The media is bursting with stories about how rapidly car prices are exploding. Up 29% since 2009! Meanwhile median household income has only increased by 6% in the same time period. What’s a poor car buyer to do! Go without, or take out a 12 year loan?
It’s all a total crock.
These articles all fail the most basic journalistic standards as they don’t even properly identify the actual subject they’re writing breathlessly about, and how they compare them over time. They’re mixing up light trucks with cars, two different categories of vehicles. Actually, what they’re calling “cars” are “light vehicles” which is a combination of passenger cars and light trucks. And the sole reason the average light vehicle price (average transaction price actually, not MSRP) is going up so much is 100% attributable to a shift in consumer preference for light trucks (pickups, SUVs and CUVs), which are of course more expensive; not necessarily because they cost proportionately more to make, but because they have drastically higher profit margins. In 2020, light trucks will make up some 72-73% of the market.
Furthermore, they’re using 2009 as a comparison, which was the very depths of the great recession. Actually, light vehicle prices haven’t changed much on average since 1999, when they hit some $34k in 2019 adjusted dollars.
Meanwhile, actual cars (“passenger cars”) are as cheap or cheaper than they have ever been since modern records. In this case, I’m going to show you a list of what the average expenditure per car (considering sales of both domestic and foreign models) for each year since 1967 as per the US Bureau of Economic Analysis, as well as what those cars would cost in inflation adjusted dollars.
1967
Car Cost: $3,215
Car Cost in 2019 Dollars: $24,251
1968
Car Cost: $3,407
Car Cost in 2019 Dollars: $24,657
1969
Car Cost: $3,556
Car Cost in 2019 Dollars: $24,398
1970
Car Cost: $3,543
Car Cost in 2019 Dollars: $22,994
1971
Car Cost: $3,742
Car Cost in 2019 Dollars: $23,266
1972
Car Cost: $3,879
Car Cost in 2019 Dollars: $23,368
1973
Car Cost: $4,052
Car Cost in 2019 Dollars: $22,984
1974
Car Cost: $4,441
Car Cost in 2019 Dollars: $22,695
1975
Car Cost: $4,951
Car Cost in 2019 Dollars: $23,190
1976
Car Cost: $5,416
Car Cost in 2019 Dollars: $23,978
1977
Car Cost: $5,813
Car Cost in 2019 Dollars: $24,167
1978
Car Cost: $6,379
Car Cost in 2019 Dollars: $24,648
1979
Car Cost: $6,848
Car Cost in 2019 Dollars: $23,771
1980
Car Cost: $7,574
Car Cost in 2019 Dollars: $23,166
1981
Car Cost: $8,910
Car Cost in 2019 Dollars: $24,704
Car Cost: $9,903
Car Cost in 2019 Dollars: $25,856
1983
Car Cost: $10,607
Car Cost in 2019 Dollars: $26,836
1984
Car Cost: $11,374
Car Cost in 2019 Dollars: $27,590
1985
Car Cost: $11,838
Car Cost in 2019 Dollars: $27,717
Car Cost: $12,651
Car Cost in 2019 Dollars: $29,068
1987
Car Cost: $13,383
Car Cost in 2019 Dollars: $29,683
1988
Car Cost: $13,933
Car Cost in 2019 Dollars: $29,685
1989
Car Cost: $14,372
Car Cost in 2019 Dollars: $29,218
1990
Car Cost: $15,045
Car Cost in 2019 Dollars: $29,020
1991
Car Cost: $15,473
Car Cost in 2019 Dollars: $28,641
1992
Car Cost: $16,334
Car Cost in 2019 Dollars: $29,356
1993
Car Cost: $16,829
Car Cost in 2019 Dollars: $29,364
1994
Car Cost: $17,803
Car Cost in 2019 Dollars: $30,275
1995
Car Cost: $17,900
Car Cost in 2019 Dollars: $29,610
1996
Car Cost: $18,525
Car Cost in 2019 Dollars: $29,753
1997
Car Cost: $19,214
Car Cost in 2019 Dollars: $30,166
1998
Car Cost: $20,238
Car Cost in 2019 Dollars: $31,273
1999
Car Cost: $20,686
Car Cost in 2019 Dollars: $31,278
2000
Car Cost: $21,047
Car Cost in 2019 Dollars: $30,776
2001
Car Cost: $21,478
Car Cost in 2019 Dollars: $30,552
2002
Car Cost: $21,866
Car Cost in 2019 Dollars: $30,613
2003
Car Cost: $21,663
Car Cost in 2019 Dollars: $29,648
2004
Car Cost: $22,068
Car Cost in 2019 Dollars: $29,407
2005
Car Cost: $23,013
Car Cost in 2019 Dollars: $29,659
2006
Car Cost: $23,629
Car Cost in 2019 Dollars: $29,509
2007
Car Cost: $23,892
Car Cost in 2019 Dollars: $29,024
2008
Car Cost: $23,429
Car Cost in 2019 Dollars: $27,420
2009
Car Cost: $23,252
Car Cost in 2019 Dollars: $27,322
2010
Car Cost: $24,899
Car Cost in 2019 Dollars: $28,796
2011
Car Cost: $25,498
Car Cost in 2019 Dollars: $28,574
2012
Car Cost: $25,552
Car Cost in 2019 Dollars: $28,047
2013
Car Cost: $25,581
Car Cost in 2019 Dollars: $27,664
2014
Car Cost: $25,464
Car Cost in 2019 Dollars: $27,102
2015
Car Cost: $25,332
Car Cost in 2019 Dollars: $26,936
2016
Car Cost: $25,449
Car Cost in 2019 Dollars: $27,060
2016 is the latest data I have readily available. What this information shows is that passenger car prices have actually changed very little over the decades, peaking in 1999 at $31,278. The gentle but steady drop in adjusted prices since then undoubtedly reflects the fact that consumers with more money to spend were switching increasingly to trucks and SUVs, at the expense of the more costly upper end passenger cars. Who buys expensive sedans anymore, other than Teslas?
And what about 2020? My answer to that question is this screenshot of several trims of 2020 Camrys allegedly available currently in Eugene. A well-equipped LE goes for $23,381. That’s within a few dollars of the lowest prices historically (1971-1975). And then let’s factor in interest rates that are still near historical lows (3-4% for good credit buyers), much better fuel economy, performance, reliability, durability, and incomparably better safety and entertainment features, higher trade in values, etc. . It appears quite obvious that the actual cost is the lowest ever. (Note: the Camry is only an arbitrary stand-in for all passenger cars, but a fairly representative one).
Even if an out-the-door Camry costs $27,000, that’s the same as the average car did in 2009. And mean household income has gone up since then by some 6%. That’s hardly much, and the reasons why are another very complex subject, but in terms of affordability, cars are cheaper than ever.
I covered this issue before back in 2015, when I showed that the actual cost of driving a comparable family sedan dropped 25% between 1968 and 2015.
Here’s a chart that shows the strong divergence of car and light truck prices that began in about 1996-1997. That was the start of the big SUV boom then, typified by the explosive sales of Ford Explorers and Expeditions. The Expedition became famous in the industry for having a $10,000 profit margin, and being the first mass product to do so. It was really not much more than a F150 with a passenger body, but it sold at remarkably high prices. Detroit was hooked.
And as this chart shows quite clearly, the average price of all light vehicles had already hit about $34k (adjusted to 2019 dollars) in 1999! So really the average light vehicle price is now just barely surpassing that previous record. That makes all the headlines doubly wrong. 2009 was simply a low point for prices due to it being in the depths of Carpacolypse at the time.
If buyers want to buy light trucks, that’s strictly a discretionary decision, so please, no more crying about how cars have become so much more expensive.
