The auto industry has seen two trends over the past decade. Car prices have risen steadily since the Great Recession. Depending on the source, the average American car sells for between $35,000 and $40,000. Also, cars bought new last longer. Most recently, the average car bought new has stayed on the road for almost 12 years.
In its “People Are Spending More on New Cars, But Prices Aren’t Necessarily Rising” report, Consumer Reports shows that car price increases are being distorted by the fact that more people are buying high-end, relatively expensive vehicles. The analysis looked at J.D. Power data, which showed more people recently have bought cars with prices over $70,000, while a falling number of buyers have opted for cars under $40,000.
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To make the point about how car prices have moved unevenly recently, Jake Fisher, senior director of the Consumer Reports auto test program, commented:
Once you adjust for inflation, many popular cars like the Toyota Corolla and Subaru Forester are actually cheaper today than they were 20 years ago. And that’s despite the fact that today’s models are better in just about every way.
The best example to make the case is the Toyota Camry. Consumer Reports points out that with a base price of about $25,000, it costs about half the national average for all new vehicles. Its price has risen $1,900 during the past five years, which is about the rate of inflation. In that time, “Camry gained an eight-speed automatic transmission, Android Auto and Apple CarPlay, updated infotainment displays, revised styling, a freshened interior, and an expanded suite of active safety systems that are standard on every version.” Also, the price of the hybrid models has dropped $1,200 on average. The Camry costs less than it did five years ago.
The report does not add another factor. If the trend toward better-built cars continues, a new Camry may well last longer than the same model did several years ago. It will not only have cost the buyer less, but it will give the new owner an improved value.
Click here to read about the slowest-selling American cars.
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