The idea of buying a car as an investment that should retain value is totally alien to me. The thing starts to lose value as soon as you drive it off the lot. By the time you're done with it the car will be worth a couple hundred to a few thousand bucks. You agreed to buy at the listed price, and that's on you.
When your back two tires hit the road outside of the dealership, the car is instantly worth 20% less.
Cars don't appreciate unless they fall under the classics category, and the time frame involved is decades. Who's going to hang on to a car for 60 years in case its the next 57 Chevy?
> When your back two tires hit the road outside of the dealership, the car is instantly worth 20% less.
No longer the case. After cash for clunkers, the used market is much more expensive than it used to be. If you're looking at reliable brands like Toyota/Honda a two-three year old (ex-lease?) model isn't even 20% off, and that has 15-20K miles on it.
There's a reason why so many people are buying new, the used market is strange/irrational for some brands. And new vehicle incentives/lower APR loans/safety features etc make it a hard call.
People should go check out a no-negotiation dealership (e.g. Carmax). You'll be surprised at current used prices compared to new.
Your information is out of date. Cash for clunkers was a while ago.
I work in the used car industry and across the board (on average) used cars depreciate at about 1.5% to 2% per month! Some are slightly better and some are worse, but the vast majority depreciate in that range.
I am shopping for cars right now, I'm talking about my current experience with the cost of recently used vehicles (specifically Toyota, Honda, and other reliable brands).
> I work in the used car industry and across the board (on average) used cars depreciate at about 1.5% to 2% per month!
Where can I buy these two year old vehicles that are 48% off? Or a three year old vehicle for 72% off? I'm seriously asking, link me to a 2017 Toyota Highlander Limited for $22K or a 2016 Limited for only $11K...
Locally a 2017 Toyota Highlander Limited is $32K with 65K miles on it. Or $36K with under 20K miles, that's a two year old likely ex-lease vehicle that has a 15% discount, but a higher APR, worse features, higher maintenance costs, diminished warranty, and a lower resale value.
The current used market is highly irrational right now. Your imagined used market where cars are 48% off after only two years sounds fantastic, but that isn't the reality on the ground.
> Where can I buy these two year old vehicles that are 48% off? Or a three year old vehicle for 72% off? I'm seriously asking, link me to a 2017 Toyota Highlander Limited for $22K or a 2016 Limited for only $11K...
You misunderstand what 2% depreciation means per month.
2 years at 2% would be:
1 - (0.98^24) ends up at 38.4% off, not your 48%.
3 years at 2% would be:
1 - (0.98^36) == 51.6%, not your 72%.
The reason obviously being that 2% off monthly means that the 12th month's 2% is a lower dollar amount that the first month's 2%. This is also intuitively true since a vehicle depreciates more steeply at the beginning and less over time in total dollar terms.
Also I said 1.5 to 2%. At the 1.5% end of the range, a vehicle at 3 years is:
1 - (0.985^36) == 41.9%.
Not too long ago I did the rounds of dealerships. Each new car dealership had a corner of their lot for used cars. It was a head-scratcher to me to repeatedly note the same model cars in the used corner that were two years old, but cost $1-2K more than their brand new counterpart three rows over. Even with a little effort to control for features, I couldn't reconcile the price difference. I challenged a few salesreps. They just shrugged their shoulders.
This is 100% true. My sister sold a piece of junk Subaru that had a defective engine which was replaced twice for like 85% of what she paid two years prior.
I would normally agree... also unbeatable cars in the snow. Some of the 14-15 models had defective engines, and the car I was referring to was one of those.
There are cars newer than 60 years old that appreciate :). Of course, they do not usually appreciate past retail, but they appreciate relative to the lowest historical cost.
My last two cars I sold after a year of ownership for about 3% less than I paid. In the most recent case I sold the car for just $500 less than I purchased it for as a new car with 20,000 miles on it.
Go price out used cars that are a year or two old and then price out an invoice less holdback purchase on a new car.
A lot of modern supercars appreciate rapidly now days it seems.
A a 3 yr old used LaFerrari will likely cost you triple the original price for instance
Aside from really terrible models and premium/luxury cars (and some edge cases like EVs), a new car should not depreciate 20% in the entire first year, much less the moment it rolls off the lot.
In Spain, dealers struggling to meet their annual sales targets will register a car and give it plates in order to hit their targets, and those cars are known as 0km cars.
They sell at a ~10% discount to new cars. They're a day old and haven't rolled off the lot yet.
Might not be allowed by their sales contract with the manufacturer, or might not find a buyer for that price before some deadline for which they want to hit a target.
The dealer is providing a buffer for the manufacturer, holding extra stock at their own risk. The manufacturer rewards this behaviour because it’s in their interest. The customer benefits from this arrangement with a discount. All parties involved are aware what has been done, all parties consent, no parties are defrauded.
