Good Cars are Bad for Business!

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Good cars are killing the car industry.

Think about it …

After decades of consumer complaints about often-iffy quality control, the car companies (the American companies in particular) performed the equivalent of a parking brake 180. New cars (almost any new car) can be counted on to last longer than most people’s marriages. A 150,000 miler used to be exceptional; it’s routine today. Back in the ’70s, the typical new car was good for about 5-7 years and maybe 100,000 miles, if you got a good one and treated it very gently.

But for most cars built in the ’60s, ’70s and ’80s, by the time the odometer said 75,000 miles the car was telling you (in the form of constant breakdowns and endless repair costs) … Kill me… please.

75k in a late model car is nothing. Hardly broken in. The thing not only still looks new, it drives new. Feels tight and strong. Doesn’t breakdown or overheat. Most want nothing from you but the occasional oil and filter change; maybe a set of new tires every 40,000 miles or so.

It is amazing.

Notice, also, that you almost never see (or smell) an Exxon Valdez anymore. You know – a not-too-old car with clouds of blue smoke pouring out of its tailpipe. That was a common sight back in the ’60s and ’70s. As were “ring jobs” and “motor honey” (gunk you put in the engine if you were too poor – or cheap – to afford a “ring job”).

So was rust.

Swiss-cheesed bodies on cars not even five years old was a common sight back in the Days of Disco – and even into the Reagan Years. It was terrible. As palliatives, dealers sold high-dollar Ziebart rust-protection packages to try to make up where the factory skimped. You spent hundreds of bucks to have some dude drill holes in the lower rocker panels and other areas to spray in rust retardant. And that maybe bought you two or three extra years before the paint began to bubble up. The only realistic way to keep a ’60s or ’70s-era car from rotting was to keep it from getting wet – which was fine if you never needed to actually drive (or wash) the car.

But since the ’90s, rust has become almost a non-issue.

Check out the typical late model 10-15 year old car. Most usually still have completely intact floorpans and quarter panels. No sign of rotted out lower fenders and doors. Even if they are subjected to months of wintry driving (and road salt) every year. And kept outside. Aftermarket rust protection packages are no longer necessary; you don’t even have to wash or wax the car. It just endures

Miraculous.

Even the paint usually still looks good ten-plus years down the road.

That was rarely the case prior to the ’90s – unless the car in question was treated like a holy icon, never driven in poor weather and always kept under cover in an enclosed garage when not in use.

It was once – and not too long ago – pretty exceptional to see a 20 year old car in service as a daily driver. It’s commonplace today. In fact, the average age of the American car in service as a daily driver is now 8-10 years old, a record.

This has been a disaster for the car industry, as you can imagine.

People have clued in. They know that with decent care they can expect to need a new car not once every 4-5 years or so but maybe once every 10-12. New cars are more than ever a discretionary purchase and when the economy slips a little (let alone has a coronary and flatlines) people eschew the new – and keep on driving Old Faithful.

Yet the car industry continues to pour forth new cars – on the order of 18 million of them every year at peak – on the assumption that people need them. Which they don’t anymore.

How long can the industry tread water?

Notice that the value of used cars is increasing – an unprecedented development. Part of this is the scarcity induced by the vile “cash for clunkers” federal giveaway of two years back. But the major factor driving the upsurge in used car value is that people know that late-model used cars are a smart choice. There’s almost no downside to buying used – while there are many to buying new, including much higher taxes on the new car.

In my area, there is a personal property tax on motor vehicles. It is based on current retail value – and can be as high as $1,000 or more annually depending on what you have. But if you have a 10 year-old car, its retail value will be much lower than the retail value of a just-bought new car, which can save you literally thousands of dollars that would otherwise have to be forked over to the local Mafia (that is, the government).

