The average transaction price of a new car is now over $30,000. How much over depends on the reporting source, but it’s right around 30 large. Ten years ago, cars were leaving showrooms for about $26,000 a pop, on average.
Thanks to a killer recession and long-term low inflation numbers, car prices have risen at a notably milder pace recently than in most previous decades. What’s interesting is that while base prices have been kept largely in check, and transaction prices have climbed only modestly, the potential to pay a huge sum of money for an option-laden vehicle has never been greater.
Nowhere is that condition more pronounced than in Ford showrooms. For demonstration purposes, let’s look at the Focus and Explorer. We’ll start with the Focus. In 2002, a base sedan with no options listed for $13,440. Pack on every conceivable option, and you could build yourself a $21,180 car.[table “15” not found /]
Note that in 2002, there was a 57 percent jump from the cheapest Focus sedan to the most expensive, most option-laden Focus sedan. Also note that for this comparison we ignore the Focus ST, a sport model for which there is no direct 2012 counterpart. Now check out the 2012 Focus:[table “18” not found /]
Worth noting here is that from 2002 to 2012, the price of the cheapest-possible Focus sedan climbed about 29 percent, while the price of a fully loaded car leapt 39 percent. More telling, an every-option loaded sedan now costs 73 percent more on the sticker than the stripped standard car. But wait, there’s more . . .
In 2002, a base Ford Explorer without options could be had, at list, for $25,210 while a topped-out truck would sticker for $39,995.[table “19” not found /]
Here, the all-in Limited model would have set a shopper back, at list, 59 percent more than the optionless XLS. Here’s the Explorer today:[table “20” not found /]
First of all, that number is correct. You can get an Explorer for more than $50,000 if you try. We see that since 2002, the price of the no-frills base Explorer has risen by just 15 percent, while the sticker on a fully loaded version of the truck is up 28 percent over the same period. And the 2012 gap between a base and loaded version of the Explorer? A whopping 77 percent—almost enough to start using the word double. It’s worth noting that the 2002 loaded-Explorer price includes the available V8 engine. For 2012, there is no comparable up-power optional engine. Remove the V8 and the price leap becomes even more dramatic.
So, what’s going on? Mostly, Ford’s stacking the options list with some impressively high-end goodies. Seriously, a Focus that parks itself? With voice recognition, a navigation system, and heated seats?
It’s worth noting that you can still build yourself an affordable entry-level Focus, but more and more folks are demanding the cool stuff, and there are few compact cars that offer more cutting-edge gadgetry than the Focus.
Also, the Focus is a different car now than it was 10 years ago. Where the Focus was once sold primarily on price, and rarely seriously cross-shopped against the likes of, say, the Honda Civic, today it’s very much market competitive, if not market leading by some metrics.
Likewise, the Explorer has moved up market. The cabin is classier these days, and the list of standard and available safety and entertainment features is lengthy.
While base prices on both vehicles remain sane, loaded versions are climbing the sticker-price ladder to new heights. Time will tell exactly how ready the buying public is for a $30,000 Focus or a $50,000 Explorer, but if dealers can sell big-ticket versions of these vehicles, who’s to fault Ford for building them?
I for one am much more comfortable with a $50,000 Explorer than I ever was with a $10,000 Tempo.
For some startling prices, check out ‘Content Creep, Part 2’, here.