How come there are so many expensive new cars on the roads?

I was wondering how people can afford the vast number of new cars, lets say 141 and younger
on the road in the higher end price range 40k+.

Are these people paying cash ? Then well done to you.

Large hire purchase monthly repayments at terrible interest rates ? Why do you do it ?
I hope you can afford it. Why do we like debt so much in this country and to show off in flashy cars ?

I reckon to justify a landrover as a priority in your life you need to have a 200k salary, own a successful company, be in the higher professions etc.

We have a 1.25m valued house with 400k mortgage and a 2004 audi a4 but could never afford or justify a new loss making car (due to looking after our childrens futures primarily and the mortgage and important things like skiing!).
There are people a mile away from me, in lets be honest here very average 1950s pebbledashed semi d homes with no less than 2 151 BMW SUVs outside at least 70k each value. Can anyone explain the logic here ? Again well done if you aspire to that and can genuinely afford it.

Maybe they don't have a €400,000 mortgage.

or value material things that are not good investments.

Your post reminds me of living in London in the 1990s. I rented a room in a house that at home I would have considered very poor. A tiny kitchen, sitting room and converted bedroom downstairs and two bedrooms and a bathroom upstairs. The whole thing would nearly have fit in my parents kitchen.

The street was full of similar houses, which in Ireland if you knew someone who lived in a house like that, you would have thought it was unfortunate that they couldn't afford something bigger.

The street was also full of new high end cars. I knew no one in Ireland at the time driving a new BMW or Audi, this street was full of them.

Different values I guess. You are probably getting old like me. Look at this thread, everyone needs a new BMW.

People are inherently different and choose to focus their budgets in different proportions on different priorities.

We have one 10 year old car and are choosing to build up cash reserves at the moment. My sister & husband insist on 2 new BMW's every 3 years, yet they are in an insolvency process with the banks. We earn broadly similar salaries.

I shop in Lidl, She shops in SuperValu.

Yes different values I suppose, good replies cremeegg and JamesN.

What actually would be interesting to get some figures on what % of the high end cars on the road are
3 or 5 year expensive agreements, or bank loans, versus cash buyers.

Maybe its published somewhere....

personally, I drive 35K+ miles a year so I prefer to drive a good decent and safe car. Not a 40k+ one in my case but I change it ever 2-3 years due to mileage. Everyone's circumstances are different, I don't want an old car with fewer safety features and more likely to break down due to the amount of time I spent driving

I was thinking the same. I read that the vehicle with the most sales this year is the Hyundai Tuscon ([broken link removed]).

cremeegg said:

Your post reminds me of living in London in the 1990s. ...The street was also full of new high end cars. I knew no one in Ireland at the time driving a new BMW or Audi, this street was full of them...

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Can't really compare it to England. The costs of running and owning a car in the UK are a lot less than they are here, and its a bigger more competitive market for cars.

Expensive cars are usually paid by:

1. Personal debt
2. Company cars
3. Lease plans

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

What are the ways less expensive cars are paid for SBarrett?

When you mention personal debt above are you talking about the car loan from the bank, credit union etc.?

The vast majority are on the never-never I would think. Most will have balloon payments to boot (pardon the pun!), meaning that from Jan 2017 onwards there should be a plethora of cars hitting the 2nd hand market. A lot of people are getting over-exposed again I think. Perhaps not in the grand buy-to-let sham in the mid 00s, but lots of debt nonetheless.

Firefly said:

The vast majority are on the never-never I would think. Most will have balloon payments to boot (pardon the pun!), meaning that from Jan 2017 onwards there should be a plethora of cars hitting the 2nd hand market. A lot of people are getting over-exposed again I think. Perhaps not in the grand buy-to-let sham in the mid 00s, but lots of debt nonetheless.

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I would tend to agree ....

The car has traditionally been one of our "status symbols" so a new flash is high on many peoples' list of priorities.

The finance arrangements on offer from several of the larger car manufacturers, offering 0% or 3.99% finance cannot be ignored ... but people should be very careful before signing up for such arrangements, given the serious financial implications they are committing to.

