Friday, December 27, 2013

Subtle Changes in the American Economy: Buying Cars

This C230 2002 Mercedes Benz Kompressor went up this morning on Craigslist for just under five thousand dollars. It's immaculate and in excellent shape.

    As the jobs have left the United States, for countries where labor may, for now, be cheaper, a lot of changes have come to the American middle class.  In the 1960s, a large number of people in the US middle class bought a new car every few years.  Although this may have been a delusion of sorts, many families believed that after several years, the most economically expedient thing to do was to trade in ones three or four year old car, and buy new.  This was reputed to save the purchaser any major repair bills.  In essence, you and your family would always have a fairly new vehicle.  I remember this thinking well because my family didn't believe in this. My father believed that you drove what could get you there safely, and that having new didn't make you wise, just careless with your money.  I also remember that everyone from my father's boss to some of our friends asking why we didn't do this.

This one is immaculate, but there are other types of cars for two and three thousand dollars which are just as clean.

             Of course, a lot has changed since the 1960s.  A flood of foreign cars, some superior to some of the American, and many not, have flooded into the world market, and the US one as well.  Cars don't cost four thousand dollars new anymore.  Some of them cost forty and fifty thousand dollars, and some of the luxury vehicles I see sometimes, cost over one hundred thousand.  Cars also have the potential to last longer than they once did.  In the late seventies, when I started driving, a car with 80,000 miles was on its last legs.  Now, I have many friends with lovely cars with 250,000 miles on them, who do the maintenance so that vehicle will continue to deliver reliable service for even longer.  American cars from my youth were gas guzzlers.  My first vehicle was a used gas sipping Peugeot which was an extremely economical car from a fuel standpoint.  I remember $3.85 a week fueled it for all the errands and college trips I needed.  Getting parts for it was difficult, but still worth it because it had uncommonly good gas mileage.

            Like my father, I have not had an abundance of new cars.  In the 1980s, the director of nurses at the major hospital center I worked in, didn't like my older car.  "It looks as if I am not paying you enough".  "You're not", I said.  "I can have a nice house, or a nice car" I asserted. " have two small children (at that time) and I can't afford both."   I was due a raise anyway.   She told me that if I went to a local dealer and selected a NEW car (not good used, it had to be new) and applied for a car loan at our hospital's credit union,  then she would provide a monthly raise equal to the payment of the car.  I selected the car, and she provided the raise as promised.  It was, the first and only new car I have ever owned.  It served me well, and even in its advanced age served us here on the farm running hay and supplies back and forth.  It only left the farm this year.  It will be returned to scrap, sent to Japan and recycled, probably as a car.

             Since then, I have bought used cars, only occasionally from a dealer, and most often from friends.
My current vehicle is a diesel volkswagen which is fairly new. It was purchased for its exceptional range per full tank and for its 57 mpg capability.  The downside was the initial cost, and the fact that to own this car, you need to be on good terms with a diesel mechanic, or BE a diesel mechanic.  My lawyer has retired and become a mechanic, and my son can pretty much do anything on it, and has.

              However, what I want to mention today is that many people no longer buy new cars from dealers at all.  In fact, they aren't buying used cars from them either.   Many people who were formerly middle class and now consider themselves part of the working poor, buy cars either from friends, publications like the Mid-Virginia Trading Post, the Pennysaver, E-bay, or Craigslist.   There is no shortage of some really fantastic cars and some good buys in many locations in the US and Canada in these sources.   (Craigslist has listings worldwide)  When looking at a car you heard about on one of these sources, take a friend who is a mechanic, or a smart person who might as well be one.  First, you are safer to do so, from a personal safety standpoint.   Secondly, a mechanic will notice many of the flaws which will necessitate your either thanking the person for their time and walking away, or suggesting they discount their asking price so that you can fix the items which are clearly not working.

            This week, I have been looking for a back up vehicle so that I still have something to drive when my diesel is receiving its routine maintenance.  I also could use something which has the capability of toting a few more supplies than my diesel vehicle. It also could be used by my sons when their cars are receiving maintenance or when a back up vehicle is needed for some other reason.    I am looking now because when Spring comes, good deals go almost instantly.  At this time of year, almost no one is looking for a used car, unless they must.  I looked at one yesterday and my son and I are traveling quite a distance to take a look at one today.