I agree with your insights but I don’t get one thing as a European. Don’t you think that classifying CUV’s and most SUV’s as “light trucks” is a bit ridiculous? Those are almost entirely based on normal passenger cars… They usually only have a bit bigger wheels and often don’t even have 4×4. Some of them are even subcompact-sized…
I think that classification on what is actually “passenger car” should change. But I’m not from your country, so maybe I don’t know what I’m talking about 😉
It’s strictly a governmental definition and highly debatable. But it’s useful in this case, because it clearly shows how the shift from cars to light trucks is fueling the average cost.
Nicely done, Paul.
Kamil makes an excellent point. I’ve always thought of crossovers as just tall cars. Do you know what exactly is the EPA difference between a car and a light truck? Is it simply ground clearance?
I wonder if a 1948 Ford would be a car or a light truck by these rules.
Nobody does. 🙂
here’s just a snippet of this very opaque issue:
When implementing fuel economy standards, however, the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) categorize CUVs as either passenger cars or light trucks depending on their characteristics and features. For instance, one of the best-selling CUV models is the Honda CR-V. The two-wheel drive CR-V qualifies as a passenger car, and the all-wheel drive CR-V qualifies as a light truck.
Other popular models that can be classified as a passenger car or light truck depending on how they are optioned include the Toyota RAV4, Nissan Rogue, and Ford Escape. For these vehicles, the differentiating factor is whether the vehicle has front-wheel drive or all-wheel drive. Some other CUVs and vehicle model types may also be classified as passenger cars by EPA and NHTSA depending on other criteria. The classification of some CUVs as passenger cars by NHTSA results in the application of more stringent fuel economy standards to those vehicles despite being classified as light trucks by some other sources. This application of fuel economy standards, as well as the higher fuel economy of CUVs classified as light trucks by NHTSA compared with other types of light trucks, tends to moderate the fuel economy and energy consumption implications of increases in the popularity of CUVs.
Wow, that’s really broken. A car is a car, a truck is a truck, and a CUV is maybe. Same vehicle even. How can the product planners deal with that??
“Cars are so expensive “. Go and buy the $9000 Mirage then, but they won’t as its so cheap looking. You get what you pay for…..
The VW Tiguan AWD is sold in the US with or without a third row seat, but the FWD version is only available with three rows. VW’s explaination was that a FWD two-row Tig would be classified as a car and bring down their car CAFE rather than increasing their truck CAFE, so now Tiguan FWD buyers are forced to spend $500 on a uselessly small (even for many kids) third row seat that decreases second-row legroom and luggage space even when folded.
Lots of people here laugh at me, but CAFE has prodded manufacturers into an endless series of little individual decisions like this. It is a huge factor in their lives. When you set a standard people have to pay attention to the standard and meet it somehow.
The big joke a decade or so ago was that EPA classified the PT Cruiser (a FWD Neon compact with a hatchback body) and the HHR (a FWD Cobalt with a hatchback body) as light trucks. Now the joke is that they consider 2WD CUVs as passenger cars. Neither makes sense in context. You can decide which makes more sense out of context.
Yes, the government’s definition of inflation is rubbish. While prices have increased annually as the dollar is debased, actual earnings have not.
They’re classified as such for EPA fuel mileage standards. The American automobile industry has been playing fast and loose with what defines a “truck” since trucks are not expected to match cars for fuel mileage. Of course, they’re bigger and heavier. Except when they aren’t, are based on car platforms, but are still ‘trucks’ because that’s how the manufacturer classes them.
And, as trucks, they’re not subject for the EPA corporate fuel economy of (I think) 27.5mpg.
Yep. Lawyer honesty.
Yes, it all depends on what lawyers say.
I work for Ford on future products, and every time someone in the product planning asks me definition on car, crossover, truck, such, I always tell them ask the lawyer. Lawyers can make a Chrysler PT Cruiser a truck, so it is not my position to say anything about the definition, because absolutely I have no clue!
It’s not that different than many European countries that will give a tax break to a SUV or station wagon that has a barrier behind the front seats and blanked out windows because it is now considered a commercial vehicle.
Same as the State of California giving a tax penalty based on similar criteria. Commercial vehicles pay a weight fee in addition to other taxes and fees.
So, a van with no backseat is commercial, one with is a station wagon.
And of course that is how Ford imported Transit Connects for many years w/o paying the chicken tax. They were imported to the US with a back seat, seat belts and side windows so it entered the country as a wagon. Before heading to dealers the seats and belts were removed and the glass replaced with panels to make it a truck.
I totally agree with you. Crossovers are jacked up cars.
Interesting, no doubt today’s cars represent a good value especially when you consider the level of equipment in today’s cars that were options sometimes quite expensive options. AC was expensive and it just wasn’t seen much in a lot of areas in the early 60’s. PS, PB and radio are now standard fare but were extra cost options on most cars in the 60’s.
Then there are things that weren’t even really available, like ABS and stability control and umpteen air bags. Computer controlled engines that give us more power and fuel economy as well as better driveability in any condition.
I love this Paul, and thanks for doing it.
When this subject has come up before, I did a little of my own research on just what I’ve paid over all these years, adjusted for 2016 dollars at the time, because that was the first truly new car with no miles on it (ok, 7 when I test drove it). I paid about $23.4 K on the road for my Civic EX-T Coupe.
All of my other cars were slightly used, with very low miles on them. With the exception of my first “new car” (it had 253 miles on it for whatever reason), a Fairmont Futura in 1979 ($4,800 or about $16K adjusted for 2016), all of my cars from the first Thunderbird on up were… you guessed it $23K to $25K adjusted. It seems to be a personal sweet spot for me.
I’d buy really low mileage, late model used cars (i.e. the 2007 Mustang in early 2008 with 1127 miles on the odometer when I took delivery from CARMAX). This always saved me a little depreciation – in this example $20K on the road when it stickered new for around $24.5 mere months before… Adjusted… yep, $23.5 K in 2016.
I always wanted a new car out of the box, just once… and went a little down market for my commuter car in August of 2016 when I got my Civic.
As to what you say about value going up? Yeah, that too. My Civic is loaded with features that were only dreamed of in the seventies, and if even available then, only on luxury (or pseudo luxury brougham) cars.
I think the biggest issue here is that people are expecting nicer vehicles with more luxury items, and they’re willing to take out ludicrously long loans to pay for it. Thus, I believe what’s going on is that people are buying more expensive vehicles because the finance manager says they can. I’m willing to bet that Camry buyers are buying far more XLEs, XSEs & hybrids than LEs, which used to be the model at the top of the sales curve.
The funny thing about the Wrangler and Gladiator is that the higher FCA prices them, the more people seem to want them.
I was listening to a story on NPR recently about how a woman had to take a seven-year loan in order to be able to afford her Jeep Cherokee. Apparently, according to the story, if she didn’t take the seven-year loan, she would have had to purchase a less expensive vehicle. This is the world we live in now.
I think that’s a big part of it. Last year, we bought a new Kia Sedona for $22,000 — a great bargain for a relatively large, new vehicle. This was about 30% off the sticker price. A good reason for that was that it’s an LX model, not one of the higher-end versions with more luxury and electronic items. We didn’t particularly want those higher-end items, but most people do, and the car companies have that figured out, and charge people accordingly.
It seems that in most car models, one sees more high-end versions than lower-end ones.
Here in Canada anyway, guys buried up to their eyeballs in debt for a 3000 kg commuter howl about how much they pay in taxes and fuel. It never seems to occur to them a smaller car is a lot cheaper to buy and to run and are usually a lot more fun.
When I was young, I used to think conformity was only a big thing in Asia. Having spent many years in Asia, I see that conformity is just as strong here. Whenever I see a giant truckie-thing drive by, it’s inevitably a young white guy with a beard and a ball cap. It just amazes me how many people buy into this tough guy nonsense. But like I said, conformity is a powerful force.
