Enticing a Trade-In

We have two cars right now, and both of them are getting old.  The newest is a 2000 model, so it's 12 years old; the other is a 1995 model.  Both of them have over 150,000 miles on them.  And both of them are starting to encounter problems that fall into the "major repair" category.

On one, the anti-lock brake light is glowing on the dashboard.  When I took the car to the repair shop, I was told that the repair would run nearly $2,000 ... and only $200-300 of that was labor.  The part itself cost $1,700.  I took it to the dealership for a second opinion, and was told the same.

So here's what I don't understand.  The car originally sold for, let's say, $35,000.  (Since we bought it used about 5 years ago, I'm honestly not sure what the new price was -- but that is about what the 2012 version runs.)  If this part costs $1,700, then that's 1/20 the value of the vehicle.  I'm sure there are 19 other individual pieces which carry hefty price tags, like this one, and those parts account for the total cost of the vehicle.  What about all the other stuff?

And what about the big manufacturing plants, filled with expensive equipment and powered by expensive union labor?  What about the transportation costs of delivering new vehicles to the dealerships, by train or by truck?  How in the world do they ever sell a car for less than a couple hundred thousand dollars?  Not ever having worked in manufacturing, that boggles my mind a bit.


Of course, I have a different theory as to why a part would be so expensive.  I think the manufacturers want to encourage people to upgrade to new vehicles.  They can't make the price of every part exorbitantly expensive -- they know the ruse would be up if a spark plug cost $200.  But they can find a few key parts, especially those on major components of the vehicle (like the braking system), that will be so expensive that it will nearly guarantee that the person believes the car needs to be traded in for something new.

The only part of my theory I'm not sure about is how they identify which parts get this special pricing.  But it doesn't make any sense that it is really that expensive to make that particular part -- because there is no explanation for how a car containing that part could sell for $35,000.