Are Today's Vehicles REALLY That Expensive?
Thread Starter
Lexus Fanatic
Joined: Oct 2003
Posts: 94,223
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From: Virginia/D.C. suburbs
Even in the low 60s income level (which is about the lowest median figure I've seen...the highest being near 100K), that still leaves room for almost two vehicles in the 35-36K (average price) range....close to where it was decades ago. True, housing costs have gone way up in a number of areas, so, if people aren't spending your income on vehicle, they are likely spending it on a mortgage or rent.
CL Community Team
Joined: Feb 2007
Posts: 9,312
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From: IL
And this is the exactly reason why most Americans are broke. A family with a pre-tax income of $62k (so more like $48k take-home after taxes and health insurance), can NOT afford two $36k cars, replaced every three years. This would literally mean spending more than half of the household budget on cars. That’s before housing, food, insurance, property taxes; plus insurance, fuel and maintenance for said cars, and all the other expenses that come along as a part of daily life.
Thread Starter
Lexus Fanatic
Joined: Oct 2003
Posts: 94,223
Likes: 220
From: Virginia/D.C. suburbs
And this is the exactly reason why most Americans are broke. A family with a pre-tax income of $62k (so more like $48k take-home after taxes and health insurance), can NOT afford two $36k cars, replaced every three years. This would literally mean spending more than half of the household budget on cars. That’s before housing, food, insurance, property taxes; plus insurance, fuel and maintenance for said cars, and all the other expenses that come along as a part of daily life.
Fast-forward to today, at the start of the 2020s. According to salary-explorer, the average salary in the U.S. this year is $94,700...which would seem like a lot, though inflation has driven up the cost of everything we buy along with it, and eroded its value.
http://www.salaryexplorer.com/salary...=229&loctype=1
Or has it?
http://www.salaryexplorer.com/salary...=229&loctype=1
Or has it?
Thread Starter
Lexus Fanatic
Joined: Oct 2003
Posts: 94,223
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From: Virginia/D.C. suburbs
Perhaps so....but, IMO, still a good thread-discussion of what vehicles, today, cost in comparison to income. Income, of course, also varies quite a bit across the U.S. In my part of the country, for instance, one can notice an enormous difference in living standards between the D.C. area and just an hour or two to the west, in eastern WV.
Perhaps so....but, IMO, still a good thread-discussion of what vehicles, today, cost in comparison to income. Income, of course, also varies quite a bit across the U.S. In my part of the country, for instance, one can notice an enormous difference in living standards between the D.C. area and just an hour or two to the west, in eastern WV.
In 2000, the car price was 62% of household income and in 2019 was 50%. In 2010, it was 59% of household income. By that metric, the Camry XLE V6 prices are getting cheaper relative to household income.
With reliable data sources, you can do the same math for all the cars that you're interested in and for different years to see if it's general trend for the car industry.
https://www.census.gov/library/publi...o/p60-213.html
https://www.autotrader.com/toyota/camry/2000
Lexus Test Driver
Joined: Feb 2002
Posts: 8,127
Likes: 223
From: New York
Overall most ppl can afford a much better and safer car now compared to 50yrs ago.
The quality of life even for the poorest Americans has never been higher. People now also have many ways to generate passive income that did not even exist before because of new tech, globalization, Internet etc.
Cars in America also remain much cheaper and more affordable compared to rest of the world. Finance tools like leasing allow ppl to acquire expensive cars for a relatively low monthly payment. This is possible primarily due to our great financial system which most other countries lack.
The quality of life even for the poorest Americans has never been higher. People now also have many ways to generate passive income that did not even exist before because of new tech, globalization, Internet etc.
Cars in America also remain much cheaper and more affordable compared to rest of the world. Finance tools like leasing allow ppl to acquire expensive cars for a relatively low monthly payment. This is possible primarily due to our great financial system which most other countries lack.
Pole Position
Joined: Jan 2006
Posts: 2,816
Likes: 7
From: UK
That's perhaps the best way to look at it; you can argue whether or not cars are comparatively cheaper than 50 years ago and do all your calculations on salaries and inflation etc. I don't think you can argue that they haven't become more affordable as manufacturers look for more and more creative finance packages/leases to get you into a new vehicle.
Driver School Candidate
Joined: Mar 2020
Posts: 33
Likes: 0
From: Bay Area, CA
Well, how about this?
My 1997 LS400 when new sold for $53K. Median household income in 1997 was $37K (70% of the price of the LS).
Today's LS sells for $76K and median household income is now $68K, which is 90% of the price. Seems to me that Lexus sedans have gotten relatively more affordable.
My 1997 LS400 when new sold for $53K. Median household income in 1997 was $37K (70% of the price of the LS).
Today's LS sells for $76K and median household income is now $68K, which is 90% of the price. Seems to me that Lexus sedans have gotten relatively more affordable.
Driver
Joined: Feb 2018
Posts: 72
Likes: 18
From: FL
One of the things that is most-often-complained about today's vehicles is the high sticker-prices....which, yes, in terms of absolute dollars, has probably never been higher.
