By on November 17, 2014

Woman Receiving Car Keys For Her Death Ride 1969 Extravaganza

Consumers looking for a new car may not need to take their wallets to the hospital afterwards should prices continue to fall and incomes continue to rise.

According to Edmunds, the Auto Buyer’s Affordability Index found that a consumer whose income matched the U.S. household median of $54,457 could afford 54.1 percent — $16,448 — of a new vehicle with an average transaction price of $30,382, as recorded in October 2014.

ABAI publisher Requisite Press stated that while the current percentage was still high, “transaction prices have recently begun to weaken under ideal conditions for strength,” such as the rise in income among consumers. There, the ABAI found said income had climbed 3.8 percent above the 52.1 percent value reported in April of this year, corresponding to an extra $653 in spending ability.

The publisher adds that should the center hold, the U.S. median household income would continue to outpace automotive pricing, a status not seen since 1980. President Phil Kelton explains:

New-car affordability is likely to improve in the coming days if we can avoid an income slowdown. The selection of affordable models is best increased by competition, but a sustained improvement in affordability will certainly give it a boost.

As for taking advantage of this burgeoning reality, Requisite Press suggests consumers “maximize their buying power” along every step of the car-buying process, with a suggestion to follow the 20-4-10 rule: 20 percent down, four-year loan term max, 10 percent of income spent on car payments.

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67 Comments on “Report: US Median Income Could Soon Outpace Falling Car Prices...”


  • avatar
    CoreyDL

    I think she be in a Volvo C30, in a color choice not sold in the US, at least with those interior colors. And that’s not a real Volvo remote key.

    • 0 avatar
      energetik9

      You realize that’s likely just some random stock photo and has nothing to do with premise of the article?

    • 0 avatar
      DeadWeight

      She is saying “[G]I’ve me keys, brah!”

      He is saying “[H]ere they come with length.”

    • 0 avatar
      Thatkat09

      Orange was most definitely offered for the C30 in the states. A cream interior was also offered, Ive never seen the two together though. This one is definitely a lower priced one seeing as how it doesn’t have cruise control(missing buttons on left part of steering wheel). Im not sure what Volvo was thinking offering such a sparse car for a $25,000 base price in the states. The T5 in the C30 was a gem but they should have offered the 2.4i like they did in Canada/with the S40/V50 to make it more price and feature competitive. A $20,000 Mini competitor probably would have sold alot better and helped Volvo’s bottom line.

      • 0 avatar
        CoreyDL

        So I was more on the interior referring to the orange seat inserts. They sold bright orange seat inserts here? Doesn’t seem like them unless it’s an R version, which clearly as you mentioned this is not.

        The C30 was overpriced all around, though I do like them when I see them. Especially in two-tone. But Volvo continues to have silly as you please pricing, which was reflected straight through to the used pricing when I checked these out whilst shopping around.

        • 0 avatar
          Thatkat09

          There was an ad covering the bottom of the picture so i didn’t even see the orange inserts. Your definitely right, i wonder what country this picture was taken in? Canada maybe?

          Edit: That XC70 in the background has a rectangle style Euro licence plate so definitely somewhere in Europe with left hand drive cars.

        • 0 avatar
          JMII

          A used C30 is a decent good deal… as mentioned new it was WAY overpriced. Thus the reason we got our used. The wife’s C30 is the “Version 2” model which is two tone: cream over brown or in Volvo speak Cosmic White / Java. Its the color you most often see. However the C30 was offered in an amazing range of colors because Volvo wanted it to compete with the Mini, so lots of customization.

          • 0 avatar
            CoreyDL

            When I was shopping them, it was hard to find one that was fully loaded. Most of them had one or two options, but nothing too impressive. Ended up spending less money on my Infiniti which has abundantly more options, is larger, and has arguably much better reliability.

          • 0 avatar
            JohnnyFirebird

            C30s undercut a Mini Cooper, are less expensive to maintain, and also come with the awesome T5 engine. Or the less awesome 2.4i engine here in Canada.

            The newer the C30, the harder it has been for me to sell. 2007 C30s last a couple of weeks. We had a low mileage 2012 C30 T5 manual that stuck around for a few months, with CPO warranty, ended up selling for $20,975 Canadian.

