By on July 20, 2018

Just a couple of weeks into my ECO 101 class, I knew that something was terribly wrong.

At the age of nineteen, I’d already worked for a few dealerships and I was on the way to opening up my own bike shop. Yet I knew at some level that I was profoundly ignorant of the levers that truly move the world. So I signed up for an economics class to learn about those levers.

I learned a lot of theories and concepts in that semester, most of them “proven” by long experience if not by experiment; much like climate science and astronomy, economics is one of those disciplines where much of the scientific method is rendered inaccessible for obvious reasons. Even as a kid, however, I could tell that pure economic theory, like pure Marxism, had no relation to the real world. I was shown a lot of charts where imaginary widget factories maximized output until they broke even on the last widget they made. I heard a lot about elastic and inelastic demand. Things were shown to be fungible, or perhaps not. But if there was a direct connection to the way business worked in my daily life, it must have been made of Larry Niven’s shadow-square wire.

Now, in my forties, I have come to the conclusion that ECO 101 should not be taught to anyone who has not already taken ECO 102, or perhaps owned a business, or maybe reached the age of retirement. ECO 101 contains information that is too dangerous to be used or acted upon in its purest form. The real world doesn’t play by the rules you learn in that class.

Want proof? Here’s some: apparently people won’t buy a brand-new $16,950 car if it’s listed for half price.

The world of automotive pricing, like the world of wristwatch pricing, works on some bizarre rules which exist nowhere else. Periodically, my brother tries to tell all of you examples of how that world really works, only to be blitzed by people who are still living in the world of ECO 101.

“How can dealers keep the price of used cars above a certain level? THE MARKET WILL CORRECT THAT!” Yet the prices of used cars continue to rise even as the lease companies flood the auctions with bargain-priced junk. It’s weird stuff that has elements of chaos theory in it. Too many variables to map. You’re left with the results of their interactions.

Most of this happens because customers don’t behave like the rational automatons of ECO 101 when it comes to buying cars. Here’s an example. Nearly-new Toyotas often sell at dealers for more than brand-new examples. The reason for this won’t be found in your textbook, but here it is: There is a group of people out there that has almost a talismanic faith in the idea of saving money by purchasing a nearly-new car. The supply of nearly-new Toyotas is fairly low compared to the supply of new Toyotas, so their prices are often higher — and that part is straight out of the textbook. It’s just that there is no textbook capable of acquainting you with the breadth and scope of human delusion, except perhaps for this one.

The picture that heads this article is an example of a different market distortion. You can see that this new Elantra is being marked down from $15,999 to $10,999. Staggering, right? That’s the shot, but here’s the chaser: that’s $10,999 CDN. Which is… under $8,400 USD as of this writing.

For $8,400, you can get a new Hyundai that lacks A/C or an automatic transmission but which does have heated seats. That’s used-car money; in fact, it is six-year-old Elantra with 85,000 miles money. If you want, say, a five-year-old Elantra with 70,000 miles, be prepared to pay more.

I called a couple of Ohio used-car shops and they confirmed that used Elantras are not that hard to sell. Not easy like used Corollas, which “have a nerd waiting to buy them when they come in on trade,” but easier than used Sentras, which are “for people who have found the bottom of the beacon score.” I asked one of the dealers if they could sell brand-new Elantras for $9,999. “All day and every day.”

So why is the Canadian dealer in this example out there on Facebook absolutely begging people to come out for a test drive? The answer is simple and a bit unpleasant. Decades’ worth of marketing saturation, “great advice” from a thousand self-anointed financial gurus, and subconsicous-level preconceptions regarding class and race have all conspired to create entire cohorts of “used-car customers” who don’t think they are entitled to, or capable of buying, a new car.

Does it make sense for people of less-than-Kardashian-esque means to buy a used car? Absolutely, when it is a used car from a private seller at a competitive price. There is no reason to buy a 2012 Elantra from a corner lot at a $4k post-auction markup. Except, of course, for the fact that the banks and the used-car dealers have all conspired to remake the market in their own image.

Your ECO 101 textbook will never tell you about the agreements between corner-lot dealers and “Loan Zone”-style financiers that restrict the availability of 560-beacon-tier financing to cars sold through a dealer. Hell, even the big banks will ding you for buying a private car; when I took out a credit union loan to buy my 1995 Porsche eighteen years ago, I had to pay a two-percent bump because I wasn’t taking delivery at a dealer. I did the math; $29,900 for a private-sale 911 made more sense than $38k for that same car from a Porsche dealer, regardless of interest rate. But I grew up as a child who was taught to do the math. Not everyone did.

“Wait a minute, Jack… you’re playing your own games with us, comparing brand-new Canadian Elantras with used American Elantras.” I confess that I did play that game, just to see if you’d notice. Here is a Canadian used-Elantra result. An entirely average listing for a 2013 Elantra in Toronto. New-car money, with just a little more equipment.

It’s a strange world, isn’t it? Used cars selling for more than new ones, often side-by-side at the same dealer. It doesn’t make any sense on its face, but once you get a sense of how the sausage is really made, some of it starts to become clear. The market for new cars is not nearly as free as we might like. Everybody from the government to Suze Orman’s publisher has a finger on the scales. Which doesn’t exactly explain why I can’t go buy a new Elantra for $8,400 at my local dealer — but maybe it explains why nobody would bother to take advantage of it anyway. Don’t worry; someday I’ll figure it out. And I’ll write it all down in a textbook for a new class. We can call it ECO 100.5: They Don’t Think It Be Like It Is, But It Do.

[Image: Steele Hyundai/Facebook]

(Many thanks to Mark Stevenson, former TTAC Managing Editor who is now pushing tin at Steele Hyundai. If you’re in the Great White North and you’re smart enough to buy a stick-shift Elantra for giveaway pricing, you should buy it from him! — JB)

Get the latest TTAC e-Newsletter!

Recommended

140 Comments on “No Fixed Abode: What If They Held a Cheap-Car Party and Nobody Came?...”


  • avatar
    danio3834

    “For $8,400, you can get a new Hyundai that lacks A/C or an automatic transmission but which does have heated seats. That’s used-car money;”

    With those options, this car was born as a used car. Almost assuredly, it’s a “price-leader” regional dealer advertising agency special, foisted upon the dealer by the manufacturer in order to ensure compliance with the latest low price print ads (If they’re advertising a low priced car, they must have one available). New car buyers don’t want cars with sh1t for options, bump to a higher model. When the promo is dead and gone, the vehicle is punched into a “loaner/demo/dealer rental program” at the behest of manufacturer cash, chalked up as a new car “sale”, then it’s sold as “used” at a hefty discount, usually loss.

    • 0 avatar
      FreedMike

      Makes sense in general, but that particular car probably wouldn’t end up a loaner – it’s a manual.

      • 0 avatar
        240SX_KAT

        It’s wha’t known as a “Quebec Stripper” A special negative-options version to have the absolutely lowest price for Quebec.

      • 0 avatar
        danio3834

        “Makes sense in general, but that particular car probably wouldn’t end up a loaner – it’s a manual.”

