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with entry level cars priced at 15k the average person has to work years just to save up enough money to buy a new car. Have cars always been this expensive in
by utnick 18y ago
with entry level cars priced at 15k the average person has to work years just to save up enough money to buy a new car.
Have cars always been this expensive in relation to american wages?
- ssharp 18y agoNo, but cars also have higher resale value, are much higher quality, and last significantly longer than they used to.
- hugh 18y agoI would have thought they're just about cheaper than they've ever been in relation to wages. I can't find numbers right now, but I'm pretty sure I've read such figures in the past.
- ojbyrne 18y agoMost people buy cars on credit or lease.
- hugh 18y agoOnly in the US, as far as I know. I was actually shocked when I came here at the extent to which borrowing money to pay for a car is seen as normal. Personally I still tend to think that real estate is the only thing worth borrowing money to buy, and that if you can't afford a $20,000 new car you should buy a $3000 used car. As a side effect, I see a lot more new cars on the road here than in Australia. Also, used cars depreciate a lot faster.
- ojbyrne 18y agoAlso, used cars depreciate a lot faster. I'm guessing you mean compared to used cars in the US, because generally I hear that new cars depreciate the most in the first two years.
- hugh 18y agoSorry, yes, what I meant to say was: cars depreciate faster in the US than they do in Australia.
- rudyfink 18y agoBorrowing money to buy a depreciating asset is surprising to me too.
- edw519 18y agoIn the U.S., banks built drive-in windows in order to see their property once a week.
- helveticaman 18y agoI don't think it is a bad move per se. Mining companies buy machinery on credit, and this machinery depreciates. But in the context of a consumer, I agree, it's surprising. It's short-sighted.
- ojbyrne 18y agoTo put it in the same context, there's lots of jobs out there that essentially require a car - the job is in an area poorly served by mass transit, or its a job that requires visiting clients' offices. It's clearly not short-sighted then. In addition, up until the recent gas price increase, there was a perceived tradeoff between living in a small apartment in the center of a city, or living in a larger, cheaper house in the suburbs. The total cost of car+house was generally perceived as paying less for more versus the inner-city apartment. Finally, if you have children, there's going to be tons of activities (sports, summer camp, etc.) that basically require a car. It's an investment in their future.
- helveticaman 18y agoGood points. I guess it's often short-sighted.
- nostrademons 18y agoFrom Wikipedia's entry on the Model-T: "In 1914, an assembly line worker could buy a Model T with four months' pay.[18]" 4 months pay for an average American making $45k/year is $15k. (Not including taxes, but I'm not sure if they're included in the Model-T figures above.) I recently asked my parents how much they paid for their first cars, and IIRC the answer was about $3k on a $6k/year salary, for 6 months of pay. (This was around 1970.) It'd seem that cars were more expensive then.
- mynameishere 18y agoThe Chevy Aveo is about 10K, which is less than 4 months of an average salary. Needless to say, it is far superior to a model T.
- dangoldin 18y agoAh cool info. I'm wondering whether the actual costs of ownership were higher or lower now or then though? I imagine now with the price of gas and insurance the costs may come close. In addition, let's not forget the fact that now families tend to have more than 1 car whereas before they used to have one.
- nostrademons 18y agoPrice of gas as a percentage of household income is significantly lower now than it was in the 70s, even with today's $4/gal. Remember that in inflation-adjusted terms, gas prices in 1973 were about $3.30. Figure in 50% or so real wage growth since then and we'd need about $5/gal gas to equal then.
- edw519 18y agoactual costs of ownership were higher or lower now or then though lol My current car has 40K miles and has never been in the shop except for routine maintenance. My last car had 100K miles without a lick of trouble. 35 years ago, it was not a question of "if" you had trouble, but "when". This was before front wheel drive, fuel injection, electronic ignition, imbedded computers, and manufacturer warranties. A $3000 car would normally cost at least another $3000 in repairs during its lifetime. (Unless it was a Pinto or Corvair that blew up) Factor in lost time broken down (without a cellphone of course), tow fees, and lost wages, and we forget how easy we have it now.