Sunday, June 15, 2008

New Real Car Prices Fell by $2,500 from 1998-2006

Thanks to an anonymous comment for the link to this Dept. of Energy website with data on the Average Price of a New Car from 1970 to 2006, in both current and constant dollars. The chart above shows the real, inflation-adjusted average price of a new car from 1976 to 2006 (in constant 2006 dollars).

What's interesting is that the real price of a new car fell by 10% from 1998 ($25,186) to 2006 ($22,651), and decreased in 7 out those 8 years, or by a total of $2,535 during that period.

Note that this measure of retail car prices does NOT adjust for the continual quality improvements over time in new vehicles, while the CPI: New Cars measure does (see post below).

10 Comments:

At 6/15/2008 11:04 AM, Anonymous E. Harokopos said...

Question: how is the "average price of a new car" determined? Do you add lamborginis, ferraris, bugatis, etc.?

Note: After 2006 the Dollar dropped substantially, making the imported car price significantly higher. If you add data from 2005 to 2008 you will probably see an upward spike.

Furthermore, any kind of deduction you make from this data is subject to the fallacy of division, meaning a confusion between the whole and the parts. There was a flood of cheap, low quality cars recently, after for example the takeover of Daewoo by Chevrolet.

The real issue is how much a car costs to maintain over a six year period per se. Not the purchase price.

Now, do we have this kind of data? I suspect it will be surprising and show real cost has skyrocketed.

 
At 6/15/2008 11:45 AM, Anonymous Fred said...

e. harokopos,

Sounds like you the basis for a good research project. Let us know what you find.

 
At 6/15/2008 11:47 AM, Anonymous Anonymous said...

do we have this kind of data?

Yes.

Annual operating costs through 2006 have not skyrocketed. Perhaps you can cite the 2007 data from the AAA. Hint.

 
At 6/15/2008 1:40 PM, Anonymous E. Harokopos said...

anon:

again, the data goes back to 2006 only, when inflation was very low and dollar index at much higher levels.

I cannto speak of the AAA data. there you have selection bias obviously.

IMO, consumers are getting squeezed all over the place, the purchasing power is diminishing and then you get these studies that gloriously announce you must have more money in your pocket and life is less expensive.

 
At 6/15/2008 2:19 PM, Anonymous Anonymous said...

Please e. harokopos, cite data or STFU.

fred encouraged you to do some research and report back. Are you up to it? or are you another wilting violet who flunked philosophy 101?

Listen man...some 2 earner over-indebted and over-indulged exurban based households are screwed due to rising gasoline prices; most households are not and will adjust to the new era of expensive energy and food costs. Apparently, you fit into the some not most category. It's called confirmation bias.

The point of the blog post is that new car buyers have made out like bandits since 1998. Can't say the same thing about new truck buyers though. It makes intuitive sense. The auto manufacturers (particularly the domestics) hitched their wagon to high margin passenger truck sales. Cars were lost leaders.

 
At 6/15/2008 4:37 PM, Anonymous E. Harokopos said...

anon:
Please seek help: [url]http://en.wikipedia.org/wiki/Psychosis[/url]

 
At 6/15/2008 4:51 PM, Anonymous Anonymous said...

anonymous attacker listen:

ad hominen attacks are a clear indication two things: (a) the personality of the attacker sucks and he is a loser (b) lack of valid counterpoints.

Harakopo's arguments are all valid. You need to reconsider your sick attidute man. Hey stupid moron, this blog is the epitomy of straw man arguments. Harakopos is playing with you stupid and you bite the bate like a moron you are.

 
At 6/15/2008 9:14 PM, Blogger OBloodyHell said...

> Note that this measure of retail car prices does NOT adjust for the continual quality improvements over time in new vehicles, while the CPI: New Cars measure does.

How the hell do you place a dollar value on a safety feature like air bags and antilock brakes?

 
At 6/15/2008 9:56 PM, Blogger OBloodyHell said...

> Question: how is the "average price of a new car" determined? Do you add Lamborghinis, Ferraris, Bugatis, etc.?

It does not expressly state, but I would assume this is handled by a median, not a mean, calculation. Whether it is weighted at all based on sales I don't know. I'd assume not, but it might be.

> Then you get these studies that gloriously announce you must have more money in your pocket and life is less expensive.

No, what they are saying is that life doesn't utterly suck just because you have to tighten your belt for six to twelve months and actually think about whether that five-dollar latte from Starbucks is REALLY worth it for the first time in 15 years.

That would be a distinction of some significance.

> Please seek help: [url]http://en.wikipedia.org/wiki/Psychosis[/url]

You, too!

If nothing else, you can always depend on this

============

.... and it looks like we're done.
But, HEY!!! Then anon pipes in:

> Harakopo's arguments are all valid.

If you're lacking substantial reasoning capacity, sure.

> You need to reconsider your sick attidute man. Hey stupid moron,

What was that about namecalling?

> this blog is the epitomy of straw man arguments.

Again, to one bereft of substantial reasoning capacity, absolutely correct!

Your prize, sirrah:
DING DING DING DING!!!

Don't worry about collecting it. It'll be yours soon enough, this is quite evident to all and sundry.

> Harakopos is playing with you stupid and you bite the bate like a moron you are.

Sez the poster with no less than three spelling errors in one paragraph: a, b, c, as well as a fourth in the preceding paragraph, and at least two bonehead obvious grammatical errors in all of three sentences.

Yu gits an xtry speshil Award:

"For expression above and beyond the call of your vastly overvalued intellectual talents."

 
At 6/16/2008 8:51 AM, Anonymous Anonymous said...

"...but I would assume this is handled by a median, not a mean, calculation."

You wouldn't know the difference, wouldya?

Now I know why you were fired from your last job you bloodyhell man. It's because you was paid to know but you made too many assumptions along the way.

You are bloodyhell, no question about it...and I don't assume that, it's a fact.

 

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