Are New Cars Worth the Money?

New Cars - Are they worth the money?

Aside from most new automobiles being a terrible purchase from a financial perspective, are new cars worth the money? Living in the throw-away world we do today are automobiles also falling into the category of being cheaply made and sold with the intention of buyers having to replace their cars more often? These are just a few questions when it comes to car manufacturing and quality today.

Cars have gotten so expensive over time that lenders have even started to offer 72- and 84-month financing to put people into new vehicles. The prices of new cars keep going up but has the quality also improved? Although some car enthusiasts would argue that new cars are being built better and lasting longer, I am not so sure.

The ever-changing global business model and the chase for the highest profits while continually cutting costs does not just come in the form of shopping at your local Walmart. The concept of low-quality cheap throw away consumer items doesn’t stop at the discount store. It might also be present at your local car dealership.

The truth today is when you buy a new car you are paying for the technology and not necessarily the overall build quality.

Car Manufacturing Has Changed

Changes in the auto manufacturing industry have made me question the quality of cars today. I don’t believe most vehicles today are made up to the same standards they were at one time. For this reason, they really are not worth the price to buy one. Not only do most cars depreciate in value fast, but they also fall apart and become very costly to fix.

American car manufacturing decades ago was vibrant and several manufacturers were known for quality. Today, this is much different. Automobile company mergers along with outsourcing for parts and labor are the modern car manufacturer business model and it’s not just American automobile manufacturers that are following this pattern. Many imported and even some very expensive car brands are always looking for ways to lower costs. This often comes at the cost of quality.

American Cars and Quality

American automobiles for the most part today are no longer looked at for having quality. Part of the reason is the decline in quality control and just control in general of the build quality for American vehicles. Cars have a lot of moving parts and not all of them can certainly be made in the same place. However, American car builders have sacrificed quality control and oversight for cheaper labor and manufacturing costs.

American Automobiles - No Longer Looked at for Having Quality

It is not uncommon today for an American carmaker to source parts from low wage countries like Mexico or China. Understandably, all car parts can’t be made domestically. However, the more often parts are sourced to other areas around the world the less oversight on quality control. Most American car manufacturers are knowingly willing to give up some quality for cost control.

Another problem with American car makers today is the many mergers and acquisitions so many of them go through. It seems one day a company such as Jeep is just that. The next day these cars are Jeep Chrysler and now they are also in business with Fiat. Many supposedly U.S. car companies are no longer only in America. Factories, manufacturing methods, and parts are often being interchanged between different vehicles. This is done to cut costs but many times at the expense of quality control.

Foreign Automobile Quality

Many of the foreign carmakers are no different than American car manufacturers. They have sacrificed quality for cost-cutting and often with sourcing parts and labor to low-wage areas around the world. It’s not just outsourcing, but some carmakers, such as Mercedes, figured out that it doesn’t pay to make long-lasting automobiles.

Probably two of the more popular foreign automakers that are still known to have cars that last are Toyota and Honda. However, Honda has recently teamed up with GM so it will be interesting to see how this plays out in the end. It could be the end of Honda’s reliability.

Even with Toyota still holding quite a bit of value with dependability in the eyes of many owners, I would argue that just about all car manufacturers seems to have something in common today that can’t be good for quality long turn. This commonality is the material they use for making vehicles. Materials that are cheap to manufacture.

How has the material in car making changed?

It is undeniable that cars today are proven to be much safer to drive. They are made to fold when a crash occurs and protect the passengers. Decades ago, cars were made from a lot more metal and steel which made them heavier. The sheet metal was thinner, but there was more of it. Today, there is a lot more plastic and fiberglass in just about all cars. Part of the argument for this could be better fuel efficiency. Yet, the truth is more cheap plastic is used because it is less expensive.

More Plastic and Fiberglass = Lower Car Manufacturing Costs - The result is lower overall quality.

The problem with the many plastic and non-metal parts on cars is they wear out much faster. Plastic tends to crack and disintegrate over time. Extreme heat only adds to the problem. Look under the hood, on the outside, and the inside of just about any car today and there is a plastic party occurring. Try to even compare a Mercedes or BMW of today to one from 10 or 20 years ago. Is all the cheap plastic worth the average price tag of over $30,000 for a new car?

It’s not just the engine compartment and trim on most cars today that use cheap materials. The finishing touches on the inside of many automobiles are also using plastic and fiberglass to take the place of wood or metal. For car owners in hot or very cold climates, the inside of a car can look faded and dated very quickly.

When it comes to quality materials being used in a lot of cars today consumers are often paying more for less.

