Think today's technologically sophisticated new vehicles are getting too expensive?
Fine. Don't buy one.
Instead, consider a less sophisticated new vehicle, such as the Dodge Grand Caravan minivan, which, 12 years into its life cycle, refuses to retire. A 2019 model can be had for about $10,000 less than the average new vehicle, with seating for seven, side-curtain airbags, a five-year warranty and new-car smell, standard.
Or take your pick of certified pre-owned vehicles, just back from being babied on three-year leases. They're abundant, and while their prices are climbing, the slope isn't as steep as for new vehicles. The average transaction price for a 3-year-old used vehicle was $22,489 in the second quarter, according to Edmunds, a $13,000-plus savings off new.
Yes, the affordability of new vehicles is a concern for the industry and the economy, especially as wages stagnate, interest rates rise and payment periods stretch out.
But between automakers and dealers, the industry has developed a sustainable ecosystem to segment the market, preserve consumer choice and share the profits equitably.
Automakers can cater to the biggest budgets with high-margin advanced vehicles and to the more modest ones with legacy products such as the Grand Caravan or Volkswagen Tiguan Limited, whose costs have been fully amortized. Dealers can draw prudent premium buyers to their well-contented CPO inventory and steer economy buyers to the rest of their used-car lots.
Somewhere out on the fringe are the new subscription models, where the customer who wants it all and can afford it all can have it all.
The profit margins are thick in each column.
You can't blame automakers for rising prices. They have an affordability problem, too. Product development and technology costs are escalating, making it more difficult to serve all price and product segments with the latest goodies. Reckless discounting would only put them back where they were in the mid-2000s: the brink.
But look at the market as a system of new and used, cutting edge and time-tested, automaker and dealer, and it's clear the industry can be bold, disciplined and profitable at the same time, while the consumer is still well-served.