        Most cars that get punched in to mfg sponsored “loaner” programs never get loaned out. It’s a cash incentive to punch a sale, then they end up on the used lot with a prescribed amount of mileage.

    • 0 avatar
      robc123

      This article is based on a non-existent price.

      Even on the Hyundai Canada site- $13.8k CDN price- and this is a cash price, on a lease they don’t move on the price. And this is black/white/silver, zero options.

      Look at Autotrader.ca or any other dealer- at least in AB does not even have the manual base in stock- most start at $20k.

      At the $13.8k that you have to pay in cash up front- smarter to move into a mazda or toyota for a better residual.

      No way in hell would I spend $14k on a Hyundai in cash.

    • 0 avatar
      srh

      This car sells for $8400 because nobody wants it.

      Perhaps it was a special order that was cancelled. I didn’t realize you could buy a car without A/C, but JB’s Ohio dealer would certainly never sell it.

      • 0 avatar
        danio3834

        “This car sells for $8400 because nobody wants it.”

        Precisely. It’s a car that solely exists in order to promote a low price in print to get people in the door to bump them into a higher spec that they want and someone will make money on.

        • 0 avatar
          danio3834

          It’s either an advertising campaign special, or a manufacturer sales bank unit forced upon the dealer. No dealer would order a car like this, for themselves or even for a customer without an enormous deposit which won’t happen on an econobox.

          • 0 avatar
            Lou_BC

            It sounds like a “loss leader” to lure buyers onto the lot. They see the price and come in. Once they see the options list they balk but the sales staff are there to “direct” them to a more well equipped *read* more expensive car.

            A local dealer in my town got busted a few times for similar advertising but they did not have the advertised unit in stock.

            It is common practice so in reality, nothing to see here.

    • 0 avatar
      deanst

      I’ve bought one of these types of cars before – $10,000 CDN with 0.9% financing. No air, manual, no right side mirror. They exist only to be advertised, and since nobody can drive standard and everyone wants a/c they are lot poison, but I guess they actually have to make a few so they don’t get sued for false advertising. To actually get air and auto, you have to pay up to $5,000 more as you may go from an L to an LE version of the car. I should also note that most cars have about a $2,000 delivery charge in Canada plus lots of other mandatory government fees plus taxes averaging over 10%.

      The problem really is that people don’t know math. These things can be advertised as low as $35 weekly, while a better equipped version of the same car may be $52 weekly. People recognize this as $17 more, not 50% more.

  • avatar
    Gardiner Westbound

    Few private owners, less than one percent, sell or trade-in a current or previous model year car without a good reason. The 20% to 30% depreciation is prohibitive. The majority of recent models for sale used are former daily rentals, cars with uncorrectable service problems, accident involved cars and bank and finance company repossessions. Cars bought and repossessed within a year’s time are particularly rough.

  • avatar
    dukeisduke

    No air conditioning? No deal. Today’s forecast high in Dallas-Fort Worth? 109. 110 on Saturday, and 108 on Sunday. Record breaking, all three days.

  • avatar
    jack4x

    Great piece Jack.

    I guess I’m one of the few who has taken advantage of something like this when I bought my new Fiesta as a commuter car last year. Some combination of undesirable options (stick shift, 1.0L, no heated seats or touchscreen) and general antipathy toward small cars had made it lot poison. I watched for weeks as the dealer kept slowly lowering the price until it became so cheap I had to go in and take a look. The thick layers of dust and delivery miles meant no one had test driven the car in the 8 months it had sat. I made an aggressive offer and got it.

    All the while I had been paying attention to used versions of the same model, which had cycled through online listings pretty regularly (meaning I assumed they had sold near asking price). They were consistently higher than the new ones. As you said, it doesn’t make a lot of sense, but I’m happy to take the peace of mind/full warranty for a new car and save money at the same time.

    • 0 avatar
      JimC2

      No touchscreen?!? Savagery! How do you survive?

      • 0 avatar
        jack4x

        Not only that, but I was genuinely surprised to see a 2017 model car without a backup camera of any kind. Not that it’s really needed in a Fiesta, but still.

        To be honest, the worst part of the car is the old Sync non-touch system constantly dropping Bluetooth and requiring a hard reset. So I really would have paid extra for a touchscreen in this case…

      • 0 avatar
        ttacgreg

        Or heated seats!!! More savagery!

        FWIW In my experience, heated seats need some lead time. My butt always gets the seat comfortably warm before the seats begin to feel warm.

    • 0 avatar
      Robotdawn

      I did the same on my Cruze. No matter how hard I tried to buy used, which my ‘logical’ friends all do, it just doesn’t make sense to save 3-4k but lose 12,000 miles and a year off the life of a car.

      • 0 avatar
        ClutchCarGo

        The logic of it is very model specific, and depends on how long you expect to keep the vehicle. I tend to keep cars a long time, 7+ years unless it’s involved in an accident. I would look at Consumer Reports for cars that had a better than average reliability score and a worse than average depreciation score. Unless there is serious cash incentives or financing on new models, the significant depreciation meant I could get a long term vehicle for a very good price.

  • avatar
    theonlydt

    Unless it’s Quebec, Canadian dealers have huge challenges selling anything without air conditioning. Despite our northern-ness, with the humidex it can be 40 in Ontario. This is particularly true if that car is larger than a sub-compact (Micra without aircon? That’s okay. Elantra, that’s a compact car, that needs aircon).

    There’s also the whole manual transmission thing at play here.

    To test some economic theory (did you not cover Willingness to Pay, Willingness to Lose etc?) I’d love to see two stripped models going head to head. One is auto, but no air. One is manual, but air.

    Air-conditioning costs, what, a few hundred bucks? But our willingness to pay is beyond that – ignore any car without it. For a sub-compact the next trim level up is usually $3k+ extra, but we’ll happily pay it. We’ve experienced it, we don’t want to lose it.

    I’m also assuming (but don’t know) that automatic transmissions have decent margin on them. While more expensive, when you combine the economies of scale (80%, therefore at least 4 times as many purchased from the supplier), and amortized cost of homologation (per unit), those charging $1200+ for automatic transmissions are probably making a fair chunk of change. We’re willing to pay because we want an automatic, and the resale takes a pounding without it, so eventually we get our money back because the used buyer has a similar willingness to pay.

  • avatar
    28-Cars-Later

    $8,400 is a reasonable price for that pile, but in Amerika it will not be allowed to happen because it would upset the balance of power. The Mitsu Mirage is an 8K POS yet they msrp it for 13,3; can you believe this sh!t?

    Even at the factory sale, a new MY18 Elantra 1.4 ECO did $15,1.

    7/18/18 $15,100* 12 4.8 4GT/A

    The MY17s do 11s

    5/16/18 $10,500 34,586 3.5 4GT/A
    5/10/18 $8,400 89,624 3.2 4GT/A
    5/9/18 $13,300 5,462 4.5 4GT/A
    5/1/18 $12,500 17,525 4.8 4GT/A
    3/14/18 $11,700 20,886 4.1 4GT/A
    2/9/18 $11,500 14,543 4.2 4G/A

    Dealers are not stupid, so this suggests either there is some funny business going on with Hyundais being imported to Canada or there is collusion at some layer to keep the same model artificially higher in USDM.

