The last car under $20,000

[begreen]

In just 3 years the average price of the American car has gone up 25%! It's now $48,000. No wonder car sales are in a slump and people are holding onto their cars longer. With the average family income of just $70k who can afford a new car as car makers continue to push bigger SUVs? One thing for certain, the average wage has not gone up 25% in this same time period. It's actually gone down around $2k.

Looking for a new car under $20,000? Good luck. Your choice has dwindled to just one vehicle

Just five years ago, a price-conscious auto shopper in the United States could choose from among a dozen new small cars selling for under $20,000.

apnews.com

 

[woodgeek]

In just 3 years the average price of the American car has gone up 25%! It's now $48,000. No wonder car sales are in a slump and people are holding onto their cars longer. With the average family income of just $70k who can afford a new car as car makers continue to push bigger SUVs? One thing for certain, the average wage has not gone up 25% in this same time period. It's actually gone down around $2k.

Looking for a new car under $20,000? Good luck. Your choice has dwindled to just one vehicle

Just five years ago, a price-conscious auto shopper in the United States could choose from among a dozen new small cars selling for under $20,000.

apnews.com

Not sure where you are getting the -$2k figure. Wage numbers are not the same as average or median income.

The Fed says total personal income is up about ~15% in nominal $$ from Sep 2020 to present. Similar to inflation. You could knock a few percent off for population growth, maybe.

Personal Income

Graph and download economic data for Personal Income (PI) from Jan 1959 to Feb 2024 about headline figure, personal income, personal, income, and USA.

fred.stlouisfed.org

Most hourly workers were buying used cars before, and are still buying used cars. The used cars they are getting now are safer and higher mpg than the ones they were getting 3 or 5 or 10 years ago, on average.

 

[begreen]

Not sure where you are getting the -$2k figure. Wage numbers are not the same as average or median income.

Lost the link, but I think it was the US Census bureau for median household income. It was around $72K in 2019.

Found it

The used cars they are getting now are safer and higher mpg than the ones they were getting 3 or 5 or 10 years ago, on average.

What changes have been made in the past 3-5 yrs. that have made an important safety improvement on all US sold cars, not just luxury models?

Did you read the article? The fact that a new car has become a luxury that few working class families can afford is not a good thing. The pandemic suddenly boosted used car prices too. The average price of a used car is now $29,000 according to the AP article. The car might have been safer when new, but as a used car it will have more wear and tear and who knows what deferred maintenance. If you are a senior on a fixed income this presents a serious dilemma.

New Cars Are Only for the Rich Now as Automakers Rake In Profits

With pandemic-era chip shortages fading, manufacturers are keeping inventories low — and prices high. The shift to EVs will make things worse.

www.bloomberg.com

Is This the Breaking Point? A New Car Now Costs More Than Many Americans Make In a Year

Should you pay rent or buy a car? That's a decision no one should have to make. In 2022, new car prices are approaching median income.

caredge.com

 

[bholler]

Not sure where you are getting the -$2k figure. Wage numbers are not the same as average or median income.

The Fed says total personal income is up about ~15% in nominal $$ from Sep 2020 to present. Similar to inflation. You could knock a few percent off for population growth, maybe.

Personal Income

Graph and download economic data for Personal Income (PI) from Jan 1959 to Feb 2024 about headline figure, personal income, personal, income, and USA.

fred.stlouisfed.org

Most hourly workers were buying used cars before, and are still buying used cars. The used cars they are getting now are safer and higher mpg than the ones they were getting 3 or 5 or 10 years ago, on average.

Yes but decent used cars have gone up in price a higher percentage than new ones have

 

[woodgeek]

Lost the link, but I think it was the US Census bureau for median household income. It was around $72K in 2019.

Found it
View attachment 314634

Ah, your census numbers are real, not nominal, and don't include 22 or half of 23. Mine are nominal, and total population. So, we can split the difference and say nominal income went up 10-12% during the last few years, similar to inflation. (Ofc, all the boomers moving into retirement are losing income... working folks could be going up to compensate.)