    • 0 avatar
      Land Ark

      “that’s not a real Volvo remote key.”

      I wouldn’t want her driving it anyway since the car is inside facing the back of the showroom.

    • 0 avatar
      JohnnyFirebird

      This was my first reaction as well, Corey. Although that colour combo *does* exist in Canada.

      • 0 avatar
        Thatkat09

        In refrence to your comment about price:

        Here in the states, in 2008 the Mini Hardtop started at $18,000 while the C30 started at $23,000. Keep in mind both base models came with sticks(which you probably know). I really do like the 2.4i with a 5 speed, I still dont understand why Volvo didnt use it here in the C30.

        • 0 avatar
          JohnnyFirebird

          Yeah, sorry! I meant USED C30s come in less than a Mini. Mostly. I’ve sold both used (Worked at a Mini / BMW dealer and now at a Volvo dealer) and am much less terrified of a used C30 than a used Mini. The Mini beats it in “fun to drive” and style, the C30 is a much more livable vehicle.

  • avatar
    energetik9

    I read a real interesting article in a recent car magazine discussing car prices. Many people in forums (to includie here) always want to disucss how cars are increasingly not affordable and “back in the day”. The article compared car prices against median income with adjustments for inflation. Although I do not remember all the specifics, the premise fo the article is that car prices have remained steady over the years and in some segements have even dropped in relation to median income. They even looked at some individual makes. Some individual cars had gone up in price (Toyota Land Cruiser as an example), while others had dropped quite a bit in price over the years.

    • 0 avatar
      stuki

      The “median income” that’s of interest, is the one after taxes, but also after other “mandatory” (as in, more mandatory than car payments) outlays. The GOP may ballyhoo tax percentage cuts all they want, but if you take a median earner, then subtract out health care costs for his family, college costs for the kids, mortgage costs for keeping the kid in a school district that leaves him a shot at getting into college in the first place, insurance premiums to feed an ever more rapacious band of trial lawyers, retirement savings in an era where all interest on your savings (plus a good bit more) is being channeled to banksters…… Middle class car affordability ain’t getting any better anytime soon.

      • 0 avatar
        28-Cars-Later

        Bingo, very well put.

      • 0 avatar
        AJ

        I’d include a lack of job security in your list. I’ve had three layoffs since 9/11. My wife is currently concerned about her job should the company have layoffs again. Our daily drivers are about 10 years old, when we use to buy new cars every three to five. I keep saying, lets give the cars another year. I certainly don’t any car payments if one of us were to lose a job.

        And I am for any kind of tax cuts, as it’s not just on my paycheck, but that includes businesses that I use as we all pay their taxes.

  • avatar
    theupperonepercent

    If people only bought the car “they could afford” this wouldn’t be a problem.

    But there are used BMW, Mercedes, Audi, Nissan GT-R, Bentleys, Rolls Royces, etc which need to be flaunted.

    • 0 avatar
      CoreyDL

      Conversely, if they only bought the car “they could afford,” sales would be in the toilet and the auto, finance, and insurance companies would be in a world of pain.

      Capitalism like we have is based on greed, consumption, and debt.

      • 0 avatar
        Roader

        Less cynically, auto loan delinquency rates topped out at 1.6% in Q4 2008. Right now they’re < 1%.

        • 0 avatar
          Lie2me

          Anyone ever tell you that your a car forum meme spoiler? Sub-prime delinquencies are a drug around here

        • 0 avatar
          stuki

          Overall individual indebtedness is rising again, as opposed to Q4 2008. And 75 year old’s who expected to enjoy retirement after 50 years of hard work, are bagging groceries at WalMart instead. Helping to pay down strawberry pickers’ BMWs. It’s the Dystopian (or American, the two don’t really differ any more…) way.

          • 0 avatar
            CoreyDL

            Wal-Mart does not have baggers.

          • 0 avatar
            Lie2me

            Yeah they do, ME, when I buy stuff there. I love spinnin’ those bag roundies, Weee!

          • 0 avatar
            Roader

            According to the Fed, consumer (non-mortgage) debt was 5.2% of disposable income in Q2 this year, vs. 5.8% in Q4 2008, so consumer debt in relation to income is lower now as opposed to then.

