Rich People Are One of The Reasons You Can’t Have Things

Because everyone is busy making nicer things for them

The only problem I have with the headline “Americans Can No Longer Afford Their Cars” is that it leaves out one very important truth: Some Americans, namely the rich ones, can afford their cars just fine.

In fact, I would argue that, because rich people can afford such nice cars, and so many other nice things, the rest of us are increasingly unable to afford any things at all.

The point of the article I linked to above is to point out how high the prices of new and used cars are currently. And that is shocking: “In 2023…new car prices rose by 1 percent to an average of $50,364, while used car prices fell by only 2 percent to an average of $31,030.”

I am currently driving around in a 2002 Toyota Camry. This is mostly because I love that car with my whole heart and soul, and because it (knock wood) keeps on going, but it’s also because I don’t have fifty grand OR thirty grand right now to throw down on a new or used car.

Do you?

As unsettling as the car price numbers are, however, I find this little paragraph buried at the end of the article to be more disturbing.

“Automakers are increasingly focusing on the production of expensive SUVs and trucks while dropping smaller, cheaper vehicles…Manufacturers cite disappointing sales results as primary reasons for discontinuing smaller, more affordable vehicles from their lineup.”

This leads me to ask, are the sales results for slightly cheaper vehicles “disappointing”? Or do those vehicles simply not provide the profit margins that manufacturers and dealerships would prefer to chase? There’s money to be made out there on any vehicle, but businesses know there’s more money to be made on more expensive cars.

Reading that article a couple of times through actually made my head hurt. In the middle of the article, the author points out that, following conventional personal finance rules, that you shouldn’t spend more than 10% of your monthly income on car-related expenses, which means that “Americans needed an annual income of at least $100,000 to afford a car.” The author further points out that, based on current census data, that means that more than 60% of American households can’t afford a new car (and that’s households — if you need an individual income of 100 grand, that excludes 82% of Americans).

And yet? The consumer analyst they interviewed for the story also said this:

“Car buyers’ preferences have also shifted dramatically to larger trucks and SUVs in the past 10 years or so, and even more towards high-tech and comfort amenities in the form of cameras, sensors, radars and large infotainment screens…”

Yeah, okay. I believe that everyone’s preferences have changed for the bigger, the better, the flashier, the more tech-heavy.

But the fact remains that at the end of the day, 82% of individual Americans cannot really afford the cars they want.

So, 82% of individual Americans cannot afford cars at their current price levels.

And yet manufacturers are telling us that sales of lower-priced cars, that arguably that same 82% might actually have a chance of affording, are “disappointing.”

Doesn’t that strike anyone else as weird?

If I’m reading between the lines, what this article is telling me, even more than it is telling me “car prices are high,” is this: Manufacturers can make the most money on expensive cars, and they still have enough consumers in the top 18% of American earners, to exclusivel manufacture very expensive cars for them. It’s not that they can’t manufacture and sell slightly more reasonably priced cars; it’s that THEY DON’T WANT TO, because why do the work and lock yourself into a slimmer profit margin, when the top fifth of American consumers make (and spend) such stupid amounts of money that you can just pump out pricey, tech-loaded cars for them, and still clean up?

Maybe I’m wrong. I do tend to view everything through a lens of “the top 20% income class in America is screwing everything up for the rest of us,” I’ll admit.

But all I’m asking you to do is this:

Start to look around. Really read these “everything is expensive!” articles, and think about what they’re really telling you. Think about how much money you have to buy things, and what is currently available for you to buy. Actually look at your community and observe how people shop. Remember how there used to be department stores where a lot of middle-class people shopped? JCPenney, Shopko, Sears, Boston Store, Kohls? Sure, there’s still some around, but I would argue that now if you look, you’ll find more “upscale” name boutiques in wealthy communities, and dollar stores in poor communities, and, in between? Not much else.

Then ask yourself if this isn’t happening in housing, too. There are many reasons for the ridiculous prices of housing right now, but might one of them also be that housing developers and building contractors only want to chase that high-end, spend-money-like-water crowd, and pretty soon you end up with one-bedroom apartments with “high-end finishes” that cost more than three grand to rent every month?

I honestly don’t think the “good old days” were all that great.

But let’s end with some historical car price numbers to see how far “progress” has brought us.

Here’s an interesting article, from the Chicago Tribune, and way back in 1996, on “the true price of buying a car.” It points out that, in 1947, the average price of a new car was $1,864, while the median family income that year was $3,031. This meant that it took 61.5% of the family’s annual income to buy a new car. By 1960, although new car prices had gone up, so had family incomes — so that, in that year, it only took 50.8% of a family’s annual income to buy a new car. In 1970, a new car purchase took slightly less than 36% of a family’s median income.

But then the numbers started turning around. By 1994, shortly before the Tribune article was written, a new car once again required a larger chunk of a family’s median income to buy — 48% of the family’s yearly income, to be exact.

Now? If the average price for a new vehicle in November 2023 was $47,939? And the average median household income in America for 2022–2023 was reported at $74,580?

Well, do the math.

Those numbers mean that a new car is now up to 64% of the median annual family income.

Income inequality is not going in the right direction, and our car prices (among others) prove it. Unless you’re lucky enough, that is, to be in America’s top 18–20% of earners…and then you can buy whatever you want, because manufacturers are falling all over themselves to provide it for you.