With an older used car you can also dramatically cut back on your insurance costs because the premium will be based on the much lower replacement value of the older car and because you can choose to buy a lower-cost liability-only policy – which can be a smart move and a big money-saver if you are a good driver who doesn’t make mistakes that cause accidents. With a new car your premium is based on the replacement value of the new car – and unless you paid cash, you’ll have to buy a full-coverage comprehensive policy.

So, the smart money – and smart people – Go Used.

As more people clue in, it’s going to get even harder to sell the new stuff… much less make any money on the deal.

Throw it in the Woods?

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9 COMMENTS

  1. Let’s not forget that cars were fairly cheap back then, too. It was common to pay cash+trade up until the late 1970s period of stagflation. Back then it would have been impossible to get more than a 3 year loan for a car. My last car was financed for 5 years, and I’m sure that’s the norm. The car before that was used and I financed it for 4 years (after a 3 year lease from the previous owner). I don’t know if it is still the case, but BMW or Mercedes were offering financing for 10 years! It makes sense to expect the car to last longer if you take that long to pay it off.

    In 1976 my dad bought a Charger Daytona. It cost about $6000, which in today’s money is around $22K. It was custom ordered, had upgraded seats, A/C and and FM radio (not stereo). It was top of the line for it’s day (for a Dodge at least). The current Charger equivalent looks like it will cost about $10K more in inflation adjusted dollars. That’s a big difference, and even more so when you figure in the bank tax if you finance.

    • Yes.

      Also – and I’ve written about this before – while modern cars are more reliable at first and last longer – for awhile – after about 15 years, when their much more complicated systems begin to reach the end of their useful service life, modern cars become much more expensive to keep up and within a few years, uneconomic to keep.

      I got into an argument here with another poster about this. I pointed out that a car like my ’76 Pontiac Trans-Am has a very basic drivetrain, the entire thing rebuilt easily and relatively inexpensively if necessary. For example, the engine consists of a cast iron lump of metal with a very simple fuel delivery system. There is a cast iron intake manifold (almost indestructible/essentially infinite usable life) and a simple stand-alone fuel mixing device – the carburetor – which can be rebuilt to as-new condition with a simple gasket/seal kit for about $75 if you do the work yourself (well within the capability of a reasonably competent DIY mechanic with a few basic hand tools) or maybe a couple hundred if you turned the job over to a professional rebuilder such as Cliff Ruggles. My old Pontiac’s entire fuel-delivery system can be restored to factory-new condition for a few hundred bucks – and that includes peripherals such as the fuel pump (simple, mechanical, easy to get to and replace). This process can be repeated probably infinitely or at least many, many times, well beyond my own lifetime. My Trans-Am could and probably will be still running 100 years from now.

      But a modern car with a fuel-injected engine and computer?

      Even if you assume that the often-plastic major components (including the intake manifold itself) don’t deteriorate to the point of requiring replacement after 20-plus years or so, eventually, inevitably, the electrical components – including the computer that controls everything – will fail and will require replacement. If the parts are even available 20 or 30 or more years down the road, they will be orders of magnitude more expensive than the parts needed to keep an older, pre-electronic car like my Pontiac running – unless there is a miraculous reduction in the cost of these parts in the future. But today, a replacement computer can cost many hundreds of dollars; then there are the multiple sensors necessary for the system to function properly. Each of these little parts has a big price tag. But we haven’t even gotten to the fuel system itself yet. Now we need multiple injectors (most late model cars have one for each cylinder), fuel rails, the wiring harnesses associated with all this… etc.

      If you had to replace most of the major components of a late-model fuel-injected car 20 or 30 or more years from now, it is likely you would be spending $1,000 or more just to get the parts – if you can find the parts. (It is very likely that many parts will not be available decades from now – precisely because of the economics. It is cost-sensible to reproduce a $70 rebuild kit for a 1976 Rochester Quadrajet; it is probably not going to be cost-sensible to reproduce a $600 EFI wiring harness for an ’87 IROC-Z.)