This is a Mazda truck.  It's immaculate, has low mileage,  and has new tires, and is only $1650. Craigslist has everything in between the Mercedes and the Mazda.

          I will admit that I wonder if more and more people sell used cars to one another, then there are fewer people buying new cars.  Fewer people buying new will eventually result in fewer used cars being available, and the prices of these rising, due to simple supply and demand.  Still, looking at good used cars intelligently from individuals rather than dealers who must meet overhead, can be a good way to get what you need at a price you not only can afford but for which you could possibly pay cash.  I'll let you know how it goes.


UPDATE:   Although I had some difficulty locating the address where the car was located, we did eventually find it.  (It has been entered incorrectly in the Garmin database.)   My son took a long look over and underneath the car and checked out the engine, and we test drove it.   We bought it and spent the rest of the day locating a DMV in the town in which the car was located, and getting the car plates, a title and registration.   We will pick it up another day. Geico was almost giddy at the prospect of our insuring yet another car, but then that is another post !


Gorges Smythe said...

Getting a gas vehicle will give you an option, should diesel be temporarily harder to get at some point.

Humble wife said...

Good Post! My husband and I have never bought a new car, and recently we did buy a vehicle it had 92,000 miles on it and it is not a diesel. Being without cash has made a new car for us one that is near its death.

Our other vehicle is the farm truck~a diesel that is a 2001. Seems like I may never have a new car!

In the world we live in new is oversold.

I enjoy my new to me vehicle but prefer the truck as it does everything and more!

JaneofVirginia said...

Yes, that's a good point Gorges. My husband has a gas powered truck, but he is almost never without it, and so I think I have only driven it once.

JaneofVirginia said...

You were wise not to buy new. A car is a depreciating asset. So much money is lost when the car leaves the lot that unless you are getting an unusual car or one with an insane warranty, it doesn't make much sense.
"New to me" will do just fine.

Linda said...

My husband and I bought a new car in 1969. He bought another new car for me in 1972. We kept new cars for at least 7 years. Our other cars were used. My parents never bought a new car. Daddy could work on them, tearing down the motor or transmission. Even when he could well-afford to buy a new car, he just refused to buy one. He had all the skills to keep a car running and had friends who either could help him, or recommend someone who could cheaply.

JaneofVirginia said...

Your Dad and mine were wise. If you can rebuild a car, and have the tools to do so, then you can save a fortune on maintenance and repairs. This saves money that you are not making on a car payment. When I was a new driver, a car payment could be $90-$160. Now people spent $600/ or more on a car payment. This doesn't leave anything for gas, car insurance, maintenance or repair ! Thanks for posting, Linda.

BBC said...

I worked in dealerships for years and even though I could get one at cost I never did buy a new car or truck. My 96 Dodge Dakota has 174 K on it still runs like a clock, it will likely last for the rest of my driving days.

JaneofVirginia said...

It appears that you and my father were correct in your thinking, even though in the boom times you might have appeared not to be taking advantage of the opportunities. My kids were smarter than I and arrived at this conclusion sooner.

Robina Shaheen said...
This comment has been removed by a blog administrator.
JaneofVirginia said...

Thank you, Robina. Best wishes.

Darren Scarboro said...
This comment has been removed by a blog administrator.
JaneofVirginia said...

Thank you, Darren,
We try to discuss everything practical here, which relates to being prepared, for emergencies, for financial challenges, or even just for life.

Ann Jerry said...
This comment has been removed by a blog administrator.
JaneofVirginia said...

Thanks for posting, Ann. In buying cars on Craigslist there is significant competition. One must do research and pre-work first in order to "strike while the iron is hot" otherwise someone else will pick up your good buy or your heart's desire. A consultant could be helpful, but one is not choosing from a new car with all the bells and whistles, but from the used cars which are available in a particular region.

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JaneofVirginia said...

The car company mentioned in Ann's post has requested removal of their link, and so her entire post had to be removed due to software limitations.