    Oh and since I brought up the Mirage:

    MY17 ES

    BASE MMR
    $7,175

    Avg Odo (mi)
    25,857

    Avg Cond
    3.8

    Typical Range
    $5,975 -$8,400

    MY18 ES

    BASE MMR
    $7,225

    Avg Odo (mi)
    11,567

    Avg Cond
    3.8

    Typical Range
    $5,325 -$9,125

    Now that’s an $8K car off the lot, Canadians are getting Benzes in comparison.

    ““How can dealers keep the price of used cars above a certain level? THE MARKET WILL CORRECT THAT!” Yet the prices of used cars continue to rise even as the lease companies flood the auctions with bargain-priced junk.”

    Collusion is how they are handling the glut coming off of lease. We used to have district attorneys and attorney generals for that kind of stuff.

    • 0 avatar
      FreedMike

      What’s your honest take on buying something like a ’15 CPO BMW or Audi off lease, 28?

      • 0 avatar
        28-Cars-Later

        I trust not the B-M-W or Audi in a long term capacity, but if your goal is to ride the CPO I could crunch the numbers. I suppose in the end its about mission to a potential buyer, so what is the purchase trying to do for you?

        If I was choosing between the two it would depend on model, but I’d probably lean BMW depending on drivetrain. Audi for whatever reason has developed strong residuals so a new lease may make more sense, but remember its still VAG through and through. Mercedes died to me the day they dropped a hamster wheel drivetrain in the E and then put that cheap front clip on it. The E/S klasse should not look like a CLA from afar.

        For my money its Lexus and possibly Infiniti. Acura is dull and there are usually no deals so if one is going to “pay” so-to-speak, why bother when you can have Lexus. I may be able to score a deal on an Infiniti product with a decent track record (i.e. G37) vs their Q and earlier M products which became paperweights quickly.

        • 0 avatar
          FreedMike

          “…so what is the purchase trying to do for you?”

          I’m a yuppie, always have been. Like Kendrick says, it’s in my DNA. Budget’s going to be in the low-20s. I could spend more than that, but I’d rather kick the difference into my retirement funds at this point.

          Most likely next move is a GTI or maybe even an Elantra Sport – it’s a DAMN nice little car, and you can lease one for 0/$275-300 a month, which is an insanely good deal. But with prices for entry-lux cars being so ridiculously low, it kinda/sorta makes sense.

          And agreed with you on Lexus – I’ve tried some out, but in my budget, you’re talking an IS250, which is a terrific car with no balls. The IS350 takes care of that but it’s more than I want to spend.

          Thanks for the input.

          • 0 avatar
            28-Cars-Later

            Happy to help. How about an Infiniti CPO for low 20s?

            http://cpo.infinitiusa.com/browse-inventory/15243/Pittsburgh/Infiniti?searched=1&warranty_program=46&_warranty_program=cpo&modelYear_from=2012&modelYear_to=2019&price_from=16000&price_to=25000&km_from=15000&km_to=82000&cylinders=6&zip=15243&radius=483&sort=distance:ASC

          • 0 avatar
            30-mile fetch

            How long are you planning on keeping the car, Freed? I’m curious since I had the same shopping list awhile ago and it was one of the big considerations.

            Have you tried the G37/Q40?

          • 0 avatar
            FreedMike

            Thanks, 28.

            @30-mile – I actually did try a Q50…love the styling, but the handling is meh. The engine’s a bit on the rough side for this class. But it certainly has enough power, and like 28 says, it feels like one you could keep for a long time.

    • 0 avatar
      Gardiner Westbound

      A handful of large Canadian dealer groups and smaller regional operators own dozens of local car dealers. They know each other, belong to the same clubs and associations, and get the same deals from the manufacturers. Is it coincidental many have similar pricing and hold out for identical mystery fees? I don’t think so.

      • 0 avatar
        TDIandThen....

        This ^^

        I’m trying to figure out why no Fiat/Dodge/Chrysler dealer will budge from MSRP-factory incentive, when I’m trying to but a MY17 (!) Fiat 124 convertible that no one in Canada really is buying. Meanwhile I test drove a ten-year old Saab 9-3 Aero and it’s $5k for a super-clean plush example with memory seats etc….all I can figure is that one is the fixed dealer price and one is the actual competitive used private sale.

  • avatar
    ajla

    “There is a group of people out there that has almost a talismanic faith in the idea of saving money by purchasing a nearly-new car.”

    How is that not explained by demand elasticity?

    • 0 avatar
      theonlydt

      +1.

      Another important piece of ECO 101 (or equivalent) is the idea of the fully informed, rational buyer.

      • 0 avatar

        Most of this is based on rational thought not something humans are great at.
        On the used car thing for decades it was very true, and it still is for a lot of brands. oddly enough thou CPO warranty longer then OEM property taxes on new vs used. and financing for less then perfect credit can sometimes make the used car worth more then you think.

        • 0 avatar
          Scoutdude

          Yup this is all perfectly explained by Econ 101, I guess Jack didn’t pay attention as much as he believed he did.

          It is all based on the notion that the buyers and sellers are both rational and well informed.

          Fact is the percentage of consumers that are rational has been dropping quicker than the number of people who know how to, and are willing to buy a car w/o a manual transmission.

          Fact is that irrational people actually believe that they are rational and reasonably rational people will use irrational arguments to convince themselves that they are being completely rational in their largely emotional purchase.

          Fact is the average consumer believes that are better informed than they actually are.

          Fact is in general used cars are a better value than new cars.

          Fact is the sellers of cars are rational in the fact that they want to get as much profit as possible from every consumer.

          So the fact that the average consumer is not rational or well informed and are making an emotional purchase while the dealer is usually rational and much better informed does not mean that the theories of ECON 101 are not sound.

          So in the case of the Hyundai the demand is non-existent because no one wants a manual and very few people don’t want AC.

          For the Toyota it is a case of an uniformed irrational consumer who believes they are actually informed (they’ve been told used cars are better value) and rational (not going to consider a new car because a used car is a better value) Seeing a customer like that of course just puts $$ in the eyes of the sales people and dealer. In most cases the vehicles on the lot with the greatest profit potential are the used cars that were bought right. You know the dealer payed significantly less for that 1 year old Camry than they do a new one and if they can get someone to pay new car money for a used car they are happy to make the sale.

          • 0 avatar
            Jack Baruth

            My point was that ECO 101 deals in theoretical, not practical, matters — but far too many people expect the laws of that theoretical world to apply. Which is why I said people should take 102 first.

          • 0 avatar
            Scoutdude

            No Jack it doesn’t just explain what happens in the theoretical world. It is the basis for what happens in the real world as the market tries to approach the equilibrium point.

            The Hyundai clearly shows that there is currently an oversupply of Elantras with a MT and no AC and this price is still not low enough to attract a buyer.

