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Are new car prices getting out of control?

Updated on May 7, 2013

Buying a new car is buying a lot of value!

Many people see the price of new cars, and think the prices of new cars are getting too expensive. While the average price of a new car has risen from $18,000 in the year 2000, the average price in 2012 was approximately $30,000. This is an average $1,000 increase per year for a car...but like anything, there is more to the story.

First, in the year 2000 more sedan/cars were delivered while the SUV market has increased its share of the market percentage. Because an SUV is a larger vehicle, has more engine and a heavier duty transmission, they naturally are going to be more expensive. While plugging in the government inflation calculator, the money value for a car built in the year 2000 is $24,331 in todays dollars. So, the theory of cars are getting more expensive is true, so why is this? With more car manufacturers than ever, KIA, Hyundai and Suzuki entered into car production, the price should not have gone up as quickly as it has.

As you start to really analyze these statistics, and consider the SUV is a more dominant vehicle in the sample and is more expensive, the truth is you are buying a lot more car than you did in the year 2000. First, most new vehicles have multiple air-bags for safety, while the year 2000 may have only had two airbags. Stability control is very common in most new vehicles today, back in the year 2000 very few except the luxury brands had this safety feature. Just about all vehicles purchased today have 4 wheel disk brakes, ABS is standard on everything, and the frontal impact protection is much more advanced than they were in the year 2000.

Take into consideration that the new car sample in 2012 has a much higher average of leather interior, sunroof, XM radio, OnStar communication systems, keyless entry, power everything. Back in the year 2000 most vehicles maybe had a sunroof, but leather was not as common, which is approximately a $1,200 option for most 4 door cars. Remote start probably represents 10% of the cars purchased in 2012, while blue-tooth capability and connectivity was not available in cars back in the year 2000.

Bottom line to this is that the ante has been raised for the way vehicles were equipped just 12 years ago. Checking on the Chevy Camaro back in 1975 with all 155 horsepower, the price for a base Camaro was $3,540, calculating the new price for 2012 shows the Camaro would retail for $15,107. A base Camaro in 2012 showed a sticker price of $23, approximately $8,000 more than the rate of inflation shows. So what does that $8,000 buy with a new Camaro?

Starting with all the safety features of airbags, ABS, stability control, with the standard features of the new vehicle like cruise control, XM radio, air-conditioning, anti-theft systems, power remote door locks, and wireless blue-tooth setup. Driver and passenger power seats, along with much better wheels and tires, along with increased performance. How does a 3.6 liter 323 horsepower engine make you feel? In addition to the horsepower increase that is significant (although rear wheel horsepower ratings Vs. crankshaft ratings are in play here), you still are buying a lot of horsepower...and the best news is that you get much better gas mileage, rated at 28 mpg on the highway.

If you start adding the price of all these additional features, and compare it to the features in the 1975 model, you will probably get very close to the $8,000 spread in price that the new 2012 Camaro commands. You can compare these features across about any vehicle, and find that although the price of a new vehicle has risen over the years, the truth is you are buying much more for the money. A quick comparison of a basic vehicle you can buy today at $12,470, the price for that vehicle would be $2,944 in 1975. If you income is $50,000 per year, your income in 1975 dollars would be $11,556 or a much higher percentage of your income to buy a new car.

That my a lot of value in todays cars!


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    • honda-stream profile image

      honda-stream 4 years ago from Canada

      Buying new is beneficial if you would like the comfort of knowing all major issues will be taken care of under warranty. Depreciation value on the other hand, that part is no good...

    • hardlymoving profile image

      hardlymoving 4 years ago from Memphis, TN

      Some good points. Also longevity has gone up as well ... i.e ATF fluid changes, spark plugs, struts, etc. all last longer. But the cost of ownership and upkeep has gone up. Parts prices have come down but labor rates have been rising; like around $85 + .

      Personally, I'll never buy a new car again. Too expensive, I can fix problems on my own and my commute to wherever is short.