• Nov 12th 2006 at 9:09AM
  • 25

Cars are becoming increasingly affordable? It hardly seems possible given today's economy, but statistics show that a new vehicle purchase takes a smaller bite out of your wallet today than it has in years.

You can bet that huge incentives and subsidized leases have been a factor in bringing those costs down. Bloated inventories have forced automakers to do whatever it takes to sell vehicles that are sitting not only on dealer lots, but in storage yards around the country. These factors have helped the average cost of purchasing a vehicle today fall to an average of 23.6 weeks of income for a family making $58,000 a year. That's nearly three weeks fewer than five years ago and 7.3 weeks less than in late 1994. Average vehicle prices have dropped 5 percent over the last year to $26,500, while median family income rose about 5 percent.

Several dealers have had customers come in to buy a vehicle with paperwork from a vehicle purchase from the mid-80's and the price of the new vehicle is only a couple of thousand more, some with dramatically lower payments. While everyone seems to complain about how expensive things are today, it certainly doesn't seem to have affected what they drive.

[Source: Detroit News]

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    • 1 Second Ago
      • 8 Years Ago
      My Dad's 1992 Toyota Cressida stickered for $28,000 with leather, a CD player, ABS, and four speed automatic.

      His 2003 Avalon stickered for $26,000 with leather, a CD player, ABS, and four speed automatic. Not to mention front and side airbags, traction control, and that wood trim stuff.

      The difference? The Cressida was shipped in from Japan, the Avalon is made in the US... and the I-6 in the Cressida went into a few Lexuses (I think) and the Avalon picked up the Camry's V-6.

      The bottom end of the market's gotten more expensive (though better), but the "meat" of the market has essentially remained unchanged for the past decade or so. On the low end, $18,000 can get you a 4-cylinder Fusion, Sonata, or maybe an Accord - about the same as a decade ago. On the higher end of that spectrum, $35,000 can still get you an entry level BMW, Lexus, Audi, etc.

      It also helps that modern 4-cylinder engines are roughly as powerful as the 6-cylinders of a decade or so ago.
      • 8 Years Ago
      Any decrease in relative car prices is highly outweighed by significant vehicle improvements over time.

      A car costing, say, 70% of the average wage in 1980 can't come close to a car costing 70% of the average wage today. It's worked that way for so many products. Hell, keeping wages constant or even decreasing them a fair amount would still mean consumers are better off for the vast majority of products like cars. The difference in bang-for-income-fraction-buck is simply not measured by looking at prices or wages.

      The CPI and recent real wage blip don't accurately reflect the fact that what people receive for their income portion gets better and better all the time. Indeed, I'd argue that the real wage blip is precisely because we get more value for our money; specifically, global wage effects from other economies making our consumer goods at such low prices.

      Economic life is always improving. People who think the old days were better are either old cranks or hopeless nostalgics. Either way, they're fools.
      • 8 Years Ago
      how is everyone forgeting the one of most important factors in lowering the affordability of an automobile. The interest rate in the mid eighties was flirting with 10%, and there wasn't the huge incentives that there are today, those lower the monthly payments significantly. There was no zero percent financing back then.
      • 8 Years Ago
      > i am old enought to remember when you went to the doctor and you paid for it yourself but thanks to price and wage controls put in by the federal govt companies started to give health care insurance as a way around the contols to give wage increases.

      Ding. Ding. Ding. Motorman is the winner. Health care is hurting to the extent "third parties" are involved. Look at the areas that are not covered by insurance. Plastic surgury, LASIK, Homeopathic, etc. These areas are booming and price is not come crass item beneath the vaunted medical professionals. It's an integral part of the process. LASIK prices have fallen by nearly a factor of 10 since it's introduction. You don't see them clamoring for a "Department of LASIK", do you?

