Automotive inflation - Will the whole thing go bust?

This article here seems to address a common misconception about rising new car prices, that safety and environmental regulations are to blame. Advancements in manufacturing and design technologies have allowed car prices to stay the same (adjusted for inflation), whilst being more fuel efficient and safer.

 
There's some funny math in this study when you actually go to the data pool sourced. For example:

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"Truck SUVs" and "Car SUVs" are delineated in a way that makes absolutely no sense when there's barely any of the former left on the market compared to 2003 yet their market share has allegedly dramatically increased overall. People simply are not buying 4-5 times as many Tahoes and Expeditions and 4Runners as they are basically anything that isn't a variation of those combined; but when you say "any SUV that has 4WD is a 'truck SUV'" you can make the data say whatever the hell you want. Yes, said data provided is the EPA's moronic classifications, but despite that Consumer Reports is contorting themselves to have their data/classifications fit the EPA's functionally useless ones.





I also suspect their conclusions about price trends would resonate a bit better if they didn't try to blow off things so obviously when they don't fit the conclusion they wanted the data to spit out. "Only two other individual models... also became more expensive" while those models happen to consist of the best selling model in the US for basically that entire time period analyzed and another one whose name practically became a synonym for "midsized SUV." Their justification for dismissing the data that doesn't fit their argument also approaches outright lying:
“The Explorer was once little more than a closed-in pickup truck; now it’s a luxurious, full-featured vehicle,” Fisher says. “And the F-150 has grown over the years in size, performance, and capability into the premium vehicle it is now.”
That wasn't really true when the Explorer came out (the glorified pickup truck is what the Explorer replaced); and it certainly wasn't true in 2003. It's why the Explorer sold 300-400 thousand every year all the way up until the housing bubble burst and the Bronco II struggled to average 100k per year. The beginning of their study also coincided with end of the generation of the F-Series where Ford explicitly repositioned it as a more premium product; compared to ten years earlier when it dated back to the 1970s. If this study trended 30 years from the early 90s to now, these conclusions would hold more weight.


On that topic tough, it is also pretty suspect that only the F150 has notably increased in price versus other metrics over the two decades, and not the other domestic trucks (plus Toyota). How could it possibly be true that only Ford has seen a statistically notable price increase when the F-150 is the "benchmark" in the class? When all the domestic brands cost and performed about the same now and they all cost and performed about the same in 2003? And how could pickup trucks not have a statistically significant increase in price when their prices have inflated in lockstep with large SUV prices and lower priced options (that were on their last breath in the mid-2000s) have been completely eliminated over the period of this study?





A side note:
One vehicle class (midsized cars) and two specific models (the Volkswagen Jetta and Passat) actually decreased in price relative to inflation.
Yes, and everyone who doesn't get their auto news from Consumer Reports is well aware of the debasement VW did to those two nameplates to get that to happen.





I also have an extreme criticism of Consumer Reports' attempt to play the blame game but then eat their cake too:
Another is that many of them look at average transaction prices across all car sales. But that’s misleading, Harto says, because consumers have come to favor more expensive crossovers and SUVs over less expensive small cars. In other words, it’s not that cars are getting more expensive but that consumers are choosing to purchase more expensive types of vehicles. Sales of SUVs doubled from 26 percent to 56 percent of the market during the study period, while car sales fell from 50 percent to 26 percent.
The bottom line, Harto says, is that “policymakers should keep their foot on the gas in insisting that automakers continue to deliver efficiency and safety improvements, which these findings show to be unambiguously good for consumers.”
Policy makers are in fact directly responsible for the extreme shift in the market away from more affordable more efficient small cars over the period, because policy makers directly incentivized manufacturers to shift their product lineups to larger SUVs to the extent of eliminating any desire for them to sell smaller cars at all. The chicken and egg here is obvious, and it has always been obvious and it was never purely consumer driven. You tell manufacturers that they not only don't have to make small affordable cars (or pretend small affordable cars are actually SUVs) with narrow margins to try and game the fleet wide fuel economy but punish them for doing that and instead actively make it beneficial to pursue more larger vehicles that they can charge more for and not spend as much on meeting regulations with and they are going to do that.









However, the true elephant in the room for the whole argument that sidesteps basically all of the data collected (no matter how fishy some of it may be) is that upfront purchase price is not the only aspect of a car's cost. Cars are more reliable generally than they were 20 years ago (though I suspect we're well past diminishing returns on that compared to cars of the early 90s vs the early 2000s until electrification takes hold) but what of maintenance? What of parts? Are cars made in the past 5 years going to outlive the cars made in the fifteen years before that? I don't think they will so long as the majority of the states in the country continue to have safety and emissions inspections; nor do I think "five digit fuel savings!" would be at the top of someone's mind when they need to shell out a grand every time they need to have a light fixture replaced or every time some mandated piece of safety equipment has a sensor failure and forces their car into limp mode and the warranty either won't cover it or is already out because they have it financed on a 7 year note.
 