          • 0 avatar
            Lie2me

            There are also two real world Econ 101 “theories” at work here that weren’t taught in class, but somehow we all manage to learn them along the way
            1) “If a deal looks too good to be true it probably is”
            2) “There’s a sucker born every minute and two to take it away from him”

            Both “theories” are often at work at most car dealers, best to learn them early on

          • 0 avatar
            deanst

            Umm, ECON 101 assumes people are rational, not that they think they are rational. Your other statements like “fact is general used cars are a better value than new cars” shows a similar misunderstanding. For a new car purchaser, a new car represents more value, perhaps due to less expected time getting things fixed, or the value of status derived from the purchase.

            Asymmetry of information is key here – people just don’t know all the facts. My last purchase was a left over new car bought at a 30% discount. Before that I got a new GM at a 50% discount in their going out of business sale. You have to be willing to spend the time and effort to gather the facts, and adjust your buying schedule when the opportunity presents itself. Most people have preconceived notions about new and used cars, and just follow those heuristics.

          • 0 avatar
            Scoutdude

            @ deanst, yes Econ 101 assumes that people are well informed and rational. My point is that the irrational and uniformed person is an easy target for selling a used car at a new car price.

            The other thing that has been left out of this discussion so far is that the person who over pays for a used car is just as likely to over pay for a new car.

            Just because someone places a value on the seats being free of some unknown person’s farts does not mean that there is an intrinsic economic value in buying a brand new car.

          • 0 avatar
            KalapanaBlack7G

            Where are all of these uniformed people? And are they stylish?

    • 0 avatar
      TW5

      Demand elasticity is the market’s reaction to a change in price. It’s not an irrational aversion to a vehicle’s lack of patina.

      If the buyer comparison shopped on price, and concluded that a $1,000 savings over a new vehicle was enough to entice consumption, then fine. But the article doesn’t really address that specific consumer. It’s talking about the person who rejects new cars out of hand because “they cost more” without actually comparison shopping.

      This person, if he truly exists, has nothing to do with elasticity of demand.

      • 0 avatar
        ajla

        “Demand elasticity is the market’s reaction to a change in price”

        What you are referring to is specifically known “the price elasticity of demand”. Other measurements of demand elasticity exist that have nothing to do with price changes. At its core, elasticity is just the measurement of how two things respond to each other.

        “This person, if he truly exists, has nothing to do with elasticity of demand.”

        I disagree. The buyers Jack wrote about are a good example of a relatively inelastic demand curve. Beyond that, there are plenty of articles out there about how brand loyalty or market perceptions impact demand elasticity. That might not be “Econ 101” material, but it’s hardly PhD stuff either.

        • 0 avatar
          TW5

          @ ajla

          You’re right, I’m referring specifically to price elasticity of demand, which is the default on a quantity-price graph, unless someone is referring specifically to another variable. Phobia of new things or ignorance is not an elasticity variable to my knowledge.

          Perhaps though someone can write a scholarly paper about elasticity of demand as it pertains to phobias and ignorance, but I’m not sure it would be recognized outside of contrarian circles within academia.

          Furthermore, the “saving money” aspect of your original post made it clear you were referring to price elasticity.

  • avatar
    DeadWeight

    Jack is BACK and that ain’t NO WHACK!

    On a non-automotive theme, centered around the industry I’m in (I wear two hats, one created by a specific degree and licensing, and the other by opportunity + few fellow co-workers or employees “street smart”), there are very similar anomalies now running at light speed, making even self-proclaimed “experts” dazed and confused, because of price distortion (there’s lots of mis-pricing of significant assets and horrendous, never-to-turn-anything-other-than-losses – until the workout is done post meltdown) and a lack of fundamentals supportive of many deals voluntarily,’freely being entered into by “sophisticated investors” such as insurance companies, pension funds, private equity (LLP aka OPM), etc.

    I’ll make a phenomenal claim/prediction here and now: Asset prices across a large swath of what comprises the economy are even less fundamentally sound, and more ridiculous when viewed from a rational, math-based approach, than the run-up in prices from 2002 to 2007, and the only real question is whether hard inflation (due to globally coordinated fiat printing on a massive scale) or hard deflation (due to the lack of the ability to such a thing for a variety of reasons, too numerous to list here) will follow when the next real downturn occurs.

    Finally, here’s a humorous Rodney Dangerfield clip from ‘Back to School,’ whereby Dangerfield’s character destroys the theory in a vacuum being peddled by his professor:

    • 0 avatar
      28-Cars-Later

      You really must come out to Vegas in October so I can confirm you are indeed real and not Kim Jong-un.

      • 0 avatar
        DeadWeight

        28CL

        I was there from May 20th-23rd for official biz (but actually arrived on the 18th and left on the 25th because why not when your rp-suite at The Cosmopolitan is paid for as well as a healthy per diem for food/beg/transport is allotted), and I was also in the general area of Nevada-Utah last week of March (business + plus some fun).

    • 0 avatar
      TW5

      Why is a downturn imminent? Why can’t foreign capital simply return home, and swap places with privately held American capital trapped overseas previously by high statutory corporate rates and repatriation tax?

      Without a doubt, investment patters will be different because fund managers will control less capital, but I’m not sure why a correction would be apocalyptic.

    • 0 avatar
      Drzhivago138

      Just a heads-up: if you wanna link YouTube vids, just include the “/watch=” ID so the spam filter doesn’t remove them. Like this: /watch?v=Hy8kmNEo1i8

  • avatar
    FreedMike

    At the lower end of the market, used cars are definitely a sucker bet.

    I’m not as convinced when it comes to luxury cars. Around here, you can pick up a three-year-old entry-lux car (BMW 328, Audi A3, etc) for a touch over 21 grand.

    As far as that Elantra’s concerned, if I lived in Canada, I’d be putting my 21-year-old, impending-college-grad kid in touch with Mr. Stevenson post haste. That’s one hell of a car for that kind of money.

    • 0 avatar
      PrincipalDan

      Sometimes it almost seems like the higher the original price the steeper the depreciation. Compare a CPO XTS to an Impala. With similar miles/model year the dealer’s suggested price is almost the same.

      • 0 avatar

        My inlaws bought a 2016 highlander limited platinum recently. Retail 47,000 seems like the sell around 42,000 they paid 31,000 with 24,000 miles. They pay cash so financing does not matter. They get 5 more years and 80,000 more miles on the power train. 1 year comprehensive. So they saved over 11k and about $600 a year in property tax. Not sure it work that well on a lower trim thou.

  • avatar
    cicero1

    I’m guessing there is more to the story of the car pictured. For instance i recently saw an ad for a 2016 Infiniti Q50 with less than 15K miles for 17K. a look at the fine print showed it was “factory repurchased” – likely so full of electronic and other issues you’d be better off with a horse.

    • 0 avatar
      Jack Baruth

      There are five of them on the lot, all brnad new, and you can get an Accent with the same options for a grand less, making it a $7800 USD car.

      • 0 avatar
        FreedMike

        That’s nuts. Talk about the perfect car for a recent college grad.

      • 0 avatar
        arach

        @Jack,

        Its not a $7800 car because its a CAD, and you can’t buy a new car as an American in Canada. Drives me nuts.

