Used Car Prices....insane?

I'm wondering if I am the only one that is thinking car prices have just gotten way out of control, particularly for newer models. I was debating selling my 99 Escalade which has about 120k on the clock. We have a 29 foot Coachman trailer that we purchased last year to camp with the family. The weight capacity is right at the top of what the Escalade is rated for. My 99 was the first year Cadillac introduced this model and it is basically a glorified Tahoe with some fancy trim, 5.7L 350 engine. We've had it for 6 years now and it has served us well. At the time we bought it, it was 9 years old w/ 80k and we paid 11 grand for it. I have babied and garaged it, so it still looks like a 2 or 3 year old vehicle.

Fast forward to 2014...I started looking around over the last 6 weeks at Tahoes, Yukons, Suburbans, and Escalades, and even the full sized Ford trucks like Expedition and Navigator. I was kind of stunned to find that mostly everything was around 30 grand give or take a couple of thousand. The "more affordable" trucks in the lower 20's range all had 90 - 100k or more. And then I started figuring out the car payments....YIKES. My wife and I are both teachers and we bring home enough to get by on, but I can not imagine spending 500 or 600 bucks a month on some of the junk I was seeing that wasn't in as good of shape as my old Caddy. We've decided to run the Caddy for at least a couple of more years. We just got it back from the shop today and it is running as good as new. New serpentine belt, 4 new shocks, complete brakes all around, a/c charged up, new gaskets on the valve covers and intake manifold. I've figured that what it cost for all of this work would have been about 3 - 4 car payments, so I figure we are still coming out ahead for now.

I'm interested to see what any of you think about the prices??


Here is a pic....mine looks just like this, including white lettering on the tires.

 

Yes, these are expensive vehicles to buy as well as to operate, but I see a lot of them around. They're also, along with pickup trucks, the bread-and-butter vehicles for the automakers, and I'm not surprised they try to get as much for them as they can. The markup on these is large compared to the Chevy Aveos out here, and they contribute greatly to company profits. I always wonder how so many people can afford these things, but they apparently find a way to.

 

Nearly ten years ago I decided to buy another pick up truck. My last was a new 1977 Ford supercab. I really wanted another hi-top van but couldn't seem to find one that wasn't made of gold.
Started looking for a low mileage used Ford or Chevy truck large enough to haul passengers in a rear seat. Seems like everything was listed as low mileage yet had over 80,000 miles on them. I used to trade around 75,000. Even then they were nearly as much as a new truck.
The Dodge dealership is right on the way into our little town. It was October 04 and the new trucks were out. A red 2004 quadcab Sport was sitting for weeks on an end row calling my name. I got it for less than some of the used Ford and Chevy trucks altho I didn't really want a Dodge. I even paid more for the Sport model without chrome grille or chrome bumpers because it looked sportier!
Nearly ten years now, only basic replacement items and still less miles than those used trucks. Still looks and feels like a new truck to me.
Seems like the year end close outs are the best time to trade.

 

Inflation. The cars aren't costing more, the dollar is buying less. I don't want to sound like one of those crazy conspiracy nuts, but the U.S. dollar is not worth as much as it used to be. That is the reason that the cost of everything from milk to cars has gone up so much in the past 10 years.

 

Cars are costing more sonny. Why I remember when we could buy a Model T Ford for under $300 and a gallon of milk for 15 cents.

 

Holy cow, you're right! Didn't realize the price of the big SUV's was that much. These are all in your area. Did find a few that were more reasonable. It does look like you would get more for your money buying a crew cab 3/4 ton P/U rather than a SUV.


$15,995
http://www.autotrader.com/cars-for-...EV&searchRadius=100&listingId=367559404&Log=0


$27,995
http://www.autotrader.com/cars-for-...EV&searchRadius=100&listingId=366539353&Log=0


$21,999
http://www.autotrader.com/cars-for-...s=100&makeCode3=GMC&listingId=368210098&Log=0


$22,885
http://www.autotrader.com/cars-for-...s=100&makeCode3=GMC&listingId=370369068&Log=0


$19,000
http://www.autotrader.com/cars-for-...s=100&makeCode3=GMC&listingId=353144948&Log=0

 

They cost more for any number of reasons, but here are a few.