I paid C$27,000 on the road for my Golf SportWagen, or less than half that of an F-150. In real terms, cars are about the same price as four decades ago, but the cars are simply much better to drive and have a lot more equipment.
Oh yes, my city is full of brand new luxury CUV’s, almost as if its a requirement.
Most are leased or financed. Imho you can spot the leased ones in winter, they’re the ones without snow tires. Why buy a set of dedicated winter tires and rims when you’ll simply be leasing a new car in couple of years?
My co worker, a petite single lady is currently shopping for a new vehicle and has her heart set on one, and is looking at paying a huge premium just to buy one.
She’s complaining about the cost. I show her listings for sensible cars at a fraction of the price, and for some reason she refuses to consider them. She wants what she wants, regardless of the debt.
I repair cars for a living. I can’t tell you how many people will go and spend a $5k down payment and take on a $500+/month car note because their current car needs $500 worth of work which they “can’t afford.” Consumerism.
Yup. “What, I need new brakes/tires?! Time for a new car!”
It actually makes a kind of sense for those on a tight, set monthly budget. A fixed payment and a warranty are something you can plan around. Saving $300 on a monthly payment then having to cough up $1200 after six months might be a better decision in the abstract, but the fact is that most people will find other uses for that $300 every month and will have a huge problem coming up with the $1200 available for the repair. But then if everyone made good financial decisions, there would be a lot fewer good used cars for people like us. 🙂
Heh, I get what you’re saying, but who hasn’t used that excuse? Even regular maintenance items can easily reach into the thousands these days if you have a few to do. If you’re not looking to keep a vehicle that much longer anyway it makes good sense because you don’t recover most of that investment on trade or sale. Which of course is also a reason to be wary of used cars.
$1200 worth of repairs was my breaking point, but that was on a 17 year old Escort, and I opted for a $75 a month transit pass and a new rain jacket instead of another car.
This is a fascinating and well-researched article. Now, this article and its topic focuses on passenger cars. I would like to see a follow-up article of the topic of vehicle price relating specifically to trucks, and another one for SUV’s and CUV’s. My Partner loves his compact pick-up truck, a 2007 Chevy Colorado club-cab. He mentions that compact pick-up truck prices today are beyond his means. I would be interested to see your research on truck and SUV prices over time, adjusted, as you have done here. Thank you for this article!
How about this chart I just found, which I will add to the post? it clearly shows that light truck prices have risen strongly. No doubt that’s because once upon a time, it represented much more basic pickups and SUVs. They were once more utility vehicles and now are often prestige vehicles.
Thanks for adding that, I was thinking the same thing average truck prices have risen since today’s “average truck” is far from the the regular cab, 2wd strippers that used to be the norm. .
Nicely done Paul. It’s amazing, some of the utter drek that passes for journalism these days. It’s especially distressing in politics. It’s becoming quite difficult to have productive discussions because people are so entrenched in the mindless rhetoric of “their side”, whatever that may be. I fear we are approaching a tipping point of divisiveness from which this country may not recover, and the decline of journalism has much to do with that.
I hear all the time about how expensive trucks have gotten. And they have. But not when you compare apples to apples. You can get a basic rear wheel drive pickup for around $23K with far greater comfort, performance, and safety than decades past. And you can get a modest but still nicely equipped 4×4 crew cab for around $35K after incentives.
I hear the same complaints about $1000+ cell phones. Yet you can get a pretty competent phone for around $200 as well, which frankly is a marvel of usefulness for that price.
And then of course there are the complaints that people earn less today. Adjusted for inflation, real household income has increased since the ’60s, and unemployment is so low that the Census Bureau is offering up to $30/hour in some regions for census workers. I will admit more skills are required to earn similar money today, but that’s true the world over.
The problem with that household income figure is that we are often comparing one-earner households of past decades with two-earner households of today. And there was a time when a basic pickup cost less than the price of a cheap compact car. You can see from Paul’s graph that light truck prices of the 80s were significantly lower than car prices. I would guess that the spread would increase as you went farther back in time.
But I agree with the overall point that it is possible to buy a much better vehicle for a much lower price than ever. So long as you pick the right vehicle.
Some very interesting numbers here.
They imply that a car in 1979 or 1980 cost $23,xxx in 2016 dollars, while a 1967 or 1968 cost $24,xxx.
Hence the 1979 or 1980 car cost less. That was not the case. The 1980 car cost more, adjusted for inflation, not to mention in real $$$.
Now, that 1979 had lower emissions; it had a THREE speed automatic (vs TWO for GM), and it had better rustproofing.
The 2016 car offers a lot more.
What the analysis doesn’t consider is, what percent of the average middle class American’s income does the 2016, or 2019, require?
In 2016, the percent of gross pay that makes it to net is less than 1979, which was less than 1968. That smaller percent of net has to pay a lot more for health insurance, or God forbid, health care. College bills? Much higher. Auto and home insurance? So cars cost more in relative terms.
The cars of the 1995-2015 will last a lot longer. So they need not be replaced as much. Still, the ratio of new cars sold per 100 Americans is considerably lower than in the 1970s.
For a huge chunk of middle America, real wages peaked in 1973, which kept pace with the rising price of cars.
With no data to support my assertion, I think ‘peak NEW car’ buying power was 1967-70, before inflation picked up, and the dollar devaluation sent German car prices through the roof.
I do think that a sedan costs about the same to buy today as in 2011, perhaps a tad less in real terms.
People today are opting to buy more car than they need. That’s because, compared to the pre-1979 especially, and even 2000, buying NEW is not a sign of being UPPER middle class. As such, for reasons of status, or just wanting more utility, there is a richer mix than 1979.
And BTW, $6800 in 1979 bought a base Caprice with a V8, I’m sure, or a Malibu with air. That was higher on food chain than a $24000 car in 2016 (even thought a 2016 Camry, or even 2016 Malibu, is superior to the 79 Malibu)
Just my two cents.
buying new IS NOW as sign of being upper middle class. NOW, not ‘not’. My bad
As one point of reference:
In 1985 I bought a 1983 Toyota Tercel for $CDN 7700, that’s $CDN 16,462 in 2019 dollars. Today on autotrader.ca I see many 2017 Corollas for around that price, which is one model “up” as it were.
People have been complaining about the high cost of new cars since forever. In my opinion, the Internet just makes complaining easier.
My collection of vintage 1940’s through 80’s car magazines (including Popular Mechanics etc) the high cost of new cars is a common complaint among consumers.
What is interesting is how much better value new cars are. For only a small increase in price (constant dollars) newer cars offer far more luxury, safety, technology and a demonstrable increase in lifespan. The most humble new car exceeds luxury models of 50 years ago in many regards.
…and the savings carry on accruing after purchase in tune-ups not needed, breaker points and spark plugs not replaced, carburetors not rebuilt, oil changed and tires and exhaust systems replaced fractionally as often, etc.
Not to mention that *most* modern vehicles will give you many, many more miles of good service than a 1967 **anything*
Gents, yes and no. Older cars were more maintenance intensive for sure but if you did not skip on those time consuming things like greasing, changing oil every 3000 miles etc. etc. older cars DID last. And when things went wrong, most people with basic mechanical skills could repair them. With modern cars, when something happens, unless you have the diagnostic equipment AND a source of reasonably priced electronic gizmos, you more often than not have to scrap an otherwise good car.
In actual fact, newer cars last longer than even fastidiously-maintained older cars. Partly it’s because now we have better materials and build techniques, and partly it’s because today’s fuels burn a lot cleaner and today’s lubricants do a much better anti-wear job.