        I tried so hard to do that last year. I was going to cash purchase a canadia Mazda 6 GT (MT- because they don’t sell them in the US). It was legal to import, but not illegal for the franchises to sell to an American…

        The only loophole would have been to buy it as a Canadian, pay HST, then import it to the US as a used car, then AGAIN pay local tax on it (for an effective tax rate of like 20%)

        Used cars however can be purchased by an American in Canada on a whim, no real hurdles as long as you follow the import laws.

        So since this is a new car, I object to referencing them in USD currency, as those who count their cash in USD are ineligible for acquisition of this car… (but are eligible for the used alternatives!)

      • 0 avatar
        deanst

        As I’ve mention before, car prices can very widely between the 2 countries. Nissan likes to price cheap models at the same numeric value, so a savings of over 30% in Canada. (Options may vary).

        Can I interest you in a $10,000 Micra, or $7,600 USD? Perhaps a $23,000 USD 370Z?

  • avatar
    DeadWeight

    p.s. – On a broader, societal level, today’s price distortion and lack of the ability to price anything rationally (largely in part to financialization and regulatory capture, graft and government contracting) is a major constituent reason why so many people are anxious about their financial security, and feel resentment and frustration to a degree that is causing them to reject societal and economic norms of the last 60 years.

    Example: My niece was confused and resentful that the one Jenner that started a makeup company is now a 25 year-old billionaire (on paper), given that she claims that the makeup is of poor quality, and is only successfully sold because of social marketing, “curation,” societal trends (i.e. Celebrity Water in a can advertised by engineered gossip). When millennials see these things, they ask themselves if it’s fair that they might make 40k a year (maybe without health insurance, maybe in a gig economy, or as a contractor), working 40 to 6p hours a week.

    • 0 avatar
      FreedMike

      It’s who you know…

    • 0 avatar
      JimC2

      “Example: My niece was confused and resentful that the one Jenner that started a makeup company is now a 25 year-old billionaire (on paper), given that she claims that the makeup is of poor quality, and is only successfully sold because of social marketing”

      That’s actually a good life lesson under the topic of “life’s not fair.” You should turn the lesson around and teach your niece how she too can take advantage of the kinds of people who spent their own hard-earned money on those poor quality products. Somebody is going to take advantage of them and get rich, and somebody might as well be you or somebody in your family, right?

      • 0 avatar
        TW5

        @ JimC2

        I’m not sure anyone is taking advantage of them. They simply place far too much value on celebrity, and they are probably completely passive in their quest to find alternative products.

        I suppose it is debatable whether this is attributable to their behavior or whether they are being manipulated by search engine analytics and algorithms.

      • 0 avatar
        TDIandThen....

        An awful lot of the millennials I’ve met are taking the lesson that US society is not fair, crooks are in charge at almost every level, and capitalism works no better and in some ways worse than autarky or totalitarian communism. Having lived on a kibbutz and generally liked it, I don’t often argue too much against their position.

        • 0 avatar
          bking12762

          This kind of thinking is what is wrong in the USA.

        • 0 avatar
          FreedMike

          U.S. society has never been fair per se. But I can see how milennials would think the deck is stacked a little higher against them.

          • 0 avatar
            bking12762

            Liberalism is a disease of the heart and mind. It is a dangerous and failed ideology that rewards laziness and incompetence, but punishes hard work and success. It is a severely skewed concept of “fairness” that takes from one and gives to another whether deserving or not. It favors special interest groups over individual liberty. It is the entire opposite of what our founding fathers had in mind. It is a system of entitlements that results in supply causing demand instead of the opposite. It is fiscally reckless and morally misdirected. It says it promotes tolerance and equality, but the result is racism and class warfare. It is a false belief that mankind can evolve for the better and that government can socially engineer a utopia. It is a cancer that spreads if left unchecked.

          • 0 avatar
            FreedMike

            blah blah blah

          • 0 avatar
            Lie2me

            Ditto, “blah blah blah”

          • 0 avatar
            ClutchCarGo

            “It is a false belief that mankind can evolve for the better”

            If mankind cannot evolve for the better even as its technical capabilities evolve, mankind will not exist much longer.

          • 0 avatar
            Lou_BC

            @bking12762 – Which “alt-right” site did you cut and paste that pearl from?

            Winston Churchill was talking about socialism at time when the USSR was being seen as a bigger threat than Nazi Germany.

            Mindless parroting of a second hand quote just makes you look and sound like a mindless parrot.

        • 0 avatar
          ClutchCarGo

          A large number of millennials are caught in an education trap, where an ever increasing number of jobs require a post-secondary degree, which requires an unsustainable level of indebtedness for most degree holders. A small percentage of degrees will result in employment that justifies the price tag. The set of millennials who do not get a degree are screwed if they don’t pursue other job specific training, and the unwary student can get screwed by private schools that don’t deliver the real training needed. I can see why the millennial generation sees it as an unwinnable game.

          • 0 avatar
            Arthur Dailey

            The writers of the American Declaration of Independence and Bill of Rights would have described themselves as ‘liberals’. Those who blindly denounce liberalism or ascribe to it the attributes listed above, do not know what it is or stands for.

            If you were a Caucasian, male, born or raised in North America between 1930 and 1946 you won the ‘economic jackpot’ in a way unmatched in history. Those of that generation who put down others or who complain about how hard they worked do not understand just how lucky they were.

            The same largely applies to the ‘early Boomers’.

            Millenials are in a difficult economic position. Many of the jobs that they train for will not exist in the future. And many of the jobs that they will spend much of their careers in, do not exist now.

            Furthermore, rampant international capitalism has forced them to compete in an unfair labour market, with the often over educated populations of developing nations.

            Corporations/employers no longer demonstrate loyalty to workers, because their markets are international so they have no ties to any community.

    • 0 avatar
      Scoutdude

      I’d say you and your niece’s parents owe her several apologies. First and foremost that you have failed as human beings because you are not able to give her the notoriety and funding that made it possible for her to start that makeup company.

      But seriously this does show a failure in educating her because she apparently fell for buying said makeup because it was from a celebrity and/or because she felt she needed to purchase it to fit in.

      The other problem that affects so many Millennials is that no one taught them that the world is not fair.

      Back when I was growing up when Johnny asked why Jimmy’s slice of cake was bigger he was met with the standard response that life isn’t fair. If he persisted he just might loose that smaller slice of cake all together. Now when Jaden asked why Aiden’s slice of cake is bigger the parent will bend over backwards to make things fair.

  • avatar
    Scoutdude

    The theories taught in Econ 101 are sound. The problem with application in many of today’s markets is that it is based on both parties in the transaction being rational and also assumes that they are well informed. Car dealers do their best to ensure that the customer is not informed and cars being an emotional purchase for many means that the buyers are not rational.

    The other factor at play here is the car itself. It is a base model w/o AC or more importantly AT. Fact is just like the percentage of rational car buyers the number of people who know how to drive a car with a manual transmission is at an all time low. Of just knowing how to drive a manual transmission doesn’t mean that the person is willing to buy a car with a manual transmission.

    So the reality is that most dealers don’t stock manual transmission vehicles and if they do it is purely so they can say they have the model starting at $X of course with the stacked discounts no person can actually qualify for, and possibly at a dealer discount that results in a loss. Hence the marketing term Loss Leader where you advertise something to good to be true to get the customer in the door in hopes that you can flip them into a vehicle that maximizes the dealer’s profit.

