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http://seekingalpha.com/article/81546-real-prices-for-new-cars-keep-going-down?source=yahoo

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

In the face of all of the bad news about rising gas prices, here's maybe some good news: The real cost of new cars is actually declining.

Here's why: In the last 30 years since 1978, consumer prices on average [CPI: All Items] have increased by about 3X (see chart above). During that same period, the CPI for Gasoline Prices has increased almost 6X, meaning that the real cost of gasoline has risen. But the CPI for New Cars has only gone up by less than 2X, meaning that the real cost of new cars has been falling, offsetting some of the sting of higher gas prices for consumers.


On an average annual compounded basis, consumer prices have increased annually at a 4.1% rate since 1978 (see chart above), while gas prices have increased by 6%, meaning that the real cost of gasoline has been rising by 2% per year on average over the last 30 years. But the cost of new cars has increased by only 2% annually, suggesting that car prices adjusted for inflation have been falling on average by 2% each year since 1978!

Another way to look at it: If new car prices had risen at the same rate as inflation since 1978, new cars would be more than 50% higher than today's prices. And if new cars had increased annually at the same rate as gasoline prices, they be more than 3X higher than current car prices! If the real price of gas is rising, but the real cost of new cars is falling, is it possible that the overall cost of owning and operating a car might not be changing that much?
 

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http://seekingalpha.com/article/81546-real-prices-for-new-cars-keep-going-down?source=yahoo

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

In the face of all of the bad news about rising gas prices, here's maybe some good news: The real cost of new cars is actually declining.

Here's why: In the last 30 years since 1978, consumer prices on average [CPI: All Items] have increased by about 3X (see chart above). During that same period, the CPI for Gasoline Prices has increased almost 6X, meaning that the real cost of gasoline has risen. But the CPI for New Cars has only gone up by less than 2X, meaning that the real cost of new cars has been falling, offsetting some of the sting of higher gas prices for consumers.


On an average annual compounded basis, consumer prices have increased annually at a 4.1% rate since 1978 (see chart above), while gas prices have increased by 6%, meaning that the real cost of gasoline has been rising by 2% per year on average over the last 30 years. But the cost of new cars has increased by only 2% annually, suggesting that car prices adjusted for inflation have been falling on average by 2% each year since 1978!

Another way to look at it: If new car prices had risen at the same rate as inflation since 1978, new cars would be more than 50% higher than today's prices. And if new cars had increased annually at the same rate as gasoline prices, they be more than 3X higher than current car prices! If the real price of gas is rising, but the real cost of new cars is falling, is it possible that the overall cost of owning and operating a car might not be changing that much?
I'm calling Bull on the numbers used in that article. The problem? the inflation figures are bogus. Is there anyone that really takes the U.S. inflation numbers that the government releases seriously. After hedonic adjustments and the substitution effect, the numbers are so manipulated that they mean virtually nothing at all.
 

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.....sooooooooooo that would mean lower prices? GIGGITY GIGGITY, GIG, IT, EE !
 

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Lets keep in mind also that many of todays cars are made much more cheaply by outsourcing to other countries, outsourcing and bidding for the cheapest parts, thinner metal and lots more plastic pieces and bumper fascias, decontenting little things like rear seat map pockets, cigar lighters, door lock cylinders, bodyside moldings, interior colors that are the cheapest to make(tan/gray and black) and simplification of models with very limited options that keeps time and work own on the assembly lines. Some of this has of course been balanced out by the government mandated air bags and safety devices and the never ending technological do dads that keep poping up year after year but they are usually extra cost items passed on to the consumer. Some parts of this article reak with government nonsense and padding and to come up with another bull crap excuse why gas is so crazy expensive. Things should not be going up as much as they are. The ever weakening dollar is causing devastating havic and will only get worse if not brought under control.
 

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The problem is that CPI is only half the story. Real incomes have declined unless you part of the small group that makes over $1M a year. So for purchasing power to stay the same, the product has to become cheaper.

Also this thread is going to fill up with goldbugs.
 
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