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Old 10-17-2008, 11:45 AM   #1
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Inflation and new car prices

In 1993, I bought a new Mitsubishi Ecplise GS (I know the eclipse is a turd nowadays, but back then they were really reliable).

5 speed manual, air, cruise, AM/FM cassette (yes, tapes), power everything, fog lights. BUT, steel rims, no airbags, no keyless entry, 4 wheel disc brakes without antilock...

Back then, power windows and such were still options that you had to pay extra for. I paid $13,300 for that car. And I got my money's worth, put 140k miles on it and the only reason I sold it was because we had a new baby and a car seat wouldn't fit in the back. The only place for a car seat was the front passenger seat. Never had a problem except the thermostat died once near the end. Sold it in 05 or early 06, I forget exactly.

So fast forward to 2008 when I get my new FoFo. All the same equipment except no fog lights. I also got airbags everywhere, anitlock brakes, and traction control - as well as a CD player. I paid $14,000 for it.

That's a difference of only $700 over 15 years. And the FoFo is more car than the Eclipse was IMHO. Granted, many of the "options" on the Mitsu are now "standard" equipment.

My question, is it that inflation just hasn't hit car prices over the last 15 years? Have American car prices dropped due to all the issues the American car companies have had in recent years? Was it only a recent thing because all car companies are having trouble moving new cars nowadays? Combination of all three?

Or am I just a super-savvy car shopper extraordinaire? ;)

What are your thoughts?

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Old 10-17-2008, 04:54 PM   #2
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Manufacturing costs are coming down due in large part to automation. By comparison, your Ecplise was a hand made car.
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Old 10-17-2008, 09:48 PM   #3
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^^^ Also on top of that, people are willing to pork over extra cash for yor Eclipse regardless of what condition it is. It could have the transmission dragging on the ground (in a figurtive speach) and some one is willing to pay for it and getting it fixed to make it into a show car or a "10 second car".(Just had to do that)

It's just something to think of for a while.
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Old 10-18-2008, 09:49 PM   #4
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Several reasons I can think of...

The yen was high in 1993, forcing Japanese car companies to charge more in order to try to eke some semblence of a profit out of their cars. OTOH the Eclipse is built in Normal, Illinois, so it was less affected than many other models.

Ford sells Foci near cost. First, they have to sell lots of fuel-efficient small cars to avoid gas-guzzler taxes on their larger models. Second, the inexpensive FWD compact market segment is very crowded with various models chasing the same cost-concious buyers. An MSRP $500 higher than your competitor's will push these buyers out of your dealership and into theirs. FWIW it's not a profitable segment, for Ford or anyone else. Most carmakers accept this because they see this market segment as way of making young carbuyers familiar with their brand in hopes that they'll come back for a more expensive and profitable model in a few years. (OTOH GM has historically seen this segment as a way to sell miserably cheap crap to suckers who don't know better, and it's a strategy that they've paid dearly for over the last 15 years. But I digress. )

And yes, you're right about all car companies having trouble moving cars. IIRC an article I read about 2 years ago said that the auto industry worldwide had close to 15% excess capacity, i.e. the ability to produce 15% more cars than they can sell. The article said that in most industries, 15% excess capacity is far too much, and predicted lots of plant shutdowns and worker layoffs worldwide... a prediction that has come true.

And finally, inflation has been very low in America over the last 15 years due to a combination of low food prices on the world market and a flood of inexpensive imported household goods from the Far East.
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Old 10-19-2008, 02:39 AM   #5
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Now is the time to shop for a car.....sales across the board are down 30%
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