CPI
A consumer price index (CPI) is an index number measuring the average price of consumer goods and services purchased by households. The Bureau of Labor Statistics publishes the CPI for overall consumer goods and specific items such as cars. By looking at the CPI for the automobile and in general, you can get a sense of the cost of automobiles relative to everything else over the ages.
I added the Cars per person statistic from the earlier post.
As you can see, prices of cars generally increased with inflation, but not as fast. Over the years, cars have become cheaper for people to buy (I also didn't know inflation was a post 1970s phenomenon). However, somewhere around 1995, their prices started dropping significantly. What caused this?
Mean Income, Average Cost, Affordability
The US Census Bureau puts out historical per capita income since 1967 and the Department of Energy has a the Average Price of New Vehicles since 1970. Once you have both, the ratio of the two can tell you what percentage of you annual income you had to spend to buy a new car in any given year.
Unfortunately the data doesn't go back before the mass automotive adoption, but as you can see, for the last forty years, the average cost of a new automobile has been slightly below the annual per capita income. Cars were also more affordable in the 70s, and only recently (mid 90s) have they become more affordable.
You could oversimplify and conclude that "people are willing to buy/rely on automobiles when they are cheaper than year's salary." Approximating GDP per capita (shown below, not PPP adjusted) as income per capita (also oversimplifying things), you can see the disruptive nature of the Tata.
The average person of many countries in the world will be able to afford the $3000 car, and it puts China's billion+ people within reach of owning an automobile. Of course cars are usually heavily tariffed and not easily transportable so a $3000 car in India doesn't mean it will be available for that price everywhere else in the world. Also, looking at the average figure does not capture the individual situation that differentiates country from country. Brazil with it's large income disparity is an important market for automakers, and China with it's billion people is much more important than Luxembourg, even if most people can only afford a bicycle.Nevertheless, cars are getting cheaper, and more and more people are going to be able to afford it in the next 15 years. That is going to cause some interesting changes to come.
The Department of Energy statistics also have average new vehicle costs for domestic and import cars (CPI adjusted):
As you can see, import cars used to be cheaper than domestic cars, but that flipped around 1980. The price of domestic cars have stayed constant for the last 20 years when the price of import cars have varied wildly.
Comerica Bank in Detroit (of all places) publishes the quarterly Auto Affordability Index, measuring how many weeks worth of the median (not mean) family income is need to purchase the averaged-priced new vehicle. From the Q4'07 report:
The curve, as expected, has the same shape as the self-devised affordability metric I used three graphs ago. It also captures the sharp increase in price in the late 70s and the drop in price around 1995.
So what happened in the late 70s and around 1995?
Conclusion
This foray into data is really short on conclusions. If anything, it's a good history lesson on the price of automobiles, but that provides very little insight for future forecast. Trying to determine what changed in the late 70s and mid 90s may be worthwhile next step in figuring out how changes happen. Besides that, it highlights some recent trends very well, which is the decreasing price of automobiles.
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