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New Cars Are Too Expensive For The Typical Family, Says Study (gulfnews.com)
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.
The Anonymous Coward is right.
In 1973 a new Datsun (Nissan) 510 cost around $2300, which is around $13,000 today. By contrast, a 2016 Nissan Versa sells for about $12,000 MSRP - And the Versa is a much better made car than the 510 was.
You should never spend more than 20% of you annual income on a car.
Where did that rule come from?
"First they came for the slanderers and i said nothing."
If I've used the Inflation Calculator correctly, then the cumulative inflation of the U.S. dollar from 1969 to 2016 is 554.6%. And so that $13k Mercedes-Benz in 1969 would cost ~ $85k in 2016. Much more than the $30k you cited.
84% of statistics are made up; however, GP is not 100% wrong, just wrong about what cost should not exceed 20% of your income.
According to AAA, an organization more reputable than Bankrate.com, the cost to own and drive a vehicle in the USA today is $8,558 per year. That's a number with a lot of precision but without a lot of accuracy. They have an article up on the web that talks through their assumptions and calculations, though. Fun fact: they note that the cost of owning and driving a car has fallen to a six-year low, so TFA's author can go peddle their papers someplace else.
Back to GP! 5 x $8,558 is $42,790, which is not so far off what actual people actually working actually make. If you're making less you should consider a small sedan, which AAA estimates costs only $6,579 annually. You can do a little better if you buy a good used car. You can't do much better, though, and there is an element of luck around whether you buy a car from a careful owner or a doofus.
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.
"When information is power, privacy is freedom" - Jah-Wren Ryel
Unfortunately, holding on to a new car for more than 6 years stops helping much (annual costs become dominated by other factors).
???
I generally hold onto a car over 10 years, and it's never cost me that much extra. You *do* need to maintain it as you go along, and it depends on how much you drive, but my current car is from the 1990's and isn't yet in condition where it needs to be replaces, though it's getting there.
I think we've pushed this "anyone can grow up to be president" thing too far.
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.