The prices for new cars have risen exponentially since the start of the COVID-19 pandemic, hitting an all-time high in December 2022, of $49,507. Prices dropped this past month to $49,388 – down 0.6%, but still 5.9% higher than a year ago.
This is why I drive older used cars.
I did buy a new Ford Pinto hatchback with a 4 speed manual transmission and no a/c in 1974 for around $2,500. Then in 1979 bought a new VW Rabbit hatchback with 4 speed manual transmission but did have a/c for around $5,200. Since then always bought used vehicles. And since 1990 always a Toyota.
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This trend of price and size escalation has been in place since before the plague.
The die was set when the CAFE reg was “reformed” in 2006.
The old system mandated a single MPG for a sales weighted fleet average for each manufacturer. That system forced manufacturers to build and sell more fuel efficient vehicles to offset the poor mileage of their larger models.
The “reform” replaced that system with a mathematical formula to set an MPG target for each individual model, based on it’s size. This had the effect of removing the incentive to offer smaller vehicles at all. In fact, the text of the regulation disclosed that the mathematical formula had been intentionally skewed to discourage the production of smaller vehicles, using the excuse that smaller vehicles are, by definition, “less safe”.
Financing terms have also been extended, now to 84 months.
Remove the incentive to build small cars, and extend payment terms to hold down the monthly payment, and “professional management” does it’s thing to maximize profit.
Steve
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