            As far as 75-year-olds working at Walmart, median real income for 65+ heads of household rose steadily from ~$17K in 1967 to ~$35K in 2013; it doubled. And when I say steady, I mean it never dropped substantially as the median income for all the other age groups did.

            I’m sorry if I’m killing anyone’s buzz with these boring (and easily looked up) facts.

          • 0 avatar
            stuki

            Roader, household debt has been rising again since around Q2 2013 +-. The high delinquencies you referred to in 2008, was because credit became more constrained, resulting in less ability to roll debt over, refinance and other tricks to facilitate mortgaging ones future. Now, with the mirror fogging test for obtaining credit back en vogue, and the Fed succeeding in allowing some to pretend Andy Gumps in the dessert are worth more than the Versailles was at time of construction, there’s much less immediate strain on pocketbooks.

            And looking at median incomes for those 65+ gives a very distorted view, if getting a picture of middle class fortunes is the goal. Middle class earners in general wold prefer to be retired by 65. Professionals often choose to stay longer.

            A great tragedy of our time, much more so than corporations squandering the occasional retirement fund for the benefit of Gordon Gecko (although that’s tragic as well), is how easy it has proven to decimate people’s lifetime savings under pretense of “stimulating the economy.” Of course, robbing old frugal people to fund those who are paid to lend and spend shows up as increased “activity” in a GDP report. But confiscating other people’s retirement savings to fund projects that were not worth vile at 1% interest, in order to bring interest down to 0% and make them nominally worth vile, sure as heck is value destruction in it’s crassest form.

          • 0 avatar
            Roader

            Stuki, how does one’s view become distorted when noting the doubling of real income for people over 65 in the last 46 years? Real income doubled. I don’t know how else to say it. And it’s a pretty amazing thing, especially since fewer and fewer workers are paying for that increased income. It won’t last. But your characterization of poor, old people working at Walmart doesn’t fly. 65+ net worth is high and hardly dropped in the last recession, while the under 40 crowd’s net worth tanked along with their median income. It’s the young people that are hurting in this country, not the old.

  • avatar
    Rday

    Don’t believe much about the figures these sources quote. All i know is that more people are struggling and having to work longer hours. And many cannot afford medical insurance. So I don’t things are getting better for many americans.

    • 0 avatar
      Toad

      “All I know is…” is a common way to say “I don’t like information that contradicts what I want to believe.”

      All I know is that I ignore any sentence that begins with “All I know is..”

  • avatar
    kcflyer

    Here, Here,

    If I made 54 grand a year and someone suggested I buy a new 30 thousand dollar car I would call them nuts. Unless of course I had saved enough to pay cash. Then you could call me nuts for blowing my nest egg on a depreciating hunk o metal. But if everyone behaved that way I’m told our economy would collapse.

    • 0 avatar
      kvndoom

      Could we ever turn it around and become a goods-based economy versus a debt-based economy again? We’ve gotten pretty entrenched.

      • 0 avatar
        jmo

        Where would people put their savings in a “goods” based economy?

      • 0 avatar
        Pch101

        Having nostalgia for the good ol’ days when just about everyone was poor is a bit bizarre.

        • 0 avatar
          psarhjinian

          I think it may be nostalgia for relative job security and defined-benefit pensions.

          • 0 avatar
            Pch101

            The pension/secure jobs era was built upon a foundation of expanding consumer credit and government-insured mortgages.

          • 0 avatar
            Toad

            Going back to the “good old days” would require going back to reducing competition for jobs by keeping women, minorities, and others from accessing those opportunities. Oh, and reverting the rest of the non-western world to grinding poverty.

            The narrow post World War II boom years with job stability and defined benefit pensions was built on lack of internal competition for many jobs and very little international economic competition. Those days are not coming back.

        • 0 avatar
          Lorenzo

          If the “good old days” being mentioned were around 1970, not everyone was poor. That year was the peak of US oil production, and pretty much the peak of widespread prosperity, not to forget it was the muscle car era! Plus, McDonald’s advertised getting a cheeseburger small fries and a coke, and getting change back from your dollar bill.