It makes perfect sense for those spending a lot of time in their cars to want a good quality, reliable car. But thereafter, there are few reasons to justify the expenditure and people in the mindset of buying new (or near new) cars.

I strongly recommend that people take a serious look at quality second hand cars. The likes of Mike Brewer and Edd China on Discovery Channel's Wheeler Dealers for example, shows just how good a car you can have at a reasonable price (even if it does need a little work when you first get it)

Given that a lot of these new cars are funded by borrowings and that there has clearly been a huge increase in purchases, I presume the Central Bank (who after-all regulate these lenders) are taking a close look?

Maybe young people who cannot buy houses are buying cars instead. Ireland it would appear to me to be booming again - based on observations and trips back. Also noticed traffic has greatly increased. Any of my family that were unemployed are now all working again for a long time. Some of them are working their way out of debt. I assume some others in Ireland have rid themselves of debt and are maybe splashing out.

I was listening to Michael O' Leary on Newstalk, didn't he once say there was no need for the new terminal. Well I use both terminals and they are heaving.

bmount said:

I was wondering how people can afford the vast number of new cars, lets say 141 and younger
on the road in the higher end price range 40k+.

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Since 2010 it seems like all the manufacturers/dealers have switched from offering subsidized personal loans to PCP financing. This seems to have the effect of making it more attractive to replace every 3 years rather than make the balloon payment at the end and own/keep the car. http://www.consumerhelp.ie/pcp

thedaddyman said:

personally, I drive 35K+ miles a year so I prefer to drive a good decent and safe car. Not a 40k+ one in my case but I change it ever 2-3 years due to mileage. Everyone's circumstances are different, I don't want an old car with fewer safety features and more likely to break down due to the amount of time I spent driving

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I think the primary motivation for a lot of our car spending is to signal status. New car buyers often cite Reliability and Safety are primary motives. I think there's an element of rationalization at work here:

Reliability
Good quality cars have been very reliable for the last 20 years. Unless you buy a lemon, the days of long car trips being a lottery are gone.
In 10 years and 200k of driving <€5000 cars, I have experienced 1 breakdown. I was off the road for 1 hour, and the experience cost me ~€300 to replace an expired fuel pump. Breakdown assistance costs €20/30 per year. Unless your time is unbelievably valuable, the depreciation costs of a newer car dwarfs the increased cost of breakdowns and maintenance on an older car.
I suspect that a 2 year old car is more reliable than a brand new one, since manufacturing/assembly/software bugs are most likely to shake out during the first weeks/months of a car's driving life.

Safety
I don't think that crash survivability has seen any major improvements since the widespread adoption of airbags 15 years ago.
In terms of passive safety (ie avoiding crashes):
ABS and traction control has been available since the late 90s and standard since the 00s.
Fancier stuff like ESP, automatic emergency braking, blind spot alarms, and driver monitoring have only been around for a few years, and definitely offer some value - maybe a few seconds of extra life expectancy per hour of driving. For most people, there are cheaper ways to improve one's health outcomes.

Its very much an individual thing I think,as someone that use to work in the maintenance of corporation houses in Dublin I used to be amazed at some of the conditions these people were living in and they might have a new car outside the door totally mad to me, but saying that my own father had the exact same attitude you didn't have it made until you landed with a new car. I perfer a nice house myself.

My 'new car' is a result of coming into some money. It's a 131 and it's the newest car I've ever had. My previous car was 13 years old and same with the one previous that I replaced it with. I bought the latest one as I had the cash right there and it'll probably be the newest I'll ever buy so may as well take the opportunity.

There is limited value in 2-3 year old second hand cars at the moment so people are going for new ones instead.

PCP can be great in certain circumstances and it's certainly driving the growth in new car sales.

I think it's interesting though to take a walk around the car park of a firm with really well paid employees. You'll typically see high end cars in the 2 to 6 year age range, probably without a cent owed on them, and no new cars.

I would never buy a new car personally.