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Priced Out: Can the Average American Keep Up With Rising Car Prices? | Elio Motors

 

The Model T is perhaps the most famous vehicle in automotive history. According to Auto Evolution, the Model T “democratized motoring and opened travel to middle-class America thanks to the then-innovative way it was assembled.” By 1925, as improvements were made to the assembly line, the Model T sold for $260. Adjusted for inflation, the Model T would cost $3,510 today. Unfortunately, the spirit of democratizing transportation has not passed into the 21st century. New car prices are at an all-time high, at an average selling price of $33,560.

Autoblog believes that Americans are having to spend too much of their hard-earned money on vehicles. “If you think cars are getting too expensive, you may be right. A new report shows that the average price of a new vehicle is out of reach for people in medium-income households in all but one of the 25 largest metro areas in the U.S.” With rising used car prices, average Americans have fewer and fewer options in finding affordable transportation.

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Conventional wisdom would suggest that with new cars selling well, and at sky-high prices, the price of used cars would decline. The opposite, however, is true. Used cars are selling at an impressive clip, with over 38 million vehicle sales in 2015. Used car prices are also at an all-time high, with the average used car selling for $18,600, up 4.6 percent from 2014. Consumers who are priced out of the new car market increasingly need to pinch pennies to afford a used vehicle.

There have been countless technological advancements since the 1925 Model T, so why are vehicle prices so high? One of the major reasons vehicle prices continue to climb is the changing definition of what comes “standard” in a vehicle. Instead of offering a vehicle with essential features, many manufacturers are increasing the transaction price by making expensive options a part of the standard package. For some vehicles, a flashy interior and expensive “options” are included in a base model, increasing the profit margins for manufacturers. A commuter who simply wants to get from point A to point B affordably is stuck paying an exorbitant amount for options they may not want or use.

As the Autoblog article mentions, experts believe that households should not spend more than 20% of their take-home income on a vehicle. With the rising prices of new and used vehicles, that rule of thumb will become more and more difficult to follow. In order to keep the spirit of the Model T alive, and to continue to democratize transportation, Americans need affordable new vehicle options.

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