The World is Ending Because Expensive New Cars Are Expensive!

The headline sounds so dire: "New Cars Are Too Expensive for the Typical Family, Study Finds:"

AS prices for new vehicles continue to rise, the cost of an average new car may be a stretch for typical households.

A new analysis from Bankrate.com found that a median-income household could not afford the average price of a new vehicle in any of the 50 largest cities in the country, though cars are more affordable in some cities than others.

“The new reality is that cars are becoming more expensive,” said Steve Pounds, a personal finance analyst for Bankrate. “People are having to make tough decisions about financing.”

You'd think our entire economy is on the verge of collapse.

But the basis for this alarmist article is completely false. The problem isn't that new cars are too expensive. It's that people are spending too damn much money on cars they can't afford. No one needs to spend the "average" $30,000 on a car.

Checking the current price of the class of cars that I have bought brand new over my entire 40-year new-car-buying lifetime, they range from about $13,000 (Chevrolet Spark) to about $26,000 (Subaru Forester).

And that's first-time new cars -- if you're buying a replacement, you can sell your old car for a decent chunk of change.

And since when are new cars a necessity? When I was a kid, in a family with six kids, my dad always bought used cars (he still does). You can get perfectly serviceable used cars for half the price of a new car.

That puts the cost of a car completely within the economic grasp of the average family, which has 2.54 people in it. The average family does not need a car that holds eight passengers or tows four tons. A five-passenger sedan or hatchback will fill the needs of the vast majority of American families.

And don't feel sorry for people with a ton of kids, who "need" a gigantic SUV: they made their bed, now they can sleep in it -- or maybe not, since that's what got them into trouble in the first place. They can just buy a used station wagon or van, like my dad did. If their kids won't be caught dead catching a ride to school in a junker, they can take the bus or walk.

The reason the average price of a car is "out of the reach of the average family" is that a relatively small number of really expensive cars dramatically raise the average price. No one needs to buy an expensive car. Too many people treat their cars as a measure of their manhood or social standing, so they have to buy the flashiest or fastest car.

Cars are just a way of getting to point A to point B reliably. Thankfully, many millennials have seen the light and are not stuck in the car rut: they don't even want drivers licenses.

The main reason for the financial meltdown of 2008 was that banks encouraged people to take out loans on houses that they simply could not afford, which drove up the price of housing even more, which exacerbated the problem.

This is the same mistake that's driving the "I have to buy an expensive car" mentality. Most expensive cars get you coming and going: pricey Cadillacs, BMWs, Mercedes, and big honking SUVs get terrible mileage. For example, the $151,000 Porsche 911 Turbo gets 17 mpg city, while the $24,000 Toyota Prius gets 58 mpg. The Porsche costs 6 times as much and gets about a quarter the mileage.

Oh, yeah. I forgot. The Porsche can go 205 mph. As if someone stupid enough to drop that much money on a car is actually competent to drive that fast...