How Cars Got So Expensive | WheelHouse

How Cars Got So Expensive | WheelHouse


Buying a new car sucks. Yeeeehaw! Do the stanky leg, do- Dealership haggling aside, the most stressful part about buying a car is usually figuring
out for paying for it. Cars are expensive, usually the most expensive
thing you own. But it wasn’t always like that. Here’s how cars got so pricey. Henry Ford sold the Model T for $825 in 1908. When Ford improved their assembly line, the
cost went down to $300. When adjusted for inflation, I’m gonna be
saying that term a lot, that’s the same as going from $23,000 to 4300. Henry Ford’s assembly line made the car
something pretty much anyone could afford. Early access to transportation changed the
way americans lived, and growing industrialization meant the birth of the middle class. Fast forward to 1950, and America is doing
great. The Post-war economic boom doubled and even
tripled wages compared to 1938. When adjusted for inflation to today’s money,
the median income in the US was around $52,000 a year. In 1950, The base model F100 pickup will set
you back around 1300 dollars, or about 14 thousand today. That’s a great deal for a brand new truck,
a Ford F series no less. When we look at the F100’s lifespan, we
see that when adjusted for inflation the price for a base F series truck has nearly tripled
in it’s 70 year history. And it’s not alone. When compared against the Honda Civic and
even a base Mercedes sedan, pretty much every model of car has seen an increase in price
by about double. Let’s compare the features of a Base model
2018 Ford F150 to that of a 1948 F-1. When new, the F-1 made 95 horsepower and that
was about it. The F-1 didn’t get armrests , radio or a
dome light until 1953.The F150 has a 6 speed automatic transmission, 3.3 liter V6 with
variable cam timing making 290 horsepower, Independent front suspension, power steering,
air conditioning and most importantly, an aux jack. (Bleed by Meshuggah) A production vehicle that had every feature
present in the 2018 F150 would cost a fortune in 1948, even simple technology like power
steering wouldn’t be available to the public for another three years. And that’s just everyday features.That base
2018 F150 get a decent combined 22 miles per gallon thanks to that variable cam timing. Old flathead engines like those in the F-1,
would be lucky to hit the mid teens. Old cars were absolutely horrible on safety. Car safety as a whole needs it’s own episode
but I just want to look at this IIHS video comparing the 1959 Chevy Bel Air to a 2009
Chevy Malibu. See how the old car completely collapses in
the collision? How the roof pillars lose all integrity, and
the steering column hits the dummy in the face? That guy is dead for sure. The Malibu on the other hand, is completely
totalled, but the driver survives. When adjusted for inflation a base Malibu
cost around 25 grand, while the Bel Air would be about 22 grand. The Bel Air is pretty sick, I won’t lie,
but I don’t think the 3000 dollars you save is worth being bludgeoned to death by your
steering wheel. Even the most basic cars today for lower prices
are a way better value. Take the Mitsubishi Mirage, one of the cheapest
cars on sale in the US. At it’s most basic, the list price is $13,395. Even at that low of an entry fee, it has standard
features that would have blown Henry Ford’s mind. Bwoooaaah It’s got a touchscreen, rear view camera,and
attractive chrome grille accents. The Model T can’t touch this thing. Okay that’s great, Nolan, new cars are an
awesome value compared to what my great grandpa was driving. But I still can’t afford one. Well neither can I. But why not? In 1950 the median income, when adjusted for
inflation, was $52,000 per household. Today, the median income is $59,000. Looking at the median income next to the price
of the F150 side by side from 1950 to now, the price of a pickup increased 14,069 dollars. That’s outpaces the median income by a factor
of two. Going back again to 1928, buying a Model T
costs 300 bucks. So that’s about 21% of your annual income
going towards the purchase of a new car. Comparing that to today, using a base, base
Ford F150, it costs about 47% of your yearly haul. But if you get a Supercrew cab, you know,
a truck that could actually hold your family with, that takes nearly 60 percent. It takes twice as much money to buy a new
car as it did 60 years ago, which is fine because new cars are better. But the problem is wages didn’t keep up
with the rise in prices. Okay Nolan, just don’t buy a new car then. A used car is just as good and more affordable. No problem. Yeah I agree, but the problem for a lot of
people is saving up a big enough chunk to buy a used car in the first place. Instead of buying a used car outright, more
and more people are signing up for long term loans. A 74 month loan on a two year old car is not
uncommon, and loans up to 96 months are getting more popular. As of the fourth quarter of 2016, loans lasting
73 months or longer made up 31 percent of auto loans given out by Credit Unions, comapared
to 12 percent in 2009. And these loans don’t depreciate with the
value of the vehicle, meaning by the time you’re done paying it off, you’ve payed
way more than what the already depreciated car was worth. In most places, especially small towns, cars
are an absolute necessity in our daily life. People will take on these brutal loans because
they don’t have any other choice. And with stories coming out about long term
loans with interest rates of 25%, it feels wrong. Hit that subscribe button so you never miss
an episode of WheelHouse. What do you think? Is the higher price worth it, or should manufacturers
make super-cheap cars that crumble in an accident? Follow Donut Media on Instagram @donutmedia
and follow me on Instagram @nolanjsykes. If you want to know more about Henry Ford
check out this episode of WheelHouse, he was a weird guy. And if you wanna know more about cars you
can’t afford regardless of median income check out this episode of Up to Speed on McLaren. Wear your seatbelt, see ya later 🙂

