How are people affording cars?

[rare]

I have a 2007 W204 C220Cdi, immaculate, 70k miles, full Mercedes history (the paperwork is amazing!) and it cost me £4500 last summer.

I’ve done a couple of bits to it, thermostat, cam sensor, tyres, but overall it’s been spot on.

The idea of spending hundreds (especially 500+) every month on a car makes me feel a bit sick. Been there done that. I understand it makes perfect sense for a lot of people and that it’s all relative just not sure I could go back to it.

 

[SDK^]

A lot of people running older cars say that it's cheap to keep going, but then you see the car and there is a load of stuff which isn't working correctly, or not at all.
Which is fine if the owner is okay doing this but honestly - if those broken things were fixed it wouldn't be cheap !

 

[Armageus]

Maybe not "normal" then but even "normal" cars have lots more tech on board. A run of the mill modern suzuki has sensores, variable cruise control, 360 degree cameras etc. And the engines are many times more complex than older cars.

None of which "has" to be repaired. Even if it breaks it doesn't stop the car functioning

 

[silvagti]

Modern cars once they are 10+ in age will definitely cost more to keep on the road than cars from 2012 do in 2022.

I do wonder whether the reason manufacturers are pushing all this technology into cars is because they know fine when it fails it’ll be uneconomical to repair when the car is older and people will be forced to buy new cars instead !

 

[SDK^]

I do wonder whether the reason manufacturers are pushing all this technology into cars is because they know fine when it fails it’ll be uneconomical to repair when the car is older and people will be forced to buy new cars instead !

Do manufacturers really care about the 2nd, 3rd+ owners anyway.
My guess is people who buy a new car and run it until it breaks are in the minority these days, and people with a history of buying used cars and suddenly buying new are also in the minority.

 

[robj20]

I do wonder whether the reason manufacturers are pushing all this technology into cars is because they know fine when it fails it’ll be uneconomical to repair when the car is older and people will be forced to buy new cars instead !

No it's consumer lead. People crave the extras, heated seats, heated steering wheels, cameras everywhere, sensors everywhere, cruise control.
I miss the simplicity of older cars a lot, but do appreciate some of the modern comforts.
When it comes to the engine it's led by the emissions standards and economy.

 

[[TW]Fox]

Do manufacturers really care about the 2nd, 3rd+ owners anyway.

Of course they do. Why wouldn't they? There are loads of reasons why manufacturers care about second and third owners. Here is a sample:

Strong used demand supports residuals, which encourages more new car purchases and enables better deals for new car customers. The more cars are purchased on finance the more important this becomes - the reason so many people can take a new car on finance is because the deals are supported by good residuals. Without second and third owners there are no residuals. A

Positive used car experiences reinforce a brands reputation - everyone knows Toyota means reliability, right? This reputation was not forged from year old cars that didn't go wrong.

Second and third owners are a source of aftermarket revenue - you can sell them approved used cars, you can sell them manufacturer backed insurance products and you can sell them parts and accessories.

A car manufacturer with a reputation for building cars which fall to bits after the warranty expires would find it more difficult to sell new cars.

people with a history of buying used cars and suddenly buying new are also in the minority.

You cannot seriously believe this. Virtually every single new car buyer was once a used car buyer. The number of people who order a brand new car as their first car and never buy used again are the ones in the minority. Many peoples views of the brands they want to own are based at least in part from prior experience. This forum alone is a classic example, look at the number of people here who have gone through the journey of buying increasingly newer second hand cars until they eventually become new buyers, ordering new cars from the manufacturers they've grown to like and trust through previous experiences.

My partner is a case in point - the first car she bought herself was a used Mini as the second owner. She really liked the car. Her next car was a factory order for a brand new one. I'd imagine the next one will be as well. If the manufacturer hadn't cared about second owners and hadn't offered a manufacturer backed approved used scheme, warranty services and service options for second and third owners I doubt her experience would have been the positive one it was which directly led to a new car order.

I really am quite surprised that you can't see that this happens all the time.

 

[lordrobs]

Do manufacturers really care about the 2nd, 3rd+ owners anyway.
My guess is people who buy a new car and run it until it breaks are in the minority these days, and people with a history of buying used cars and suddenly buying new are also in the minority.

Ideally they should because the person who buys the car new will want to sell it on for a good price when they upgrade or renew it. To do this the car should still be desirable and reliable when it is 3 to 5 years old. Repeat for the next owner when it is 6 to 9 years old and so on until it hits banger status and ends its life with 250,000+ miles on the clock and is 25+ years old.

In reality the original "owner" never actually owns the car so as long as the monthlies are cheap - who cares what happens to it after 3 years. Hence why the quality of certain manufacturers has gone downhill over the last 5 to 10 years and we've come to just accept it in a whitewash of gadgets and extra inches of "infotainment".

 

[[TW]Fox]

The strangest thing about his post is that he once had a Golf R on one of those amazing lease deals.

Remind us all again why those Golf R deals were so good and whether that fits with this idea that only new car buyers matter...

 

[Telecaster]

And don’t forget the number of households with 2/3 of the things! It seems every 18 year old near me has a Mercedes’ a class!

