It’s a presidential election year, which means we’re hearing politicians talk about “the new normal” whenever the topic of the economy or political gridlock comes up. But there’s also a new normal in the automotive arena. While it’s been around for some time, I’ve only just started to recognize that the higher prices I’ve seen for several years are now the status quo.
It all started at the premium luxury level, as I’d start to get upper-crust review cars with six-figure price stickers. Breaking the $100,000 price barrier was once common in the exotic field. Indeed, some factory representatives have noted that their exotic car customers actually want to pay more. Their flamboyant supercar should proclaim to the world that they have arrived, big time.
Other buyers of high-priced cars are not so showy. One salesman told me that he has some customers who will buy a new Mercedes-Benz at the beginning of the model run, just after the design has changed. Then, they will return several years later at the end of the model run, just before the styling changes, to buy the same model in the same color. They want their new car to look like their old one and go unnoticed by friends and neighbors.
Even if the looks are unchanged, that new car will undoubtedly cost more than the model it replaces, thanks to inflation and additional content.
I’ve had four review cars in that past few weeks that cost more than $100,000. That, apparently, is the entry price for an established German premium luxury sedan, coupe or high-end sports car, along with a world-class Japanese exotic-car. Surprisingly, onlookers who want to talk about these cars gloss over the pricing with a nonchalance that suggests total acceptance.
It’s not just luxury cars that have seen prices rise, nor is it a recent phenomenon. The prices of new vehicles have been climbing steadily over the last 40 years. The U.S. Department of Energy pegged the average price for a new car in 1970 at $3,542. By 1980 this had more than doubled to $7,574.
This Department of Energy data also notes differences in the average prices of a domestic and imported vehicle. In 1970, the average domestic car cost $3,708. The average import was $2,648.
This trend continued until 1982. That was the year in which the average price for an imported car rose above the average price for a domestic vehicle; $9,957 vs. $9,865. The average price for foreign cars has exceeded the average price for domestic vehicles ever since.
In 2010, the average price for a new vehicle in the United States was $28,160. In 2011, it was $29,500 and as of April of this year, it stood at over $30,000. Forbes says it was $30,303 while other sources place the average at $30,748.
At least some of that money goes for optional equipment. If you take a typical compact with a starting price of $17,000 for the base trim level, it would likely be possible to add at least 50 percent to that sum by going to the top trim level and then specifying many pieces of optional equipment. One review car I had last year came with a suggested retail price of $33,000, though the base version could be had for $19,000. Options can do a number on the bottom line.
So, the “new normal” for car prices seems to be $30,000. For premium European luxury cars it’s approaching, or even exceeding, $100,000. No wonder we’re keeping our cars longer. The average age for a vehicle now on the road in the United States is 10.8 years. While this is a reflection of the rising cost of vehicles, it’s also a reflection of the improving quality we have seen in the cars and trucks we buy. This, too, is part of the “new normal.”
Jim MacPherson is the host of "The Car Doctor" show airing Sundays at noon on WTIC-AM. Paula MacPherson is his wife and new-car review partner. Send comments, questions, suggestions in care of Special Publications, Hartford Courant, 285 Broad St., Hartford, CT 06115, or email jdee@courant.com.
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