Dilution of the Modern Car

You are right, but I think it is a great thing for me personally.

Instead of going out and spending 900 dollars a month to be like everyone else, it gives me more incentive to lease/buy a cheaper car and save my money. The 900/month car is no longer a status symbol and anybody with any form of intelligence these days should not be impressed by this anymore. If you love cars and can afford a nice car...more power to you, but to me they seem like a waste of money if your only reason for purchasing one is to impress your peers, co-workers, and friends.

So this means that I am going to save my money and work hard. I think very soon when the economy takes a downturn these people that are stuck in their high house payments and high lease programs are going to be in for a serious reality check. And not only do I hope to avoid this through self dicipline...I hope to rise above them and use my saved money to make myself money in the times when others are having problems. Very soon I am trading in my "nice car" for something well below my means so that I can start saving for a house, invest, and maybe...just maybe I'll get that Ferrari someday.

There are still status symbol cars out there, but they are no longer the Mercedes/Jaguars/Range Rover/BMW's...they are the Bentley's/Rolls Royce's and of course the high end sports cars.

 

+1. It is not only cars though. We now have "luxury for the masses". Watches, women's handbags, etc. The last time an S-class Benz had cachet, was... what... the late 80s?

 

If you want to make a statement these day, you need to be driving a 4x4 F350 King Ranch Superduty or the equivalent. They cost $50-70K optioned out, aren't often leased, and cost a small house payment just to fuel. THOSE are the guys with F-U money

 

They're also a joke. At the Houston Rodeo last year we were checking out an F350 dually. How much? That specific one, $63,000. WHAT!!!! Vaseline wouldn't even help lubing up that dick in the ass.

Another problem with modern cars, is they all have design characteristics from one another. Not just subtle ones. Very obvious ones. Lexus, MB, BMW, Infiniti, Toyota, etc.

 

You hit the nail on the head.

 

Yup, seems like everyone wants luxury these days, even those that can't afford it. If you really need to stand out from the crowd of over financed "nouveau blingers" ; move into personal aircraft and yatchs before the masses do! "How can he afford a Lear Jet on that kind of salary?" "I think its one of those kit planes...notice the propellers!"

 

Reminds me all the time of people who own $40-50K SUVs. They then see a 2002 Maserati Coupe and think that the person is very well off and highly successful. When in actuality, you can get a 2002 Maz for less than an "executive" SUV, BMW 3-series, or MB C-Class.

Is that a problem? In my eyes, NO WAY! In fact, that is one reason why I love the Maserati Coupes. The depreciation on them have put them in a field that I may soon afford to own, instead of paying through the nose for a new 335i and taking a large hit in the depreciation 4 years later.

 

How about the Louis Vitton luggage. People have knock-offs left and right. Rarely will you see legit LV luggage on a commercial airline flight. That luggage is meant for personal travel on personal jets, NOT on commercial flights.

 

Thats the thing with all these knock offs of exclusive brands. You see them around so much that you are put off from buying the real thing. Was reading an interesting article in a psychology mag about people's percieved values on originality versus knock offs and copies. The gist of it ,from me, is that no matter how far you go and try to attain originality and exclusivity, its gonna be reversed engineered to differing grades.

 

IIRC, it used to be a big deal to have a 200bhp car, or leather upholstery, or power seats, etc. The fact is you can get all of that in a relatively affordable BMW 3 or Benz C-Class, and those cars are the best drivers in their respective lines. Maybe part of Uro's hangup is that all cars have become very good. If I needed a good German sedan, the C-Class does anything I'd want except seat NBA players in the back seat.

I agree that vintage or 'modern classic' cars have a lot more cachet. My 328 regularly sits next to new Porsches, BMWs and Benzes at stoplights, but there aren't any others on the road. When I park it, it's a conversation starter like nothing else I've driven. Is it as "good" as all the 2007 BMWs parked next to it? No, but it's the only car worth noticing. I've had acquaintances come over to my house just to ride in my 260bhp Ferrari 328 with crap A/C and manually adjusted seats.

