Latest findings says cars more affordable now than they have been since study began in 1979
While tanking auto sales are bad for automakers, the customers buying cars and trucks are paying less for them than any time in the past 30 years. Comerica Bank's Auto Affordability Index shows that a vehicle with a $26,000 MSRP takes the average family 21.5 weeks of median income to buy. That's 1.3 weeks less than in December of 2008, as incentives have grown by an average of $1,700 per vehicle purchase in only five months. Lower interest rates and deep discounts are being assisted by looser credit requirements as well. In April, industry incentives averaged out to $2,931 per vehicle, and domestics were at $3,412.
The lower price of cars and trucks hasn't resulted in higher vehicle sales, though, so analysts expect the downward pricing trend to continue. Chrysler, for example, is beginning to offer incentives of up to $6,000 per vehicle. If GM enters chapter 11 bankruptcy on June 1, it's possible that the Detroit-based automaker could offer similarly deep discounts. Again, bad news for automakers, but not necessarily so for car buyers.
[Source: The Detroit News]
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Reader Comments (Page 1 of 2)
Tony 3:18AM (5/11/2009)
They're more affordable now to buy, and are far better value for money (think ABS, a battallion of airbags, traction control, high power engines, etc). But they're less affordable to keep longer term, owing to the cost of repairs. Cars have gotten so complicated that in some cases, to replace a door switch, you need to change the whole lock assembly (Audi, VW). Automatic transmissions not so long ago didn't have computers, and no DSG meant no mechantronic control modules. You replaced the heater fan switch, not the whole climate control panel. The body electrics had switches and relays, not body computers. The price of components make cars cheaper to build features in, but owners are not charged low prices for such components.
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British_Rover 10:07PM (5/10/2009)
Service has gotten much more expensive on new cars but they last longer too. You couldn't run a car from 1979 for 100,000 miles without a tuneup. The entire ignition system, except for maybe the coil, would have been replaced at least twice by 100,000 miles.
Most cars now the only thing you need to do between mile zero and 100,000 miles are oil changes, air filters and maybe a timing/serpentine belt.
Warranties are also much better now then in the past. What was the average warranty of a new car sold in 1979? IIRC some where around two years tops and probably less then 30,000 miles.
HiTek 4:27PM (5/10/2009)
Finally I can get a Challenger R/T for a low price. If GM go belly up then for sure a G8, Lacrosse, or the Camero. So many to choose from, hopefully GMAC can offer 2 for 1 or better yet 4 for the price of 2!
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Tango 4:35PM (5/10/2009)
but at what cost?
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akboss302 12:33PM (5/11/2009)
best post here. you're 100%.
Ramiro BA 5:51PM (5/10/2009)
Wow...doing some math I've found that buying a Toyota Camry LXE 4 cyl a/t($25.575) would be 21.15 weeks of median income in the US, while in Argentina (where I live) would cost 298.22 weeks of median family income. That's crazy! (Camry LXE 4 cyl a/t cost $ 40.300 here). Argentinian median family income is around $ 540. Lucky bastards!
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Sea Urchin 5:57PM (5/10/2009)
I'd advice that you guys stop voting in communists into power, but then what do i know living in USA.
DCorbett 6:25PM (5/10/2009)
I don't know what you do know living in the US, but what I know you don't know is that Argentina is not a communist country. Perhaps you're thinking of Venezuela?
paul34 7:03PM (5/10/2009)
Sea Urchin, I've truly come to believe you are a troll. What does this have to do AT ALL with international politics? You really just love to make inane statements, out of context, just for the sake of opening up a can of worms. And yet, you somehow truly believe you are capable of intelligent discussion, even after you get slammed and slammed again. Unbelievable - I almost feel sorry for you.
Hellas 7:28PM (5/10/2009)
Why would anyone want to buy a Camry LXE in the first place?
All jokes (political and otherwise) aside, you guys have to stop comparing identical cars sold at different countries...it is NOT THE SAME thing! You cannot take the US market as the benchmark for what every car in the world should cost. Different countries have different values, cost of living, economic index etc. etc. and the markets dictate the pricing.
If things were that simple, then I would be screaming bloody murder every time I compared my Canadian bought A4 to the equivalent US one...mine costs $10,000 more!!!! and my dollar is worth about 87cents US. If I were to buy the same car in, lets say Greece where I spend a few weeks a year, I would pay close to $25,000 more compared to the US pricing!
So once more...compare apples and apples...not apples and watermelons.!
My 2 cents guys....happy mother's day!
meatycheesyboy 7:49PM (5/10/2009)
Since the title says that cars are more affordable now than they were in 1979, shouldn't the article have a comparison between now and 1979 and not now and Demeber of last year?
