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Car Prices

4/21/2019

4 Comments

 
Picture
The other day a car ad popped up on TV. “Save $8,079 through our special April offer.” OMG!
 
That dollar figure “savings” floored me. Smashed me in the face. Made me realize my age and how much has changed the past 40 years regarding car prices vs. the yearly income of most human beings in the United States. If you’re saving that much, WHAT IS THE ACTUAL PRICE of the vehicle? I don’t want to know.
 
Probably over 80 percent of Americans cannot afford a new car. It doesn’t mean people still don’t buy them. They just finance it longer or maybe they lease instead of buying.
 
If I go back in my memory banks, I remember when the last car went over the $1,000 purchase price for a new car: the Volkswagon Beetle (the old one, that’s right). They kept their price at $999, ballyhooing it about, then they too succumbed to break the thousand dollar barrier.

Now you can get over eight thousand dollars back on a deal. Let that settle into your brain.
 
That’s eight times in SAVINGS what you used to PAY for your car. Hmmmm, if we do some math, that would mean your annual income should be at least eight times what you made in 1979, probably closer to 20 or 30 times if you consider you’re saving that eight grand and it’s not the purchase price. So if you were raking in 15 grand a year in 1979, you need to make about $300,000 annually to now afford a comparable model of car.

That’s certainly not happened for me. Nor for the vast majority of our citizens. Is it any wonder we go in debt?
 
My first car (second-hand, of course), purchased with my older brother while we were in high school, was a black Chevy Biscayne, a true boat you could sail the streets of Kankakee, Ill., with. It cost $250. We could afford that, and paid cash from the jobs we worked at the time.
 
It broke down regularly, we put new (used) tires on it when necessary, and we didn’t take any long trips with it. But the “Black Beauty,” as we termed it, served its purpose to get us and our friends to our after-school and weekend jobs, the golf course and school. 
 
We broke the bank on our next vehicle, spending $895 on one that had to have its gas tank pumped regularly to keep the fuel line from clogging. There’s your first price inflation lesson as a teenager -- $250 to $895 in just a few years.
 
I bought my first new car when I was in my early 30’s and it cost just under 10 grand. That was around 1990. The price was almost the $8,079 you can now SAVE on your current purchase of a new vehicle.
 
Cars today cost what most Americans could probably afford to pay for four or five years worth of housing. The average price of a new vehicle as of 2019, just topped $34,000.
 
If you put 10 grand down and financed $24,000 at zero percent, you could pay that off at $200 a month for the next 10 years. Sounds about right. But it shouldn’t be.

4 Comments
mike
4/22/2019 02:01:21 pm

note quite apples to apples as today's cars have lots of bells and whistles...many questionable...you can get a new car for $15K, I think...what is really hurting the average households budget is all the new stuff we need since the old days, electronic devices and phone, cable, internet subscriptions, etc.

Have a great day Sir!

Reply
Dave Simon link
4/22/2019 02:27:34 pm

Very true that it is not apples to apples. And that is a chunk of the price. One could argue, you don't want or need a lot of those bells or whistles, but it's gotten to the point where if all the cars have them, you can't get a less expensive model.

Reply
Jim Luschen
4/22/2019 02:22:42 pm

Dave, you shouldn't be surprised. Economic disparity is growing, and people/companies are adapting as a result.

It's shocking, but:
https://www.theguardian.com/business/2019/jan/21/world-26-richest-people-own-as-much-as-poorest-50-per-cent-oxfam-report

So now we see commercials on TV that could never exist back in the day. For instance, I saw a commercial for a charter airplane service, aimed squarely at the new class of super-rich so they can go on vacation without the hassle of commercial airlines. I admit it was on Bloomberg TV, where rich people watch their portfolios grow, but still...

Then for their younger elite trust-fund spawn, Southwest Airlines advertises that they should stop binge watching TV shows all week long (what, you have no job to go to?) and instead leave that darkened living room to fly off to Nashville and see what actual people are doing with their lives.

And Christmastime brings the car commercials where there are matching his and hers Land Cruisers in the driveway with bows on them. And Lexuses. And so on...

Corporations pander to the ultra-rich now because there are quite a few of them, and because average people have no money. It will get worse, watch for it.

Reply
Dave Simon link
4/22/2019 02:29:18 pm

Totally with you, Jim. Why do you think I picked 40 years as my barometer to go back? Because the schism you mention has gotten exponentially worse the last 40 years. The upper two percenters and the rest of us. I foresee a lot more collective action by disenfranchised workers in the coming years to ensure living wages.

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