How Cars Are Getting More Expensive Every Year - Mercedes Benz SLK Forum
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#1 Old 01-20-2017
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How Cars Are Getting More Expensive Every Year

is editorial is about a subject that's been bugging me for a very long time, and that's the fact that cars are getting more and more expensive each year. I wouldn't be far off in saying that most models have had a near 50% bump over the past decade if you ignore the stripped out base models.

I could also go on and on about how the last Ford Fiesta ST was only about €15,000 or how Mazda has stripped affordability away from the MX-5 Miata. I might also point out that the €25,000 Golf GTI is but a dream. But the vast majority of the tens of millions of people who buy a new car every year don't want these frils. They just want a reliable, safe mode of transportation for them and their families. As a bonus, they might get a sense of pride and that new car smell.

But the way I see it, about half the major companies intentionally punish you for wanting the base car to deter you from buying it. It's weird, right? But let me share a few of their tactics: steel wheels, small infotainment screens, crappy headlights and even poor noise insulation. Safety is another sticky subject, with cars in India not having standard airbags and the Europeans adopting the twin-rating system.

Still not convinced? How about the fact that even in developed markets, base compacts costing $20,000 or more don't come standard with lane departure warning and auto emergency braking, technologies that have been proven to save lives? Sure, they cost money, but not enough to hurt the companies in the long run.

So how much money is too much to spend on a new car? Most Americans are clearly paying more than they can afford; it's a bubble. Billions of dollars every year are devoted to ensuring you have your 2010 Ford Mustang or Chevy Camaro. You would look so much cooler in that 2018 model, right? In the back of your mind, you know that spending a third of your income on something that will depreciate like a rock isn't smart, but you do it anyway.

A good rule of thumb is that you should spend no more than 10 to 15% of your income on a new car and finance it for 4 years max. So if you earn $50,000 per year, that's $7,500 tops, times four, which leaves you with a general budget of $30,000 if you ignore interest and such. So that's the price of an average car, even though that's an above-average pay grade.

Honda Civic, Mazda3, VW Golf, Ford Focus - if you want to have a good one, expect to pay at least $25,000. Again, these are supposed to be the economy cars, the ones that get people to work. Go for the model below and you are punished with noisy engines, small trunks, a lack of features and above all sub-par ride.

But most folks stretch their credit to the max and loan the money over as much as eight years. Why? Because 10% of their money won't buy much. Cars have become incrementally more expensive, and that's also starting to affect second-hand prices.

So why are cars becoming less affordable? It's a combination of factors, such as the price of steel, emissions regulations pushing development costs and new safety standards. We, the consumers, are also to blame. Our standards have steadily risen to the point where a Renault Scenic of today has more features that are better screwed together than the first BMW X3.

It's not just the cars, as gas prices are much higher now then they were a decade ago. A recent study found that the cost of insurance rose 16% in Britain last year. More cars, more accidents, less fuel to go around. And it can only get worse from here on out.

One thing is for sure, inflation has very little to do with it. Some companies are just greedy, like Porsche who seemingly pushes prices upwards by $5,000 with each model update. But it's not just them. I was recently shocked to discover that the options on the 2017 Skoda Octavia cost as much as on the Audi equivalent.

But I don't think I can offer a more eloquent example then what's happening in the luxury and exotic market. The U.S.-spec 1985 Lamborghini Countach model had a base price close to $100,000, with only two options available, the $5,500 aero spoiler and a $7,500 sound system. Nowadays, it's not inconceivable to spend that much on a Porsche 718 Boxster with a 4-cylinder engine. And how about the Nissan GT-R, which is steadily approaching the supercars it was supposed to undercut? How about the $200,000 Porsche 911 Turbo or the 150,000 BMW M6?

The problem has steadily crept up on us. In 2010, the Lexus LFA seemed unreasonable at $375,000. "Wow, how amazingly rich the guy who bought a Bugatti Veyron must be," we all thought. But nowadays, Ferrari and McLaren can sell hundreds of cars just as expensive very easily.

Sour grapes? Maybe, but I bet even Ferrucio and Enzo would be shocked.

How Cars Are Getting More Expensive Every Year - autoevolution
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#2 Old 01-20-2017
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Your headline should have read "How Everything is Getting More Expensive Every Year", which leads to discussion on economics and the fractional reserve banking system . . .

My solution has always been to buy used - and not to finance. Your pride may suffer but your wallet will celebrate!
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#3 Old 01-20-2017
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Not to invite the discussion of politics, which I understand is taboo here, but the fact is politics can and will affect US auto prices, particularly prices of those lovely European cars that we are so fond of.
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