Take a look and see the steady upward trend of the average age of a car on American roads. In 1969 it was 5.1 years. In 1977, the figure was 5.5 years. In 1983 it was 7.2 years. In 1990 it was 7.6 years. In 2014 it was 11.4 years. And the current figure is within a spark plug gap of 12 years.
I am aware of that. Older cars did not thrive on neglect like the moderns do, period. My point was things were easier to rectify and cheaper. I am aware of the cheap diagnostic tools/programs but have on more than one occasion seen experienced main dealer techs tear their hair in despair when despite the best equipment and the replacement of more than one component the problem did not go away. Old microprocessors exposed to the elements at a scrap yard are not exactly confidence inspiring either. Like I’ve said, it’s yes and no. Best of both worlds (at least for me) would be a 60s car sensibly up-rated with the best that modernity can offer – but without the unnecessary electronic toys.
I think the bigger threat modern cars are facing in sending them to the junkyard early are collisions. With lane keeping, automatic emergency braking and adaptive cruise control there can be a number of sensors in the front of a car adding hundreds, if not thousands of dollars to the cost to repair resulting in more cars being totaled that would have been repaired in the past.
If you don’t like JY electronics if you have a common enough model someone will figure out what fails, what it takes to fix it and offer a repair and return service at the minimum. There are already lots of companies do this and I don’t expect that industry to go away.
People said that about the early fuel injected cars, only problem is that average vehicle life went up.
Since the dawn of the automotive age cars eventually reached the point where it would go to scrap because the cost to repair was more than the value of a running and driving example.
Yes you need some new skills to fix certain things on modern cars and instead of needing a tach/dwell meter and a timing light you need a scan tool which can be as cheap as $20-30 for a dongle and app/program to cover the basics or you can spend more and get up to OE level capabilities. It does depend on the brand of vehicle just how much you’ll have to spend to get it all. This here for example will get you a very long way with a GM, Ford, Toyota, Mazda, Honda or Nissan brand vehicle. https://www.obdlink.com/mxp/ It will also work with other brands for Powertrain and with the right program/app OE functionality.
As far as the parts wrecking yards are not going away any time soon and there will always be the people who know what sells and will put it up on E-bay if you don’t have one near you as well as the websites you can search wrecking yards across the US that will ship you the part.
Even if you do send it to the wrecking yard because the dealer wants an outrageous amount to fix it with all new parts, many yards will put it in their builder section and give you 10% off parts from the yard to repair it.
As I type this, A Cadillac XT6 ad has appeared at my right, captioned…
“CREATE THE PERFECT ESCAPE”
I’m thinking about the democratization of luxury as it relates to new vehicle prices. That’s where I find the unintentional humor in the Cadillac ad.
Isn’t the actual Ford equivalent to the XT6 probably the Explorer? But whether the Escape, or equivalent Chevies, Toyotas, Hondas etc…don’t most of them offer 90% or more of the amenities once reserved for the likes of Cadillac/Lincoln/Lexus, etc?
It’s what the public has demanded. And now the public is demanding those amenities in an all-wheel-drive crossover-sized package…
So, as you say, THERE’S the difference in new vehicle prices. They’re up so much because the public’s tastes have shifted so much, not because CARS, per se, are up that much.
And now that I think of it, while perusing Impalas last year, new 2019 Premiers, loaded with everything, could be had in the low-mid $30s before negotiations with the dealer. A more modest LT model – which would be more the equivalent of the Impala of 50 years ago – is DEFINITELY in that $27-ish ballpark, again before negotiations.
At least that’s what I recall.
A Traverse, decked out as nicely, would set me back nearly $50 large.
Thanks Paul for the reality check!
Just wish I could get my wife interested in an Impala…but the Equinox we already have is so much easier to get in and out of.
Interesting and as I suspected. There is no comparison between today’s cars and those of yesteryear in most respects. They are now cheaper, better, safer, more equipped and longer lasting than ever. If a “car” works for you, things are looking good.
I wonder what the representative average “car” would be from each year, likely just the best-selling one. I’m assuming the Impala in ’67 and the Camry last year, probably Taurus for the later ’80’s but no idea about the 70’s and early ’80’s especially.
Styles change and fall in and out of fashion. Currently CUVs and Trucks are in vogue. Getting the most popular thing generally costs more money until supply catches up and then prices start to fall once the market is saturated and everyone starts fighting for every incremental sale again. Once one cries uncle and starts to drop prices they all do. We aren’t there yet but it’ll happen in one way or another eventually.
1970’s- early 1980’s was Oldsmobile Cutlass Supreme time baby!
Yes, Impala. Extrapolate back to 1965 when my dad bought an average equipped new Impala wagon (more expensive than a sedan or coupe) for $3200.
Well it does depend on how you define a car and the best seller changed over the years in response to gas prices and general economy. So that full size Chevy gave way to the Cutlass in the wake of the 1st energy crisis while the downsizing put the full sizer back on top, for a while. The Celebrity, Cavalier and Chevette all had a time at the top as did the Escort before the Taurus locked up the title for a number of years straight. Meanwhile during that time the F-series went from being the #1 selling pickup to the #1 selling vehicle period and the Chevy as #2, something that held true until 2019. In the wake of the fish mouth Taurus the Explorer actually took the #3 spot in a few years, battling with the Camry for that spot. Once the Escape came along the battle for #3 was between the Camry and Accord. Now the RAV-4 is coming in 4th and is the best selling non-pickup.
These days, you get what you pay for.
What I mean by that is look at all of the technology that you are getting for the slightly larger price.
As an example, since my father sold his Chevelles in the mid-70’s and decided to have kids. We have driven mostly 1970-1980 B Body GM’s, a few 1980s Toyota Cressidas, and some mid 90’s Nissan Maximas. Even though these cars were well past their sell by dates, we never really felt that any of these cars were “obsolete” through about 2015 or so. We could add a navigation unit to the windshield, and the aftermarket radio companies (we prefer Kenwood and Pioneer) always had a Bluetooth, CD, and XM option if we needed an update.
But getting into any car built post-2015 or a luxury car built after 2010? Forget about it.
Heated Seats, AC Seats, Heated steering wheels, start your car from your phone (Bluelink), keyless entry, push button start, panoramic sunroofs, voice recognition. It is truly amazing what cars have become in the last decade. I left out “Auto-Pilot” because I have never driven a Tesla or “Super Cruise” car but I am sure it would blow me away. I have a Sonata with the radar adaptive cruise control and itself is a revelation for me.
I went with my father to purchase a Certified 2014 Lincoln MKS for him, we paid $20,000 which is the most my father ever paid for a car ever. But driving it and playing with all of the features (messaging, heated, and cooled seats, 14 speaker THX surround sound, 20 inch chrome “turbine wheels,” stunning White pearl tri-coat paint that cost 1,000 on the option sheet in 2014, among other features) my father believes that he Under-Paid for it and I am inclined to agree with him.
I saw the other article about the $10,000 Mitsubishi and I watched some of the Barrett Jackson auction this past weekend. In this day an age, I am truly surprised anyone is purchasing a penalty box like the Mitsubishi and I am just as surprised that on the other end of the spectrum, people continue to pay hundreds of thousands of dollars for fifty plus year old cars.
Maybe that is bad news for the industry as a whole, that someone like me is eschewing the past for the current. But so be it, I have the memories. Models, Posters and pictures will always be available. Let someone else worry about the maintenance, upkeep, and taxes of the real thing. I don’t miss it at all.
It is important to look at the relation between income and cost to determine affordability.
