Inflation Plus….

by Eric Peters
EricPetersAutos.com

Inflated car prices are a great way to gauge how much we’ve being gouged by the private banks that control (and relentlessly devalue) the currency of the United States. But we’re also being gouged by the government – and those costs are even more hidden.

Let me explain by way of example:

In the latest issue of High Performance Pontiac magazine (I’m a subscriber) there is an article about a restored 1977 Trans-Am. The base price of this car in ’77 was $5,799.

Using the CPI inflation calculator (see here) you’ll discover this sum has the same buying power today as $21,785. To parse this in terms of the real cost increase of a new car (as opposed to merely the increased number of “notes” one must have in one’s pocket today to match the buying power of $5,799 in ’77) it is instructive to take a look at what this sum will buy Now vs. Then.

Then – back in 1977 – $5,799 ($21,785 in today’s money) would buy you a brand-new Trans-Am. Not merely a Firebird. The Trans-Am was the top-of-the-line version of the Firebird – and also one of the most expensive Pontiacs at the time. For another $75, a buyer could select the optional high-performance 400 cubic inch engine and with it, a close-ratio manual transmission. Add $281.76 for that (in inflation-adjusted 2012 dollars).

Total MSRP for a ’77 Trans-Am with the optional high-performance 400 engine and manual transmission: $5,874 in 1977 – the equivalent of $22,067.53 today.

Now let’s step into a Chevy showroom and see what $22k (the equivalent in real purchasing power of $5,874 in ’77 money) will buy:

A base model V-6 Camaro.

Well, not quite.

The 2012 base model Camaro’s sticker price is $23,280 – so about $1,200 higher in inflated 2012 dollars (about $320 higher in ’77 dollars) than the cost of a top-of-the-line Trans-Am equipped with the optional engine (a big V-8) back in 1977.

The more direct cost comparison is to compare the cost of a current V-8 Camaro SS to the cost of that ’77 Trans-Am. And how much is a new Camaro SS? $32,280. In ’77 money, that’s equivalent to $8,592 and change. So, the real cost of a modern version of the ’77 V-8 muscle car is about $2,800 more – which doesn’t sound like a lot until you put it in terms of inflation-adjusted 2012 money.

Which comes to about $10,520 and change. Not including interest on the loan.

That’s not inflation. It’s the cost of government. For things like driver and passenger side airbags, tire pressure monitors, traction/stability control and all the rest of it – plus more to come, including the just-mandated back-up cameras that every new car will be required to have beginning with the 2014 model year. Those costs are fairly easy to quantify; dual air bags, for example, add an estimated $800-$1,000 to the bottom line cost of every new car. Assuming the lower figure – $800 – that comes to about $212 in ’77 money – or about three times the cost of the ’77 TA’s optionally available high-performance V-8 and manual transmission! Which would you rather have? A pair of air bags in a V-6 base model Camaro? Or a big (6.6 liter) V-8 and close-ratio manual transmission instead?

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March 19, 2012

Copyright © 2012 Eric Peters

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