      Capatalism. Works everytime it's tried.
      • 8 Years Ago
      everybody in this country has "health care" just walk into a emergency room for free treatment. a lot do not have "health care insurance" but the ones that do are paying for the ones that do not. my wife was in the hospital from 8:00 AM one day till 11:00 AM the next and my insurance paid $55,000. this will cover the cost for a lot of people who do not have insurance. i am old enought to remember when you went to the doctor and you paid for it yourself but thanks to price and wage controls put in by the federal govt companies started to give health care insurance as a way around the contols to give wage increases. every action has a reaction and this is what happened there. as far a wages go times have changed and you will not make $50,000 to $100,000 a year working in on the factory floor like it has been in the past. you need a education in the right fields to make that kind of money now. if the stuff like DVD players,Ipods flat screen TVs we buy now were still made here in the USA most average workers could not afford it
      • 8 Years Ago
      Interesting timing: Just last night I calculated what I paid in todays dollars for new cars bought in 1984 and 1992 using a very convenient inflation calculator at www.westegg.com/inflation. The 1985 Cherokee I paid $16,000 for in 1984 would cost $30,000 today, and the 1992 Grand Caravan I paid $22,000 would be $30,000 today. I saw an ad for a new Grand Caravan yesterday for $17,000. Supply and demand have changed, and there is tremendous excess capacity. Cars are cheaper, generally.
      • 8 Years Ago
      If income is going up, and the stock market is at an all-time high, what is so bad about our economy? this myth of a poor economy is perpetuated by people typing it because they hear it from so many sources that back it up with nothing, look at the numbers sometime and i think 'the economy' may impress you. Cars may be becoming more affordable, how about you leave your comments to cars, not econometrics...
      • 8 Years Ago
      "wow, I still can't believe there are people who think the President has much to do with the state of the economy

      The people of my country never cease to disappoint me, time and time again

      Posted at 11:40AM on Nov 12th 2006 by apt34 0 stars"

      Sounds like this guy Loves Bush...must be a true right winger..they all think he's doing a great job.
      • 8 Years Ago
      I think cars are getting both cheaper and better when you consider that today's cars have much more content than cars of the past.

      Almost all cars sold today have standard air conditioning, power steering and brakes with ABS, longer-lasting radial tires, airbags, and more. They use less gasoline and are more reliable even though they're more complex.

      In the '50s and 60s, cars were considered well worn when they reached 60,000 miles. Today's cars are expected to run twice that far before they're considered high mileage.

      After adjusting for content, new cars cost less than those of 30 to 50 years ago. And new cars are MUCH safer, more reliable, and require far less maintenance.

      Anyone longing for the "good old days" wants his/her youth back, not the crappy, old cars of the past.
      • 8 Years Ago
      Well if I recall, my 2000 Chrysler Cirrus LXi started at $20,085, and the 2007 Chrysler Sebring Limited starts at 27,265. So that proves cars are not cheaper.
      • 8 Years Ago
      First the car issue: Our 2003 Accord SE sits on the used car lots (certified) for about the same we paid for it when it was 2 years old, I have not lost a cent on that car. It's ride and handling are phenominal, pickup with the 4 cyl is unbelievable. My 2006 Silverado is worth about a 1/3 less then when I paid for it and it has a ton of little problems that crop up. You get what you pay for, yes cost of American cars has come down.
      As for the economy, I challange all of you questioning the current economy to come liver her in N.J. Run by the dems for years and years we have not experienced one bit of the flourishing economy. I make over 100k a year and still am at the point of diminishing returns. Our property taxes when we moved into the new development 8 years ago, 3550, now 8000 a year. The politicians love to spend our money and give NOTHING in return
      • 8 Years Ago
      The economy is indeed doing brilliantly, and it never ceases to amaze me that people deny that, and it's sadly too common to see that type of dumb journalistic throw away whine "given today's economy ..."

      Leaving aside the historically low unemployment rate (when I studied economics just 10 years ago, it was thought a 6% rate was unsustainably low), low interest rates, low inflation, the vast opportunities for people who seek them rather than whine, and ongoing economic growth that is the envy of the entire rest of the developed world -- just look around and it's clear and undeniable that we are vastly wealthier than we were in the past.

      Cars don't show the kind of astonishing price plunges of, say, irons or electric razors or CRT televisions or computers or long distance phone service, but no surprise they keep getting a bit more affordable despite the drastic increases in power and quality.

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