Do you think new cars are way over priced?

Question

I mean, I think of how many new cars are probably made and even sold in one day, and sometimes I wonder if we're being way overcharged for new cars. What do you think? Does it really cost them $20,000 +++ to build them?

Answer 1

I don't think cars are overpriced, if by that you mean they have an artificially high, inflated profit margin. Too many car manufacturers (domestic and import) are not profitable for that to be the case. In addition to the basic manufacturing costs of a car, you've got to consider development costs, marketing, warranty claims, and everything else that adds overhead. I think it's more a case that people just spend too much on them.

If you just want basic transportation to get you from point A to point B, you can get still get a brand new compact car with power windows/locks and AC for around $15k.

But people have demonstrated they're more than willing to spend $25k+ for bigger, heavier cars with bigger engines and all kinds of optional luxury conveniences (moonroofs, large alloy wheels, premium stereos, leather seating, power seats, etc). Heck, people will spend $35k+ just to get a "luxury" version of a car that already has these accessories!

Answer 2

They're not overpriced. Cars are just expensive. The technology in 'em, the testing, the R&D, marketing, etc....

But the profit margins for new cars is ridiculously low. Somewhere like 2-8%. It seems high because cars cost thousands of dollars so you "feel" it more. But the margins are thin.

In other businesses the margins are way, way higher. When I worked in a retail shop I saw the cost of everything we bought and I saw the price we sold it for. Margins were anywhere from 30-400% or higher!!!!!

400%!!!!!

We'd buy a shirt for 12.50 and retail it for 59.00. And nobody batted an eye. it was "normal" or "expected"

If they did the same things with cars that 20K car would come in around 80K.

Nobody knows the true cost a manufacturing a car but the margins are thin.

Answer 3

Look at it this way, in the 70's a Sears riding lawn mower with 4 tires, stick shift, steering wheel, etc, cost around $1500. Today you can get the same brand mower with a bigger engine, a much better transmission and tires for about $1300. Why does a automobile bring in 3 or 4 times as much increase in the same period? Part of it is safety equipment that is required by regulations in which the industry passed the cost on to the consumer. This is done in a obscene way of overcharging in order to make more money. How can they offer so many rebates if they didn't overcharge?

John

Answer 4

the idea of business is to sell for more than it costs to make something, everything you ever buy, you pay more than it cost to build, so someone somewhere makes a profit and the economy continues. The larger the item the larger the profit margin. Also remember there are development costs, it may only take a few thousand $ in materials and labor, but car companies spend billions on engineering design and testing, and getting factories set up to manufacture the cars. so you are also paying a portion of that cost.

No, I don't think new cars are over-priced for what you get, although i do think buying a used car that will not go down in value as fast is a better financial move.

Answer 5

Cars are overpriced. I would rather wreck with an old car just because they don't dent as easily as a new one does. I think it costs so much to fix a new car just so the auto industry can get more money! Too bad new cars look really nice, otherwise the demand wouldnt be so high.

Answer 6

Much of the time it is not the cost of the car, it is the taxes placed on them. No it doesn't cost $20,000 to build, but with taxes taken away the car could cost $10-12,000.

Answer 7

Depending on the model, some of them are very overpriced, other are not, like the small cars.
The problem is the mark ups, when a model is brand new you can expect to pay a lot for a car. When they are stopping building a car, you can get huge rebates in it.

Answer 8

Actually no. I calculated this out. The link to the full article is below.

My $5,000 new car in 1979 is approximately equal to the same class of car now in 2007, after factoring in inflation. However the same class of car is vastly improved since 1979, in safety, reliability, emissions, fuel economy, and standard features.

Answer 9

Yes, they are way over priced! Most cars sell for $30,000-$55,000! I want a Corvette and I won't have the money to get one. The Corvette is $44,000-$77,000! WOW!!!

Answer 10

No maximum used vehicle sellers down charge is what the broker owns the vehicle for subsequently once you tension off the lot each dime you deliver to him is organic income. sellers constantly attempt to have the top hand and could verify to no longer lose any money in the event that they are able to help it.