What doesn't add up to me is that people will just say "oh it's all on credit, they don't own it" but you've still got the high monthly! They may well be dishing out credit willy nilly but where are people getting the money from to pay for it every month?

I've picked a few random £30-35k used cars on ebay, and with 2k down a lot of them are still £600+ a month, and these aren't new cars.

 

[Greebo]

What doesn't add up to me is that people will just say "oh it's all on credit, they don't own it" but you've still got the high monthly! They may well be dishing out credit willy nilly but where are people getting the money from to pay for it every month?

I've picked a few random £30-35k used cars on ebay, and with 2k down a lot of them are still £600+ a month, and these aren't new cars.

I always felt the reverse with my old boss and his aventador. People used to pass comment that they wished they owned a car like that or "i bet that cost a fortune" and he always replied he didnt own it and they were welcome to the monthly HP payments. Totally missing the point that "normal" people couldnt afford the £6400 per month HP payment on the car.

 

[Robbo]

It's all relative. I know people who will scoff at a £50k car and then spend £10k on a holiday, to me that isn't sensible. At least a car is an asset, albeit a typically depreciating one.

Some people are always out travelling and doing lots of different expensive things, going to events in London, etc.

It all comes down to what your priorities are. A lot of people will be spending £300 a month on cigarettes, just as one example - or booze.

 

[paradigm]

What doesn't add up to me is that people will just say "oh it's all on credit, they don't own it" but you've still got the high monthly! They may well be dishing out credit willy nilly but where are people getting the money from to pay for it every month?

I've picked a few random £30-35k used cars on ebay, and with 2k down a lot of them are still £600+ a month, and these aren't new cars.

Probably slightly less of an impact now, but typically I found that nearly new purchases attract much worse interest rates than new, add in the (currently few and far between) manufacturer and dealer incentives/offers, and suddenly PCP on a new car vs a used one makes more sense, sometimes cheaper even.

They likely get the money from only just making a paycheque last until the end of the month, not putting anything away into savings and paying the bare minimum into their pensions.

 

[AndrewNR]

My current car cost about 2% of my salary. That's how I afford it.

How is the Zonda these days?

 

[ChocAndGray]

What doesn't add up to me is that people will just say "oh it's all on credit, they don't own it" but you've still got the high monthly! They may well be dishing out credit willy nilly but where are people getting the money from to pay for it every month?

I've picked a few random £30-35k used cars on ebay, and with 2k down a lot of them are still £600+ a month, and these aren't new cars.

That's exactly it.

You still need to be doing reasonably well to spend 600+ a month, on a car.

Not many people living at home with their parents are spending that.

At Landrover it was common to see 4 figure monthly payments, some might look down at it as "they don't own it" but these people didn't want to own a depreciating asset long term. They were also in very well paid jobs to afford the monthly payments.

 

[Telecaster]

BTW I'm talking about average folk here, not business owners or contractors running Lambos. Just normal people that happen to have a new 5 series and a Mini on the drive.

 

[ChocAndGray]

BTW I'm talking about average folk here, not business owners or contractors running Lambos. Just normal people that happen to have a new 5 series and a Mini on the drive.

I doubt a typical mini driver is paying £600 a month on a PCP.

I know you mentioned you picked some random cars at around 30k but payments can differ wildly on the same car.

Even with a PCP different finance companies offer at times drastically different residual values which effects the payments.

The APR plays a big part too, used mini dealers have aprs around 10%, a used toyota offer (or did 4.9%)

I'm assuming you were looking at hp quotes? As borrowing 30k plus is definitely going to cost over 600 with minimal deposit.

PCP is far more popular, as it get's people into more expensive cars than they would normally have afforded in the past.

If someone has 600 a month and would normally buy a 25k car on HP, a PCP could potentially get them a car at 40k plus. A lot of people who finance cars typically change before the agreement is fully paid too.

 

[Deleted User 298457]

I'd wager people living at home with parents are the precise target market for such high monthlies. They have no outgoings, for a start.

A quick Google shows a Mini is pretty cheap tho tbh. £2.5k deposit, £240/mo.

£600 a month is more like Volvo XC40 money. £5.3k deposit, £399/mo. I guess a lower deposit would push monthlies up.

Edit: Even an A-Class is only £3k/£350mo.

I paid £2k + £330/mo for my C180 coupe in ~2013.

 

[ChocAndGray]

One thing I have noticed is the younger generation don't really do bangers. I know that's a generalisation, but when I was 18 it was common for people to have a 10 plus year old car bought outright, a few rich kids would have new cars. My first car was a H reg fiesta lol.

Now though it seems far more common to see younger people with fairly modern cars.

 

[Lopéz]

That's exactly it.

You still need to be doing reasonably well to spend 600+ a month, on a car.

Not many people living at home with their parents are spending that.

At Landrover it was common to see 4 figure monthly payments, some might look down at it as "they don't own it" but these people didn't want to own a depreciating asset long term. They were also in very well paid jobs to afford the monthly payments.

I could afford to spend 4 figures a month on a car but there's no way in hell I could even contemplate doing that, personally. Mental money.

I'll stick with my 14 year old shed (I'm being unfair; it looks alright after a clean, drives well and has been perfectly reliable)