      Then you’d need a higher order of knowledge/aptitude/skill to actually restore the system. Or you’d have to pay someone who has such to do the work – another big expense.

      My friend – the guy who argued with me – said that learning how to competently work on an electronic car is not harder than learning to work on a pre-electronic car. I very much disagree with him. A 16-year-old with a basic socket set can remove the intake manifold from my Trans-Am and reinstall it. The equivalent job on an electronic/EFI car is much more involved, requires more skill and tools. I’ve worked on both, so I’m speaking from experience. The carburetor is a straighforward and basically simple mechanical device; if you have a Holley carb, an extremely simple mechanical device with only a few moving parts that almost anyone can remove/replace/rebuild in literally 15-30 minutes’ time. The equivalent job on a late-model car with a computer and EFI is much more involved, requiring at least a working knowledge of fairly complex electronics as well as specialized tools and diagnostic equipment. Even “trained” technicians often have trouble isolating and dealing with bugs that develop with modern computerized/electronic systems.

      The engine itself:

      I could have the engine out of my car and on the stand, ready to tear down, in about an hour using basic hand tools.

      Rebuilding the entire engine to “good as new” is a simple process, involving some light machine work, a set of gaskets/rings/bearings, etc. and about 2-3 hours of assembly time. If I do the work myself, the cost (machining and gaskets/bearings, etc. ) for the entire job is going to be less than $800. That is for a complete tear down and rebuilding to as-new condition – good to go for another 100,000-plus miles.

      If I paid to have the engine professionally rebuilt the cost would be about $3,000.

      Remember: My engine needs no sensors,no complex wiring or electronics. The whole “works” can be brought back to functionally new condition for an amount of money that’s not only manageable, it’s proportionate to the value of the car itself.

      This is where you get into trouble with a late-model car. Unless it is a desirable collectible and worth a lot of money – and few late model cars will fall into this class 20, 30 or more years from now – the cost to keep it going (let alone restore it) will be out of proportion to the worth of the vehicle itself.

      For instance, something pedestrian like a Camry or Corolla. After 15-20 years, how much will such a car be worth? Probably next to nothing, maybe $2,500 or so.

      Who is going to put $1,500 into such a car – for anything?

      In the past, an equivalent pedestrian model such as Chevy Nova or Dodge Dart was like my Trans-Am; it was simple, cheap and easy to keep going.

      New cars have many virtues, among them “just drive it” reliability for many years from new. But eventually, almost every modern, computer-controlled, EFI-equipped car will reach a point of diminishing returns, a point after which it becomes either cost-prohibitive as such to keep it going or cost-nonsensical to do so relative to the value of the car itself.

      • 🙂 you keep using examples of repairs I have done on OBD2 cars….

        Intake manifold replacement came about due to a design error of the first few years of them, that is keeping a coolant crossover. This heat cycling degrades the plastic. The intake part doesn’t fail, the coolant passage does. These are now separate aluminum pieces in newer designs. Replacement manifolds have mostly or entirely Aluminum cross overs.

        I’ve replaced the intake manifold on two Ford 4.6L V8s. And taken them on and off more times than that. No special tools were used. None. Zero. I had to unplug the injectors… but the fuel rails lift right off after removing a couple bolts and are set aside, no need to disconnect them from the fuel line (where a special tool is required) The injectors simply sit in the manifold held in place by the fuel rails. The throttle body is mounted with less complexity than the average 1970s carb. (see for yourself: http://www.autoclinix.com/Manifold.htm )

        I wouldn’t trust someone who rebuilt a carb in 30 minutes. It takes longer than that just to clean it properly. I’ve rebuilt two carbs and never had to do more than clean a throttle body. I replaced one TPS on an 80s car. A simple procedure accomplished with a multimeter. No more difficult than hooking up an old fashioned ‘engine analyzer’ and setting the low idle. The TPS is the only sensor in the throttle body. Idle is often controlled with a simple solenoid, same as many 1970s carbs.

