The cost isn’t that connected to raw materials, so shouldn’t they go down every year?

I suppose Tesla tried this, and the market got upset, but it seems like that’s how it should work.

Are the barriers to entry too high to permit a functional market?

(Kind of like smart phones.)

Bloat from EPA regulations.

quote:

Bloat from EPA regulations.

And the other meddling like driver "assist" systems. And just plain old inflation.

As to the bloat, for example, the Honda CR-V's first generation (1997-2001) is about as long as the current one's wheelbase. A modern pickup truck positively dwarfs those from 20-30 years ago.

In my opinion a lot has to do with technology.
The more gadgets the car has the more the car manufacturers can charge.

My first newish car cost me in 1987 around $7000.00.
It was a basic car with hand crank windows, manual door locks, AM/FM radio and an automatic transmission, and all that was very basic compared to what we have now.

Now with all the high tech stuff that goes into cars the price is going to go up.
Plus all the government requirements to meet safety and environmental standards adds to the price.

Most cars are also built by Union workers, every few years a new contract is negotiated that includes pay and benefits including retirement benefits, that all adds up.

Of course this is all just my opinion.

Mohair interior?

1934 Ford cost my grandfather $450, but the 1935 Ford was $90 more and had a mohair interior.

Well, every single one seems to have an iPad 'Ultra XL' Pro on the dash, so there's that!

Because people are willing to pay what they are asking.

Who do you think pays for the employee cost of living raises and bonuses?

Cars were relatively flat from 2000-2020 during the time of low inflation. My 2002 WRX was about 25K and my 2017 Civic Si was about 25K. The Civic of course lacks AWD but has a lot of other stuff the WRX didn't have. Off-shoring of component manufacturing to lower cost countries help keep prices stable.

SUV's cost significantly more than the cars they are based on due to increased perceived value by customers. They don't cost much more to build, so most of the difference goes to profit. This is why most US manufacturers don't make that many cars anymore,

There was a significant jump during COVID - about 20%. So you have inflation, and you have the switch from cars to SUV's.

Then add the costs of EPA and FMVSS, but stuff like that becomes cheaper with economies of scale.

Trucks have gotten way out of hand. I think part of that is just manufacturers charging whatever they can get away with. Again, large profit margins.

And the elephant in the room with no clothes on....

Subsidizing EV development and manufacturing! All that investment and the accounting losses have to be paid somehow...

Just wait until every vehicle has an AI "assistant." I suspect there may be price increases involved.

So when they were so worried about getting covids, who was it that thought it was a good idea to cancel the order for all those computer chips?

...But most buyers want to buy a fancier ride to look good on instagram?

As for me, I can hop in my newest ride and don't have to put my foot on the brake to shift it out of park.

quote:

Originally posted by petr:
Who do you think pays for the employee cost of living raises and bonuses?

Yeah, unions are getting their share!

We have an inflation based economy. The gov't spends more than it takes in and the federal reserve magically creates money out of thin air. This inflation is the baseline cost increase and everything below are the additions explaining why auto price increases outpace inflation:

the manufacturer doesn't want to make bare bones cars and the dealerships don't want to order bare bones cars. The reason is they make more money off the packages where to get that one feature you actually want you have to take thousands of dollars of features you don't want. In many models, it's now possible to add 100% of base cars price in options.

a certain percentage of the population will buy even when the price is ridiculous. Look no further than the chip shortage during the scamdemic - the only people that had to buy were the ones whose vehicles were totaled, the ones who leased and existing lease wasn't worth purchasing, etc. but people were panic buying at 100+% MSRP, putting downpayments on cars that didn't yet exist, trying to "outbid" someone whose car was on the semi truck in route to the dealership, buying an incomplete car with the promise they'd later install the options not installed, etc.

US auto manufacturers know the gov't will use taxpayer money to bail them out if they really fuck up. There is no downside for them to fuck the consumer.

