I would take cars off the original post. Cars are basically cheaper now today than in 1971.
The average car in 1970 was 5.6 years old. By 2022, the average age stretched up to 12 years old. Machine parts are being built to tighter tolerances, and the lubricants and paints and other coatings that protect against corrosion mean that cars are expected to last to around 200,000 miles, rather than the 100,000 miles that were normal up through most of the 80’s.
In other words, that new car in 1971 would be expected to last half as long as the new car in 2024. And the robust used car market allows for people to choose pretty much any model of the last 20 years, when the typical buyer in 1971 didn’t have that option.
Not to mention, today’s cars are far faster and more fuel efficient than the cars of the 60’s and 70’s. A 2023 Prius does 0-60 in 7.1 seconds and gets 57 mpg. That’s around sports car performance in the 1970s.
All the while, the industry has standardized catalytic converters, seat belts, airbags, automatic transmissions, air conditioning, power steering, power windows, power locks, etc.
And there’s more to come, too. Electrification may make cars even cheaper, including/especially with maintenance and fuel.
Health care, though, no, that should stay in the original post. Yes there are new procedures and treatments that weren’t available in 1970, but a lot of the procedures and treatments that have been around that long have become unreasonably expensive, from regular saline IVs to bandages to insulin to an overnight stay in a hospital. So the overall costs are still way up, even when accounting for the quality differences.
What good is all that extra durability if all the cost savings are swallowed up by a much higher purchase price? We can always make things last longer; that doesn’t mean its worth it. Financially, a $40k car that lasts twenty years is actually worse than two $20k cars that last ten years each. With the two $20k cars, I can spend half as much at today and invest the other half. In ten years time, that $20k will likely have grown enough to buy a whole new $20k car. And it will have newer features. And that’s less assets that I’m driving around all day just waiting to get wrapped around a tree.
And it gets even worse when you consider insurance and maintenance. When cars are relatively disposable, you don’t need to bother getting full coverage policies on them. If you get in a wreck, oh well, that’s life, but you can afford to replace it. Few people have insurance plans on their bicycle or clothing for that reason. But when a car is so expensive that it represents a substantial chunk of your financial world, well then it being wrecked is as ruinous as your house burning down. You have to pay some third party for insurance, and the profit margin and admin costs they will demand. Averaged out, every insurance policy you have to buy is a losing game. You lose money every time you buy insurance, on average. The more things you have to insure, the poorer you are.
Automakers have realized that cars are more durable, and they have raised their prices to compensate. We as citizens don’t actually receive any of the benefit of increased car durability, as the automakers have simply swallowed it all with price increases.
Financially, a $40k car that lasts twenty years is actually worse than two $20k cars that last ten years each.
But that’s just it. New cars are basically a luxury today, because cars last so long that there’s a robust used car market. Most people who need cars buy used, and today’s 5-year-old car with 60,000 miles is expected to last much longer than 1971’s brand new cars. Then, even used cars retain a percentage of their value better today than new cars did back then.
So the typical car buyer in 1971 bought new, and a typical car buyer in 2024 buys used. And the used car being bought today will last longer and has better features (and uses less gasoline, which by the way has gone up in price slower than overall inflation).
The last 5 years have been bad for the consumer in buying cars. But the previous 50 years were huge progress for the consumer, when cars stopped rusting holes in them, when oil changes went from once every 3000 miles to closer to 10k miles, sometimes up to 15k, and when reliability increased enough to where maintenance outside of scheduled maintenance or car accidents is unusual.
And it gets even worse when you consider insurance and maintenance. When cars are relatively disposable, you don’t need to bother getting full coverage policies on them.
The robust used market helps with this, too. There are cheap cars in existence, and those beaters are still more reliable than the beaters of the 70’s.
No matter how you slice it, driving is cheaper and better today than it was in the 70’s.
And yet, other nations manage to build and sell perfectly reliable new cars for affordable prices today. For an extreme example, look at China’s EV market. US automakers simply don’t want to make affordable vehicles, and US vehicles are often more unreliable than more affordable Japanese or Korean imports. The US isn’t the only country on Earth. It’s just US automakers that decided to focus exclusively on the luxury market.
