The Model-T (the first cheap car) expense $850 in 1908. When you readjust for inflation, the is about $22000 now. However, it must be added that the cost of the dwindled come $260 by 1920 (about $3500 now)<2>.

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Although native a pure engineering/operations standpoint, the price of a product needs to go down in time (due to much better scale and fixed prices spread end a large number the products), car prices don"t walk down.

Why is the price not going down?


R&D and technology spending. Cars are a technology business and there are constant product enhancements. Numerous cars have better onboard computer systems than the ones offered for the man-landing mission ~ above moon. They are building new carbon fiber based body because that fuel effectiveness and better composites that carry out safety & stability. The software is acquiring complex. Emerging a new car can cost as high together $6 billion in R&D <5>. However, given the hefty competition, they need to constantly shot out brand-new models, some of which will rotate out to be duds, bring about writeoffs.
Design updates: Cars are being continuous redesigned. I look in ~ cars the came two decades ago, and also they look ugly come me. Design changes don"t cost as much as a complete breakthrough of a brand-new line, yet are tho expensive. Design calls for a most manpower and also retooling. Numerous dollars are likewise spent on market research, testing, marketing and also customer support when it concerns the brand-new designs. Right here is the to compare of 1985 Camry through the 2012.

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Input costs: Cars need a lot of metals, electrical energy and huge expanses of industrial real estate. The expense of every these room going up and also often more than in its entirety inflation. Offered the better competition because that the scarcer commodity resources, the life material expenses have been continuously going up. Labor costs: In the US, auto workers are often unionized and there is a huge push top top wages and also health benefits. In fact, Detroit service providers are saddled with substantial amount of health care costs and also other benefits.
1. How Inflation Has impacted The Price of Cars

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5. Why does It cost So lot For Automakers to Develop brand-new Models?

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