That's why at some point I decided I couldn't justify dropping $80K+ on any of the newer German models went with the Audi TT instead - not the best car in the world, but one of the few that really stands out and a blast to drive, without a stupid status surcharge. I get nice comments on that car as well, interestingly.

 

I don't think knock-offs or replicas was what he was railing against. Getting back to his larger point, I sort of agree and sort of have to profoundly disagree.

Secretaries in Lexuses, what's wrong with that? A Lexus is a 30-45k car (for the garden-variety model) and an exec. secretary should be able to swing that assuming she's working for someone making six figures or greater. A Lexus is hardly a status symbol. That's a very low bar.

I suspect BMW is pushing the auto 5-series so hard because ever since the Bangle re-design they have lost their sales edge to the E-class and I'm sure that irks them to no end, so that they make a 5-series for masses, so any and all will come to the 5-series fold. I see it as purely an attempt to regain a domain BMW sees as rightfully theirs.

I don't think "anyone with a pulse" is how I would describe someone that signs on to a $900/month lease on a car. The BMW and Jag in reference, would be the short-wheelbase variants of both of them without options that one could sign on to at 900/monthly, the 750i and XJ8 respectively. Nice cars, but it's absurd to compare those to true status symbol cars. Anyway, back to the bourgeois, that's a fair amount in disposable income per month to blow on a car for most, and for most, it is not a feasible thing.

But to suggest there are no significant status symbol cars anymore, are you kidding? You don't have to love them, but there sure as hell are -- the Phantom Drophead Coupe, the forthcoming Bentley Brooklands, the 599GTB Fiorano, the Enzo, the Bugatti all come to mind.

I suspect at the heart of his issue is one of my deepest problems with exotic manufacturers too, exotics are not for the masses. And here I would define masses as models with greater than 1000-2000 units per year depending on the make. The V8 Vantage, Gallardo, Continental GT, Flying Spur, Elise, and Quattroporte all have relatively trivialized (diluted?) their brands or at least lowered the admission fee and I think that is his real concern.

My advice -- just buy a bespoke Phantom and waft around town watching the ruffians before you succumb and divide like the waters of the Red Sea.

 

Welcome to a richer world. Does creative financing or lack of desire to leave the nest play a role? Absolutely, but it's not 100% of it.

There's more wealth out there today than 20 years ago, plain and simple. The mere rich have grown ridiculously rich in the last decade and they're dragging the whole lot of parasitic professions up the food chain with them.

It seems you're looking in the wrong place for cachet. FWIW, among the newly rich in my meager town the popular method of announcing their newfound fortune has been philanthropy(with their name attached to it of course). There is no shortcut you can take on that walk, you can't give what you don't have.


Rest assured, from private jets to large yachts to speculative art acquisition, the wealthy are still at play doing things the proletariat cannot.

 

MY experience is if you're happy with what you have it doesn't matter if someone else has it too.

 

^ + 1 on this..... there will be someone faster out there, there will be someone with a more expensive car out there. find the car that makes you happy and that you can afford and get it(or in Mr. G's case,build it).

 

You're right to a certain extent, but probably by only by a factor of 2x to 3x or so relative to your (and my) "traditional" values. Out of curiosity I did a check on 1965 versus 2005 consumer financial stats:

------- 1965 2005
Income $7500 $47,000
CPI (BY=1984) 31 195
Mustang $2400 $20,000

A Ford Mustang represented 32% of a year's income in 1965 and 43% in 2005; while if you just went by the growth in CPI, it would have stayed at 32% and been $15,100 in 2005. However, most people agree that a 2005 Mustang has a lot more value (more standard features, AC, power steering/brakes, airbags, bumpers, etc) than a 1965 which makes up for the difference between $15,100 and $20,000. Aside from this value difference, if you calculate some hypothetically typical financing plans (20% down, 7% interest, 36 months vs 5% down, 5% interest, 60 months), it's interesting that the 2005 Mustang ends up costing slightly LESS as a % of annual income in terms of payments ($60/month versus $360/month or 10% versus 9%). The longer warranty and operating life of the 2005 Mustang more than makes up for its higher relative price once you revert to a typical financing plan for each era.