They do it in the UK too, not sure who it is defrauding? I guess it could be the franchise defrauding the main dealer, but they'd see that the franchise registered it?
The sale transaction to the eventual customer is still recorded on the later date, so tax, etc., shouldn't be affected?
Sure they do. Check at your dealer late in the year and there's a good chance they'll have one or two early lease returns or "floor model" units sitting on the lot. If you compare the price of those ones to the ones of the same model year that are still brand new, you'll see a disparity.
Aside from cherry-picked anecdotes, go ahead and research it -- depreciation information isn't too hard to find. A run of the mill Toyota or Honda will depreciate maybe 15% in the first year, then the rate goes down significantly in the following years. Still worth more than 50% of original price at five years.
Yes, if you try to trade it in right after you buy it you are going to get bent over, but you could put it on the used market for a couple grand below what you paid and as long as you didn't overpay to begin with it will sell quickly.
Huh, maybe we're agreeing more than we're disagreeing, because a brand new Civic is like $20k. So if you're putting it on the used market for "a couple grand" below the new price, then there's your 10% drive-off-the-lot cost right there.
Depreciation should 100% be part of your equation when buying a car. Yes, you take a hit for buying new. But there's a huge difference in losing 30% of your value after 5 years vs 70%. The average consumer car has a depreciation curve upwards of 20 years. People buy Toyotas because they hold their value, and lease BMWs because they know they don't.
FWIW, typical depreciation at five years is 45-55% (with 55% being an unpopular Chevy or FCA product, and 45% being a Toyota). 70% only happens to EVs (and in particular, compliance EVs), and sometimes it's far worse than that (looking at you, Fiat 500E).
> I’ve been saying it for a while, Tesla’s pricing structure makes them look like amateurs.
Nice little passive aggressive completely unargumented quip here...
As a consumer and a free (but fair) market proponent, I want "amateur" pricing structures.
I don't have a lot of experience buying cars, but I recently needed some FX conversions. Compare TransferWise and OFX.
TransferWise offers transparent pricing, they do the conversion at mid market rate and add a bit of fees on top (the bigger the transaction, the lower fees are in percentage terms).
OFX advertises "no fees" but they offer wider bid/ask spread than the market does, meaning that they do charge fees, but they're hidden in the price you're being offered. In addition, they're happy to improve the price if you call them out on this!
TransferWise are amateurs telling me "we offer a service". OFX are "professionals" who are communicating "we're trying to exploit amateurs with an opaque pricing structure that tries to disguise how much our customers are overpaying".
I know which one I'll be using!
Edit: a simple way to see how much you're actually paying, is to try a two-way transfer - e.g. first ask the service to give you the price for 1000 GB (say 1,160.29 EUR), then transfer that amount back to GBP (I get 992.78 GBP). Assuming symmetry, the fee for a one-way transfer then is (1000 - 992.78)/2=3.61 GBP or 0.361%.
It's especially bad since Tesla's whole goal was to make EVs more accessible, mainly by starting at the top-end and working downwards. They were never trying to create some exclusive luxury brand not meant for plebs.
You're not understanding. It's bad that the Tesla owners are protesting price decreases, and especially bad that they're so stupid that they don't understand that this was Tesla's intention all along.
Who exactly is generalizing it to all Tesla owners? You seem to be making up a strawman. The discussion here is about "Tesla owners protest over drastic price cuts", the title of the article. The title and article say nothing about all Tesla owners, only the ones who are protesting over price cuts.
It's like a an airline ticket. You're happy to have one for the price you paid, but man, if you find out the person beside you paid $20 less, your fury knows no bounds!
>> Did you read the article or are you going by the headline? They are upset because some of these buyers got their vehicles days before the price cut.
> So what? You buy something if you feel it's worth the price. They bought it for the price, regardless what the price is after.
When I was a kid, my parents bought a TV at Best Buy. That model went on sale the next week, so my parents went back to the store that weekend and were refunded the difference.
Obviously there are some limits to policies like that, but IMHO, they're the right way to treat your customers.
Sure, but for a car your cost of ownership is affected by the resale price. If that drops $30k overnight the car suddenly becomes much more expensive to own.
I didn't see this sentiment in the article. Buyers were angry that they paid an extra $30k buying the day before the announcement. Is Tesla offering any sort of price protection for recent purchases?
What? They didn't believe Musk's claims about price reductions when they bought them? I mean it's been a long time coming but he built a space program for heaven's sake.
I can empathize with the anger over a price reduction when you just bought a product. I bought a truck and a month later, the dealership had an additional 5k in rebates. Same happens when you buy an expensive tv, and a couple months later, the price drops by 1-2k. Technology products are constantly becoming cheaper through innovation and to satisfy supply/demand economics.. why is a tesla any different?