Your 25% increase is a nominal figure too.

So, yeah, new car prices went up 13-15% = 25-(10-12) more than incomes in three years. But not 27% = (25 - (-2)).

I don't see any reason for that other than profit taking by manufacturers in a low margin business during a high inflation period. I am sure everyone is pointing the finger at someone else.... supply chains. Russia. Oil. Whatever.

In reality, the car makers are trying to remake their business in a very expensive way (EV's) at a time when ICE volume is down and falling (since 2017). So its not surprising they are jacking prices, and shifting to more luxury models. Its capitalism.

What changes have been made in the past 3-5 yrs. that have made an important safety improvement on all US sold cars, not just luxury models?

Did you read the article? The fact that a new car has become a luxury that few working class families can afford is not a good thing. The pandemic suddenly boosted used car prices too. The average price of a used car is now $29,000 according to the AP article. The car might have been safer when new, but as a used car it will have more wear and tear and who knows what deferred maintenance. If you are a senior on a fixed income this presents a serious dilemma.

New Cars Are Only for the Rich Now as Automakers Rake In Profits

With pandemic-era chip shortages fading, manufacturers are keeping inventories low — and prices high. The shift to EVs will make things worse.

www.bloomberg.com

Is This the Breaking Point? A New Car Now Costs More Than Many Americans Make In a Year

Should you pay rent or buy a car? That's a decision no one should have to make. In 2022, new car prices are approaching median income.

caredge.com

The poorest folks that are struggling to cover car costs are not buying 3 yo used cars. They are buying 7-10 yo used cars. And there were lots of improvements to safety 2013-2016, better collision testing, backup cameras, etc. And the Obama CAFE regs had started to roll through by then.

But, as @bholler points out, used car prices are up even more.... but, I hear, are falling now.

 

[bholler]

Ah, your census numbers are real, not nominal, and don't include 22 or half of 23. Mine are nominal, and total population. So, we can split the difference and say nominal income went up 10-12% during the last few years, similar to inflation. (Ofc, all the boomers moving into retirement are losing income... working folks could be going up to compensate.)

Your 25% increase is a nominal figure too.

So, yeah, new car prices went up 13-15% = 25-(10-12) more than incomes in three years. But not 27% = (25 - (-2)).

I don't see any reason for that other than profit taking by manufacturers in a low margin business during a high inflation period. I am sure everyone is pointing the finger at someone else.... supply chains. Russia. Oil. Whatever.

In reality, the car makers are trying to remake their business in a very expensive way (EV's) at a time when ICE volume is down and falling (since 2017). So its not surprising they are jacking prices, and shifting to more luxury models. Its capitalism.



The poorest folks that are struggling to cover car costs are not buying 3 yo used cars. They are buying 7-10 yo used cars. And there were lots of improvements to safety 2013-2016, better collision testing, backup cameras, etc. And the Obama CAFE regs had started to roll through by then.

But, as @bholler points out, used car prices are up even more.... but, I hear, are falling now.

Yeah they are starting to come down a bit. But still are pretty ridiculous even for 10 year old cars with 100000 miles

 

[EatenByLimestone]

We were discussing our work vehicles and decided to keep them longer. I have over 130k on my '19 Ram and don't mind putting another hundred on it. We paid 20 something for it with 22k miles on it. I dont want to replace it with a $50-60k truck. I can stomach the cost of a transmission for the savings. Other than brakes and tires its been pretty worry free.

 

[EbS-P]

Don’t forget the chip shortage is about over. All the chips went to the highest margin most expensive vehicles. Dodge lot is a full as I have seen it in over two years. I’m not surprised to see that. There will be some trickle down (used cars that is) but inventories are sitting all north of 65 days for the big three and the UAW contract negotiations don’t seem a sure thing. Sooo, they will keep prices high building more inventories of high margin products to weather a possible strike.