Let’s take the federal hourly minimum wage x 2,000 working hours in a year and divide by the cost of the car:
1967: Federal Minimum Wage = $1.40 x 2000 = $2,800 ÷ $3,215 = 87%
2016: Federal Minimum Wage = $7.25 x 2000 = $14,500 ÷ $25,449 = 57%
The affordability of a new auto (from a federal minimum wage perspective) has decreased dramatically. That is the real cost (amount of work needed to get a car) has increased significantly.
No wonder people are taking out 72-month loans.
How does the federal minimum wage correlate with the minimum wages by states? For example the minimum wage in my state, Colorado, is now $12/hr, quite a bit higher.
Per Wikipedia, taking all states together at least 29 have a higher minimum wage than the federal minimum and “The effective nationwide minimum wage, (the wage that the average minimum wage worker earns), is $11.80 as of May 2019”
Note that statement says the average MINIMUM wage, not the average wage. So if you use that number in your second calculation instead you get:
$11.80 * 2000 = $23,600 / $25,449 = 93%. Yes I know that’s the 2019 number and you had the 2016 federal one and the 2016 average price but it’s the same ballpark.
Jim:
I hear you, each state has different wage laws, just as each state also has different car prices. As well as different inflation rates.
The point I’m trying to make it that if wages don’t increase at least as much as the CPI then the cost of an item, deflated by the CPI doesn’t tell whether it is less expensive, its important to look at the relation between income and costs.
This could tread on political but there are costs that people incur today that didn’t exist 50 years ago. Many suffer under medical debt, and prescriptions that the insurance covers if they want to. Cell phone and Internet aren’t luxuries like they once were. My employment requires a smart phone. I wish I knew how to use it. Employers don’t fund your retirement anymore either. My point is that there are more and more things competing for a portion of your paycheck than years ago, making a car loan more difficult.
It’s hardly political to state the obvious: many aspects of life are significantly more expensive than they used to be, especially health care, education and housing. Others not, which includes food, clothing and driving.
The solution is political, so we’ll leave it at that. 🙂
^this. On the forums and FB groups I’m on I keep hearing how it was possible all through the 60s for low wage earners to purchase a muscle car without becoming bankrupt. I really don’t think there’s a modern equivalent.
We are obviously talking the US and Canada here, in Europe we did not have muscle cars equivalents until things like the Ford Capri, Opel Manta and then the hot hatches came on the scene. In a sense things are now better here – I’m fairly certain the current breed of hot hatches (which are extremely capable) are more accessible for European buyers than current US muscle cars are for Americans.
Here in cdn the price of gas makes sure that we don’t buy so much muscle cars . Here in Qc , where the gas is at $1.25 a litre , we love small cars but we are stuck with the American offer of big pick-ups and not much offer in the small station car category for example .
well put, Hardboiled. And that paycheck NET is a lower percentage than it was.
I saw another article online (not sure of the source) talking about new cars being priced too high for middle class buyers.
As someone who’s a middle class buyer, I agree. I haven’t bought a new car since 1985.
I haven’t had a car payment since then. And I’ve NEVER spent over $6000 for a car in the years since then.
Someone earning $18,000 a year has no business buying a $27,000 new car. Wages have not kept up with inflation.
A single person earning $18k a year surely doesn’t qualify as “middle-class”, do they? That’s less than full time minimum wage employment in my state, Colorado.
That $27,060 number is the average price. Hence there are many below that. Just yesterday we saw one for under $10k. But if that’s not acceptable surely something like a Hyundai Elantra for $14k street price would be so let’s call it $16,000 out the door after tax, title, and license. With 4% financing over five years that’s $295/month out of the $1500/month income. Probably a stretch but theoretically manageable.
My main point is that wages have not kept up with prices.
There are MANY people with $18,000/year or so jobs in this country. No, that’s not middle-class income. At all. But an increasing number of people ARE living at that level.
The gap between the haves and have-nots has been steadily increasing.
Since we are already off-topic, I feel like mentioning that by me, almost all the fast food, gas station, and grocery store workers are middle-aged or older people. These jobs aren’t entry-level for kids anymore. People live off that money. And in Indiana minimum wage is still $7.25/hr. I don’t see how this is sustainable in the long run.
Many grocery stores are unionized and employees get much more than the minimum.
It is sustainable for the employers as long as workers are willing to work for that little. The employees could likely panhandle at the nearest freeway offramp and earn vastly more than $7.25 per hour. Tax free too. And same benefits.
Our fast food prices aren’t higher than yours while our wages are and our real estate that the restaurant sits on DOES cost more and there is still no shortage of them here. So where is the extra income going that isn’t being paid to the employees or the rent? Yes, the owners. Stop patronizing those establishments and let the ownership know why. Research the establishments that do pay living wages and go there instead.
Costco pays their people significantly more than the minimum wage. Get gas there instead if you can.
Fast food prices DO vary between states. They are not the same for each state.
There is even an index that pegs the cost of living in a municipality to the cost of a McDonald’s quarter pounder within that municipality.
https://www.nerdwallet.com/blog/mortgages/quarter-pounder-index-most-least-expensive-cities/
I don’t know, I think there is “price” and there is “value”. If someone is only able to earn $18k per year then that doesn’t mean they necessarily should be able to afford a “new” car. It’s not like it’s actually a right or anything. It’s just like the people going on about some place not having “affordable” housing but they lose sight or ignore the fact that people aren’t necessarily forced to be there. I would love to own a 3000 sq ft home in Manhattan, NY, but to me it’s not “affordable”, hence I didn’t move there and instead I live somewhere that I found to be a decent value. I also moved myself halfway across the country in a rental truck and started my family’s life over from scratch without a job or anything when we moved. It took self-discipline, budgeting, doing without cigarettes, tattoos, and good beer. But most of all it took motivation and a willingness to try new things. Now I drink good beer again.
New cars are a tremendous value IF one isn’t hung up on the latest trend, style, or whatever. If someone has to have the latest hotness then that will cost money. And yes, you have to have an income that supports it. Frankly it is difficult to find a mid-size sedan from a mass-market manufacturer that costs, actually costs, over $27,000. Those that are are only that way because of extraneous and completely superfluous “luxury” features and ALL of them have perfectly functional versions for much less than that amount.
If you look at what a real middle class income is and then look at what the average price of a new “car” is, then I think that car is completely affordable.
As a last point, let’s say that a new car lasts ten years (which is low). Why would the $18k income earner need a new car every five years? Perhaps they could purchase it, pay it off over five years and then bank that same payment for the next five. After ten years they will have a paid off car AND the money to purchase a new car for cash.
If enough people can’t earn enough to buy new cars then sales will fall and the manufacturers will develop new models that are more affordable. They won’t just say take it or leave it and if you don’t buy it we will shut down.
My main point is that wages have not kept up with prices.
Depends what prices. Food? Yes. It’s much cheaper now. The cost of driving is cheaper. But education, health care and housing are more expensive.
If I was king I’d raise the minimum wage to at least $20/hr. $25 in big metro areas. If should be indexed to rough cost of living. There’s a big difference in getting by on $12/hr in a big city and a little town.
Paying people more would be a huge stimulus to the economy, which will make rich people even richer, contrary to what many think.
From Wikipedia:
Ford astonished the world in 1914 by offering a $5 per day wage ($130 today), which more than doubled the rate of most of his workers. The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs.
Detroit was already a high-wage city, but competitors were forced to raise wages or lose their best workers. Ford’s policy proved, however, that paying people more would enable Ford workers to afford the cars they were producing and be good for the local economy.
Ford could afford to pay that wage because he had a virtual monopoly on the low-price market for new vehicles. Plus, the new-car market in general was still growing. The U.S. didn’t reach the “saturation point” – meaning, everyone who could afford a brand-new car had one – until the mid-1920s.
That was one reason why GM’s Alfred Sloan adopted the idea of the annual model change. It was a way to stimulate demand by encouraging people trade their vehicles when they looked “old,” as opposed to trading them when they were completely worn out.
