Why are cars expensive?

Answer 1

The amount that car companies charge for cars is the price at which they can make the most profit by selling them. If they only charged $100, for instance, they would not be able to make enough to keep up with demand. If they charged $1 million, not many people could afford them. So as an example, let's just say that cars cost about $10K to build, deliver, pay workers, etc. with no profit. The car company learns that, if they charge $15K for a model, 100K people will buy it. If they charge $20K for a model, 25K people will buy it. 100K people x (price of car $15K - cost of car $10K) = 100K x $5K = $500K profit OR 25K people x (price of car $20K - cost of car $10K) = 25K x $10K = 250K profit. Therefore, the car company makes twice as much money if they build 100K cars and sell them for $15K each. This is _extremely_ simplified, but the truth is that companies charge "as much as the market will bear"; in other words they maximize their profit. No company in the world is going to say, "We can make a reasonable amount of profit and give the largest number of people jobs and help the largest number of people get cars at a reasonable price if we charge $x." They all ask themselves, "What is the least amount of work we can do to get the largest amount of money?" Whether this is right or wrong - well, it's human. It's just the way economics works.

Answer 2

Your not just paying for the car - and this is true of anything that is expensive you buy. You're paying for labor costs, costs to market the car, the R&D that went into building the car, the cost to deliver the car to the dealership, the cost for the tax on the car, the cost to finance the car so you don't have to pay for the whole thing at once, the cost for the materials that are used to build the car, and probably some other things I forgot to mention too.

Answer 3

They have no right to be, but they are. Additionally costs for repairs and maintenance--not to mention the costs of LABOR-- have skyrocketed. For these little pieces of "aluminum foil" that become totaled if just tapped.

In my parents time, cars were actually tough metal, and bigger. Seat belts were coming out, but OPTIONAL. Babies were safe in the front seat in a baby carrier (if someone was not with mom to hold baby in their arms). The cars were strong--no need for air bags! There were few drunk driving incidents to speak of--as the cars were bigger, stronger, and safer. Organizations like MADD didn't existg until after they started streamlining cars, and making them out of paper--that's when the fatalities began.

Look at the price of car insurance today--I know of an incident where someone slightly scratched a car in a parking lot--the cost of repair was some $900--and the person's insurance went up by a few hundred per year.

Answer 4

It's the same as it used to be plus inflation. The carmakers are not making any more money than they used to, in fact, they are making less. The wages have gone up, healthcare is through the roof, advertising is ridiculous, and the price of steel is at an all time high.

They are not expensive, you get what you pay for.

Answer 5

Mostly because of corporate greed. If the manufacturers would cut prices to just the level of a decent profit instead of trying to retire off from every sale, the cost would go down. This is about an extra $4,000 for a US branded car (made "off-shore.")

If you want a good deal on a new car buy Japanese brands, most of them are built in the US now and the mark ups are only about $1,500 per car (about 10 %.)

Answer 6

Cars are expensive because people keep buying them.

Answer 7

Here's ONE reason:

Execs ore over paid (in my opinion)

Mr. Wagoner, made $5.5 million in 2005, down from $10.1 million in 2004, G.M. said in a regulatory filing that also revealed pay cuts for other executives.

Answer 8

The average line mechanics at Ford are making 64 dollars per hour.Toyota at 45 per hour.

Answer 9

They can be made cheaply, but we have to pay the wages of the workers, trucks, inspectors, taxes and for the technology that built them. Plus, for all the human resources used along the line.

Answer 10

People like them & "need" them to go from point A to point B.
So forth,Supply & Demand the manufactures charge outlandish
prices for them. Nicer & more elaborate they are, the more
exspensive they are !