Car Engines are Lasting Longer Today

I know some readers might argue that car engines are lasting much longer today than they did at one time. This is also true. Just getting to 100,000 miles in a car at one time was an accomplishment. Today, 200,000 miles or more seems to be common but often with an asterisk and a disclaimer for many carmakers.

The improvements in fuel injection, synthetic oils, and some of the high-tech in cars are helping them last longer today. Yet, the high mileage often does not tell the complete story. You might get 200,000 miles out of the new car you buy today, but it will likely hit that milestone with a check engine light that won’t turn off and technology glitches that you have come to live with.

Advanced Technology is Making Cars More Expensive

From an overall build quality today, I would argue that new cars are not worth the money. The cost of them is not for the build materials, but for the technology. People are paying for the advancements in the electronic and computer-controlled components in cars. There isn’t a new car sold today that probably doesn’t come with Bluetooth and a backup camera. These items are what most buyers expect today.

I would agree that it’s not just the comfort of Bluetooth technology in cars that is nice. All the fancy technology has made cars more fuel-efficient and safe but it comes at a cost. Things like digital odometers, electric windows, and tire pressure monitoring systems all eventually have an issue. They either malfunction or completely breakdown.

The problem with all the technology on automobiles today is that at some point it wears out. Computers and electronics do not run forever and car manufacturers know they do not make money when they build things that last forever. Just look at some of the most expensive technology to replace on cars and you can see the overall cost of automobile ownership can get expensive over time. An engine control module for a car, which is its computer, is estimated to cost between $1236 and $1283. Need a new electronic car key? This might cost as much as $250 or more.

Car Makers are Purposely Making Vehicles More Expensive and Less Reliable

There is nothing wrong with making a profit and America is certainly a capitalist culture. But carmakers have certainly figured out that making them last does not make a profit. Just like most companies have figured out to make things that need to be replaced several times over.

Yes, car engines are lasting longer. However, many of the parts and particularly the technology is going to break. When it does break it will be costly.

Electronics on most cars are not only going to likely malfunction or break down before the engine wears out today, but it will also many times require a specialized tool or mechanic to do the required repairs. This service might even require a much more costly automobile manufacturer dealership service department as opposed to your local mechanic.

The auto manufacturing industry is estimated to bring in over 950 billion dollars each year through sales and service. A lot of money is at stake and auto manufacturers are always trying to figure out how to cut costs and improve the quality and reliability of their vehicles. The problem is so many of them have cut costs without keeping that same quality in mind.

New Cars are Not Worth the Money

My view is that new cars are not worth the money today. People are paying a higher price for overall lower quality. There is better technology and improved performance. This is what consumers are paying for. They are not buying a more expensive car and getting a better one. Sure, there is improved safety and fuel consumption. Yet, repair costs and actual long-term overall durability doesn’t make a new car a good buy.

Forget the fact that most new cars depreciate in value on average 22% in the first year and 55% after just five years. New cars have gotten much more expensive over time and the problem is the actual overall quality has not gotten better. It likely is much worse.

The problem is people are paying much more each year to buy a new car and most wages are not rising. According to an article by Road and Track, car prices went up 29% in the last 10 years. This is while the median household income has seen a climb of just 6% to an average of $62,000. This means a new car for most people today is costing almost half of their annual income.

Buy Used Cars and Not New

Because new cars are not really worth the money, try to buy a used one. However, the truth today is that even a relatively used car just 3-5 years of age is not likely worth the cost either. It would not be too far behind in the computer-controlled electronics and an abundance of plastic. Yet, a used car will at least be a better deal financially. Not as much money would be spent on a depreciating asset.

The issue even with used automobiles today and their value is the market of supply and demand. Because new vehicles are getting so expensive more people are discovering that buying used is a better alternative. The problem with this is prices for even used cars are seeing a rise. This has been particularly the case during the COVID-19 pandemic as many people are out of work or living with an unknown financial future.

If you are in the market for a car, here is a previous article on “Car Buying Tips” that should be helpful.

Conclusion

Car pricing has gotten out of control. This is particularly the case when you look at the quality and reliability of most cars. Most automakers seem to think that every consumer is just going to accept the fact of paying more for lower overall quality standards. The problem is in some regards they are correct. It seems a lot of car buyers have gotten comfortable with six or even seven years worth of monthly car payments.

I always hear to this day from a lot of people that an auto loan is just a normal part of life. The fact is that it shouldn’t be and does not have to be. Why continue paying more and more money for worse quality and reliability. At least with most cheaply made consumer items they are actually cheap to buy. Cars are not in the same category. Quality keeps being cut but the prices are continually going higher.

New cars today are not worth the money. Don’t waste yours to get one.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest

Leave a Comment

Your email address will not be published.

You Might Also Like