    Econ 101 also perfectly explains why there are people who will pay more for a used Toyota than a new one. We know that the dealer wants to maximize the profit from each customer. We also know that most people are not rational when they make a car purchase, even though they will often convince themselves that they are being rational and will often attempt to convince their friends and family that they purchased a particular vehicle for purely rational reasons. This type of consumer also probably thinks that they are better informed than they really are.

    As you mentioned there are lots of people who have been saying that used cars are a better value than new cars. If the person who has been preaching that used cars are the way to go is a close trusted friend or family member then it may be taken as universal gospel.

    Give that dealer a customer that “knows” a used car is always a better deal and you’ve got the perfect storm. The customer will be completely uniformed about the price of the new car because they are set on shopping for a used car. The salesman usually would have zero reason tell the customer who has asked for a used Camry that he can sell them a new one for the same or less money because it will likely have less profit in it than the used car that the dealer “bought right”.

    • 0 avatar
      PrincipalDan

      I had a pipe smoking Econ professor who loved to talk about “Homo Economicus” (rational economic man) – even in my early 20s I knew he did not exist outside a textbook.

      • 0 avatar
        DeadWeight

        “Neanderthal Economicus” exists today and is seen ordering Mcdonald’s McDouble with Big Mac Sauce on side instead of 2x expensive Big Mac.

        *I do not eat any fast food, so this is strict observation of others. My body is a temple and I only eat grass-fed beef, organic veg and fruits, clean bison, venison, EVOO, etx.

    • 0 avatar

      People aren’t rational really is the answer for the most part. There is also alot of talk on econmics blogs about monopsony. Basically with more research economists are now starting to think not just pure monopoly is bad but that it extends much further down to even just slight restriction distorting markets. In this case it would be that the dealers, auto makers etc, have a unspoken (sometimes spoken) agreements or ideals that allow a common thought process to manipulate a market.

    • 0 avatar
      TW5

      Econ 101 explains the supply curve for an oligopoly. It does not explain the demand curve. Jack seems to be focused on demand.

  • avatar
    RedRocket

    Well, it IS a Hyundai with (a) no auto box (b) no A/C and (c) plastic wheel covers. How many such masochists exist in the area, much less in North America?

    • 0 avatar
      deanst

      The rational Economic problem is that a base Hyundai is essentially half the price of a desirable civic with auto and air. Sure most would agree the civic is better, but is it really worth twice as much if you were thinking rationally?

      • 0 avatar
        Scoutdude

        You do need to factor in the fact that a lot of people do not know how to drive a manual transmission vehicle and aren’t willing to learn. For them this vehicle has no value.

  • avatar
    gottacook

    As someone who first read Larry Niven’s Ringworld in its first printing as a 1970 Ballantine paperback, wherein Louis Wu made hourly transfer-booth jumps from west to east during the first few pages (it wasn’t until later printings that he went from east to west, thereby lengthening his birthday as he intended), I don’t understand the allusion “But if there was a direct connection to the way business worked in my daily life, it must have been made of Larry Niven’s shadow-square wire.” Shadow-square wire doesn’t stretch and has unbelievably high tensile strength, only breaking when (for example) a starship runs into it at high speed. Please explain what you meant. (Maybe the sequel novels have to do with your intent, but I disdain ’em all.)

    • 0 avatar
      Jack Baruth

      Well, you can’t see the wire, but it has immense power.

      That’s my implication: that the connection wasn’t obvious even though it was supremely powerful.

      I have an early Ballantine paperback sitting around here… somehow I ended up reading Engineers before Ringworld itself.

  • avatar
    djsyndrome

    Honda used to sell CX- and DX-trim cars all day long without factory a/c. If you were interested they would tack on $995 and wheel your car directly into service after signing to install a factory kit if you so desired.

    Wonder what the option is to add a/c to this Elantra, if any.

    • 0 avatar
      KalapanaBlack7G

      I knew a guy with a 2002 Accord DX automatic, with dealer-installed A/C and cruise control.

    • 0 avatar
      strafer

      I bought Element DX new in 2003, manual with no AC or stereo!
      Then had the dealer add the AC for around $1000 and added my own head unit and speakers.
      Couple of years later Honda dropped the DX and sold LX with AC and stereo included. Guess they didn’t sell many base DX.

  • avatar
    Arthur Dailey

    1) Appreciate the Larry Niven reference. Everyone should read his version of Inferno before reading Dante.

    2) I actually have looked at this exact model. They are advertised provincially in Ontario. In Ontario Hyundai did the same with the previous generation Elantra. VW did it with their City Golf & Jetta. GM did it with their final generation Blazer/Jimmy. Ford with their last run of Rangers, except the price got ‘run up’ by demand.

    I coveted it as a replacement for either my 7 year old, MT Sonata or as a go to work/go to school for my live at home children. Personally I can live without A/C. And prefer manual windows, locks, etc. It comes with the Hyundai warranty. And the standard new car safety features. However my family members believe that it is wiser to wait and purchase a ‘more fully equipped’ vehicle like a Kona, Kicks, or Soul that will have a better resale.

    3) Personal purchases, including investments are generally based more on emotion than on logic or probabilities. They most likely explained that in ECO 101. And the probably apocryphal story of the French economist/bureaucrat who closed a successful program because “it may work in practice, but it does not work in theory”.

  • avatar
    Arthur Dailey

    For those interested Hyundai Canada’s website has these listed at just under $16k ‘on special’. They are however advertising lease specials, which is surprising based on the residual value of a ‘stripped’ vehicle.

    The move up to A/C requires I believe upgrading to a different trim level, at a considerable price.

    And when I looked it was not at this price, higher but below the $16k listed.

  • avatar
    TW5

    Believe it or not, the dysfunction in the American automobile market place is related to trade deficit.

    When a nation runs a current account deficit, net exports are negative, and GDP experiences downward pressure. Something must give. Generally speaking, foreign direct investment must increase to balance payments or currency exchange rates must rebalance to reduce negative net exports. Currently, foreign countries are pumping all of their capital into the United State to expand our already unsustainable trade deficit. It’s suicidal and destructive, but they do it because its the easy way to keep their middle class happy.

    The result is capital inflow of approximately $500B per year into the US. What is the financial industry supposed to do with all of this excess liquidity? Without a doubt, some of it will go into equities, but they don’t want to create a liquidity trap so some will also become loanable funds to drive consumption. Since the market doesn’t actually have sufficient demand for credit, consumers must be induced. Dealers and creditors will work together, the same way realtors and mortgage lenders were working together during the housing crisis.

    It also helps if consumers are competing for a finite quantity of goods. Real estate is nearly finite. Going vertical is not easy and city service infrastructure is expensive and slow to expand. Remember when Sergio Marchionne was whining about industry over capacity? Does it make sense now? The auto manufacturers would benefit, if they work together to suppress the total supply of new cars, especially as the trade deficit increases purchasing power via cheap, plentiful credit.

