The Ford Model T was the first vehicle that was mass produced for a wide audience.
A Model T cost $280 in 1924.
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| 1924 Model T Touring Car Source: https://www.thehenryford.org/collections-and-research/digital-collections/artifact/159025/ |
The average assembly line worker in that era could purchase a Model T with four month's pay.
The Ford Motor Company reported its 2022 financial results last week.
I was interested to see in that report that its average vehicle sales price in the fourth quarter was $56,143!
We are not talking about Mercedes Benz, Lexus or Tesla here.
We are talking about Ford.
Customers paid an average of $56,143 for company vehicles in the fourth quarter, about 10% more than the previous year, according to Edmunds.com. Many of those sales were high-end trucks and SUVs.
In 2017, Ford's average sales price was $40,000.
Ford's biggest money maker is the Ford F-150 pickup truck.
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| 2023 Ford F-150 Platinum Credit: https://www.ford.com/trucks/f150/models/f150-platinum/ |
The average sales price for the F-150 in the fourth quarter was $65,858.
That was just short of the average transaction price for Ford's Lincoln nameplate at $66,124.
The truck pictured above has a MSRP base price of $64,695.
The median American worker made $54,132 annually in 2022.
That means that in 2022 it took a full year's income for over half of all workers to pay for the average Ford vehicle while 100 years ago an assembly line worker could buy a Model T with four month's of pay.
Of course, that overall median pay does not begin to take account of varying incomes by age, occupation and educational attainment.
$56,000 for an average Ford?
At current interest rates, even with a 60-month loan term, that is a monthly payment in excess of $1,100/month.
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| Source: Calculator.net |
Add to this the news last week that the US personal savings rate is close to 70 year lows after being at record highs two years ago.
Credit card debt in the fourth quarter, 2022 also increased 18.5% over the last year to a new record high $930.6 billion.
The average credit card balance that card holders are carrying over is now $5,805.
At nearly 20% (the current average credit care interest rate), if you made minimum payments toward this average credit card balance, it would take you more than 17 years to pay off the debt and cost you more than $8,213 in interest, Bankrate calculated.
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| Credit: https://twitter.com/KapustaGroup/status/1621611766454140928/photo/1 |
How is any of this sustainable?
This is progress?
You Americans live or have lived a life of luxury for generations. When I was a boy in the sixties my dad taught me about finance as he understood it. "Always live within your means, son. A good guide is to spend five years your annual income on a house and one year for your car." Good advice I have always lived comfortably by following this rule. The other bit of advice was borrow for an asset that will increase in value over time and save up and pay cash for devaluing assets like cars.
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