But, to understand the true effect of today's prices, one must look at it in terms of inflation, the true value of a dollar today, and how much vehicle you actually get for your dollar spent. I'm not an economist, but common sense would dictate that the more of your yearly salary (or income) you spend on a vehicle, the less of a bargain it becomes. Or, you could spend less, and actually get more vehicle (the Korean brands, IMO, are very good at that). Or, unfortunately, you could spend even more, and get even less vehicle (which, IMO, describes some lower-level Mercedes products).
Decades ago, in the 1960s, when I was growing up, the average American compact car (before options) started around $2000, mid-sized cars around $2500, full-size/low-priced cars (Ford/Chevy/Plymouth)around $2800-3000, full-sized/medium-priced cars (Buick/Chrysler/Mercury, Oldsmobile, etc...) around $4000-$4500, and full-sized luxury/prestige cars (Lincoln/Cadillac/Imperial) $5000-6000. Inflation was low in the first part of the decade, but more robust inflation in the late 60s pushed both incomes and vehicle-prices up somewhat....with even bigger jumps to come in the 1970s. The average price of the average vehicle, going out the door, back then, was around $3000-3500...and the average yearly income was around $7000 or so. So, the average American vehicle, back then, cost about half of the average American median income....although some vehicles did not last as long as those of today, and the typical engine, except for some Chrysler and Chevy designs, wore out around 80,000-90,000 miles or so, occasionally reaching 100,000 miles with good care and some luck. So, people, on average, also traded in their vehicles sooner. I use mostly data for American vehicles back then because, with the exception of the air-cooled VW Beetle and some British sports cars, imports were not a large factor.
Fast-forward to today, at the start of the 2020s. According to salary-explorer, the average salary in the U.S. this year is $94,700...which would seem like a lot, though inflation has driven up the cost of everything we buy along with it, and eroded its value.
http://www.salaryexplorer.com/salary...=229&loctype=1
Or has it?
When it comes to vehicles, many people naturally assume today that we pay more and get less. I would argue that, when taking inflation into account, although this is sometimes true, on average, it is not. Remember, back then, one paid about $3500 or so for an average vehicle the the average salary was maybe $7000. Today, the average transaction-price of a new vehicle (whether American-brand or import) runs in the mid-30s, while the average salary is 94K. That means that, instead of two average vehicles a year, the average wage-earner can buy almost three. Not only that, the vehicles of 50 years ago lacked many of the safety and comfort/convenience we take today for granted....which increases the value of today's vehicles even more.
Of course, vehicle prices alone don't necessarily determine if our salaries are going further today than they did half-century ago, as in some parts of the country, housing costs are unreasonably high, even considering the widespread near-six-figure salaries today. (Unfortunately, my region is one of them....I'm fortunate enough not to have to concern myself with a mortgage). So, today, unlike back in the 1960s, if we aren't spending a large part of our income on a vehicle, we're spending it on rent or mortgage instead....or putting our kids through outrageously-priced colleges....or paying for the enormous costs of health-insurance.
So, of course, there is probably no one set answer to the OP question if today's vehicles actually ARE more expensive, compared to what you get, than half a century ago. But, if one takes the simple comparison of the average vehicle price to average income, in a direct comparison to back then, I would say the answer is no.
MM
Intermediate
Joined: Dec 2017
Posts: 413
Likes: 43
From: PA
The rate cars depreciate is so fast that cars are going to be the worst investment you will ever make. It boils down to how much disposable income you're willing to throw away for a vehicle to get you around for basic needs and transportation.
In the PANDEMIC era, the need for vehicles have increased (avoiding public transit, safer travel options) and decreased due to increased work from home options.
That said, a $1000/month car sitting on your driveway or in garage for less than 500 miles per month means your car cost has doubled or tripled for what you're getting out of it. They say the average pre-pandemic monthly miles was about 1k or 1.5k miles per month, or 12-15k yearly. What's the point in throwing away all this $$ plus insurance and gas when you're not using it.
Anything over $30k is wasting your $$ in a few short years. That $65k BMW, Audi or Range Rover now becomes valued at $30k in 3-4 short years just because of time, and you've just saved $30k! You will not recoup much gains on the car values with fewer miles on the car due to driving it less.
There are the buyers who can throw $$ around as disposable income. Good for them. It's not a sound practice for buyers who have their income sucked up by other distractions such as college tuition bills, mortgage, phone, cable/internet, and dining/eating out.
Cars have maintenance costs and most people do not have the resources to suck up a $1k premium or luxury car service bill every 10k miles. Maybe the better question is how much of a maintenance surprise can they afford? The latest I've heard is people are downsizing to the least number of cars they need during this pandemic. 3 or more cars are collectively a waste of $$ and depreciation. It puts today's cars very overpriced unless you're going to put some serious miles on it where it costs you less than $1 per mile to use the vehicle. Stupid buyers are there for the taking to buy new when they think of their purchase/lease in monthly expense terms... Got $10k income or more per month and want to throw away10% (or 20% or 25%) to cars that wont get much miles on it? Go ahead. Chances are you will not have it 2-3 years longer than the lease or loan is up and you're $40-50k+ poorer for it.