    Limiting global capacity, I suspect, is also why the manufacturers are fighting the Trump admin regarding tariffs and expanding production in NAFTA. They don’t want to build new factories in the NAFTA zone because they will have excess assets, and the only way to utilize them will be to make and sell more cars, increasing global supply.

    Yes, the market is completely broken, but it’s not necessarily due to misconceptions by consumers. Instead, people are being induced to overspend by foreign governments who want America to consume itself (literally), and by manufacturers who intentionally make low-margin vehicles undesirable so their products become a sort of de facto Giffen good. Tax regulations did the same thing to the US healthcare industry.

  • avatar
    spookiness

    Economics, Schmeconomics. If I saw that car and that sign, I’d be convinced it was a gimmick. No way would I walk into a dealer to be put through that ordeal to find out that advertised price was due to stacking a dozen different incentives and rebates I wouldn’t qualify for. That said, I like the US “value edition” Elantras, but I just have no reason to buy, even if they were $10k. My ugly Focus is paid for and reliable.

    • 0 avatar
      Scoutdude

      I’m sure a number of people are scared away for the same reason you are, that the price was a come-on that had some loophole that made it impossible for them to buy at the advertised price.

    • 0 avatar
      danio3834

      This car is a floorplan squatter. They’d sell it to you at a loss just to stop the bleeding. It’s possible they’re using the gross from the truckload of Santa Fes they got in exchange for taking a load of utter sh1t to offset loses.

  • avatar
    SavageATL

    Those of y’all who live and breathe cars, and are fairly well versed in other fields, have absolutely no idea how an absolutely astonishing number of people actually buy things.

    Some years ago, my cousin bought a Ford Ranger, used, just because he “wanted a truck” and the dealer managed to get him to buy a used car for considerably more than what the new car was and added every conceivable gimmick. Cousin’s wife falls for the “for a little bit more than your current payment, we can get you into a new version of this car” EVERY TIME. Last time, he had backed over something in their driveway in the Pilot and it was “making a noise.” So, they went and traded it in, two or three years old. I asked him, cos he is an HVAC tech, what would you do if your HVAC was making a noise? Would you fix it or replace it? It was like a bolt from the blue.

    One ex never even looked at prices on the grocery shelf and never compared and just grabbed the first thing that came to eye.

    My sister in law was insistent on getting a two year old minivan until I insisted she look at new ones. All the two year old ones are ex rental and with the rebates, weren’t very much cheaper. They ended up getting a new one.

    Yah, depreciation blah blah blah. It’s very math dependent. Some cars depreciate faster, further than others, like luxury brands, some don’t depreciate much at all. Why are you concerned about depreciation anyway? If you’re going to trade the car in within 5 years, you’re PROBABLY BUYING THE WRONG CAR TO START WITH.

    There’s an absolutely staggering level of financial illiteracy around.

    • 0 avatar
      danio3834

      Most people aren’t in the car biz, let alone begin to understand what goes on behind the veil at the retail level with new cars. Nor does the average person actually go through the car buying process often enough to fully grasp it. Most people glide along on perceptions formed by assumptions gleaned from other sources and experience with real world interactions that they poorly understood.

      I can’t really blame them, it’s an incredibly complex business and deliberately so. Obfuscation helps keep prices high.

      I think it was when I first stepped into an Adesa lot of 10,000 very late model cars (mostly rental and lease returns) that I realized how commoditized cars really are. But not only that, the seeming gap between the retail hype and wholesale grind. Every one of those cars will be sold. To someone. At some price.

    • 0 avatar
      Sub-600

      “There’s an absolutely staggering level of financial illiteracy around” The majority of comments on this thread will do nothing to dispel that notion. If an audio component was available it would sound like Paul Krugman on nitrous oxide explaining amortization tables in French.

    • 0 avatar
      TW5

      @ SavageATL

      I think most of us are aware of the unbounded irrationality of many car consumers. The question is how they sustain themselves.

      The article suggests the market should have sorted these people out by now, and yet irrational schema seem to dominate the industry. Is it advertising? Is it lending? Is it dealer gimmicks? Is it genetic stupidity and financial amateurism?

      I tend to look at it from a macro perspective. American consumers are dumb and relentless because that is the outcome desired by the global economy, and virtually no one is working to countermand the shenanigans of corporations and foreign governments. Aggressive expansion of the US money supply by the Fed doesn’t help, though that policy is more a symptom than a cause.

  • avatar
    Der_Kommissar

    Jack- check out “Predictably Irrational” by Dan Ariely. I’m also a decision scientist who almost jumped to the private sector to try to help people sell more cars, but chickened out at the last minute. People are not economically rational, but they are somewhat predictable.

  • avatar
    ttacgreg

    So, this Elantra will presumably not appear in an ace of base post any time soon.

  • avatar
    bking12762

    Lou BC-You are correct, I did copy and paste it from where I don’t remember. I hope this did not violate a TTAC rule. To be honest, I did not realize that it was a notable quote as the person I ripped it off from was just a parrot from the interweb also. Nonetheless, the words are evidently powerful and true and speak for themselves IMHO.

    • 0 avatar
      bking12762

      Also, do not confuse free market economics with alt-right. But one could easily associate planned economies with the left.

    • 0 avatar
      30-mile fetch

      -I don’t remember where I plagiarized it from.

      -I don’t know the background or context of it.

      -I frankly don’t care anyway because my mind is made up and any random rant is “powerful”, “true”, and “speaks for itself” if it fits my world view.

      Can I borrow a quote from you about how “This kind of thinking is what is wrong in the USA”?

      • 0 avatar
        Lou_BC

        @30-mile fetch – Sigh…….. Yes. The problem is that people don’t search for the truth, they seek validation of their beliefs. The internet makes that worse since one can always find a “like minded person”. Critical thinking is much harder than common thinking.

  • avatar
    hirostates12

    All of this is explained by my “People Are Idiots” economic theory, which goes like this:

    People are idiots.

  • avatar
    dal20402

    There’s no better example of this phenomenon than the market for Subarus in the Pacific Northwest. At the same time when I bought my new 2013 Forester XT for more than $4K off MSRP with 0% financing, I could have bought a 2011 XT with 40,000 miles for a higher price on a crappy used car loan. Obviously that’s why I bought the new car.

    I sold that same Forester a bit more than three years later, with 25k miles on it, for 84% of my original purchase price. The dealer I sold it to marked it up to 90% of my original purchase price and it sold within a week.

  • avatar
    I_like_stuff

    “For $8,400, you can get a new Hyundai that lacks A/C or an automatic transmission”

    Yeah and about 95% of the public either a) doesn’t know how to drive a stick or b) would never consider a car without A/C. This car proves Econ 101 perfectly since the demand simply isn’t there for this product. There is a considerable % of the population who wouldn’t drive this car if the price were $0.

  • avatar
    deanst

    Frankly, I’m more amazed when I see the GTI on sale for $20,000 USD. Outside of VW haters, just who would buy anything else?

  • avatar

    I had three brand new Transit Connect vans and couldn’t dump em. They were getting old and we switched em to used and bumped the price back up $2000 higher and sold all three within two weeks. All to folks traveling for a deal from outta state and all had been looking for awhile. They all only had been looking at used vehicles.

