What drives Car price

Sometimes you hear people complain about how expensive it is to buy a new car, but at times you witness people rushing to car dealers to buy new cars, trade in old cars regardless if having a new car has been their priority or not.  It is important to understand the mover behind these activities is car price.  Car industry has been known as a cyclical industry, and car price has always been tightened to the economy’s movement due to its relations to costs of labor, materials and oils.  Alternatively speaking, car price often moves in parallel with the economy but the moving margin is wide and more long term compared to commodities whose prices are up and down on daily basis.  The following discuss two typical factors that drive car price.

1. Fuel prices: Enduring in one of the biggest recessions since 20^th century, everyone understands thoroughly how life is impacted by the volatility of fuel price and our dependency on foreign oil.  Oil prices spiked sky high in 2007 leaving many Americans in wonder would they ever be lower again or what would be an alternative transport if increasing oil price continued to be the case.  Oil price triggers car price has been a classic matter then as it is today.  By then and there we started to see big impact on car price, either it went higher or plummeted.  Regardless which is the case price trends are set for a certain models of vehicles.  For example, the most recent abrupt end happened to end the popularity of SUV or truck based vehicles because their sales are typically led by the prices of fuel.  The higher the fuel prices go the less likely care drivers will be interested in fuel consuming vehicle, instead they turn into some hybrid and fuel efficient vehicles, which can be cheaper to own and to operate.  
2. New technology can be a driver behind car price trends.  As you may see in new model or brand, there are always new technologies introduced as part of the package. On one hand to enhance driving experience but on the other hand serving like a selling yet proven point which ultimately driving the car price. For instance, classic cars did not have air conditioning and cassette player.  Newer models were equipped with such features but recently models are offering features that go beyond your imagination, they include everything that car designers could possibly think of like powered window, DVD player, airbags, anti lock brakes, limited slip technology, self heated seats, to enhance your safety and enhance your driving experiencing. To many people cars are not just transportation but their mobile homes where they have to find comfort when hit it.  Car’s leather seats, DVD and stereo players, GPS system, dining trays, cup holders, futon like back seating etc. are new additions yet necessary to make living in the car possible. While these improvements clearly bring driving experience into the next level they also indicate extra costs for making and maintaining are part of the car prices as well.