Surges, Discounts Among Slow-Rising New Car Prices
While most 2012 and 2013 models increased marginally in price, we spotted some surprising bumps and drops.
In our post-recession society, we’re used to seeing prices rise while our income stays the same. Movie tickets, college tuition, avocados -- they’re all absurdly expensive, especially now that we no longer speak the words “home” and “investment” in the same sentence. At Boston University, annual tuition and board cost more than $56,000, a 27 percent hike since I graduated from there five years ago.
But there is hope. Did you know the 2012 Audi A6 costs 8 percent less than the previous model? That the new Volkswagen Passat is roomier, yet 29 percent off last year’s price? With new cars, we’re getting more features, more technology and more safety every year -- and usually without paying much more.
How can I back that up? According to our own calculations, prices for this year’s freshest cars increased by just 2 percent. We compiled the base prices of 45 new or significantly updated cars that were introduced for the 2012 and 2013 model years, and then compared them with the base prices, including destination charges, from the previous model year, leaving out some new 2013 models that don’t yet have price tags.
That 2 percent increase is about on par with last year’s nearly 3 percent increase in the average new-car purchase price, as recorded by Wards Auto and the Commerce Department. This price -- what people actually paid with all options -- was $25,233 in 2011 (TrueCar, a tracking and sales firm, pegged it at $28,771). Expensive? Yes, and also no.
Here’s some highlights:
Luxury models enjoyed solid discounts: The 2012 Mercedes-Benz SLK and 2012 Audi A6 dropped their base prices by 11 and 8 percent, respectively. Even the BMW 6 Series sank by 6 percent. Downsized, lighter engines in each of these cars -- pushed by tougher fuel-economy standards -- are the main reason for such big savings.
Few cars remained flat from one generation to the next: Of those, the 2013 Lexus GS and 2012 Subaru Impreza posted the lowest increases, at $20 and $60, respectively. The Jeep Wrangler, despite packing a more powerful V6 engine and a new transmission, was just $125 more.
Several new Korean cars soared in price: The 2012 Hyundai Accent and 2012 Azera increased by 19 and 20 percent, respectively. The 2012 Kia Rio (9 percent) and 2013 Hyundai Santa Fe (7 percent) were also notable. Most of this is due to more standard equipment; the Accent, once priced at less than $10,000, now comes with standard air-conditioning and power windows, and is priced even higher for 2013.
Some cars cost more because the wealthy are easy to rip off: The latest models are those that sport the latest engine and emissions technologies, such as auto start-stop and direct injection, and use more high-strength steel and aluminum alloys. This costs more, period, and buyers simply have to it. No one, for example, would fault the $4,300 premium on the 2012 Porsche 911 Carrera, which is more powerful, more efficient, larger and lighter.
However, two of the Benzes on this list are insane. In 2007, the Mercedes SL550 cost $95,575. Today, it’s $106,405. Also in 2007, the ancient G550 (then called the G500) was less than $85,000. It’s now 30 grand more -- and all that cash just for a newer V8, a new tranny, some LEDs and other minor changes on a car dating back to the Cold War. We’re not even counting Ferraris or Aston Martins because the prices typically go unpublished.
Can you think of others?
Here’s our full list:
|Car ||New price ||Previous price || Change ||% change|
|Bentley Continental GT||$194,125||$192,495||$1,630||1%|
|BMW 3 Series||$35,795||$35,475||$320||1%|
|BMW 6 Series||$74,495||$79,325||-$4,830||-6%|
|Hyundai Santa Fe||$25,275||$23,550||$1,725||7%|
|Volkswagen Tiguan||$23,820||$24,540||-$720||-3% |
What never seems to be discussed is the income required to purchase cars.
Using TrueCars $28,771 for the "average" vehicle and the recommended 2.5:1 income ratio, would require an individual to have an annual income of $72,000. That's over 45% MORE than the average American makes.
Apparently there are enough people who either make the money, or are willing to over-extend in order to sell 13 million annually.
It's nice to have a brand new vehicle but the newness wears off in a few months and you are left with absorbing the huge depreciation.
I regularly purchase one to one and half year old suburbans for our fleet at an average savings of $15-18k on each one. That they depreciate that much in 12 to 18 months is disgusting.
My personal Highlander was $38k new and I picked it up when it was 20 mos. old with 33k miles on it for $27k.
Unless you are already set for retirement and/or have more money than you need with no end to it in sight, it is pretty silly to waste your money on brand new vehicles. With one major exception, I steer clear of purchasing most used sports cars.
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