The claim that he was paying this wage to create a market was a public relations coup that tends to fade when placed against the real-world conditions.
There weren’t enough Ford workers (or even auto workers in general) to sustain the new-car market.
Plus, not all Ford workers were eligible for the $5-a-day wage. He limited it to those workers who were married and supporting a family, or single and supporting an infirm relative. The workers also had to submit to inspections by employees of his notorious Sociology Department to ensure that they weren’t blowing it on gambling, alcohol (Henry Ford I hated alcohol) or prostitutes.
By the Great Depression, his monopoly was essentially over, and he was cutting wages or laying off workers in response to the downturn, just like every other manufacturer.
18K per annum is the sole parent govt welfare payment here and nobody recieving that is out new car shopping.
The US$ and the NZ$ are not at parity.
US$1.00 = NZ$1.52
The parity thing is a red herring. It’s what your local dollar/peso/zloty buys where you live that counts, and rest assured, NZ$18K is a pitiful amount to try and live on in NZ (or $18K AUD in Aus, even worse), hence Bryce’s point.
But even low incomes (that’d be 45-50K here) can’t possibly support a new car payment, and don’t, because of wage stagnation – in the land called the Worker’s Paradise 100 years ago! – and huge housing costs. And we don’t even have the health care issue!
It’s not apple-to-apples with respect to vehicle size. 1967 ATP could have gotten a Caprice, the highest trim of Chevy’s full sized car. I shopped a Malibu a few years ago and $25K got a base model of a smallish mid-sized car. To get the interior volume of a Caprice today one would need to get a crossover and even then it would feel less spacious than a Caprice except perhaps head room. Car prices have gone up relative to what one physically gets so it is no wonder folks believe cars cost more.
To make matters worse, when all those planned EVs finally launch prices will really go up. The car industry says EVs will reach cost parity with I/Cs in next 5-10 years but that is just as much because of I/C costs going up to meet regs as it is EV costs coming down. In the end none of us will have any more money to spend so we won’t be buying many EVs and probably fewer brand new I/Cs.
Room? For $22k you can buy a minivan, as CC contributor Eric703 did last year, in the form of a new Kia Sedona. Hauls 7 or 8 in vastly greater comfort than a ’67 Caprice!
Anyway, you’ve made an apples-oranges comparison. You can’t use the base price of a Caprice; you really want a three-on-the-tree and feeble 283, manual steering and brakes and no a/c or any other options? A nicely equipped Caprice was more like $4k.
Excellent article Paul! I truly believe this is the golden age for cars – a plethora of vehicle types and styles to fit most budgets. And 400 hp is in reach of $35k!
My new car costs have increased over the years to parallel my income (incidental)… $6700 (1981), $12800 (1988), $23300 (2001), and $30000 (2013). Now that I’m semi-retired, I’ll probably get one more that will most likely be my last.
Gently-used is always a way to get a lot of car for reasonable money. Saturday we’re picking up a 2018 Rogue SL Platinum with 5k miles that we paid $20000 for. I think we scored a hell of a deal for a car that suits her needs perfectly and should last quite a few years.
Congrats. Please buy the best service contract or warranty for this car that you can get to cover the transmission
QOTD nominee: What is a Car? Nobody seems to know.
Merriam-Webster says an automobile is “a usually four-wheeled self-propelled vehicle designed for passenger transportation”. They say a truck is “a wheeled vehicle for moving heavy articles”. What then is a pickup that seats six? How about a minivan? SUV? CUV?
Four-wheel drive, seats 7, curb weight 5,000 pounds…must be a truck.
There are plenty of new cars/CUVs to be had for less then $25,000. Even now, you can get nice sized CUVs like the Hyundai Kona and Venue for less then $18,000 using the dealer incentives.
Or those $10,000 Mitsu Mirages that Paul talked about the other day
Trouble is a lot of folks have eyes only for status things. I see it a lot hanging out at my friend’s car dealership. If there is a Benz or a BMW on the lot chances are that folks that are lucky they have 2 dimes in their pocket to rub together, will go over and look at it first and then see how they can buy it instead of looking at the Chevy Cruze or Ford Focus which they could afford.
It is like those folks that have to buy the biggest house they can get even though it is just 4 people living in the house
There are other tricks to getting a great deal on a new car. Most dealers give you a super good deal if you finance the new vehicle through them as the car maker will give the dealership a nice amount back as they make money off the financing. So you finance with the dealer and get all the incentives and the low price. Make a payment or two and then finance it though your credit union. I did that a few years ago. i got financed for 4% interest at dealer, got all the incentives and a great price on the car. I made 2 payments and then financed it through my credit union for 1.8% Interest.
An interesting comparison for certain. The one problem with statistical analyses of this sort (and the reason there are always arguments over them) is that what you get varies widely depending on the basic definitions and assumptions that come baked into the figures. It is really impossible to compare “apples to apples” over such a wide time span. As you note, there have been huge swings in consumer preferences, and also changes in the legal and regulatory landscape.
My only observation is this: your comparison (a completely accurate one, by the way) comes with a couple of definitional problems. First, the figures begin with vehicles that covered, what, 95% of what was available for purchase? They end with the field restricted to vehicles making up perhaps 35% of available choices (if that). And because the figures appear to be actual transaction prices (instead of MSRP) we end with the 35% of available choices that have been the least popular and have thus been discounted the most. In other words, the earlier figures accounted for what people were actually buying while the later figures account for only a fairly small slice of what people are actually buying.
I would argue that to lessen this imbalance, we would either need to restrict the early years to the compact and mid-size segments of the market or adjust the later years for the SUVs and CUVs that make up the large majority of today’s market. And of course, getting the figures for the first way would be a pain and it would come with its own definitional challenges.
I think that one thing has never been more true – the new car buyer can save a lot of money by choosing something that is not popular. The Mitsubishi Mirage or the Kia Sedona are great choices, but they are not popular choices. Most people (then and now) are not willing to go against the grain in that way. Today’s Mitsubishi is like yesterday’s Studebaker or Rambler. Some cars will always be more popular than others, and not always for rational reasons. And when you exclude light trucks because their profit margins are too high, isn’t this just another way of saying that they are popular (again, not always for rational reasons)?
I think that if we are going to look at the “heart” of the market, we have to look at total vehicles and not just cars (a term most of us use when we really mean vehicles).
The really interesting thing to me is that only one of my three new car purchases has been at or above the average car price. The two more recent ones have been well below, whether because they are small (the Fit) or unpopular (the Sedona).
I understand what you are getting at but wouldn’t you agree that given the constraints of the first batch (let’s say the first half of the years), the second half of it only encompassing “cars” doesn’t make those cars any less functional just because they may not be the most popular version.
In other words, if an Impala perhaps represents the older cars and something like a Camry etc. represents the latter half, they pretty much fulfill the same function in the same way with the same general positives and negatives. If people choose to make different lifestyle decisions then that’s really on them. It may well be worth it to purchase a more expensive vehicle that fits ones needs (or perceived needs, or just their wants) better but at the end of the day, a traditional “car” would likely get the job done and the information shows that the price of such has not risen over the years.
Put another way, if for some reason everyone decided that from today on, the perfect car for them is a new C8 Corvette with a base price of $65k or whatever and stopped buying everything else, that doesn’t mean that cars now cost in excess of $65k, it just means that people are ignoring what still works perfectly fine to get them to work, play and whatever else and is still available at historically reasonable and inexpensive prices in favor of wanting to spend more for something they like better for whatever reason.