About the Author: Michael Flood

100 Comments

  1. There’s another reason. Manufacturers are inflating MSRP under pressure from dealerships, which inevitably gets undercut by thousands. Gives the dealership more room to wiggle and makes the customer think they’re getting an amazing deal. Only suckers pay MSRP right? Well, everybody and their grandma knows that advice now. So dealerships have to compensate. You have to look at what people are actually paying, not just the “price”

  2. This is why most people who know cars and care about their money seem to buy 5-10+ year old cars via private sale, with cash, rather than buying new from a dealership and financing everything.

  3. Technological advancements and production costs decrease over time…
    That's how Ford was able to lower the price of the Model T.
    Just like how (date myself here) DVD players used to be expensive, now they are basically given away.
    The used car market is expensive because the financing is rolled into the car values everytime a car passes from owner to dealer to new owner.
    Never buy a car longer than you can afford payments over about 3-4 years.
    If you can't get a payment with that length of term, come with more money down or buy less car. The reason is depreciation. On a 5yr or longer loan, you won't reach "equity" until the last year, maybe two of the loan.
    If you trade before then, the equity loss of the original car gets rolled into the next car, inflating that loan, inflating the cost of that car, making the car more expensive.
    That's how used cars are getting stupid expensive.

  4. You need a little mechanical know how, patience and a garage. Get on craigslist…look for a decent older model vehicle, fix that vehicle and take care of it…take the time and make that vehicle a reliable daily driver…congratulations, now your not 70,000 in debt and you own your vehicle. Jeeps, Volvos, Buicks, Vans are on craigslist like whoa….want something a little sportier? Older BMWs populate craigslist like whoa. The hard part is, people have ego's and will literally drive themselves to financial ruin for something they don't even own, just for that new car smell and something they "Need" but can't afford.

  5. Also, the Bel Air video was also proven to be rigged. They chopped it up some so that it would crumble like it did.

  6. in the 50s cars were so strong and slow that they could get 10 accident per year and if you dont die, they could run for another 20 years… Today´s car if you had only 1 crash…, the car goes to garbage (and your life is also finnish because you still got to paid for a car that you dont have)

  7. Cars are ridiculously expensive—money pits.
    The cost also doesn’t stop at purchasing the car. Drivers license, tolls, tax on fuel, fuel itself, oil changes, tires, tire rotations, filters, air pressure, car washes, insurance, and interest on the loans. FUCK THAT.

  8. there's a happy medium, tween a deathtrap and a luxury resort, car makers will never do it though, they live in a bubble and have no issue farting out a 40 grand base truck year after year while watching their numbers stagnate till non existance … its already happened once and they still have not learned

  9. This is why I have 3.3l dodge intrepid. Engines are $600 and it's easy to work on if you know your way around a transaxle transmission. (Transaxles are mostly used in rear engine and few fwd cars. Transaxles have a fwd axle type but it's used on a 90 degree axis from the bumper like a front engine rwd car. This transmission has a differential built into the transmission and usually can only hold 4 gears.