If you bought a tesla for resale value, you are doing it wrong. Buying a tesla helps the environment, furthers innovation, and provides a status symbol.
If you're willing to wait, tech things tend to get cheaper over time, should I be annoyed that had I waited instead of getting a 486 with 8mb ram, I could have got something orders of magnitude faster, for an order of magnitude less?
These people for what ever reason didn't want to wait, they paid more, in return they got some extra months/years of use of a more exclusive machine.
That's the early adopter deal.
Plus as you say, if you bought a tesla for resale value, you are doing it wrong.
> One of those markets is Taiwan, where the price of a Model S P100D was cut almost in half by Tesla’s latest price changes – resulting in about $100,000 in savings.
When people complain about $100 drop in price on a iPhone or whatever I don't have any sympathy, but 50% on a ~$200,000 car is... significant.
That's the market, you can't buy premium cars, the epitome of consumerism and status symbolism, and ask for social justice when something happens.
We're not talking about medicine, food or other basic human needs here, we're talking about a car that costs 100 times the yearly minimum wage of some countries. Luxury isn't a right.
I'd like to see the same people reacting to a price increase, they'd probably be just as virulent on twitter, but boasting instead of complaining.
It's not an investment. It's not a necessity. The money that was "lost" was already spent on hedonistic value. (In any case, Teslas can be returned within a number of days of purchase. The individual who bought five days before the price drop is almost certainly within that window.)
Two good comments there:
1) "huh... i guess outrage over a price drop falls under the category of "there's no such thing as bad press""
2) "The news accounts on weibo posted the news in a negative tone. But the comments are mainly against who demand refund over price drop. So I would say it's now viral without much backlash"
Considering how drastic the changes were overseas and built in demand Tesla not only garnered poor public response they gave up a lot of free money.
hindsight is 20/20, they should have walked it down to the lowest price points over the course of the year while broadcasting the fact that they expect to cut prices continuously.
This ain't to excuse some US customers but I am afraid far too many people here are merely looking for an excuse to be a victim so that they in turn feel important. Reddit is all over the place with pro and con comments. The sense of entitlement. that some people have is astounding.
ps: if you want to see entitlement approach ridiculous levels just check out the crying in the apple sub that 5gb free cloud is pathetic, shameful, and outrageous.
Sucks, but cry me a river. I'm more upset we've been tax subsidizing luxury car purchases by $7.5k for years. That should have only existed for the bottom economy models, not status symbols for the wealthy.
The issue is not of value depreciation; anyone willing to drop a few thousand on a new car understands it. New buyers are pissed because they lost the opportunity cost game. They wanted their new toy NOW, and are crying because they're out thousands of dollars because they couldn't wait.
Many owners are not upset because they understand that with any tech product, prices drop over time. I would venture to say most owners, but over time the clue level will be diluted so it’s hard to say.
Yes, and for an extra $5 you can be covered against finding cheaper buyers remorse insurance. And for an extra $1 you can be covered against finding cheaper buyers remorse insurance insurance.
This isn’t Tesla’s fault. It’s the owners’ fault. When you purchase a Tesla you are making an extremely risky decision to purchase a vehicle coming from a brand new car company. The vehicle lifetime, maintenance, price, and service quality is all an experiment right now.
Call me boring but I’ll be sticking with my Toyota for a bit longer.
What does "new car company" and "vehicle lifetime, maintenance, service quality" have to do with price?
Btw, this isn't just Tesla, it's Elon Musk. SpaceX also lowered their prices, and forced all other competitors (old companies) to lower theirs as well!
It's all in the same domain as a new car company doing 'new' things. Tesla is experimenting with every facet of its company process. Sales, maintenance, production, etc. If I were an owner I wouldn't expect anything to stay the same except the company's goals.
Maybe you'll buy partly on the promise of features that haven't yet been delivered, and they either won't be delivered or won't be as good as you expected when they are. It might have fit-and-finish problems like cars used to in the 1980s, like a leaking sunroof. Perhaps quality standards will vary as production ramps up, so reports by journalists and early adopters will prove inaccurate. You might need customer service, and find it barely exists, Google-style. You might find Tesla's own mechanics can't get the parts to do repairs, because of supply chain problems. Maybe you read positive reports, but they were written by Tesla fans biased by their enthusiasm for the brand, or journalists biased by their access to free press cars. Perhaps you'll need a replacement part after owning the car several years, and you'll find replacement parts are no longer available. Maybe there will be some subtle software bug that will inconvenience you, but with trigger conditions rare enough Tesla will never prioritise finding and fixing the cause. Perhaps there will be some expensive part that wears out after X, when competing cars usually last for 2X.
As you'll appreciate, quantifying the chance of such problems is difficult.