I believe the real reason that vehicles as a whole (all available versions) have gotten so expensive from an average transaction price standpoint is that it’s too easy to purchase them with credit and the fact that for many, tax deductibility is an option. If one was simply limited to paying for it over a maximum of four years without any tax advantages you’d likely see lower average transaction prices as many people would simply not be able to afford the payments. There isn’t anything intrinsically wrong with the concept of longer terms but that is one of the effects it has. The same goes for housing, if it was decided that the maximum mortgage length was 15years prices would contract. Conversely if the idea of a 40yr mortgage becomes more palatable/popular prices will increase faster.
There is much to what you say, but in the end isn’t what people actually buy a better measure than what people would buy if they made the same choices their parents and grandparents made or the choices you or I might think are better? I would argue that a Camry today does not have the same function for a family that an Impala had in 1970. Then there were no child safety seats and seating three or four little kids in the car was not a huge problem. The Camry is strictly a 4 place vehicle that lacks the luggage room as well. It would work like an Impala for me now, but would not have ten or fifteen years ago.
The tax deductibility is an interesting issue. Back in the 1960s-70s the top tax rates were exceedingly high and company-provided cars were a huge perk available to management and the self-employed. That was how my father could afford two Continental Marks in the early 70s – he was self employed and could deduct the lease payments, which made a lot of sense for those in upper income brackets. Auto loan interest was deductible for anyone, not just the self-employed. When non-mortgage interest stopped being deductible the door opened to “home equity loans” which people would take out in order to buy cars and deduct the interest. At least until they used up their equity on remodels and college tuition. I would argue that the longer and longer credit terms (in the 70s my mother used to pay a car off in 3 years) are more a result of high prices than a cause of them.
The best comparisons I have seen are how many weeks a typical person had to work to purchase a given item. But then there is always the argument over whether a typical income of 1970 equates to a typical income today, given the many changes in society (ie, lower manufacturing wages and more two income families).
I don’t disagree with the premise (what people buy vs what they did buy back then), just was looking at it from the perspective of how I viewed the post – that “cars” are not actually more expensive than they were, just that people’s choices have evolved and thus their choices are more expensive. People put half a dozen kids in the back of an Impala because they could, not because other options weren’t available (wagons with third rows, vans etc). If your family had a Bug, maybe both moms could drive their respective broods to the bowling alley instead of piling into one, I don’t know.
Interesting re the taxes etc., I was aware of that on some level but not really accounting for it. I think I had always figured your Dad’s name was Mr. Moneybags and he changed it to Cavanaugh to be less conspicuous. 🙂
“I had always figured your Dad’s name was Mr. Moneybags and he changed it to Cavanaugh”
Hahahaha. No, it was actually “Mr. Spend All You Can To Look Successful”. With anything did didn’t affect image it was “Mr. Buy The Cheapest You Can Find”. 🙂
The space/room thing is a total red herring. How much is a Grand Caravan? A Kia Sedona? There’s a wide range of vehicles available in the sub $28k price range.
How many families have 3-4 kids? Maybe your way, but not out here.
“The space/room thing is a total red herring. How much is a Grand Caravan? A Kia Sedona?”
I just checked fueleconomy.gov, I think the EPA classifies both as trucks, which kicks them out of the analysis. 🙂
I agree with your overall point that when looking for certain vehicles, prices have not gone up all that much (if at all) in real terms. My only quibble is that under this analysis the costs of the Pinto and the Country Squire were both counted in 1971 but for 2017 it counted the Focus but ignored the Explorer or Expedition or Flex.
I just checked fueleconomy.gov, I think the EPA classifies both as trucks, which kicks them out of the analysis. 🙂
Jim, the point of this post is to show how vehicles that are out of demand have had stable (adjusted) prices while vehicles that are “hot” have risen in price much more.
Notice how car prices rose in the mid ’80s, due to the VIR, and again in the late ’90s, as more expensive import sedans were the hot thing.
The minivan is the most perfect example of that. In 1992 we paid $22k for a Grand Caravan LE with a some options. Hardly extravagant. That’s $40.5k in 2019 dollars!
Minivans were red hot then, and Chrysler probably made a $10k profit on ours. Today the sell for practically half that adjusted price, because they’re very much out of demand.
If consumers suddenly shifted en masse from pickups and SUVs to sedans (or sporty coupes?) there would be some very interesting shifts in pricing.
Manufacturers have been struggling to keep up with this big swing in preferences to trucks and SUVs, and their prices reflect that. One assumes that should change with time as the market for them becomes saturated, but manufacturers are going to do everything possible to avoid that. The Big Three are now totally addicted to high-margin trucks, and if that ever changes significantly, watch out! It’ll be time to start the Death Watches again. 🙂
“Jim, the point of this post is to show how vehicles that are out of demand have had stable (adjusted) prices while vehicles that are “hot” have risen in price much more.”
I agree with your larger point, but just think that this methodology overstates the effect. After all, the Mustang and the Impala were hot in 1967 and the Cutlass in the mid 70s – they are included in the figures, while vehicles that got hot later (minivans, suvs, pickups) have been left out. This methodology also excludes the whole minivan phenomenon because they have always been trucks. What goes up can come down and minivans prove it, and are certainly tempering the surging price trend for trucks in general.
These government numbers seem to be transaction prices and not MSRPs, so the surges in the mid 80s and late 90s would correlate with a strong economy. There was a good bump from 1975-78 too – each of these periods have featured fewer rebates or discounts because the metal was moving well on its own. These price figures reflect popularity. I just think that you could use the use the figures for all light vehicles instead of just cars, and it would provide a truer picture – which is that vehicle prices have increased moderately, in exchange for wildly increased safety, efficiency, durability and capability.
I am not trying to be a jerk and have said all I have to say on the topic. I suppose it is an occupational hazard from an old econ major who was taught to probe the assumptions and foundations that are always baked into statistics.
All of this makes me wonder something else – did the slow sellers of the pre-rebate era get the kind of discounts we see on the slow sellers of today. Your example the other day of the Mitsu Mirage that was something like 1/3 off after sitting on the lot for awhile – did buyers of 1962 Studebakers and 1974 Ambassadors see proportional discounts anything like these? There is probably no good data on this.
I’m with Jim here, for slightly different reasons.
What the US government calls a truck is ridiculous. Cars are four-wheeled vehicles that one or more people ride in mainly to get from place to place. If that’s what the vehicle is mainly meant for, then it’s a car. Common sense.
Station wagons can carry big heavy things, but 95% of the time they’re just carrying people, so they’re called cars. I just don’t see the difference between a crossover or SUV, which are in fact mainly meant for people to ride in, and a tall station wagon. So crossovers and SUVs are cars in my book.
A vehicle that’s mainly meant to carry big heavy things is a truck. Pickups are tricky. A two-door pickup with a full-size bed is for work, so it’s clearly a truck. A four-door pickup with a comfortable interior and a short bed is mainly meant for carrying people, so sorry, to me it’s a car too.
The US government mileage and safety rules that distinguish between cars and trucks have been twisted into a meaningless joke by politicians, lobbyists and both the motor and the oil industries. No surprises there. They need to be rewritten. Just common sense.
It is really impossible to compare “apples to apples” over such a wide time span
Quite right. And I have no illusions about that.
But:
If you go back to each of those previous years, I bet the average price will correlate very closely with the best selling car that year. And I just went back and did it for every ten years, but I’m sure it woouldn’t vary significantly for the others:
1967; $3,215 An Impala V8 coupe listed for $2,845. With automatic, PS, BB and a radio,and maybe a couple convenience items, it’s right at about that $3,215 number.
1977: $5,813 Impala V8 sedan: $5,021. Caprice V8 sedan; $5,237. They both sold about equally well and their average price was $5,129. A few typical options would again bring it right to that $5,813.
1988 (I jumped a year accidentally): $13,933 The average price of the two most popular Taurus trims (GL/LX) was $13,745.
