How do lots of people afford the brand new luxury cars ?

[Stroganoffo]

Keep seeing 22 plate Mercedes, Audi , BMW and tesla, when I was little these were quite rare as only the wealthy had them. Now it seems everyone has one considering the average wage isn't that high and the cost of one is 50k. I have a good wage and still don't want to fork out lots. How are people affording them. Is it all on credit ? Aren't people worried with everything else going up and the cost of living crisis ?.

You can buy secondhand on PCP as well. We had one

The same applies to cars. We debated when we ordered the one that’s taking ten months to be delivered if we should pay outright but the money’s doing very nicely in our investment account and the pcp is at a very low interest rate so leaving the money where it is was a no brainer.

We’ve just come to the end of a 4 year lease. Our new car is far far cheaper as we’re leasing an EV and the tax breaks are huge.

Exactly. Our mortgage is 1.48% for the next 4 years. Our Barclays savings account earns 5%. We’d be silly to put any extra money into our mortgage.

Which savings account is that? I want one!

That particular one is the Barclays Rainy Day Saver, but there are others offering similar rates.

Saver rather than savings accounts are higher interest as limited. Club Lloyds is 5.25%

Increasing interest rates could well burst the bubble of "cheap" car leasing.

Already, a car subscription firm, Cazoo has been reportedly ending contracts early, maybe partly because of higher interest rates and partly the current high value of used cars.

If something looks too good to be true, it probably is!

cardealermagazine.co.uk/publish/used-car-dealer-cazoo-terminates-customers-subscription-contracts-early/278999?fbclid=IwAR3ukE7VHmzfqyR0uJMYSAeWwUbycIDS3FlVD4kjsOjxQCWc6SGfapZWs4Y

Same here - we got our car when it was 2years old and 10k on the clock. Brand new it would be £40k.
We could have bought it outright and still have money left over but preferred to have it in the bank for a rainy day, rather than having to sell the car to finance emergency payments.

@WaddleAway

Our new car is far far cheaper as we’re leasing an EV and the tax breaks are huge.

Out of interest, how long do you think the tax breaks will last. There are already increases announced on BIK values of EVs. The tax breaks are only temporary to drive people to move to EVs but won't last forever as the Treasury needs the revenue generated from vehicles.

Ev’s with current tax breaks,soon to disappear are the exception at the moment.

DH is waiting for an electric company car, which to lease (with the high mileage he does) would be over £600 per month with a £5k+ deposit. His car allowance is only £3.5k a year and personal cars must be less than 5 years old, so it didn’t make sense to use our own car (which we’d have had to replace as it was coming up to 5 years old).

If DH changed job (to one with no car), we’d go back to what we had before, buying a 4/5 year old car for c £15k and keeping it until it died.

I don’t understand people who pay hundreds a month, effectively forever as they’ll never own it, “for peace of mind” when so many are failing to save enough for a pension.

Not long at all. Also getting hold of one that you want is the other issue,as is the charging infrastructure currently.

Ta. You've inspired me now, I'm off to MSE!

Thankfully we haven’t encountered these issues. Managed to order the one we want, it will be delivered in June (which is when our current lease ends), and my company are covering half of the cost of having a charging point installed.

Yes that's true. Road tax is already being introduced in a few years time and other costs will rise accordingly. I can see costs steadily rising up till 2030, when sales of ICE only vehicles end. After that I'd expect costs to be about the same, although I'm not 100% how it'll be achieved. Some lucky people will be able to charge cars via solar so am guessing road tax or some other vehicle tax will have to be introduced.

But in the short term it's still possible to save money, which I guess is better than nothing, if you're fortunate enough to buy an EV.

Maybe they have a good wage and do want to fork out lots.

If I had leased my car throughout the time I have owned it, it would have cost £57,288. I bought it cash for £52,000 at the time and have had service charges of £9k so I'm slightly worse off ... but I do still own it and would arguably get about £20k back if I sold it privately.

Lease is a great idea if you can keep it up, but the minute you stop you don't own anything.

Where I live many people are employed by big car factories, they get deals and can change their cars every 6-12 months. Everyone near me seems to have the big new cars.

I don't believe that most cars made in 2023 will have same possible lifespan like 90s or early 2000s cars tbh

The thing is technology changes and cars now are not necessarily designed to last for years and years. I've said this several times on here now but the aim with many manufacturers is now environmental , sustainability and recycling of cars whilst embracing the new technology of hybrids and all electric. Most people don't seem to have much knowledge of this.

You are right in saying that this doesn't apply to me. You are guessing about people based on one friend.

No they aren’t designed to last a long time anymore. Peak car longevity is probably late 90’s - 2008ish.

Even recycling the majority of the vehicle at the end of life the resources used in that process are obscene. Manufacturers are aware the money is in subscription providing now, not selling one car every 10 years. It’s keeping a turn over, keeping that £400 a month coming in.

You also need to be able to actually afford to buy a 52k car as well, of course.

Leasing does make sense to some people in some instances, not in others. It's certainly not 1 size fits all.

You are right - I have 2 years left on my EV lease, and I'll be surprised if it still makes sense to take out a second one.

I don't really think it should either - tax breaks for higher rate taxpayers to drive 50k cars isn't something that makes sense, generally. Except in the current context - of creating a 2nd-hand market for EVs, by filling it with 3yo ex-lease cars.

When I sold my previous car, I set the money aside as the deposit for my next car, as I realised that I probably won't be leasing forever. That said, I love my EV, and the rapidly evolving technology and increases in battery life mean that I would probably err towards leasing, as I don't think it is clear yet what the depreciation pattern will be for EVs.

We get deals via work and can swap every 6 or 12 months
I don't, I have a 8 year old polo that's fine, 40k on it and had it since new
Occasionally I drive a work car which will be one of the brand new ones you see about. The majority are on finance/pcp/lease