      • 0 avatar
        TW5

        @kvndoom

        Not until we stop regulating the lower-middle class out of the economy. Min wage, healthcare mandate, and tax burden are an impractical expense for many businesses, and employment/participation rates for the under-30 demographic continue to tumble in the US. The only “solution” offered so far is to make the problem worse by raising minimum wage to at least $10/hr.

        Businesses are designed to earn profit. That’s the extent of their socioeconomic sophistication. Government is designed for such heady objectives as insuring domestic tranquility and promoting the general welfare, yet Congress squeals incessantly that they will find a way to make businesses do the government’s chores by passing policies like min wage and healthcare mandates. The political pageant is more depressing than Les Miserable.

        I think I’ll drown my sorrows in a 3-series lease, and then I’ll pray for the sweet release of death [curtain drop].

    • 0 avatar
      djoelt1

      I’m always amazed at what people spend on cars. When I was a cub engineer making $48,00O, I bought an $8500 new car. And at nearly 4x that income now, our household buys $18,000 cars. We would need to be in the $500K + bracket to buy a $30,000 car.

      • 0 avatar
        JuniperBug

        When were you a cub engineer?

        I’m sure I don’t have to tell you that an $8500 new car no longer exists. However, adjusted for inflation, even before considering content, cars have never been cheaper. Personally, my next car, once I need one, will be about $26,000 CAD out the door, because that’s what a new Golf costs, and after owning a bunch of used vehicles, I’ve decided that it’s not worth going used when these days a new one only costs marginally more than a three-year-old one, with cheaper financing. Older used cars can work, but in my experience, by the time you find a decent one to commute in, buy it, fix the things that break on it, and then have to get rid of it for peanuts because by 10 years in the rust belt you can expect that the rust has started, you don’t save that much over buying new, either… at least not enough to justify the hassle. The math is different when you’re broke or have terrible credit, but when you can swing the payments on a reasonable new car (Civic, Golf, Accent… anything that won’t cost much to own long-term), it’s not a bad way to go, as long as you’re not trading the thing in as soon as it’s paid off.

        I guess it depends on your “household,” but mine consists of just me, and at $55k/year, a $25k car that I can pay off in 3-4 years and drive economically and enjoyably for 10 years is a justifiable proposition.

        In the meantime, I take the bus to school and work and drive a babied 15 year-old convertible when I feel like leaving the city, and stash some money aside each month.

  • avatar
    HerrKaLeun

    Is that income the taxable portion or the actual income? If it is the taxable portion (after all the deductions) the actual wage may be $70K.

    either way, a $30K car for a household (assuming family?) is ridiculous and above their means. A household with 2 income earners needs two cars, so they can afford $60K in new car? and the kids just eat the free lunch at school since the parents “needed” that new ride.

    What a household “needs” is a Honda Fit or Nissan Versa if they have 2 kids or less. that cost $17K. Everything else is “want” and flashy.

    And if the household income is $54K, they should use contraception and not have more than 2 kids since any more kids would require some sort of welfare (income tax credit, food stamps, school lunch)

    • 0 avatar
      DeadWeight

      Stop with such sensical thoughts.

      Basic, common sense has no place in modern day ‘Murica (or many other places).

      120 month vehicle loans are the answer, clearly.

    • 0 avatar
      319583076

      America – free to make poor decisions and mismanage ourselves since 1776.

    • 0 avatar
      seth1065

      Some house holds need/ Want a safer car than a Fit or Versa , they would be toast in most accidents with SUV’s, I would much rather have a 3 year old Accord than a fit for my family. hate to break it to you but at 54 K you would not be on food stamps because you bought a car, it works on how much you make not what you have at the end of the month. If your family of 4 bought a 30K car on a no interest loan and paid it off and kept it , it may work now most people do not do that but with 0% APR over 6 years the payments may work. One thing I think the survey misses is what else we pay for these days, cell phones, cable, tolls , property taxes are insane in NJ, health ins, collage costs… I think back in the “good ” old days there were less things to pay for, grants there were less things also.

      • 0 avatar
        HerrKaLeun

        you are right on the food stamp thresholds… but they may get “earned” income tax credit and other subsidies.