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Was interested in a few things after reading your post @Tornado specifically regarding whether or not cars/driving in America are safer and/or less emissive than the ROW since we tend to have unique models here that are fatass.

Motor vehicle emissions per capita ranked by country (2018, so slightly out of date)
Deaths by traffic accidents per capita ranked by country

In both of those, the US is well, well behind other developed nations. Our vehicles produce way more emissions and we have far more traffic deaths - and again, these are per capita. FIVE times more traffic deaths and THREE times more emissions per capita and than Japan. Just 1% of Japanese cars sold are electric, whereas the US is around 6%. (I should note that Canada has largely similar vehicles as the US and way less traffic deaths per Capita...so maybe Americans need to chill out a bit)

The big difference, IMO, is size. Japan made the smart (and frankly necessary considering the dimensional constraints) choice that most people should be driving small (actually small) cars after the second world war with government incentives similar to how the US has incentivized lard-machines - because American thinking can't see past the next financial quarter. There was a brief period in the 1950s where Americans collectively decided to plan a future and we got huge investments in critical infrastructure for growth (it would be impossible to try to fund the interstate highway system now if it wasn't already built, it cost half a trillion dollars in today's money) but there is zero critical thought given now to the future. Everything, everywhere, at all times, is short term thinking.
 
Wanted to circle back on this thread with some observations I've had lately.

Back in 2020 it felt like the supply of cars on my local craigslist dwindled down to almost nothing. Checking right now...there is a ton of stuff on there including a big supply of sports cars. And the prices seem to be lower too. For instance, I remember a year ago every 370z on the internet was like $25k and up. I'm seeing those down in the mid teens again. VA WRXs seem to be returning to earth too, though they are still above their pre-pandemic prices. Lots and lots of 996s for sale.

Anyone else have similar observations?
 
Well, this is unfortunate. This article points out that used car values, increasing again after a modest dip, will remain out of whack until "at least 2026" as a result of a lower supply of new cars.


Maybe this is the golden opportunity for lower-priced Chinese cars to enter the US market, but to circumvent them being protectionism'ed into oblivion, Stellantis should sell them as "captive imports" like they did with Mitsubishis 40 years ago.
 
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Well, this is unfortunate. This article points out that used car values, increasing again after a modest dip, will remain out of whack until "at least 2026" as a result of a lower supply of new cars.


Maybe this is the golden opportunity for lower-priced Chinese cars to enter the US market, but to circumvent them being protectionism'ed into oblivion, Stellantis should sell them as "captive imports" like they did with Mitsubishis 40 years ago.
If there's one thing that can unite the people of this great nation, it's Chinese xenophobia. I sincerely doubt Chinese cars will be entering the US Market in any significant quantities, even with shell games. The Japanese had a tough enough time in the 70s and 80s, and the Koreans in the 80s and 90s and they were our close friends! China is like adversary #1. I think I could honestly see Indian made vehicles in the US before Chinese, just for political/xenophobic reasons.
 
With the imminent demise of the Mitsubishi Mirage, the US will effectively have no more new cars that are below $20k. Though the Nissan Versa and Hyundai Venue are nominally under $20k, their actual price rises slightly above $20k after delivery and fees on average. Only the Mirage still has a price below $20k after taking that into account.

 
Hard to believe I bought a brand new Mazda2 for just over $14,000 in 2012. The whole industry has changed in a substantial way where it feels like the distinct and major era that began in the late 1970s has finally ended.

18xx - 193x : Prewar era (The beginning with a very diverse industry)

194x - 197x: Postwar era (Styling and luxury race in the unscathed US, packaging and production scaling/efficiency race in war-torn Europe/Asia)

197x - 201x: Post oil crisis era (Exemplified by a technological race to build efficient and better-built cars, for the sake of it...zenith being in the late 1990s, early 2000s and the rise & dominance of Japan, descent of American auto manufacturing)

201x - ???: Shareholder/Homogenization Era: interior tech, branding, electrification, mergers, platform-sharing, cost cutting, maximizing shareholder returns. The professionalization and specialization of every aspect of the industry.

The boundaries of the eras are pretty blurry, but I also think pretty on the money. If we want to understand why there aren't any affordable cars anymore, I think you just have to point at wall street.
 
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If we want to understand why there aren't any affordable cars anymore, I think you just have to point at wall street.
Don't forget the idiots in Brussels and Strasbourg crating the idiotic EU norms that killed the truly efficient and cheap(er) small cars like the Ford Fiesta etc. I'm a firm believer in the EU in general, voted to have my country join it on the referendum back in the day but those useless bureaucrats come up with more and more unrealistic things...
 
With the imminent demise of the Mitsubishi Mirage, the US will effectively have no more new cars that are below $20k. Though the Nissan Versa and Hyundai Venue are nominally under $20k, their actual price rises slightly above $20k after delivery and fees on average. Only the Mirage still has a price below $20k after taking that into account.

Now the Versa itself is facing discontinuation.
 
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