US automakers simply don’t want to make affordable vehicles
I’m talking about the US market, which is now dominated by Japanese automakers who build cars in the U.S. that completely changed the reliability game, and the Korean automakers that started at the economy side of things and slowly moved upmarket over the last 25 years. They’re not even imports, as most of them are made in North America specifically for the US market, and these same popular models don’t get sold in Japan or Korea or wherever the parent company is based. The Japanese automakers are exactly who I was thinking about when I made my post about reliability and longevity in the US for US consumers.
Even the luxury side of things has almost entirely been abandoned by traditional American automakers, where European brands dominate. But the ultra-luxury (or sporty supercars) aren’t part of the conversation here because the typical American household doesn’t buy those.
The US isn’t the only country on Earth.
Yes, but this whole post is about the US economy and the typical household in the US. We’ve only been talking about the US, because that’s how the post started.
The car market in the US has changed dramatically since COVID, and for the worse. This time last year, I was looking for a new car and I saw that the price for used cars jumped 20% over the course of December. 20% in a single month, and that was for used cars, and it continued to climb like that through January.
The average car in 1970 was 5.6 years old. By 2022, the average age stretched up to 12 years old.
Wouldn’t the natural interpretation here be that people are forced to use cars for longer due to higher prices? In the 70s it was possible to replace your car more often.
I’d argue that back then it was obsolescence, probably even planned obsolescence. The Japanese automakers came in and disrupted the assumptions in Detroit, by building more reliable, more efficient, and longer lasting cars. Even if you wanted to keep a 1971 Buick for 10 years it would be difficult to do so economically, as rust started forming and the drivetrain started acting up.
And then in the 80’s, facing pressure from foreign automakers, American automakers finally started taking quality control and reliability more seriously. Still, though, they’ve basically always been behind Toyota.
And you can see the difference in the used auto market. Back then, the older cars were sold for scrap. If they were still functional and economically feasible to run, they would’ve been sold to someone.
Some people can (and do) still buy new and replace every 3 years. The increase longevity actually ends up helping them with resale value on the back end of their ownership.
I would take cars off the original post. Cars are basically cheaper now today than in 1971.
The average car in 1970 was 5.6 years old. By 2022, the average age stretched up to 12 years old. Machine parts are being built to tighter tolerances, and the lubricants and paints and other coatings that protect against corrosion mean that cars are expected to last to around 200,000 miles, rather than the 100,000 miles that were normal up through most of the 80’s.
In other words, that new car in 1971 would be expected to last half as long as the new car in 2024. And the robust used car market allows for people to choose pretty much any model of the last 20 years, when the typical buyer in 1971 didn’t have that option.
Not to mention, today’s cars are far faster and more fuel efficient than the cars of the 60’s and 70’s. A 2023 Prius does 0-60 in 7.1 seconds and gets 57 mpg. That’s around sports car performance in the 1970s.
All the while, the industry has standardized catalytic converters, seat belts, airbags, automatic transmissions, air conditioning, power steering, power windows, power locks, etc.
And there’s more to come, too. Electrification may make cars even cheaper, including/especially with maintenance and fuel.
Health care, though, no, that should stay in the original post. Yes there are new procedures and treatments that weren’t available in 1970, but a lot of the procedures and treatments that have been around that long have become unreasonably expensive, from regular saline IVs to bandages to insulin to an overnight stay in a hospital. So the overall costs are still way up, even when accounting for the quality differences.
What good is all that extra durability if all the cost savings are swallowed up by a much higher purchase price? We can always make things last longer; that doesn’t mean its worth it. Financially, a $40k car that lasts twenty years is actually worse than two $20k cars that last ten years each. With the two $20k cars, I can spend half as much at today and invest the other half. In ten years time, that $20k will likely have grown enough to buy a whole new $20k car. And it will have newer features. And that’s less assets that I’m driving around all day just waiting to get wrapped around a tree.