        My personal rule of thumb is a car should not cost more than 1/3 of my annual income, rent or house payment should not be more than 1/3 and a house should not cost more than 3 times the annual income.

        what gets forgotten here is a $30 k car also typically has higher operating cost and depreciation than a smaller car. and as far as safety goes, even a base Accord (or CRV etc.) of your choice is safe and can be had for much less than $30K. Leather and moonroof don’t add to safety and are not needs. $30K is above actual “need”.

        • 0 avatar
          JuniperBug

          That’s a nice thought, but doesn’t really work today. Someone making an average salary, $55k, by your guidelines would never own a house. Even a condo would be a stretch at $165k. $18,000 out the door won’t get you much car even in the US. In Canada you might get a base Accent for that. At that point you can go used if you need something bigger, but end up paying more in interest if you’re not paying cash, and will definitely pay more in maintenance.

          • 0 avatar
            CoreyDL

            @Juniper

            I immediately thwart your assertion, as I make less than that, own a house, and also have no car payment. I paid <18000 for my car [used].

    • 0 avatar
      TW5

      That’s what Henry Ford and Ferdinand Porsche thought, but what success did they ever achieve? No, that kind of thinking is for losers, I’m afraid.

    • 0 avatar
      J.Emerson

      If you treat a new car purchase as a 10 year proposition, which seems relatively common these days, a $30k car for that income level seems pretty reasonable.

      When middle-class people start living “outside their means,” the self-appointed shaming advocates inevitably start to pop out of the woodwork.

    • 0 avatar
      Lie2me

      When the government was subsidizing me through tax right-offs a $30K+ car made sense, but now that the subsidy has been greatly reduced through “career downsizing” not so much. It all depends on your perspective

    • 0 avatar
      Lie2me

      When the government was subs*dizing me through tax right-offs a $30K+ car made sense, but now that the subs*dy has been greatly reduced through “career downsizing” not so much. It all depends on your perspective

  • avatar
    Mikein08

    Car prices are falling? Well, maybe yes, maybe no. My personal gauge
    is that I cannot replace my 09 Xterra (which I bought new) with a new
    one for the same price I paid for the 09. Even with Nissan’s frequent
    generous discounts I can’t do it. And, what’s worse, the vehicle hasn’t
    changed a bit in 5 years, except for de-contenting.

    • 0 avatar
      Toad

      2009 was one year after the recession; EVERYTHING was cheap because there were very few buyers. Houses, cars, anything that was not an absolute necessity was dirt cheap because very few people were spending money; many people were wondering if they were about to lose their jobs and buying a non-essential item was the furthest thing from their mind.

      Using 2009 as a baseline for pricing on many items will give you a distorted view of current values.

  • avatar
    Fordson

    With all we hear about the rich getting richer, is anyone surprised that the median income continues to rise?

    Does that mean cars are more affordable for your average person? No.

    Does anyone seem to understand the meaning of “median”? No.

    • 0 avatar
      50merc

      Yes, if only “the rich get richer” then it would surprise me that the median income continues to rise. For example, in a group of seven people, wherein only the highest income person gets a raise, the median income stays the same (that of the fourth-ranked person).

    • 0 avatar
      319583076

      The arithmetic mean and a measure of dispersion would be more useful than the median.

      However most consumers of this “information” aren’t equipped to parse meaning, so it doesn’t really matter, does it? Obviously the story is designed to fluff consumer confidence coincident with the beginning of the holiday season. Be thankful for this good news and spend freely!

      It will probably suceed.

  • avatar
    TW5

    Again, I tell you, it is easier for a camel to pass through the eye of a needle, than for a middle-class man to be without a new vehicle.

    But how is this possible, Teacher, when Edmunds says they can only afford to pay $16,500?

    Oh ye of little faith. With cash it is impossible, but with subprime lending, all things are possible!

  • avatar
    FreedMike

    That woman’s hands are HUGE.

  • avatar
    APaGttH

    120 month financing will fix everything. No money down, 125% loan – cover taxes and fees. Sign and drive and who cares if the term is almost the length of a mortgage payment. If you die, they can bury you in it!

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