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 ?.

Lease costs aren't as expensive as you'd think. A lot of the BMW's, Mercs etc are pretty low spec so aren't as expensive to buy as you'd think.

Re the leases, you're not "buying the car", you're just paying the depreciation over the 3 years. You hand it back after 3 years, and have nothing to show for it. Even worse if you pay an upfront deposit to reduce the monthly lease cost - that's gone forever. "Top" brands such as BMWs, Mercs etc tend not to depreciate as much as middle of the road cars due to the active second hand market, so the depreciation over the first three years isn't as bad.

Basically, if you can afford £300-£500 per month lease payment, you can have a BMW or Merc on your drive. But after 3 months, it gets taken away and you don't have anything to show for it. (Unless you buy it from the lease firm with a "right to buy" or balloon payment equal to the market value at the end of the lease).

Other than that, lots of people have "illegal" income/earnings typically involved in drug dealing or money laundering, or plain old tax evasion by not declaring income, or rich mummy/daddy, etc.

And as others have said, company cars are an attractive "perk", - I've seen stats showing the majority of Teslas are company cars because of the tax perks to both the company and the employee - much better tax allowances to reduce business taxes and minimal benefit in kind tax on the employee. Same with the 4 door crew cab pickup trucks (Mitsubishi Shogun etc) which seem very popular with wives of self employed scaffolders, roofers, driveway firms etc - where they're pretending to be used in the business but in reality, it's just for the wife's school run and drive to have her hair/nails done!

We pay cash when we buy new cars, then drive them until the wheels fall off. I guess we're financial idiots.

Yes, you are. You could’ve had the capital working for you for the first three years of ownership. There are still 0% or low rate deals available, for example Volvo have 0% as long as you pay a 50% deposit. Only a complete moron would buy one outright.

Realistically, there aren't always the 0% finance deals available and you can usually negotiate a better deal if you pay upfront and outright, especially if you're "open" to different colours/models as dealers often have some new cars they need to sell quickly so a pretty high discount can be haggled! Two of our least 3 brand new cars we've bought outright we negotiated better deals than we could have got with 0% finance. The best was a whopping 25% discount from list price, plus a proper spare tyre, branded mats and a towbar - list price was £20k and we got all that for £15k. The time before we got 20% off list price. We asked at the time, and those deals wouldn't have been on the table if we'd gone with their 0% finance deals. We've used 0% finance twice but only when we couldn't get a better deal with upfront payment. All the other times, 0% wasn't available and we crunched the numbers to determine that the "low" interest finance deals available weren't cheaper than just paying outright as we couldn't get better interest on savings at that time.

You really have to get the alternatives, do the negotiation, then do the number crunching. You also have to know the best times of year to get the "cash deals" - usually just approaching the quarter ends when dealers are desperate to sell a few more cars to hit their bonus targets or when they've had cars in their pound for a few months that are about to go off the dealer finance/loan scheme and they have to actually pay for them, so again, desperate to shift a car and get money in the bank! (I worked as an accountant for two different main dealerships, so understand how the financing/bonus schemes work, so know how and when to haggle!).

You’re living in the past @Badbadbunny. There are waiting lists for new cars now. We ordered ours in June last year and we get delivery next week. Dealers get commission for selling PCP and finance deals, they’re not going to forgo those and lose more money by offering discounts.

That ^^
We don't give discount for cash and waiting lists have been around 18 months

No, I'm really not. Just did it two months ago when we bought our latest car. Yes, there are waiting lists for "some" cars, maybe lots of cars, but at the same time, there are dealerships who do have cars available, particularly ex-demos at certain times of the year. Dealers still have to register demos and at the end of the "demo finance period", they have to shift them on as they have to buy them. Likewise they're still allocated cars for their showrooms and pounds, which, again, they have to shift at the end of the finance/loan period if they've not already sold them or swapped them with another dealer. Yes, I know different manufacturers have different "deals" with their dealerships, and yes, I know, the "new model" will bring them all in line eventually, but for the time being, a lot of the "old" ways of working, car allocation and financing continue as previously!

I'm fully aware of the shifts/trends in car dealerships - I've worked in/for them for decades, and I know exactly how the "new" model works re leasing/PCPs etc. I also know that the networks of new dealerships are falling fast and that eventually it'll all be remote/online and "dealerships" will basically be nothing more than servicing/repair hubs and working on commissions. But we're not there yet and there are still deals to be had if you're flexible and willing to walk away and go elsewhere. Like I say, I successfully did it just two months ago and have a lovely shiny car on the drive to prove it - not our first choice of colour or model, but it's fine and it was available to virtually drive away! Our local dealer couldn't do a deal, but one in a different town 100 miles away could (which we just popped into on the off chance during a short break there), the salesmen brought it round from their compound, we liked it, and we drove home in it the next day. Maybe we were lucky (again). But we've never been too fussy and always happy to accept whatever colour/model they were willing to do a deal on within reason.

Financed up to their eyeballs or mobility whips this is what I've found around my estate anyway. Also a lot of ppl round my way deal drugs and have business they wash money thru so doesn't surprise me either.

Mercedes, Audi , BMW and tesla are all poor people's cars. Those cars clutter up council estates, parked on the streets, in front of houses too small to have drives, proudly displaying how much debt the 'owner' will take just on to impress other, complete stranger, luxury car drivers. Try telling them this and they'll blind you with the sheer stupidity arguing how they can afford the payments but brush off any questions about their pensions or actual assets. They must be trying to convince themselves as they say YOLO I'll be ok on £800 a month state pension or that they don't want to retire early because I don't believe it.

I won't even accept a lift in a car like that as it's a massive red flag that the ride will be an ego fueled death trip controlled by a moron.

Because "financial innovation".

Cars used to be a bit like most things. You get one when you pay the money for it.

Then the financers got in on the act.

Pushing the cost of the car to a monthly payment means several things :

i) It makes the car more affordable in the short term, the tradeoff being that it is more expensive in the long term. This works the same way as mortgages, and means that financers and car companies can push the prices of cars up and skim off money for themselves.

ii) The car company can "capture" your business by making it very expensive for you to exit the plans, so you end up permanently on a plan with them to replace cars.

So paradoxically cars now are more affordable, but ultimately more expensive than they have ever been.

This is a bit like houses where the actual cost of the house is ultimately irrelevant, it is whether you can service the mortgage payment that really determines where you can live.

The benefits are to the consumer, who rather than having to save for years gets instant gratification and the ability to have a new car without having to save for it, at the penalty of paying much more in the long term. And to the financers and car companies who line their pockets with more money that they can skim off, and also confuse the customer as to what they are actually getting into with reams of small print.

Always apply the old addage. If something seems to good to be true, it usually is.

When you go into a car showroom and they push you to go onto finance/PCP, it is because it will ultimately benefit them. Not you.

Mine’s a motability car. I’d do anything not to need a motability car but it is what it is. Before I claimed PIP, we had an older car which we paid £3k in cash for.

Keith there raising a year-old thread from the dead because other people don't want to explain what they spend their money on.

Doubtless that some can get themselves into financial difficulty while reaching for things they can't afford, but I'll never understand the mindset of those that go around screeching "You can't afford that!!" at strangers who have nice things.

I'm not aware of German car manufacturers forcing tens of thousands of people into bankruptcy every year, so it can't be all that bad Keith. The last sentence of your post should be nominated for "Stupidest line of the year"