Follow Slashdot stories on Twitter

 



Forgot your password?
typodupeerror
×
The Almighty Buck Transportation AI Software United States News Hardware Technology

New Cars Are Too Expensive For The Typical Family, Says Study (gulfnews.com) 622

An anonymous reader quotes a report from GulfNews: A new analysis from Bankrate.com found that a median-income household in the U.S. could not afford the average price of a new vehicle in any of the 50 largest cities in the country, though cars are more affordable in some cities than others. The average price of a new car or light truck in 2016 is about $34,000, according to Kelley Blue Book. That's in part because new cars are loaded with helpful but expensive safety features like collision-avoidance systems. Bankrate calculated an "affordable" purchase price for major cities, using median incomes from U.S. census data, and factoring in costs for sales taxes and insurance. In San Jose, California -- the heart of Silicon Valley -- the median income is about $84,000, and an "affordable" new car purchase price is about $33,000 -- close to, but still below, the average new car price. In lower-income cities, however, affordable purchase prices for a typical family are far below the average cost of a new car. In Hartford, Connecticut, where the median income is about $29,000, an affordable purchase price is about $8,000 -- about a quarter of the average new-car price. Experian Automotive said the number of new cars bought with financing rose to more than 86 percent (Source: may be paywalled) in the first quarter of this year. The average loan amount topped $30,000, with the average term for a new-car loan in the 68-month range -- some stretch as long as seven years.
This discussion has been archived. No new comments can be posted.

New Cars Are Too Expensive For The Typical Family, Says Study

Comments Filter:
  • They are using median and average really loosely there, and comparing them in ways that don't make sense. It's a good advertisement for the website owner, though.
    • by fermion ( 181285 )
      I noticed they were talking about median income but a more vague average price of car, which makes no sense, We know that half the families makes more than this money, which means that half the families have this much to spend. On the other hand, it makes not sense to say the average price of a car as such a thing is not going to the limit the ability of a person to buy a car.

      This is not the case of median home prices, which does represent the homes sold in an area, and a high median home price will re

      • Tl;dr there are a lot of cars under $20,000, so the fact that the average person can't afford the average car is irrelevant. The average person can afford a car.

        And that's not even taking into account used cars, which I consider to be an excellent option, even though I can afford something more.

    • Re:median vs average (Score:4, Informative)

      by GameboyRMH ( 1153867 ) <gameboyrmh@@@gmail...com> on Monday July 04, 2016 @06:36PM (#52445187) Journal

      Came here to say this. The mean price is driven up by pickup trucks (the prices are skyrocketing on those due to the financing available for them, something like what happened to student loans) and possibly even 6/7-digit supercars. A regular midsize sedan costs somewhere in the ballpark of $18k~$25k, maybe a little more for a hybrid or EV. Surely well under $30k.

    • It's also just a flawed place to use the average of any kind. If you want to assert that people can't afford a new car, you need to compare the cost of low end new cars to the median income. Including $80,000 Mercedes' and $60,000 trucks in the calculation makes no sense at all. No one on the median income cares about $80,000 Mercedes', they care about $10,000 Kias.

  • by Anonymous Coward on Monday July 04, 2016 @05:18PM (#52444783)

    Why do people think self driving cars will catch on? If anything, they will be more complex with even more sensors and systems needed to operate safely. If typical families already can't afford new cars, why would they be able to afford even more complex and expensive cars? The genius of Henry Ford wasn't building the best and most sophisticated car, but finding a way to lower production costs and make them affordable.

    • Re: (Score:3, Interesting)

      Comment removed based on user account deletion
      • by Anonymous Coward on Monday July 04, 2016 @05:33PM (#52444855)

        People don't want a dirty car that strangers have been in. They don't mind a dirty car that is one they only use.

        • by hawguy ( 1600213 ) on Monday July 04, 2016 @05:41PM (#52444895)

          People don't want a dirty car that strangers have been in. They don't mind a dirty car that is one they only use.

          Plenty of people in cities get by on taxis and car-share, self driving cars will expand that to suburban areas.

          None of the car-share cars I've used have been "dirty", they are regularly cleaned and maintained.