This extended warranty (reduced costs) and operating life (higher residuals or resale value) factor is probably the first reason for your observation, i.e. a more expensive car actually has more affordability. Second, the easy money of the last decade gave more of an incentive to finance/lease companies to underwrite low interest or low money factor financing and to qualify buyers with payments representing 20-30% of annual income (the $800-1000 monthly payments you mentioned). i.e. the financing now goes further. The third reason is implied in the financing terms above - lease terms with higher residuals or financing with low downs and longer terms make getting into a car more impulse driven (don't have to save a big downpayment and payments are proportionately lower). The fourth reason might be the "failure to launch" factor, Gen Y seems to be staying with Mom & Pop into their late 20's rather than leaving home after HS or college. That means that there is more disposable income for this cohort, allowing 20-30% of income to be spent on cars versus saving up the downpayment to buy a house (which downpayments also became progressively skimpier or unnecessary as home mortgage lenders introduced no-down, no-doc home loans - to their misfortune). Result, the boom in $40-60K cars; costing roughly 1x median income or monthly payments representing 20-30% of median income.

So given this analysis, that means that cars that cost 2x-3x median income (payments representing 60-90% of median income) are what's needed to be a cut above (i.e. the next implied social/financial strata, excluding the special case of the total parasite that lives at home and spends 100% of his/her income on a car). These are cars in the $100-150K range; where Porsche/GT-Turbo, MB/AMG, Maserati and Aston-Martin are playing. Now there is an interesting variation here for us car guys; you can still create an implication of this higher level social/financial strata with a $40-60K car that is so impractical, that everyone assumes you must also own one or more other cars; mid-era Ferraris, older Porsches or recent Lotus Elise/Exige seem to fall in this category.

Finally, it now takes cars that are 4x-10x the median income to be "really special" and have some significant social/financial distinction associated with it; which makes the $200-500K car the current elite status range. I guess that's why this range is Ferrari's sweet spot right now .

All of this just reiterates your observation, that cheap financing/leasing and changes in personal financial behavior has moved the social implications of car "ownership" up 1 or 2 steps on the income ladder, but there does appear to be some rationale to it.

P.S. This change in behavior is probably also why tuner/mod shops are booming; if "everyone" owns a $40-60K car; how do you distinguish yours from the rest for a few $K?

 

Yin, do you have any stats on the length of current car notes. You used 60 months as an assumption. Some of these plans are now 72, 84 and even 96 months. Additionally you have buyers with an upside down trade-in rolling it into the new note. Seems like nowadays very few actually own their vehicle outright.

 

Hence Dave Ramsey's slogan:

".......where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice."


URO...see if you like this idea. I thought it'd be an interesting psychological test to have people be required to have a brightly-colored sticker on the back of their car if it had a lien on it....and see how much that would change people's car purchases....once the guy in the Camry that he owned free and clear was one-upping the guy with the BMW that the bank owned.

 

No stats, I'm just going by my impressions. But you're right, some people are going for even longer notes now; while I remember when 60 month notes were first introduced for cars, I thought "who would finance a car for that long, you'd owe money on a car that would be falling apart". For a certain group of buyers, it's all about being able to make payments.

 

Side note, a neighbor asked me {two weeks ago} if I could find someone to take over his lease with two years left on it. I called him a nut case and last Friday he said he found someone. Some retard took over a lease on a two year old car and agreed to make the full payments.

Point in case, some people are stupid.

On the topic.

Cars can bump you up the ladder at work, make you feel important, perhaps even make you work harder {to pay the bills} or just inflate your ego enough so you take yourself more seriously.

A Lexus here, a Porsche there, who really cares?

 

Enterprise leases cars now? News to me.

 

Dave Ramsey is a financial counselor/business guru from Nashville that has an entertaining radio show helping people get out of debt. Not the typical "buy my 5 step plan to get you out of debt....available in three easy payments" type of guy. Hence his slogan.