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Why Did New Cars Become So Expensive? Here's An Explanation

Then again, could the issue be our salaries?

If you think new cars, trucks and SUVs are expensive today, then you’d be absolutely correct. In fact, according to the latest data, the average new car transaction in the US is around $36,000. The median US salary? $56,516. Now, if you were to look at vehicle prices from before WWII and adjust them for inflation, the price increase today isn’t that drastic. Post-WWII, however, is when vehicles prices began to increase. For example, a 1950 Ford F1 pickup truck cost about $1,300. Adjusted for inflation, that $14,000 today.

Can you buy a brand new F-150, the F1’s present day ancestor, for that amount? No way. A 2018 F-150 only begins at $27,705. Compare that amount to the median salary, and, uh, yeah. Not cool. So why has this happened? Donut Media has a cool new video that offers a bit of an explanation.

Basically, new vehicle prices, even when adjusted for inflation, aren’t really the problem, but rather salaries that have not increased at the same rate. We’re not exactly economists, but that doesn’t seem very fair now does it? Not really. Should automakers lower prices? Even if some wanted to they probably couldn’t, given the extensive operation of running a car company today. Okay, so what about buying a late model used vehicle instead? Wouldn’t that save you a bundle? Absolutely, assuming you have the cash (or a majority of it) ready to pony up at the time of purchase. The alternative is long-term loans with often time unfavorable interest rates. In any case, salaries are too low today and new vehicle prices are only expected to increase.

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