          • Plenty of people in cities also have bed bugs and other infestations. Call me a hypochondriac but I am proud adherent of the bus pants [youtube.com] methodology of utilizing public transportation when I don't drive.
        • Re: (Score:2, Interesting)

          Comment removed based on user account deletion
    • Why do people think self driving cars will catch on?

      ...because in their eventual form, people won't need to buy cars any more. You call one up on your smartphone and it pulls up at your door. You get in and it takes you where you want to go, then you get out and you're charged for the trip. Much cheaper than owning a car that sits in your driveway 20 hours per day.

      • Depends. I think people will buy fewer cars or perhaps different cars. You may still want to buy the car for your daily commute, but it'll be just that: a daily driver. Not a truck for when you need to haul stuff every so often, or a large sedan for the family holidays; for those rare eventualities you'll just rent something. And that second car that the wife uses twice a week for shopping? Better just rent that too.

        There will still be reasons for people to want ownership of their car. For one, you can
    • If anything, they will be more complex with even more sensors and systems needed to operate safely.

      What do you mean, "if anything"? Of course they are more complex, with more sensors.

    • Why do people think self driving cars will catch on? If anything, they will be more complex with even more sensors and systems needed to operate safely.

      never having to worry about being in a car accident and thusly never having to pay for collision insurance will save you a lot of money. this is what is known as an long term investment. i know the short-sighted capitalists of the world who can't see beyond the next financial quarter don't understand but it's worth it over a long period of time.

    • by Nemyst ( 1383049 )
      A current day non-smart no-nonsense car would've been exorbitantly expensive 20 years ago. Like everything else, costs will go down as more and more autonomous vehicles are created.
    • by Kjella ( 173770 )

      Why do people think self driving cars will catch on? If anything, they will be more complex with even more sensors and systems needed to operate safely. If typical families already can't afford new cars, why would they be able to afford even more complex and expensive cars? The genius of Henry Ford wasn't building the best and most sophisticated car, but finding a way to lower production costs and make them affordable.

      Goods transport, people transport, older kids, elderly and others with medical conditions that prevent them from holding a license, I think. We know there's a lot of elderly that either have voluntarily or involuntarily given up driving, should give up driving and they know it or they're in denial but that I think would be quite happy to not drive. Many have been forced to leave their homes and get an apartment because without a car public transport is too rare and too hard to use and taxis too expensive in

    • I think they'll catch on because I want one, and I assume most other people have similar wants to me.

  • by thundercattt ( 4205847 ) on Monday July 04, 2016 @05:22PM (#52444807)
    Majority of young people are graduating with 20-100k of school debt. Then working at BestBuy. Their credit is shot, I work for a local car dealership. The only people who come in to buy new are the Elderly. 50+. They use it for a year, trade it in against the next year's new one. The Millennials drive old run down not fit for the road Honda Accords or moms minivan because they still live at home until they're 30.
  • by grasshoppa ( 657393 ) on Monday July 04, 2016 @05:24PM (#52444821) Homepage

    HAHAHAHAA, sorry.

    In a sane world with rational people, this would mean you'd budget for a new car and buy only what you can afford. Of course, you may very well plan on using leprechaun gold at that point, while we're playing make believe.

    Meanwhile, in the real world, people will borrow way too much for way too long, then complain about how it's not their fault. If it happens often enough, the government will get involved, ala "government backed loans"...then it'll really get exciting.

    • It's the new sub-prime gold rush. High interest loans for 6 or more years is the norm rather than the exception. Depending on circumstances, the car itself might not last that long, encouraging "owners" to trade in and prolong the debt burden.
    • People either are never taught or choose to ignore the idea that you should never borrow to pay for a depreciating asset unless that asset helps you be more productive than you would be without it by a margin greater than the financing cost.

      So financing a car that doesn't make you more productive than a car that doesn't require financing is a silly financial move.

      I don't count "autonomous cars as a subscription" as a meaningful improvement either; it means individuals are no longer owners of capital and are

      • by mysidia ( 191772 )

        I don't count "autonomous cars as a subscription" as a meaningful improvement either;

        Why not?

        it means individuals are no longer owners of capital and are therefore giving up something important.

