You have to look at a few things:
- your income
- your debts and other spending behaviors
- the change in car prices over time, and compared to incomes
At some point in time, the average new car price was $5k, $15k, $20k, now like $30k. To look at things simply, half the cars are above that price, half are below (not quite but close enough).
Similarly, the average income is what? $50k/yr?
And now there's low cost financing that goes 60, 72, even 84 months...
Let's just say someone saves enough for a $30k car over 5 years. That's $500/month. Then they pay for the car cash. Cars last around 10 years, let's say... so it's doable. Tough if you're earning $50k/yr ($4100/mo before taxes, which should be pretty low if that's all you earn), but doable for something as necessary as transportation.
The thing that is crazy to me is the cost of trucks that people buy. So many full size pickups, Tahoes, etc. relative to the cost of say, a BMW or MB, these vehicles have rocketed up in price.
Personally I'm pro-long term ownership, and pro-old car, for me, that cross section means buy reasonable cars with low,fuel consumption and keep them for as long a step possible. It has worked for me. The longer you keep a car, the less important it's purchase price is. But at the same time, the lower its price is, coupled with long term ownership, the more you can save to do other stuff. Buying used cars which have the need for more repairs over fewer ownership miles doesn't amortize correctly in my book or for the cars we buy. There's no poorer deal than a low mileage used Toyota or Honda, for example. I bought a brand new odyssey for a lower per mile cost than a used one with 30k mikes on it.