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Tony 8:30PM (5/10/2009)
@Paul34 It's okay man, chill. Sea Urchin is just working on that nasty half a star, that's all. He'll manage to have a clean board one day, although if we all banded together to highly rate him and award him a five star rating it would drive him insane.
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Tony 8:35PM (5/10/2009)
One more thing, you can lead a horse to water but you can't make him drink. GM, Ford and Chrysler can come out with the best products ever but it's the dealer service and support for the consumer that sucks. I would love to buy a G8 GXP but can't in Canada and the local dealer is a crook who will make up false "safety issues" like a hole in the muffler and replace the whole exhaust including the cats. I don't need that.
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Azrael4h 9:58PM (5/10/2009)
Don't think Canada is alone in that regard. I'd love a Subaru, but the only dealer within a good distance is one I'd rather be shot than to buy from. Chevrolet dealerships aren't any better, Most dealerships are little more than criminals, scamming people on service.
If I took a car to a dealership for maintenance, they'd try to have me replacing half the car. In fact, one around here was running a scam, stating that the cars needed brakes and would refuse to release the car to the owner unless they agreed to let them "fix" it. This ended when a local station took a car that had just had the brakes redone by a real mechanic's shop in, and caught it all on camera.
I have no sympathy for dealers going out of business. About as much as I do for serial killers being executed, politicians being arrested for corruption, and rapists being raped in prison.
FSM 8:42PM (5/10/2009)
I just saw a BMW 135i nicely loaded msrp of $44k with $6k reduction special. You know dealers are hurting if BMW is slashing prices like that.
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iQuack 10:37PM (5/10/2009)
Yes, cars are cheaper when you make required adjustments. Prices have risen 2.93 times since 1979, so one 1979 dollar is almost the same as $3 today.
You really can't compare cars exactly because no 1979 car had the following standard equipment: ABS, multiple air bags, fewer maintenance periods, and most likely, standard A/C, stability control, active head restraints, crush zones, and more.
So, when you take any 1979 car, nearly triple its price, and add the current value of all the added safety and convenience features, it's clear that today's car is a much better deal.
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dUN 11:36PM (5/10/2009)
a new car or medical insurance, that is the question...
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BoxerFanatic 12:20AM (5/11/2009)
Since when has median family income been north of 60K per year?
($26k/21.5)*52 = 62883.72.
I know I don't make nearly that much, and I have plenty of other bills to pay aside from the car, and I don't even have car debt anymore. Maintenance is becoming a killer, though. 500 for brakes, 500 for fluid changes and other 60k mile service, 700 for the suspension. Clutch looking at over 800 for parts, before 7 hours of shop-rate labor... and other turbo subaru owners talking about possible turbocharger failures before 100K miles, which is easily a 1000$
4-5000$ in maintenance and possible repairs before 100k miles is a lot, well more than 10% of the original MSRP of the car. If it were some other car, the list of parts might be different, but it seems like cars still cost significantly to maintain anymore.
Plus not to mention, while MSRP may be more attainable on cars, wages aren't exactly going up right now, on average, if you manage to keep a job. Investments and property values aren't exactly on the rise, either, and there are plenty of other things in the budget that are going up. Health care has gone up 200 PERCENT in the last decade or so, if I remember the stats I heard recently. College educations have risen 400+% in the same period. Energy probably hasn't gone down, and the groceries seem to be costing their fair share lately, as well. Taxes sure as heck aren't going to go down... and those have to be paid, too.
That doesn't account for the record amount of debt that americans on the whole have accrued, and lately have started to really come to grips with, in their personal budgets. Aggregate household savings rates have just recently come back from negative territory. (spending more than earning, depleting equity, accruing debt is negative savings rate)
There are all sorts of elastic demand issues going on right now, as well as an emotional uncertainty in the politico-economic arena, and shaken confidence in the automotive industry, that all play large or small roles in the demand of cars, aside from just MSRP.
If you can afford a car now, and need one, there are of course deals to be had. But there is a lot more going on out there in the economy than just automotive sales figures and price cuts.
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Revs 8:38AM (5/11/2009)
This is true. The National Association of Realtors has been trying to make a similar claim that housing is extremely affordable now.
Cars may be more affordable from one perspective, but a household's disposable income has declined when you consider the persistent high rates of inflation for health care, college tuition, gas (for a while), and housing. Combine that with no real wage growth and rising unemployment. A new car is the ultimate discretionary purchase and people aren't going to buy any if they don't feel like they have the free income to justify such a purchase.
recharged95 1:07AM (5/11/2009)
No news here.
The same thing happened to the computer chip business. Remember paying $1500 for that 486 Tandy with 13" CRT?
Better yet, any manufacturing industry over time has encountered this situation.
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