        Presumably the subscription has to be beneficial for people to buy it.... E.G. The subscription costs less than owning a car. This means that instead of tying up your "capital" by purchasing a depreciating asset, that you get to keep that excess capital (cash) in your pocket, from which you can draw t

        • I guess I left out a few words there - "individuals are no longer owners of their transportation capital." So maybe yeah their financial costs are lower and they have invested in financial instruments or whatever, but they are now at the mercy of the vehicle pool - that is the "something important" which was exchanged for the lower cost.

  • by Anonymous Coward on Monday July 04, 2016 @05:29PM (#52444839)

    Here's the depressing thing: cars aren't really more expensive than they used to be. This is not a shift in car prices. This is a shift in the financial solvency of the American people.

  • by QuietLagoon ( 813062 ) on Monday July 04, 2016 @05:53PM (#52444961)

    ... That's in part because new cars are loaded with helpful but expensive safety features like collision-avoidance systems...

    It is not really the safety features, but the "make the car more like a living room" features, that make cars a lot more expensive.

    .
    But don't worry, the car manufacturers are slowly turning the vehicles into remote monitoring and surveillance environments so that every aspect of our lives can be sold to the marketeers. That should drive down the price. /sarcasm

  • Does collision avoidance add significantly to the price of the car? At least one company sells an add-on collision avoidance system [consumerreports.org] that costs around $1100. If this company can retail a compete add-on system for only $1100, it must cost manufacturers less than than to build it in to the car (they may sell the option as an add-on for thousands of dollars, but that has no relation to what it actually costs them to build it)

    But even $1100 is less than 3% of a $34,000 car, so it doesn't seem fair to blame it f

    • Packages get bundles because it's inefficient to offer them as *factory* options a la carte. That $3300 tech package includes an integrated version of the $1700 item you linked, cruise control, GPS nav and a backup camera system. You could probably put together an equivalent bolt-on system for all of that for $2500, so asking for 25-30% markup at the retail level really doesn't seem overbearing. Upselling is one of the most common profit centers in any business. So, in a way, it is that expensive. Though on

  • by zedaroca ( 3630525 ) on Monday July 04, 2016 @06:06PM (#52445039)

    Here in Brazil we usually buy a car in 60 - 72 not so cheap monthly payments.

    That's in part because new cars are loaded with helpful but expensive safety features like collision-avoidance systems.

    It's never because of abusive profit margins in a not truly competitive market. Down here they always blame the taxes (they are included in the price and not discriminated).

  • Buy used? (Score:5, Insightful)

    by jjn1056 ( 85209 ) <jjn1056&yahoo,com> on Monday July 04, 2016 @06:19PM (#52445119) Homepage Journal

    I've never owed a new car, I don't think its a very good value. Cars lose like half their value in the first few years, and the insurance kills you (and road taxes, some places charge road fees based on how old the car is.).

  • It is dumb to buy a new car. It loses 25% of the value the moment you take possession. Then rusts and loses value continuously. You can get fantastic almost as good as new car, one or two years old, some 30% cheaper.
    • by hawguy ( 1600213 )

      It is dumb to buy a new car. It loses 25% of the value the moment you take possession. Then rusts and loses value continuously. You can get fantastic almost as good as new car, one or two years old, some 30% cheaper.

      If you keep your car for a long time, then it can be worth buying new since you know it was well taken care of. I bought my car new and 11 years later, am still driving it. While I've enjoyed the past 8 years of no car payments, I'm finally thinking of replacing it to get a car with better gas mileage and modern safety features.

    • by Alomex ( 148003 )

      This is no longer the case. A quality, well built Camry, Civic, BMW or Accord loses about 10% when you drive it off the lot. Some American cars as well as some high end cars on the other hand do lose a lot more of their value on possession sometimes even more than 25%.

  • ... is the MacBook Air I'm typing this on. And it's from 2011 and I only bought it because my layoff in that year had an OK severance coming with it.

    Granted, I hardly have any debt (a few hundred Euros) but if I had the money to buy a new car I'd certainly not use it for that. I'd use it for the downpayment on a small appartment or a microhouse.

    As for the car, I have been toying with the thought of buy a used Smart to be more flexible. ... Couldn't say if that's happening anytime soon. Maybe I'll just wait

  • Average car? (Score:5, Informative)

    by hibiki_r ( 649814 ) on Monday July 04, 2016 @07:29PM (#52445385)

    Many decent family cars out there are NOT, in any way, 34K new. A new Mazda 3 is a sensible car and starts under 20K. A Camry is 25K. You could buy a 350Z for less than 34K!

