There are about a half-dozen fewer brands of new cars today than there were about fifteen years ago – and almost all of them were not luxury brands. They were brands like Plymouth and Saturn and Scion (to name a few) that were economy car brands.
Today, there are an almost an equal number of new brands – and every single one of them is a high-end/luxury car brand. Tesla, Rivian, Hummer – to name a few. They all sell electric cars that cost twice as much (or more) than the cars sold by Plymouth and Saturn and Scion.
The cars sold by the remaining brands that still sell affordable cars are also less affordable than they were fifteen years ago, too.
Partly because there are very few new cars left on the market at all – most having been retired in favor of crossovers, those SUV-like things that all look-alike. Crossovers have largely replaced cars, arguably, because cars have become so costly – even the “affordable” ones. Even the little ones – models like the Toyota Corolla and Honda Civic that were, fifteen years ago, very affordable (and so very economical; the price you have to pay being at least as important to the bottom line as the fuel you don’t burn).
Back in ’07, you could buy a new Toyota Corolla for $14,305 – assuming you paid full MSRP sticker for it. You could almost buy two. Many did – and that made a little car feasible for people who needed more than just one little car.
A ’22 starts at $20,425. Harder to buy two of those. So people buy just one crossover, which has more room than one little car.
And yes, inflation.
Yes – exactly. Back in 2007, the money you had available to buy a new car didn’t lose 8 percent (more like 12 percent) of its buying power over the course of a year. So – back in ’07 – a $14k new Corolla actually cost you $14k. Not 8-12 percent more than that, in terms of what it really cost to buy it.
Plus, of course, the cost of gas. Or rather, minus that – gas costing about half as much then as it costs today (and today you buy it with rapidly depreciating Biden Bucks).
Today, there only a few new cars you can buy for what a Corolla actually cost back in ’07 and their ranks dwindle with each new model year. You can still get a Mitsubishi Mirage for about the same actual cost as an ’07 Corolla. Everything else costs more.
Most costs a great deal more.
Given how much these cars cost, people increasingly go for a crossover that costs the same because at least you get more room, kind of like going for the Exit row in economy class.
You’d think there’d be more demand for exactly that. Cheap seats. Cars that cost less rather than more – because people have less rather than more. This was the usual dynamic in prior times, as for example (and most famously) the ’70s – which was the time the Japanese brands – especially Toyota and Honda, also Datsun (today’s Nissan) and Subaru, too – made huge gains in the U.S. because they sold cars that cost less to buy and operate than the cars being made by what were then the Big Three (now much smaller, all of them).
Today – weirdly – all the new entrants are cars that cost much more to buy. And soon, to operate, too. You may have heard about how the cost of electricity is going up and that the cost to charge an EeeeeeeVeeeee approaches the cost to fuel up a car like the Corolla.
This would of course make perfect sense if people had more money to afford this. It is why every new house has not only plumbing and electricity but also (usually) AC, too. These things got less expensive – and people had more money. But cars aren’t getting less expensive – and people have less money, both in terms of what they earn and the buying power of what they’ve earned.
Yet it’s as if – to reach back into the past for a relevant weirdness – the bakers of bread in Weimar Germany were wrapping the loaves of bread in gold leaf and expecting people to pay twice as much with half as much money.
Of course in those days you couldn’t finance a loaf for six years. You can do that – and longer – with a car (a crossover) today. This stretching out of the cost over many years works just like spreading out the debris shoved under a carpet. But you can’t do it forever.
Just for awhile.
More like tulips. As in tulip mania – the textbook case of a speculative frenzy that ended when people recovered their senses, many of them after having lost their shirts.
At some point, economic reality – which can be considered a synonym for sanity – will reassert itself. In the meanwhile, expect the mania to increase.
But let others buy into it.
. . .
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