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Why Are Cars So Much More Expensive Than They Used To Be?



I'm always amazed when I hear people reminisce about a time when $4000 would get you a really nice car.

I haven't been around nearly long enough to remember something like that, so today's car prices aren't quite as shocking to me. Obviously, the cost of everything has gone up--but what besides a growing economy, inflation, etc..., really has caused the huge increase in average vehicle prices over the last few generations? How can a 2010 Ford F-150 cost so much more in 2010 than it did in 1950, and still be a top seller in the U.S.?

In a nutshell, the cars of today are more safe and durable, and perform better than the cars our grandparents remember. There are a few reasons behind the change.

Design: Huge investments are being made for the development of modern vehicles. Thousands of hours of research, design, testing, and negotiating are required for individual parts from start to finish. There are immense budgets required for salaries of research and development employees, test lab equipment, prototype materials, and software. Engineers and scientists know a lot more today than they did 50 years ago, and that knowledge allows them to design better parts. The foundation for this stage of the process is quite extensive though, requiring more funding than ever before.

Quality: As the major car builders gain experience and customers, their understanding of quality and reliability in the real world improves - and customers expect it to. Proving that every part on a vehicle can endure a lifetime of use requires extensive testing. This equates to accumulated man-hours, disposable materials, and properly maintained equipment. It takes a huge amount of cash collectively to prove durability of a new vehicle before it can be safely marketed and sold.

Safety: Along with improved quality and reliability, customers (and the government) demand more and better safety features. Air bags, active braking and stability control systems, and crash avoidance and protection technology have all taken years to develop and refine. These safety features require lots of additional equipment, testing, and research, which cost manufacturers more money.

Government regulations: Government in North America and around the world has become more and more involved with the automotive industry. We are beginning to see more political influence on safety and emissions requirements every year.  These can be good for consumers and the environment in the long run, but require new types of investments on the part of the companies selling the cars--first and foremost among them, investing in lobbyists.

All of these accumulated costs are reflected in the component and finished vehicle prices. We, the customers, must bear the burden of some of this cost in order to reap the benefits offered by the improved cars of the 21st century. Yes a 2010 F-150 costs a lot more than a 1950 F-150 did, but a 2010 does more, lasts longer, keeps you safer, and meets much stricter regulations.

So while you pay a lot more now, you get a lot more too.

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Comments (9)
  1. $4,000 did by a nice car back in 1965 when I bought my first new one. By far and away, the biggest reason today's cost more is inflation. Try the Bureau of Labor Statistics CPI calculator at http://www.bls.gov/data/inflation_calculator.htm It's very easy. Since you cited 50 years in your article, you'll see that $4K in 1960 equals $29,200 today. Yes we're paying more for all the safety and tech, but manufacturing is far more efficient today too. The lions share of the increase is just inflation.
     
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  2. It bought a greaty car in the mid 70s as well. It is gov regulations that is the primary factor.
     
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  3. I think we should take a look at E.U. where green things happen. I will never understand our petrol head nation when we have the E.U example. They build cheaper more efficent/powerful diesel cars then we ever did. Why ? Cos they are open minded and their politicians do care about their people.
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  4. The amount you spend on a car has little to do with how much enjoyment you get from driving it. In fact, cheaper cars can add to the enjoyment - it's a relief not to have to worry about how many miles you're putting on it or how much it might cost if you get a bit sideways in the wrong place. Panicking about every little noise isn't much fun, nor is having to keep aside to cover unforeseen problems!
     
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  5. This guy sounds like a car industry spokesman: last longer, better, blah, blah, blah. All nonsense. Built-in obsolescence is the name of the game, and fiberglass and plastic are not as durable as steel. A well-maintained car from the 50's will still run perfectly well. Try that with your impossible to fix new cars.
     
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  6. the problem is simple the people who put the cars togeather are overpaid.........
     
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  7. I agree with what most replies stated here. The real reason that cars cost so much is the marketing expertise that is put into play to keep consumers believing they need a new car every so often. Technology should eventually drive down the price of any product, not up. What would a TV cost if technology didn't reduce prices? What would a home computer cost? This is why THE software company is so rich, because of marketing. They convinced the public to get the latest instead of just putting out a good product and keeping it repaired in the first place. I don't object to any company making money. That is why they are in business. Just don't play me for a fool and try to convince me it's out of your hands and the price has to go up every year.
     
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  8. Also, many manufacturers are a bunch of greedy bean counters in the auto industry, hence many good performance cars literally put a graduated student in prepetual debt, thanks to the loan and interest system of capitalist nations. Once they found out that you can make the consumer constantly bleed their money for a car which in actual manufacturing costs 1/4th of the price listed, they started reaping the benefits. Hence why most cars retain their value (except for the budget/enterprise/hertz corvette rentals, as they are mass produced and take alot of gas, which most people avoid)
     
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  9. I am sorry but one of the things in the above article is hogwash...the part about expecting a car to last longer than it did 50 years ago...case in point...I see a LOT more cars on the road today from the 50s and 60s than I do from say 1985. Cars were built to last back then. It sounds like the guy who wrote this article works for a dealership. It cost more for one reason and one reason only...Gov. Regulations. Cars were made of steel in the 50's for crying out loud!
     
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