And it gets even worse when you consider insurance and maintenance. When cars are relatively disposable, you don’t need to bother getting full coverage policies on them. If you get in a wreck, oh well, that’s life, but you can afford to replace it. Few people have insurance plans on their bicycle or clothing for that reason. But when a car is so expensive that it represents a substantial chunk of your financial world, well then it being wrecked is as ruinous as your house burning down. You have to pay some third party for insurance, and the profit margin and admin costs they will demand. Averaged out, every insurance policy you have to buy is a losing game. You lose money every time you buy insurance, on average. The more things you have to insure, the poorer you are.
Automakers have realized that cars are more durable, and they have raised their prices to compensate. We as citizens don’t actually receive any of the benefit of increased car durability, as the automakers have simply swallowed it all with price increases.
But that’s just it. New cars are basically a luxury today, because cars last so long that there’s a robust used car market. Most people who need cars buy used, and today’s 5-year-old car with 60,000 miles is expected to last much longer than 1971’s brand new cars. Then, even used cars retain a percentage of their value better today than new cars did back then.
So the typical car buyer in 1971 bought new, and a typical car buyer in 2024 buys used. And the used car being bought today will last longer and has better features (and uses less gasoline, which by the way has gone up in price slower than overall inflation).
The last 5 years have been bad for the consumer in buying cars. But the previous 50 years were huge progress for the consumer, when cars stopped rusting holes in them, when oil changes went from once every 3000 miles to closer to 10k miles, sometimes up to 15k, and when reliability increased enough to where maintenance outside of scheduled maintenance or car accidents is unusual.
The robust used market helps with this, too. There are cheap cars in existence, and those beaters are still more reliable than the beaters of the 70’s.
No matter how you slice it, driving is cheaper and better today than it was in the 70’s.
And yet, other nations manage to build and sell perfectly reliable new cars for affordable prices today. For an extreme example, look at China’s EV market. US automakers simply don’t want to make affordable vehicles, and US vehicles are often more unreliable than more affordable Japanese or Korean imports. The US isn’t the only country on Earth. It’s just US automakers that decided to focus exclusively on the luxury market.
I’m talking about the US market, which is now dominated by Japanese automakers who build cars in the U.S. that completely changed the reliability game, and the Korean automakers that started at the economy side of things and slowly moved upmarket over the last 25 years. They’re not even imports, as most of them are made in North America specifically for the US market, and these same popular models don’t get sold in Japan or Korea or wherever the parent company is based. The Japanese automakers are exactly who I was thinking about when I made my post about reliability and longevity in the US for US consumers.
Even the luxury side of things has almost entirely been abandoned by traditional American automakers, where European brands dominate. But the ultra-luxury (or sporty supercars) aren’t part of the conversation here because the typical American household doesn’t buy those.
Yes, but this whole post is about the US economy and the typical household in the US. We’ve only been talking about the US, because that’s how the post started.
The car market in the US has changed dramatically since COVID, and for the worse. This time last year, I was looking for a new car and I saw that the price for used cars jumped 20% over the course of December. 20% in a single month, and that was for used cars, and it continued to climb like that through January.
Wouldn’t the natural interpretation here be that people are forced to use cars for longer due to higher prices? In the 70s it was possible to replace your car more often.
I’d argue that back then it was obsolescence, probably even planned obsolescence. The Japanese automakers came in and disrupted the assumptions in Detroit, by building more reliable, more efficient, and longer lasting cars. Even if you wanted to keep a 1971 Buick for 10 years it would be difficult to do so economically, as rust started forming and the drivetrain started acting up.
And then in the 80’s, facing pressure from foreign automakers, American automakers finally started taking quality control and reliability more seriously. Still, though, they’ve basically always been behind Toyota.
And you can see the difference in the used auto market. Back then, the older cars were sold for scrap. If they were still functional and economically feasible to run, they would’ve been sold to someone.
Some people can (and do) still buy new and replace every 3 years. The increase longevity actually ends up helping them with resale value on the back end of their ownership.