    Pros: torque straight from the engine and less drivetrain components.

    Cons: lack of gears, hard to hook up, and doesn't transfer power well after 80mph.

    Good/bad: lots of suspension travel, good for off-road use.

  10. The Interest rates demanded by Finance companies for starting drivers and less than perfect credit ratings are so extreme. That crookedness keeps people down. When I heard of Sanders and AOC's sponsored no higher than 15% interest I thought "What a great bill!" Am I'm a stout Republican. Never heard anything else about the bill since. guess it got struck down

  11. Why not get a Civic hatch? F150's are not family cars. I know people use them as family cars, but the MPG just doesn't prove it.

    And do you really use the space in the back? XD

  12. I really doubt it is just down to safety and features. A big part of the problem is R&D costs. Regulations and emission controls have no doubt contributed to these costs. Adding a bit of reinforcing to a passenger cell, and making the steering wheel collapsible isn't going to cost that much. Besides that, full seat belts were the largest improvement post the Bel Air – in the 60s thanks to Nader's campaign. After that, came air bags, but air bags don't add much in terms of survival probability. Since the crash test didn't include ABS and stability control, I won't go into that, but I suspect they won't add too much.

  13. It's insane. I've had 45k in my pocket going to car dealers everyday thinking I can easily buy a new truck. It's been a week now and still looking after visiting 7 different dealers. I can't even buy a medium range F150 xlt with 5.0 and 302a equpiment group. wtf is going on

  14. Park your money in investments,paying for these over priced junk boxs are whats contributing to the povery in this country.Central bank has you locked in as an interest slave to your own dollar.

  15. Everything is expense like houses and cars. But it's a shame we cant buy new cars like people did in previous generations

  16. The belair!!!!!! Crying please tell me it was special somehow and was detsintied to be Wasted like that

  17. Just get a older car and save money. No point of going into debt to get a "newer car" because " new cars are better" because that's not true

  18. If y'all broke, buy a panther body Ford. That's what I did with my Lincoln and I'm debt free now. Just remember to change the intake manifold before that plastic cooler runner blows up haha

  19. household income isn't really a consistent mark, cos households in 50 where lurger then now (familys where bigger and there was a lot more family owned firms and businesses.
    It would be smarter to comare sails per capita or avarage vages to car prices. Point is problem isn't here, it's in students loans and inflated education prices.

  20. Manufacturers should sell more stripped down models without all the Bells and whistles. Most cars today have all sorts of options crammed into them that make the price more extreme . In order to get a barebones vehicle you almost have to special order it, unless you buy a fleet vehicle.

  21. You can buy a cheap and reliable used car that will last you 10+ years. Cars are only expensive because theres a social construct… Save your money and just get from A-B, use that $ for more meaningful things in life.

  22. Why do you say “should manufactures make cheap cars that crumble on impact? They can make cars affordable if they wanted to.

  23. Many of the features are useless or required due to smog compliance but we still have dirty air. You also failed to mention quantitative easing drove the price of everything up….cars. houses snd education.

  24. The problem is is I know a lot of people that will take a completely spect out vehicle over a base model of a bigger nicer vehicle for example people take a Z71 Chevy Colorado over a base Chevy Silverado 1500 our generation loves features more then being practical

  25. Dealers, Advertising and Stupid Lawsuits increase the value of a car by 40% also if cars are so expensive why everyone is buying them even without negotiating? . we have the power to lower the car prices but stupid people keep buying premium luxury and nonsense. Example we pay 4 times more the price for a car that is not the twice as fast or powerful.

  26. I was so happy that the F-100 was shown in this video, by grandpa owns one, and it's the first car I drove.
    Long Live the F-100!

  27. You always have a choice to buy a 2000 dollar beat up 20-year-old car. I guarantee you those who signed up for 70+ month loans did not buy cars for their "necessary" daily drive. They signed up 70+ month loans for fancy shit they normally could not afford. They deserve not a single bit of your pity.