    So plenty of families can afford new cars: They just can't afford large, over featured, expensive to repair urban assault vehicles. US streets would be better if nobody could.

    • Comment removed based on user account deletion
      • by Algan ( 20532 )

        I will never set foot in a dealership until I know exactly what car I am going to buy (down to VIN), and how much I am going to pay for it, including taxes and fees and how am I going to pay for it, i.e. cash or pre-arranged finance with a third party. Everything is negotiated and agreed upon in advance. If they try any bait and switch I leave. They might try to lure me with their low APR financing, and I might take it if it is significantly better than what I have - say 0%. They might try to sell me extend

  • by speedlaw ( 878924 ) on Monday July 04, 2016 @11:05PM (#52446079) Homepage
    For most folks, the reason they pay the big bucks, discounting ego (eg Mercedes CLA, BMW 320i) is for a warranty. This is a promise that if it breaks, someone else will fix it, on an open ended contract. This is the warranty premium, and what sells most new cars. (I"m sick of my POS whatever, I was late again, I NEED A NEW CAR). Interestingly, repair costs are set up specifically to be just a bit more than car payments when the car begins to age...at dealer prices.... Now, in reality, it isn't that simple, but you need 99% uptime to get to work, and it plays into that. If you can afford two cheaper cars, you don't need that 100 % uptime from one, and it can be cheaper. You need space, so city dwellers can't do this. If you can do some work on the car yourself, or have basic knowledge such that you can discuss reasonably with a service tech, you can buy used pretty safely. If you know where the gas goes and the key goes, and the "check engine" (yup, still there) light scares you and results in random $500 bills, then you can't buy used. I'm driving a $50k car (new) that I bought used for $16k. I did $2500 in catch up work and this includes an alternator which puked 15k miles after I got the car. Most folks think I'm driving a $50k car, but as I have another car, and I DIY most work that does not need a lift, I can afford to drive a used car. Mileage is a factor. Warranty is because they know how much folks drive, so 3 yrs/36k means I'm out of warranty early year #2. It is brief warm feeling, like a towel out of the dryer....so new, for me, isn't equal to warranty. You can do a LOT of repair work for the "warranty premium, even a whole engine in most cases". Again, this only works if you have some space, and understand the mechanics. Otherwise, they are awfully good at separation of you and money, aren't they ?
  • by guacamole ( 24270 ) on Tuesday July 05, 2016 @01:41AM (#52446401)

    Honestly, if you spend more than 30 grand on a new car, you're already rolling in a lot of superfluous or unused features. My family members always end up buying well-equipped (not best equipped) midsize sedans like Toyota Camry and Honda Accord in the low 20Ks, and usually under the sticker price. And in fact, Camry and Accord have gotten too fat to even be called mid-sized. So if you want to save more money, go for a 20K compact car, like a Corolla, Focus, or Civic, etc. This still have four doors and five seats. Plenty for an average family, specially with younger children.

  • While the reality is that average car on the road is 11+ years old. If you take out commercial and industrial cars probably average consumer age is approximately 10 years.

    While many advocate buying used, this used car needs to become a new purchase first, and, just as the statistics shows, on average every tenth car on the road is probably a new car. If everyone would be buying a used car, then there would be no supply of new cars.

    Reality is that existing prices for both new and resale values represents a finely tuned, yet fluid, supply and demand model, that takes into account both purchasing power, vanity, depreciation, reliability, cost of auto-mechanics labor, crash accidents statistics, auto-industry profit margins and many other factors.

    Yes, brand new car is often overpriced. That is part of the model, where salespeople commissions and average buyer's vanity comes into a play. It is also true, that sometimes the old is just not the right choice for some people.

  • Wrong factors (Score:4, Insightful)

    by luis_a_espinal ( 1810296 ) on Tuesday July 05, 2016 @07:48AM (#52447275)

    That's in part because new cars are loaded with helpful but expensive safety features like collision-avoidance systems.

    Wrong factors. Median income people haven't been able to afford new cars for a while. And this is more a function of loss in purchasing power than about new (and expensive) safety features.

    People in such conditions do what they have done for a long time - buy used cars. #firstworldproblem.

You are always doing something marginal when the boss drops by your desk.

Working...