Are Cars More Expensive?

December 30th, 2015 by

Car and Driver published an interesting article this week, “Are Cars Getting Less Affordable, or Does it Only Feel that Way? Our Infographic Explains.”   Kia Country, General Manager Steve Appelbaum comments.

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There is a common misperception that cars get more expensive is a common misconception every year. There are several factors compare. If you look strictly at price, they are more expensive every year. As retailers, we cringe when the manufacturers announce price increases. The money doesn’t go to the dealer so when prices rise perceptually too feel victimized by price creep.
If you look at average payments, then there is far more parity. Payments for any number of reasons don’t adjust as much… bank terms are longer, interest rates have been at historic lows for years, and lease volumes ebbs and flow. In addition, on average; people are keeping their vehicles longer creating more trade equity towards the financed balance which also contributes to lower payments.

Kia has experienced price fluctuations in both directions.

There is no question that the majority of the Kia lineup has a higher price point than it did at their initial product offering. Significant improvements in engineering and quality are legitimate reasons. As with most new imports into the US retail car market, Kia made its introduction with price leading, simple, low technology cars; like the early Sportage, Sephia and Rio.

Today’s Kias don’t resemble those early cars in any way except in some cases by name. They are among the best engineered and technology packed cars in the world. They also have world class reliability and safety. Few manufacturers can justify their comparative price changes to improved value, features and warranty as Kia can. And in truth a 2016 Sportage AWD is only $2-3000 more than it was at its launch in the nineties. It represents as great a value now entering its 4th generation as it did in its 1st generation.

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As the article states, average price to months of income is always pretty steady at around seven months. Other factors that affect buying power are items such as fuel cost, service items and service intervals. All of those contribute to vehicle affordability and as they decline, that seven months isn’t as significant. As they increase, the impact on income does make vehicle purchases seem more expensive in real dollars.