The CEOs and c-suite executives have contracts with huge buyouts so they're getting millions no matter how poorly the company does unless they Enron the company.

putting computer chips in everything. That's how you take a $300 windshield to $3000, a $100 tail light to $1500, a $250 headlight to $2500, etc.

China has a stranglehold on rare earth metals needed for computer chips so with the lack of competition they've increased prices on what is needed to make computer chips. It's a real double whammy to the consumer with the aforementioned putting computer chips in every ridiculous thing.

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Ego is the anesthesia that deadens the pain of stupidity

DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.

quote:

Originally posted by .38supersig:
So when they were so worried about getting covids, who was it that thought it was a good idea to cancel the order for all those computer chips?

...But most buyers want to buy a fancier ride to look good on instagram?

As for me, I can hop in my newest ride and don't have to put my foot on the brake to shift it out of park.

Most of the cost of a car is purchased parts. They cancelled orders for parts, which led the parts manufacturers to cancel orders for chips. You can't spend all your cash on production materials when you aren't using them because you are shut down. The UAW demanded shutdowns, and the Big 3 complied. They would have gone on strike for safety concerns, which is one of the few things they can strike over when a contract is in place. In the beginning of COVID I'm pretty sure courts would have agreed. My company shut down a plant that supplies one of the Big-3 so they weren't producing stuff that they could not ship.

The problems is the chip makers changed over to other stuff that was in demand especially consumer electronics for people working at home, and they had to fill those orders before changing back over to auto industry chips.

Profit margin.

Raw materials are way up. Transport is way up. Wages are up. Parts are up. Energy is up.

That about covers it

At the core, greed, and stupid customers. The average new vehicle price in America has crossed the $50k threshold this year. And that is nuts. Customers, over the years, demanded larger vehicles (CUV/SUV vs. the passenger car such as coupe, sedan, hatchback, wagon) with every modcon imaginable. They also want it to drive itself so they can play on their phones while driving. It’s a bad recipe, and the vehicle offerings for the most part, suck, and they are way overpriced.

You have things like CAFE standards. The push for more and more MPG but people want power at the same time. EPA tests such as emissions, specifically cold start emissions. Both of those are expensive to engineer. Many vehicles are world cars meaning they are sold in many countries. And you have the EU leading the charge changing emissions standards almost every year. Euro 5/6/7. They change shit so fast that certain motorcycles I’m interested in, are no longer sold there.

As others have mentioned, more ECU’s/CPU’s for various system. Vehicles are getting very complex, over complex actually. The wire looms in new vehicles are staggering as are the multiple CPU’s. ADAS, which was mentioned also. ADAS is now standard on everything yet insurance rates have gone up, and wrecks too.

Suppliers have raised prices. Every vehicle mfr farms out their supply of parts to build or manufacture. Then you have the age old greed. Vehicle mfr’s are just like any business. Their goal is to make money and increase the stock price of their shares. It’s a nasty mix. Vehicles and homes are just becoming unaffordable. Consumers would be wise to stop buying or leasing a new vehicle every 2-3 years. Instead, start planning on long term purchases. Research the vehicle, the engine, the drivetrain, all of it. Make a plan, and commit to keeping the vehicle long term. 7 years, 10 years, or longer. My DD is 12 years old and I may replace it next year before vehicles get even more expensive.

If you aren’t interested in bigger and more complex CUV’s, well the consumers are. They drive the market. It seems like within a few more years everything on the lot will be small, medium, and large CUV’s, and trucks. Sedan/hatch, etc, will all be hybrids or straight up EV’s. Plan accordingly.

I also see that the features on even basic vehicles like a Honda civic have gotten out of hand. It seems every tech feature and comfort option go into even the lower end cars making them all more expensive- gone are the days of a new basic sub 20k car ( currently dipping my toe in the market as my current ride is getting long in the tooth, and the sticker shock is severe!)

Thats a great analytical summary, very cool, I learned quite a bit..

The unions building them are not exactly cost effective and add a lot to them.