Technology

Average new car price has gone up a lot because the average new car has been purchased by rich people who demand high performance and luxury features. And rich people have been doing great the last 50 years, so the top of the market has totally run away with high prices.

If you actually dig into specific models and what they go for, you see that the most basic cars have only gone up slightly in price, but are also much higher performing (0-60 times, quarter mile times, braking distance), more efficient (better highway/city gas mileage), more reliable (more miles/years to failure), and have a lot more standard features that used to be expensive add-ons (automatic transmissions, power windows/locks, power steering), and are generally better constructed (smaller panel gaps, better sound proofing/vibrations), and much, much safer by pretty much every measure.

Today's cars, even the cheapest ones, are much better than the cars from the 90's, much less the cars from the 70's (5-digit odometers because getting past 100,000 miles wasn't necessarily expected, bodies that rusted within a decade of normal use).

So if a first generation Honda Civic in 1974 cost $3000 in 1974 dollars (inflation adjusted to $21,000 today), we should compare what that car was, compared to what a Honda Civic is today (starting at around $25,000 for the barebones model, $30,000 for a few nicer features). Compare torque/horsepower specs, actual performance at 0-60/quarter mile, gas mileage, all of that. I'm not entirely convinced that the people of 1974 were getting a better bargain on their cars than today's new economy car buyer.

I hate that cars have gotten so big, and that the SUV is basically the American default at this point. But I don't think that car prices have actually gone up that high in the 30 years I've been driving. And cars from before I was driving just...sucked.