on Craigslist the day after I bought my EV6 for $13k to the first caller. Dealership made a big deal about wanting me to trade it in when we were waiting a few weeks for the Kia to arrive. Came to the big day and they offered me…. wait for it…. $2500 (insert WTF emoji). Told them to fly a kite.
Especially after having a Maxima, I have a little soft spot for 4-door V6/MT Nissans, so part of me always wanted to find a manual G37 sedan last time I bought. But, I didn’t quite have the time and flexibility to juggle a wide enough search to find one* as well as balance the end of the lease I was in.
*Sifting through used listings would be one thing but the G is also one of those cars that seemed to often have the transmission mismarked, so couldn’t trust the search filters at face value.
I’m with you, VQ/6MT is a great combination. Would definitely own another if the situation fit. I had a 2004 maxima with the 6MT prior. Loved that car too. Had it almost 10 years and 120k miles. Solid, reliable, fairly powerful and 30+ mpg on the highway. I replaced a window regulator, front wheel bearing (girlfriend hit a coyote and it developed a a bit of a howl(the bearing, not the coyote) and I didn’t want to risk it), oil cooler o-ring seal (at the base of the oil filter and a 5 minute job during an oil change) and a cv axle (oil leak rotted the boot). All cheap-ish fixes in my driveway.
*Probably >95% of the ads for 6MT G37 sedans are autos. That 7-spd auto was trash too. Filtering listings is practically useless. Have to look through the pictures. I only listed it on a G37 forum. The guy that bought mine bought a one way ticket to PDX from Denver and drove it home. Second guy in line, though he sounded less serious, was in Chicago.
I’m hoping to buy the Volvo EX-30 next year. They’re saying it starts at $35K but (1) sure, Jan, and (2) I like options! So I’m going to see what I can get for $50K or less.
Prior to that, I spent $30K on a 2017 Sienna in 2020. I sold it in 2021 after realizing that minivans are NOT mini. Got about $33K for it and bought a Kia Soul for $20K since I had gone full-time remote and never drove anywhere (thanks pandemic!).