Are Today's Vehicles REALLY That Expensive?
 

https://www.wardsauto.com/sites/ward...?itok=O1yo1bcn

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? :uh:

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.

https://image.cnbcfm.com/api/v1/imag...44&w=678&h=381

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

The average U.S Salary is almost 100 k per year? Uhhh no that’s BS . Thats not even the average salary here in the San Francisco Bay Area. What a bunch of crap.

That's not my figure.....that's from the link I provided.

Here's another link, dated February of this year, that puts it also pretty close to the previous 94K.......roughly 88K.

https://www.fool.com/the-ascent/rese...age-us-income/

The figure it seems includes the value of all benefits too, like healthcare.

Even then, it's ridiculously high. No way the average/median (which according to salary explorer are almost exactly the same) individual salary in the US is $92-95k, even fully loaded with benefits.

Why do I say that? Because the median household income in the US (not including benefits) was right around $62k according to most sources, in 2018. See:
US Census Bureau $61,937
Investopedia $63,179
Pew Research Center $74,600
The Balance $64,324

For individuals, the median income in 2018 was $34,317, and the average was $50,413.

Average salary 100k? No way. Not here in the rust belt at least

Geko is absolutely on the right track. For income we need to consider the MEDIAN, not the average.

Even if that's the case (and there is no proof, as different sources have different quotes), the average price of today's vehicles, compared to income, isn't much, if any more expensive than decades ago....roughly half. And you are getting vehicles that are better-engineered, are much easier to maintain, are generally more reliable, and have a lot more features.

Of course, that was also in the economy undisrupted by the COV-ID....the last six months have been more or less an aberration, and will probably to be permanent.

Average car is $36,000....trying paying that off under warranty at $1000/month.....I saw a $498 BMW lease the other day....that doesn’t even get you a Camry if you financed it for 36:D...the average household income is probably around $50K....salaries are not rising and the purchasing value of the US $$ is in the tank compared to what it once bought ya.

I still find that hard to believe, after taxes etc most cars today are going to cost you nearly 40K, if you finance that for 60 months you're looking at payments over $700 with a 2% APR factor in insurance and you're over $800 a month. The average family cannot afford that. It's why the used car market is so hot. It makes no sense to Finance a new car. I only lease new cars and I have a couple of Used cars that are paid off. A $700 car payment will let you lease some pretty nice cars without worrying about maintenance etc. I will never finance a new car again.

Although your 36K figure for the average new car price is pretty close to the mark, I have no idea where you got 50K from as average income :uh:.....every source I saw (and I checked a number of them) shows from 60K to as high as 100K. That means that the average new vehicle is roughly half of average income.....same as it was a half-century ago.

Average income shouldn't be used because the highest earners skew the number. Median is more accurate in this case

I agree. The median means 1/2 are above the median # and 1/2 are below. giving a more accurate look.

Sorry. When I used average I had meant median. I had assumed it was $50K....so $61K does not leave enough for a $1000/mo Camry and to pay it off under the warranty period.