Those who really can afford the expensive cars are the ones who have close to no debt, built up a decent retirement, ready for something to enjoy in 'style' after working 30+ years (and hard $$ earned), and have capability to pay full cash on the vehicle. As an added perk, if you have a business permitting you to deduct car expenses per mile -- go for it. There is an 'expensive' car market to make you happy.
In the PANDEMIC era, the need for vehicles have increased (avoiding public transit, safer travel options) and decreased due to increased work from home options.
That said, a $1000/month car sitting on your driveway or in garage for less than 500 miles per month means your car cost has doubled or tripled for what you're getting out of it. They say the average pre-pandemic monthly miles was about 1k or 1.5k miles per month, or 12-15k yearly. What's the point in throwing away all this $$ plus insurance and gas when you're not using it.
Anything over $30k is wasting your $$ in a few short years. That $65k BMW, Audi or Range Rover now becomes valued at $30k in 3-4 short years just because of time, and you've just saved $30k! You will not recoup much gains on the car values with fewer miles on the car due to driving it less.
There are the buyers who can throw $$ around as disposable income. Good for them. It's not a sound practice for buyers who have their income sucked up by other distractions such as college tuition bills, mortgage, phone, cable/internet, and dining/eating out.
Cars have maintenance costs and most people do not have the resources to suck up a $1k premium or luxury car service bill every 10k miles. Maybe the better question is how much of a maintenance surprise can they afford? The latest I've heard is people are downsizing to the least number of cars they need during this pandemic. 3 or more cars are collectively a waste of $$ and depreciation. It puts today's cars very overpriced unless you're going to put some serious miles on it where it costs you less than $1 per mile to use the vehicle. Stupid buyers are there for the taking to buy new when they think of their purchase/lease in monthly expense terms... Got $10k income or more per month and want to throw away10% (or 20% or 25%) to cars that wont get much miles on it? Go ahead. Chances are you will not have it 2-3 years longer than the lease or loan is up and you're $40-50k+ poorer for it.
Those who really can afford the expensive cars are the ones who have close to no debt, built up a decent retirement, ready for something to enjoy in 'style' after working 30+ years (and hard $$ earned), and have capability to pay full cash on the vehicle. As an added perk, if you have a business permitting you to deduct car expenses per mile -- go for it. There is an 'expensive' car market to make you happy.
Driver School Candidate
Joined: Jan 2017
Posts: 15
Likes: 5
From: SC
I'm just thankful there are people making enough money (or think they make enough money) to afford higher end cars so that I can buy them used after depreciation hits. Beyond the idea of showing stature by getting a new car, I feel tech / safety is what is selling cars and increasing the cost of new cars. As much as I would like to think people care about performance numbers and the engineering of cars, most don't. R.I.P. GS...
My 1997 LS400 when new sold for $53K. Median household income in 1997 was $37K (70% of the price of the LS).
Today's LS sells for $76K and median household income is now $68K, which is 90% of the price. Seems to me that Lexus sedans have gotten relatively more affordable.
Today's LS sells for $76K and median household income is now $68K, which is 90% of the price. Seems to me that Lexus sedans have gotten relatively more affordable.
i remember my loaded new 1994 acura legend gs was $38K out the door. not exactly a top of the line car, but still a lot of money to me at least.
It boils down to how much disposable income you're willing to throw away for a vehicle to get you around for basic needs and transportation.
That said, a $1000/month car sitting on your driveway or in garage for less than 500 miles per month means your car cost has doubled or tripled for what you're getting out of it.
Anything over $30k is wasting your $$ in a few short years.
That $65k BMW, Audi or Range Rover now becomes valued at $30k in 3-4 short years just because of time, and you've just saved $30k!
everyone's circumstances are different though. i will likely have 2 cars next year, one for work, and one for play. the play car is a 'waste of money' to many, but that's just their opinion. some people play golf, fly planes, travel to exotic places, is that all a waste of money too?
There are the buyers who can throw $$ around as disposable income. Good for them. It's not a sound practice for buyers who have their income sucked up by other distractions such as college tuition bills, mortgage, phone, cable/internet, and dining/eating out.
Cars have maintenance costs and most people do not have the resources to suck up a $1k premium or luxury car service bill every 10k miles.
Stupid buyers are there for the taking to buy new when they think of their purchase/lease in monthly expense terms...
Those who really can afford the expensive cars are the ones who have close to no debt, built up a decent retirement, ready for something to enjoy in 'style' after working 30+ years (and hard $$ earned), and have capability to pay full cash on the vehicle. As an added perk, if you have a business permitting you to deduct car expenses per mile -- go for it. There is an 'expensive' car market to make you happy.