cdynaco

excerpts:

New Cars Increasingly Out of Reach for Many Americans
Feb 27, 2013

Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.

The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to TrueCar.com data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales.

According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year. At the other extreme, Tampa, Fla., was at the bottom of the 25 large cities included in the study, with a median household income of $43,832.

The study looked at a variety of household expenses, such as food and housing, and when it comes to purchasing a new vehicle, it considered more than just the basic purchase price, down payment and monthly note, factoring in such essentials as taxes and insurance.

Bottom line? A buyer in the capital can purchase a car with a sticker price of $31,940, slightly more than the new vehicle average for the 2013 model year and about what it would cost for a mid-range Ford Fusion sedan or a stripped-down BMW X1 crossover. The buyer in Tampa? They'll just barely cover the cost of a basic Kia Rio, with $14,516 to spend.

"If you live in New York City or San Francisco, you're probably going to have to pay a lot for housing, but you don't have to pay a lot for a car," said Mike Sante, the managing editor of Interest.com, a financial decision-making website.

Affordability has been a matter of growing concern for the auto industry in recent years as prices have continued to move upward.
http://finance.yahoo.com/news/cars-i...145957880.html

Knight

I think the conclusion is that americans have too much debt. An income of almost 86k should be near $5000 after taxes a month. no reason you couldn't afford a 500 a month payment if you wanted to. Unless you wasted it already racking up debt.

exchallenger

Or you might have a problem affording a new car on 86k if you, say, had a couple of kids in college. I understand it can be quite expensive. Think of it as buying a new car for every kid you have in college, and no, that's not private college.

outlawmack

There isn't very many people making 86k a year. More like 25-30k a year

AlsCobra

I agree with the article. I for one just won't pay over $30k for a vehicle. It's just what I feel a vehicle is worth to me. $40-50k just seems ridiculous for transportation. I usually just buy used and can get a really nice vehicle for $30k and under. The first two year hit on book values keeps me from buying new. The best part is that the wife feels the same way about vehicle prices. I can do a lot more worth wild things with $500+ a month.

Rather B.Blown

I think if you've been responsible, lived within your means, planned ahead like everyone should, and haven't been trying to keep up with the Jones', buying a new car (even paying cash for one) should be no problem at all by the time you have kids going to college (18+ years). Barring major unforeseen circumstances of course.


But yes, I do think new cars have gotten way too expensive as well.

wheelman

I agree with all of that. Too bad I did none of it.

Zastava_101

I agree with the article - cars are too expensive these days.

Even the basic cars, with few options, are pretty much $20,000 these days. In the past there were a much larger selection of cheaper cars. These days, even the base Ford Fiesta is over $15,000. There is nothing Toyota/Honda for under $17,000 on dealer lots - and that's for basic base models.

Cars in the USA are generally more expensive in Europe than in the USA, but Europe has such a great selection of "cheap" cars.

Like this Skoda Citigo. It's a very high quality car (after all, it's being built by Volkswagen) and I've seen them brand new for under 8,000 euros.

burningman

I think I will never be able to get a new vehicle again. I got my one and will probably own it till it dies then end up with a used one of some sort. I do have debt that i wracked up when i was sick but it seems there might be a light at the end of that tunnel but I can't seem to keep up with the rising cost of cars.

Autotooner

It's my dream to own a brand new Mustang one day, but with my current circumstances, it seems more like a pipe dream at this point.

rhumb

While one might think making $86K in the DC area would have you rolling in disposable income, do know that it is also a VERY expensive area to live in too.

A decent sized town house in a reasonable neighborhood will easily cost over a half-million dollars -- there goes over half your monthly $5K right there in one check. Detached home? $600K-$800K easily. Kids? Figure $1-2K per month, each! Suddenly that $5K is starting to look pretty thin and we haven't even touched the regular expenses of food, insurance, clothes, commuting, utilities, schools, retirement, etc.

So yeah, while it might first seem those folks in DC are living high off the hog, everything's relative and a lot/most of that lavish $86K income simply flies right through one's wallet without leaving a scratch.

But yeah, I too wonder about feeling that cars are getting less and less affordable. One can price out a $40K Mustang GT coupe without breaking a sweat of getting to extravegant with the options, a price point that is well out of my reach. I wonder if someone has access to figures comparing average car prices as a percent of average income to perhaps get a bit more of a historical perspective on this.

NeverTooOld

1977.. I graduated high school, went to work and 4 months later bought my first new car. A 1977 Ford F-150 XLT, 4x4, LWB, dark blue metalic and loaded.. AC, sliding back window and AM/FM radio (single speaker). I was making $24,000 a year and the truck cost $4500. (gas was about $0.60 / gallon)
fast forward.
2010.. last new car. Ford F-150 Raptor. Molten Orange, fully loaded. $44,000.
10x what I paid for my first truck. Salary $210K or about 10x what I made then. (gas.. $4.00 gallon or about 7x what it was then)

Knight

24k in 1977 seems like a lot of money. And 210k a year I know is a lot of money for today. Obviously this article is not for you. lol

2k7gtcs

New cars are insanely expensive.

Ethanjbeau

Average American makes like 60,000 I think

outlawmack

Oct 16, 2012 – The national average wage index for 2011 is 42,979.61.

AlsCobra

:richard:

AlsCobra

Everybody has to make choices and sacrifices to get what they want out of life. I know some people give up big house notes to buy new cars every few years and vacation a lot. Some others want the big house and give up other things to keep it. The overextended bunch that want it all and worry about the jones's are the ones that will never rest easy. Unless you're Gary. :baller:

NeverTooOld

My point was.. salaries have gone up about 10x and car prices have gone up by 10x. So it seems car prices were about the same percentage of the salary back then as they are today.

Interesting note is the price of gas. $0.60 a gallon in 77 and 36 years later it's only $4.00 per gallon. If the 10x rule applied we would be paying $6.00 per gallon.
Hate to admit that I'm old enough to remember paying $0.28 a gallon for gas to put in my mini-bike

outlawmack

According to the yearly national average from 11. (Since 12 isn't in yet). It's only 43k. So salaries less than doubled (from what you made). Sorry to say but, People that make a lot of money and have great careers really don't have a clue to how hard it is. Some states only average 25k a year

And by the way. The average yearly salary in 1977 was 9,779.44