1) They all come loaded. Tough to find a stripped down model anything anymore. People like stuff, but they feel guilty about adding it to the bottom line. Make it standard and the guilt is gone.

2) Many of the vehicles are built with a greater degree of design, with more expensive/greater variety of materials. Those "nicer" interiors, quieter cabins and electronic controlled everythings simply cost more money.

3) There are still some pent-up auto sales. The number of new vehicles being bought today are still fewer than purchased several/many years ago. Fewer new sales means there will be fewer used vehicles available for sale. Decrease the supply without changing the demand and price goes up.

4) This to me is the big one ... the vehicles are lasting longer. I remember when a car was topping out in the 80-90k range. Anymore that's middle aged for a vehicle. In many regards, the cars they have been building are better, and will last longer, than the older vehicles. Since the auto manufacturers only make money when they sell the cars, building a fleet that runs 1.5 - 2x as long as they used to means they have to sell them for more because the cars will stay in the market for a longer period of time.

How much would you need to sell a light bulb that lasts for 10 years vs. one that only burns for 1 year if you are a light bulb manufacturer that wants to maintain its margins? Certainly a lot more than you would for the 1year bulb. It's no different for cars and trucks.

 

Cars USED to last a lot longer than people kept them. Around here, it was seldom mileage that killed a car, it was rust. To a large extent, it still is. Properly looked after, a good car can last well in excess of 500,000 miles with no major issues, provided the body stays good. Yes, there are maintenance issues that come with time and miles, but that is a LOT less than a new vehicle. If the old Cadillac is doing the job, KEEP IT! If you ever need to replace the engine a brand new crate engine is a LOT less money than a new vehicle, or even a newer vehicle.

 

I agree Paul. For instance our daughter in Illinois had to have a newer vehicle. She just had to buy another SUV like all her friends loaded with STUFF. She takes her daughter about three miles to school then doubles back about two miles from home to work. Still she needed STUFF. It's a Ford all wheel drive which is very important 95% of the time in central Illinois in city traffic on paved roads.
Her husband also drives an SUV or his extended cab truck with STUFF.
Personally I'd tell the grand daughter to walk out to the curb and get on the big yeller bus then drive a small car to work. High payments, higher insurance, more fuel, just for STUFF.
The truck I drive is only the second I've owned with AC and I really don't need the other STUFF it has to get to town and back.
Our son is a shadetree mechanic and he's replaced more power windows, door locks, and other STUFF than engine repairs for people.

 

Yeah, I realized after the fact that I mixed up two different ideas there. Inflation being the normal increase in the cost of goods and services. An example of inflation being a good 3-piece suit would cost $5 or $10 in 1900, and in 2000, cost $500.
The purchasing power of the dollar decreasing would probably be closer to hyperinflation, not normal inflation. The same $500 suit in 2000, with inflation, should cost $750, but instead it now costs $1000.

Cars do come with more "stuff", but the price of everything is increasing above what normal inflation would cause.

 

Paul makes great points about the costs of vehicles loaded with options and technology. That all factors together with inflation and dwindling purchasing power.
We also have a used car market that is still showing the after-effects from "cash for clunkers".

 

wellll...my response is probably exactly what you would think....

I'll go out and buy 5....$5000. dollar old 70's and prior POC's ...before I'll spend 25 g's on a new car

 

We will be feeling the effects for another five years at least. MILLIONS of good vehicles GONE and the remaining vehicles often have no salvage value now when they hit the junkyards.

 

I bought my Big Red Enviro Crusher(F150) brand new in 2005. It made no sense to buy a used truck since the price difference was not very much at all. This was the time when gas prices had spiked and everyone was scrambling to get sales going so lots of deals. Now the price of gas is probably the same if not a bit more and now people have apparently quit caring about crazy gas prices and are buying cars that are gas hogs so the industry is just raising prices to match demand I guess.
Wages are pretty stagnant but I think the credit scare is fading so people are buying again.