New Car Prices Have Been Falling for 13 Years
Using BLS price data, the chart above shows the CPI for all items vs. the CPI for new cars from January 1953 to July 2009, both series are equal to 100 in January 1953. Over this period, general inflation for all prices has averaged 3.78% per year, compared to new car prices, which have increased by less than 2% annually. If new car prices had increased since 1953 at the same rate as prices in general over that period, new car prices today would be more than 2.5 times their current prices.
The chart below focuses on the period from July 1996 to July 2009, which is a period during which the CPI for new cars has actually fallen by .22% per year, compared to prices in general, which have increased by 2.43% annually over the last 13 years.
Bottom Line: New car prices have actually been falling over the last 13 years, and new cars are more affordable today than ever before.