  28. Ok then if safety is the thing that is making cars expensive give me an unsafe car and I will buy the top of the range safety motorcycle gear and it will be still cheaper. It’s not that difficult or expensive to make a car safe these days. All the frame work and ideas are already there and actually the material that cars are made of today are cheaper

  29. Do you Americans want to know what the interest rate on my new car was? 1.5%.
    That is because my dad works at a Toyota subsidiary and gets a company discount. And since the car seller knows my dad and me(I played hockey with his son), he did it so that I got my dad's discount.

    But the interest rate here in Sweden is nowhere near as big as in America. In fact, if it's over 5%, they'll find it hard to sell any cars. The interest rate on my car without the discount would have been 3.55%.

    The costumer protection laws in America seem to be pretty fucked up. I have no idea why you seem to accept getting fucked over constantly.

  30. Also that is the median household income. If you look at individual median income it is closer to 30k a year. A lot of families have 2 working parents these days.

  31. You forgot to emphasize on how dealerships charge more than the real price of cars,, thats why in japan cars are cheap due to the fact that you buy them directly from the factory

  32. That BelAir was a fake mockup! it didn't even have a full frame as the shot from the rear showed! The front end crumpled too easily to be real…
    To be credible, this would have to be done by an independent group and the vehicle shown both under the hood and under the chassis.

  33. Cause people are willing to pay for it dim wits paying 25k for a toyota when they could have bought one from Craigslist for 1k and be just as reliable

  34. I never understood this thing that in the EU we have net-yearly-salary of around 20k-25k and cars are more expensive than in the US. For the average person it's not even an option to buy any 50k+ car (unless you finance it, but for sure not the best option).

  35. Oh cmon, safety is usless , just drive like a normal person and if another car hits me well thats just destiny

  36. Bruhhh not to mention friggin insurance and gas ughhh 😤 I say anything over $20k used is too much for my blood.. right now I'm happy w a base Mazda 3 2014 under 10k kms and just over $10k CAD 😀

  37. Fuck, give me a car that wont kill me, burns a reasonable amount of gas, and has AC. It doesn't even need a radio I can just buy my own from walmart for 15 bucks.
    Also make it possible to fix it yourself, and people will make their cars better themselves.
    Make the documentation for how all the computers controlling the car work available so people can fix those themselves too.

    If they just started making 90's Toyota Corollas again I am sure they would sell by the hundred millions.

  38. The times he was talking about, for exsample 50s and now, consider that taxes, insurance, registraion, gas were at a much lower rate as well. At that time our currency wad valued diffrentley it was the gold standard now its a gdp standard. This fact devalues our currency.

  39. was looking for new car but realized my daily commute to work in uber cost me 200 a month vs 600 a month with payment, insurance and gas leasing a forte

  40. If they made a new car with crank windows, basic ac, a radio, and a decent cost benefit ratio engine and transmition i would buy it. Preferably something where i dont have to remove the engine for simple repairs

  41. think the problem is we all keep accepting loans for everything instead of demanding those rich fuck billionaires to pay more salary.
    Capitalism drives innovation but this is it's dark side.

  42. I feel like this video is trying to justify why vehicle prices have gone up so much. Yes there have been some technical improvements but honestly, a lot of it is just technology for technology's sake. "Look what my car can do".

  43. All I want from a new car is some power, AC, 5 doors and most importantly, reliability. Get out of here with those stupid, useless touchscreens, power windows, remote locks…

  44. Basically base model cars are not base innuf in comparison to a base income …so basically something has gone wrong

  45. Burnie/AOC 2020 they'll make predatory loans illegal, And we can all drive electric government issue vehicles. Somehow

  46. Despite earning well over the national median, I exited the insanity of buying expensive cars in 2003. Since then, I've been buying interesting used cars for sub-$2k. I spruce them up with another $2-3k and drive them for 3-5 years. Because I search for deals, I've gotten some great cars: Mercedes, Audis, etc. Even big trucks that haul my horses in a 38' trailer. I do my own work on my cars, and the savings have paid for a garage full of tools including a car lift, etc. After the great experiences I've had over the last 15 years, I can't imagine going back to spending >$30k for a new car.

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