  • avatar
    PandaBear

    Used car is not a great deal usually until at least 3-6 years old, even then if you can afford a new car and bargain well it is better to buy a new one and keep for 20 years.

    Because new cars are commodities you can shop across dealers, used cars are all a bit unique and makes cross shopping slightly harder.

    This is identical model comparison, if you add in the manual no ac base model loss leader it skew toward buying new car even more.

  • avatar
    el scotto

    Very few people want to buy this car; very few people want to buy the base model of any vehicle. I say the manufacturers make a few stripper models for mostly artificial “demand” purposes while Ole Four Square Larry can get right to work on a nicer model that is in supply (stock). Oh there are a few cheapskates who insist; nay will only buy the Single Letter model or an XL/WT/Tradesman if going the truck route. Oh they’ll carry on about TCO, this is TTAC after all; but I (and great many others) don’t (or wont) spend 7-10 years in an “Ace of Base” vehicle. For those who live in a major metropolitan area; you can get a CPO off lease luxury vehicle for what a new compact care costs; Chevy/Caddy, Ford/Lincoln, Toyota n Nissan/Lexus n Infiniti. The last four have separate lots.

  • avatar
    danio3834

    Is anyone actually confused about the economics of this car? Anyone that’s ever tried to sell a new car in the last decade with no A/C and a manual transmission will tell you demand is basically nil. These 2 options are a non starter for North Americans at any price in the new car realm. Basic luxuries have trickled down to even base compacts at reasonable prices. Potential cheapskates in the used market rarely cross over. If I was this dealer I’d call my Sudanese exporter, but even they have a steady supply of 10 year old american used cars with A/C and automatic transmissions.

  • avatar
    Sub-600

    They should just donate the pos to the Kidney Foundation or something and write it off. Either that or find the northernmost car dealer on the continent and sell it to them.

  • avatar
    King of Eldorado

    Twenty years ago, I needed an economical car for a temporary but of unknown duration 140-mile/day round trip commute, and zeroed in on a new Civic CX 3-door: manual, no AC, crank windows, steelies…. My local dealer (early internet days) assured me that they didn’t have any in stock and in fact they sold those “right off the truck” on the off chance one showed up, plus, “didja know these have double-wishbone front suspension…?” (yeah I did know that.) I laughed in his face and told him OK, I’ll take the next one you get for XXX price cash and here’s a deposit; done deal and I wish I still had that car today. My point, based on an Econ 101 course and a few years in retail, is that there’s a buyer and seller for everything, and Econ 101 pretty much covers it IF the parties bother to inform themselves.

  • avatar
    King of Eldorado

    “We can call it ECO 100.5: They Don’t Think It Be Like It Is, But It Do.”

    Kinda transparent racism, eh Jack?

    • 0 avatar
      gtem

      You’ll have to explain the racism angle to me here. He’s quoting a hilarious quote by Oscar Gamble of internet-meme fame. What’s wrong with that? Gamble is black, and?

    • 0 avatar
      SPPPP

      Actually, more like “translucent trolling”. It’s like “run it up the flagpole and see who salutes”, only it works both directions. You can also see who complains. That single comment seems to have increased comment count by at least 5 (including this one), so one could say it is working.

      Also, I thought the quote was applicable and kind of funny. :)

  • avatar
    gtem

    I think there still are some worthy used car buys, mostly in the heavily depreciated (but CPO) lightly used premium/luxury car space.

    Another very specific example (IMO) are the newer Nissan Armadas, one of which I finally test drove this weekend in the ex-fleet SV spec that I’ve proselytized about before. The cheapest I see a new 4WD SV anywhere in the country on cars.com is right at $40k, you can get a 1 year old one of these with 30k miles for about $31k if you look. And let me just say that I was absolutely smitten on my test drive. It just fit me like a glove. The velour is indeed the classic Japanese stuff that I so sorely have missed. I think the wood grain on he dash is vastly more interesting to look at than some typical coal-bin interiors with piano black trim these days. The power is incredibly smooth and addicting, the ride is quiet and sublime. Hugely wide cabin with insane rear legroom. Downsides are I wish some of that rear legroom instead went towards the cargo area. Also, the third row does not fold entirely flat, you can push it flat but the pre-load on the springs causes them to be propped up at a slight angle by default. That’s just lazy/sloppy. Also the SV’s 2nd row passengers look at a very obviously blanked out area of the back of the center console (occupied by more vents and heated seat controls on upper trims). Mind you there are vents in the ceiling for 2nd/3rd row, but it still looks crappy. Aside from that the interior is much closer to the 90s Japanese interiors I grew up with and love, more so than any Toyota I’ve been in recently.

    • 0 avatar
      Carroll Prescott

      You get what you paid for. The interior may be dandy, but that exterior only gets better the more accidents that it is in (and not repaired).

      • 0 avatar
        gtem

        I don’t mind it. I really don’t care for the QX80 however, and especially the pre-facelift one. I do think the global Y62 has better bumper designs front and rear, ours are different due to 5MPH crash standards.

        For the price (new or used), I’d say it walks all over a 5.3L Tahoe.

  • avatar
    Stumpaster

    Yup yup. My favorite are the smarties who buy cars off a lease. Sure, why wouldn’t you want a car that someone ran from new knowing they won’t be keeping it? Oil changes, wheel alignments, tire rotation, those are silly expenses when the car is on a lease. So you smarie buys a car from lease, with say 30K miles, and in short 10K miles starts to replace brakes, tires, full fluids, all the while paying on a used car loan. The dollars just don’t add up, if you do the maths.

  • avatar
    joeb-z

    I leased a Ford F-150 in 1997 as strictly an exercise in price. Ford was taking away their credit card money I had accrued. In a lease, they pay you back for any “free” or discounted options at full price in the residual. So I hunted down an F-150 with a New England Patriot package and a straight six with a manual. The package was about $200 and they bought it back for $800. The engine/trans got you free air conditioning that they bought back. I did a two year prepaid lease. About $1000 out of pocket and $2K from the evaporating credit card. Beat it up a bit hauling 35 loads of brush from an ice storm. Two years later I turned it in in Ann Arbor.

  • avatar
    Carroll Prescott

    After reading about Canadian dealer practices, likely what you have here is the lowball offer and then loads of dealer addons – I bet there is fine print here somewhere – it has to be disclosed. The actual price the car will sell at is likely around $14999 after the interesting Canadian sales practice fees are added. And don’t forget that outrageous biweekly payment! More places to get the customer.


Recent Comments

  • Inside Looking Out: MBella, it has nothing to do with turbo. Last five years I had two Fusion with 2.0 Ecoboost and...
  • ABC-2000: I don’t understand why it took that long? Back in June 2011, I was looking for a new car to replace a...
  • APaGttH: What was the last NA V8 that punched at 500 HP with NVH that would be acceptable for Cadillac built? Oh ya,...
  • APaGttH: It will go to trucks/SUVs first because ‘merica.
  • theoldguard: I had two of these PowerShud-d-d-er transmissions. Clutch packs pulled on both. I used to follow the...

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States