Why are people throwing away so much money on cars?

[GoodSteward]

The auto market is rather absurd at the moment, and I continue to be floored at what people are doing. I'm worried the whole market will shift soon and MSRPs will go up due to all of this.

$100,000 over MSRP for a corvette? What?! Folks are basically buying a $100k ticket to buy a Corvette.

[disneysteve]

I've known quite a few guys who have bought Vettes. These are mostly retired guys with more money than they could ever live to spend. Dropping 100K on a car is no big deal to them. Dropping 200K probably doesn't phase them either. They don't care about resale value. They just want to blow the dough and enjoy themselves for as many years as they can.

You really can't use Vettes as a good indication of the overall market.

[bjl584]

All prices across the board for all cars are currently inflated.
I'd imagine that some people are buying out of necessity.
Others, are buying because they want to.

If you were bad with money before all this happened, then you're probably still bad with it now.
Lenders are extending car loans to 8 years and beyond, so the monthly payment looks attractive even with the higher sticker price.

[LivingAlmostLarge]

I think the cheapest tesla now is $46990 so $47k before taxes and after tax where I live like $52k for rear wheel drive Model 3. $55,990 pre-tax for the model 3 AWD long range (more normal one I think). So $62k for an electric car? I guess it'll run forever but at the same time I might as well keep my 2016 subaru legacy because that's a lot of gas and repairs I could be paying with the $35k I saved on buying my car "new". I guess the I would also save the $1600/year in fuel I pay but after 10 years that about $16k then repairs. But some of the repairs i bet the tesla costs more for tires and alignment the same (I'm a terrible driver), windshield blades. I definitely have not spent yet $10k on the car for maintenance.

Until I see some real life savings it's not exactly worth it. Now if i were looking at the VW ID4 with the $7500 rebate maybe but even then spending $40k on a car when I have one that still runs seems foolish.

People always see the costs of "savings" but never actually consider if they are saving money.

[GoodSteward]

You really can't use Vettes as a good indication of the overall market.

It is more of an extreme case but does bring home the point. I've seen similar things with some trucks, especially the special edition/higher-end versions of them. One dealer told me someone paid 20-30k over MSRP for a special dodge truck, just to turn around and sell it again and make 50k on it.

I mean, good for him for clearing so much on a car deal, but who is paying $150k for a 75k truck? Just blows my mind. I am not sure any market will return to normal that has been affected by this. It's resetting the value of everything. Some carmakers are now changing MSRP prices mid-year now apparently.

[scfr]

The lure of the high prices people are paying was too much for my DH to resist. He sold our 12-plus-year-old car for half of what we paid when we bought it new.
We're down to one car. He runs his small business from home so that works for us.

[Like2Plan]

This is not a good time to be buying a car. But, nearly everyone in my family has had to buy one in the past year. My 16 year old Vibe crapped out. I wanted to get a RAV4, but it didn't work out. Most of the dealerships in this area had an added 20% above MSRP fee. (Although neither my sister or my sister in law had to pay it--they bought Toyota products-one lives in the Seattle area and the lives in MA). i ended up with a Subaru (which i really like).
DS's car had 285K miles on it and had some expensive emission codes come up (I think the estimate was 5K to repair)- so he replaced it. I think he paid MSRP for the replacement.

[ua_guy]

The example of the Corvette isn't something us peasants have to worry about. The Z06 is a limited production supercar and one that is very highly anticipated. There is a market for those cars and some buyers have that kind of money to pay. It's none of my business, and I wish I had that kind of money too.

There's a bigger problem people probably aren't thinking about. With limited production cars like that, there are dealerships and resellers participating in very gray-market transactions. If dealers only sold Z06's at MSRP, resellers would swoop in and buy up all the inventory and resell at a huge profit. If dealers aren't allowed to add markup, then they do things like line up known buyers who agree to handshake deals... buyers who then decide a week after taking delivery that they want something else - and they sell the car back to the dealership who gives them a cut of the money for their trouble. It's legal. The dealer gets to sell the vehicle as "used" which gets them out of any price gouging agreements with the manufacturer, and they mark it up. It's not uncommon to see a new Corvette with say, 350 miles on it being sold as a used vehicle, having just been sold as a new vehicle a month or two prior.

On the everyday vehicle front, yeah, prices are up for both new and used. It doesn't mean a dealer will get a 2nd sticker price if they ask for it. At the end of the day they have to move inventory. I did the unthinkable last spring and bought a brand new pickup truck in a constrained market, and I paid significantly less than MSRP. But it wasn't without forethought. The truck I wanted was aged inventory that the dealer wanted to move, and my trade was something they'd rather have on their lot. Prices are one thing. Buyers need to be smart in this market.

[Franchie92]

The example of the Corvette isn't something us peasants have to worry about. The Z06 is a limited production supercar and one that is very highly anticipated. There is a market for those cars and some buyers have that kind of money to pay. It's none of my business, and I wish I had that kind of money too.

There's a bigger problem people probably aren't thinking about. With limited production cars like that, there are dealerships and resellers participating in very gray-market transactions. If dealers only sold Z06's at MSRP, resellers would swoop in and buy up all the inventory and resell at a huge profit. If dealers aren't allowed to add markup, then they do things like line up known buyers who agree to handshake deals... buyers who then decide a week after taking delivery that they want something else - and they sell the car back to the dealership who gives them a cut of the money for their trouble. It's legal. The dealer gets to sell the vehicle as "used" which gets them out of any price gouging agreements with the manufacturer, and they mark it up. It's not uncommon to see a new Corvette with say, 350 miles on it being sold as a used vehicle, having just been sold as a new vehicle a month or two prior.

On the everyday vehicle front, yeah, prices are up for both new and used. It doesn't mean a dealer will get a 2nd sticker price if they ask for it. At the end of the day they have to move inventory. I did the unthinkable last spring and bought a brand new pickup truck in a constrained market, and I paid significantly less than MSRP. But it wasn't without forethought. The truck I wanted was aged inventory that the dealer wanted to move, and my trade was something they'd rather have on their lot. Prices are one thing. Buyers need to be smart in this market.

I agree that the example of a corvette is not entirely appropriate here, because buying exclusive cars does not fit into the interests of the average person. That is why I have always bought a used car because a normal new car loses about 20% in price after leaving the dealer. And after COVID, things with the prices of new ones only worsened.