1998: $20,238 The Camry average price was right at $20,000
2008: $23,429 The average of the various Camry trims was right at about $23,000
Sheer coincidence?
My whole point was simply to note that the typical best-selling type sedan’s price hasn’t changed significantly over time, all the way since 1967. In fact, when I first encountered these numbers, that’s what my first thought was: these reflect very closely the typical best selling cars of those years.
I’m sure if we filled in the other years, we’d find the same results or very close.
The fact that there were Pintos and Country Squires included in 1974 or whenever is mitigated by the fact that they tend to average each other out. The same applies today: there are obviously passenger cars significantly cheaper and more expensive than our representative Camry.
The fact that passenger cars represent a smaller slice of the total pie doesn’t mean the numbers are less relevant. They show what they’re intended to show: average cost of a new passenger car.
What’s happened since about 1996 is that SUVs and pickups became substantially more expensive than in the past, because they now had a much higher status, and were sold as such. The market for light trucks diverged from the passenger car market because of growing affluence as well as drastically lower interest rates and longer financing/leasing terms.
But the passenger car market is still there. And let’s not forget one key thing: although the passenger car market is a much smaller percentage of the total market, at 33% of 17 million, that’s still 6 million cars, which is not that much smaller than the 8 million passenger cars sold in 1967.
I’m about done too. A appreciate your input, but to me, the overarching point was to show that the typical popular/best selling car’s price has not changed materially over a long time frame. And I think these number do that very convincingly.
And I think that if the media wants to write about the rapidly increasing price of cars, they might point out that it has to do totally with shifting preferences over time. Actual cars have not increased in price.
A comparison of annual passenger-miles in “cars” vs passenger-miles in so-called “trucks” would be illuminating. If such data existed.
It’s definitely an interesting subject.
One the one hand, cars have changed. The drive/ride experience is generally much better:
quieter
smoother
can corner better
Air Conditioned
VASTLY better radio/stereo
more leather seats
better mpg
and
bluetooth
satellite nav
So the product is better.
Also, the “2016 dollars” inflation adjuster. Where is that from?
In 1980 and 1990, the government changed the way the calculate inflation. If one goes to shadowstat.org, one can see what (allegedly) the difference is in what the CPI says to what the CPI might have said.
But here again, perhaps the CPI adjustments are more pertinent. Or not.
Everyone has an agenda, and everyone wants to prove their point.
This was a good, thought-provoking piece, that shows, once again, the only constant is change. It is next to impossible to ‘normalize’ for “content”, vehicle type, “what is average”, inflation, and real purchasing power….
I forgot….SAFER! Airbags and crashworthiness, and CLEANER (and both contribute to cost)
Thanks for this Paul, the narrative swirling around out there is ridiculous. If you don’t want to spend $35K on a new vehicle, then don’t go shopping for F-150s and XLE Highlanders. These writers have never apparently heard of a Bell Curve.
It’s remarkable that cars as good as the Accord, Camry, Optima are now solidly left of the peak. That $23K 2019 Camry SE would have been $31K adjusted for inflation in 1996. If you move down one rung to the Elantra/Forte/Civic, things are even better–they’re now roomy enough to function as midsize family sedans and cost several grand less. Even trendy RAV4s and CR-Vs can be had for $27K, and they’ve got far more standard crap than anyone would have known what to do with 20 years ago.
Qwitcher-bitchin’!
New cars are getting cheaper the new equivalent of the car I drive is 38K out the door my car when new cost 64K, the new one however is a CUV so I wont be gitting one even used sorry PSA you blew it.
Regarding the current Camry, models stickering for 25,380 were non existant at a nearby dealer the past couple of times we went car shopping for a friend that is trying out various mid size 4 door sedans. Those of course are the lowest rung L models which we almost never see. The next up model is the LE which starts at 25925 but the two we saw on the lot were priced at a hair over 28K with one option package and some accessories. The majority of Camry’s otherwise were far more expensive SE’s for about 30K, quite a few XLE’s that were between 32-35K, numerous XSE’s that nearly topped 40K and a surprising number of hybrids in SE guise for about 34-35k and a few XLE’s for 36-37K.
The point I make here is that in today’s world dealer’s typically stock more mid range and higher end models with inflated stickers and consumers take a quick glance at a few of those examples and assume this is the price for all of them. I hear it all the time. Did I see such and such vehicles that are now selling for 69K etc. Of course they were looking at a loaded King Ranch F-150. I then tell them that I also saw a nicely equipped XLT 4 door with the 2.7 EB engine and a healthy helping of options for under 50K sticker on sale for 40K. Yes vehicles are most certainly the best values they have ever been for the most part. The trick is to be reasonable with the add ons because all that tech and fancy equipment does quickly inflate the sticker to nearly double in many cases.
In support of Paul’s main point, I would suggest that sticker price and transaction price are two different things. I doubt that even Toyota dealers can charge sticker price for a Camry in today’s environment. I understand his figures to come from actual purchase prices and not from MSRP, which has sort of become the equivalent of the figure on a medical bill before the insurance company gets ahold of it.
Toyota (and Honda) dealers have had to deal for years now, particularly when it comes to passenger cars. It’s no longer 1982, when the GM was peddling obsolete, doddering Chevrolet Chevettes and Honda was peddling up-to-date Civics.
There are 3 pages of new LE/SE Camries with a list price under $25K within 50 miles of me on Autotrader. Two pages of Optimas under that price, with the first full page under $20K. The situation may well be different in smaller towns with limited dealer networks, but in my medium-sized metro area I am spoiled for choice regarding affordable 2-row family haulers.
In 2007, I bought my first NEW car, a 5 M/T Honda Fit Sport. Financed it for three years, paid it off in two. I could have easily afforded a more expensive cars, and I can’t tell you how many times I was told “I can’t see why YOU bought that little car”. My reasons were : It was fun & what I wanted, it was all I needed, and I didn’t care what others thought I should have been driving! (BTW, it was also my first 4 door car, as I prefer only two!) Besides, it also allowed me to indulge in the care and maintenance of my then mini fleet of old cars and pickups! Due to a H&R accident, it was replaced by a 2012 model, same configuration/payment. My only regret is that I din’t get a V-6 M/T Accord coupe before they were discontinued; I WANTED to, but I simply didn’t NEED to. Currently, there is NOTHING new that lights my fire and I don’t have a NEED, so I doubt any more NEW car purchases are in my future! 🙂
Thanks Paul for doing this article. I was thinking that some of the regular and automotive press has to have something not quite right on this subject.
I have purchased two new passenger cars in my life, both for about 60% of the listed average, a 1980 Ford Fiesta and a 2010 Honda Fit, both in base trim.
Interesting and informative as always. Thank you.
The ’67 had many, many ways to kill you, whilst putting out pollution enough to kill all your neighbours as well – just on start-up.
The 2020 has a massively sophisticated structure and internal protection system, along with roadability that means you have to try most insistently to get that tech tested by crashing it. All while using a quarter of the (much cleaner) fuel for more performance, and emitting a waft you could bottle and sell in Dehli. Almost.
Oh, and I’m talking the $9,999 Mitsu (vs an Impala 283 PG at $24K today), not even a posho Camry. Yes, cars are a mature technology, but the modern car is, even at its least, a thing of true wonder.
And despite all – all – of these changes being brought about not courtesy of the recalcitrant manufacturers but by that known economy-crusher called government regulation, we are all clearly paying a lot less.
And that’s a true capitalist miracle!
(Now, as for the ability of many of us in 2020 to AFFORD the same proportion of car-spend as in ’67, that’s a different and sadder capitalist miracle, sort-of like that of the Loaves and Fishes – only, in this one, He and The Twelve were collecting….)