        I would really suggest following some of the model specific forums out there and seeing what teenagers with simple tools are able to do themselves. Visiting u-pull junkyards and hanging out with people of lesser economic means works too. They both keep modern 15 year old or so cars running with little money and basic tools.

        Engines… smaller tolerances, better materials, etc, but rebuilding them should be the same as always, just more attention to detail. The electronics like the carb aren’t part of the rebuild, but there’s no need to do anything with them. Just reuse them. They are hidden somewhere under the dash anyway 😉

  2. I had heard that in the 50s, 60s, and 70s, the Big Three engaged in “planned obsolescence” to sell cars, which not only included things like Cadillac’s yearly tailfin changes, but also cutting corners on rustproofing and designing engines to have loose tolerances because, after all, so what if the engine will leak oil after 100K miles or the rocker panels will rust after 5 years…it’s not like anybody keeps their cars that long.

    German and Japanese carmakers did no such thing; in fact, VW’s ads explained that part of the Beetle’s low cost was that they didn’t “change for the sake of change.” In the 80s, American carmakers caught on and cut back on planned obsolescence.

    • That seems to have been the case – to an extent at least. Part of it may have been deliberate; part of it a function of the times/car design. For example, body integrity in those days was much poorer than it is today. Panels were shimmed into place and there was a surprising variance in gaps/tolerances from one car to another. Moldings around glass tended to retain moisture, etc.

      The early Japanese and mass-market German cars (VWs especially) had some of the same issues. Floorpan rust was a common problem with original Beetles.

    • Japanese cars made before about 1983 simply dissolved in Chicago winters. The big three cars held together a lot longer. It was just the level of technology and market demands of the time.

      Design life is function of the market. The market drives it. What is the market willing to pay for? What is the market like for materials and labor? Tolerances are largely a function of cost. Fit and assembly is something that just gets better over time as people think of new ways of doing things.

      The idea that cars were deliberately designed to break sounds like something out of the mind of a statist who wanted government intervention. Simply I don’t believe that enough car buyers wanted to pay for a car that lasted 15 years at that time in order to design and test for it. Automakers are generally going to set design life for new car buyers and their expectations of resale/trade-in value.

      These days new car buyers expect to keep their cars much longer and be trouble free and are willing to pay for it. Back then it was ‘ooo new shiny’ and the new car buyer was off to something else. Hence the new tailfins… Plus people were poorer so they tended to buy cheaply more often…

      • Yes, also the practical (economic) realities of technology available in manufacturing/assembly in the ’60s and ’70s was very crude compared with the “modern” era (generally, mid-1980s forward). It was probably not possible to mass produce cars with the close tolerances and panel fitment – and uniformity – we take for granted today. That alone accounts for much of the improvement in durability and longevity.

  3. All of this is a good thing. Eventually, the government will have to pass legislation that imposes an end-of-life on cars older than a certain age. They’ll justify it based on some nonsense like safety or fuel efficiency. Sure you can keep your old car, but you can’t drive it. It’ll have to be a trailer queen or museum piece. How else they gonna keep those UAW folks employed so the politicians can keep those votes?

    Financial responsibility is not a virtue to Keynesians.

    • Japan has had this sort of “stimulus” for a long time. There’s actually a business exporting parts of and (I think) entire vehicles that were retired before their time from Japan to the rest of the world.

      In the USA it’s been attempted many times to ban/crush/etc pre-1980/82 vehicles since the late 1980s. All that resulted were the crusher laws that I think cash-for-clunkers was modeled on.

      My guess is that there won’t be any such attack on older cars, not for awhile anyway. I believe the attacks will continue to be spreading the TSA/DHS throughout daily life. They are attacking travel itself now. It won’t matter what cars we own because we won’t be driving anywhere. Driving upon the roads will be for party members in good standing… er trusted travelers.

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