People Pay Too Much for Cars

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Would you pay 40 thousand dollars for a car worth just over half that price? Purchases like this happen every day and most people are oblivious to it. Cars that should be purchased at much lower prices are being sold at sky-high prices to maximize net profits for car makers. Evidence of this is shown through resale. When a car is purchased, even after putting a single mile on the odometer, the car is considered used and will sell for a fraction of the cost of a brand new model. Due to inflation, prices of almost all consumer goods have increased steadily over the years. This inflation has also impacted cars. While many car manufacturers price their cars according to the build quality, some have reached the point to where they can factor in brand name and driving pleasure, which in turn increases price, and is the case in the modern day and age.

Due to changing times and the developing car industry, some cars have risen to a noticeably higher price than others. In 2001, a brand new BMW 3-series cost approximately 34 thousand dollars. Now, in 2017, a brand new BMW 3-series can be purchased for 50 thousand dollars. In under two decades, even with inflation taken into account, prices for new cars are relatively much higher than they should be. Another factor that can be attributed to an increase in vehicle price is social status.  Over time, paying to have a luxury item has gone up, as people now have to pay a premium to get simple goods. As a result, consumers will buy less of an expensive good, and will prefer that it gives off a better image. Interiors of cars from the early-2000s compared to current interiors are comparable, and have definitely gotten better, but do not make up for the difference in price. Both a 2001 and 2017 BMW 3-series come with leather, power seats, various heating options, an advanced audio system, entertainment and countless other features. The jump in price seems to be unnecessarily large even with inflation once again being taken into account. As a result of various factors including but not limited to: interior quality, social status, and inflation, new car prices today have increased to an almost unattainable number for many. However, for those who can afford it, they are sure to purchase the most loaded new car they can get for their money.

Although, all these higher prices may not always be worth it. Nowadays, overall driving pleasure in low, mid and high-end cars are very similar, if not the same. Today, vehicle efficiency has increased in all cars and has made the gap between car makers even smaller. Newer model Nissan’s make an average of 33 miles per gallon (mpg), with Subaru following closely at 29 mpg. Additionally, cars like Mazda make an average 31 mpg. Compared to a German car average of approximately 30 mpg, the additional jump in cost is not worth it to many. Compared to American and Japanese cars, German cars had a certain driving pleasure unique to BMW or Mercedes which gave many a good reason to fork over the extra money. Although, around 20 years later, American and Japanese cars have caught up with fun-to-drive cars such as the Toyota GT86 and the Dodge Challenger Hellcat. Another tipping point towards older German cars were the plush leather upholstery during the second half of the 20th century. Once again, even the driving comfort of German cars has slowly made its way into Japanese and American cars such as the Toyota Corolla Sport and the Cadillac Escalade Platinum. As time has progressed, so has the competition between car brands. Consequently, this has created a smaller gap between German, American and Japanese cars in terms of driving pleasure, handling and gas efficiency.

Another pro to buying an expensive car to many people is the increasing build quality, which has slowly become a more debated topic. Back in the late 80s and early 90s, German car quality was unmatched compared to that of Japanese and American cars. But, today, most cars will have options for leather, heated seats, power seats, and built-in GPS, for little to no additional cost. While German cars still have a unique refinement to their upholstery and build quality, the jump in price is usually not worth it. For example, my family purchased a new Ford Edge in 2008. The Edge at the time had a “limited” trim option, which offered leather, heated, power seats, GPS, and an aluminum interior trim. In the same year (2008), cars such as BMW were making the previous body style BMW X5. The older body style included many of the same features, plus a few smaller features, all for a significantly higher price. Nowadays, jump in price is merely for a person’s own social status, and to most is not worth the price. For example, more people will look and talk about a new BMW M3 or Mercedes C63 AMG compared to a new Ford Fusion or Hyundai Sonata. In general, people will pay more for a car with better build quality, reputation, or social appearance, due to their own human nature.

While many car brands today are using brand name, build quality, and driving experience to gather a larger profit, people are starting to become more aware of the price difference and the money that can be saved by merely purchasing a US or Japanese built car. Owning a German car has its perks, but sometimes cost cutting decisions must be made in order to satisfy both parties. While some may argue that the jump in price is due to import, many do not understand that car import in bulk is very efficient and cheap for car manufacturers. Additionally, Japan and Korea ship cars to the US, but are able to maintain relatively low prices. By purchasing a car built in the US, Americans can support their own economy and local car manufacturers. Domestic production is much higher than foreign production, but foreign production in the US has increased over the last few decades.Why does this matter? It matters because increasing foreign car production in the US indicates that domestic production will go down, resulting in more and more foreign cars on US roads.

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