10 December 2013

Do New Cars Cost Too Much?

How many cars will you buy in your lifetime? That's a lot of depreciation.

I say yes, with a qualification. The fact is that what you get for in a car and how much it costs mean they are better value than ever before. Still I say yes, they are too expensive. How does that work?

Models sell in larger numbers, are built in larger factories and much of a car is made by machinery such as robots. So cars should be much cheaper. So what holds the price back from dropping?

Extra safety does, but we don't want to compromise on that. The other thing is there are too many car makers duplicating costly car design over too many models. Car makers realise this and are trying to save in this area. Car platforms are increasingly shared within a company, and new ways of making them more usable across different sized models are being used. Yet there is much duplication within the industry.

The answer is greater cooperation between brands. As an example PSA and Mitsubishi have done some sharing of models, but limited. Why not have PSA design all cars and small vans while Mitsubishi does SUVs, a large van, pick up truck and electric car. They make them for each other, with body variances to look different. That is an obvious one. VW bought a stake in Suzuki but little or nothing has been done to share anything that I can see. So what is the problem?

Probably working together takes compromises on each side and it doesn't work out. Professional pride. Also losing brand uniqueness may be a fear too.

The reason I write this is the new car I bought eight years ago is getting near to replacement. Low kms means an OK trade in price, but I don't want to spend a large amount on what is simply personal transport. The price, depreciation, insurance, road license not to mention fuel and maintenance makes mobility expensive. I'm not a big earner and have better things to do with my hard earned money.

Over to you car makers....

2 comments:

Grunt said...

I agree completely, RayCee.
On one hand I find cars very cheap when compared to other pieces of equipment people buy. A simple kitchen extractor can cost a few thousand, a heating system for a house often costs more than a basic car - and is a whole lot simpler to develop, design and produce...
That said, in absolute terms cars cost a heapload of money now.
the success of a back-to-basics brand like Dacia shows that you are not alone in your considerations...
Why don't you go second-hand? A three-year-old car will usually cost only half, and if you set aside some of that for unexpected repairs you should save a bundle...

RayCee Smith said...

I appreciate the suggestion, Grunt. Sounds like the way to go.