Here's another economic chart. The hook is that October sales of new cars were released today, but that's just an excuse. What I really want to show you is the long-term trend:
Look at the trendline since that smooths out volatility. On a per capita basis, new car sales have dropped from 57 per thousand people to 44 per thousand. That's a decline of nearly a quarter in 25 years.
Why? There are two likely explanations. First, we're just not as car crazy as we used to be, especially among the young. Second, cars last a lot longer than they used to so we don't buy new ones as often.
Or maybe both.
I'd add #3 - price increases. A new car is massively expensive for most people, causing them to run existing cars for longer and replace with low mileage used.
Just came here to post this.
I am finding different numbers, but the avg price of new car in 2000 was around $21,500. That would be $40,000 today adjusting for inflation. Yet the average price of a new car today is like $48,000.
That's not the whole picture, though--a 2024 car is a much, much better product than a 2000 car. Take fuel economy, for example.
A new car in 2000 had an average fuel economy of ~17 mpg. A new car in 2024 is closer to 27 mpg. So the cost per mile is dramatically lower. Assuming a lifespan of 150,000 miles, that's almost 3,300 fewer gallons of gas needed for the new car, which, at about $3/gallon, is roughly $10k in savings.
Obviously, you have to do things with discount rates (and we're not even talking about other aspects like safety, maintenance costs, insurance/licensing fees, or things like what the "average" new car price even means, given the wider array of options and likelihood that richie rich types are skewing that average upward more in 2024 than they were in 2023), but it's not quite right to just look at sticker prices.
DOE tells me avg fuel economy in 2000 was 20 MPG, so that is closer to 2000 gals of savings.
And the average price of gas in 2000 was like $1.30 so I am not sure the cost per mile would be that much different
and it costs a lot more to service a car in 2024 than in 2000, from vehicle complexity to repairing advanced materials to the cost of technicians
so just talking about potential fuel savings is not a complete picture and leaves out a huge chunk of life cycle costs,
"And the average price of gas in 2000 was like $1.30 so I am not sure the cost per mile would be that much different"
Yeah, but we're adjusting for inflation, right? $3 is a rough average of inflation-adjusted gas prices across the lifespans of the theoretical 2000 car and the 2024 car (and is actually somewhat lower than current gas prices, fwiw).
But setting aside the question of what exact gasoline price we should use for assessing the "average" price of the "average" vehicles from 2000 and 2024, the bigger point is that you can't just look at purchase price; cars are different products now than they were a quarter century ago. They last longer, are more efficient, are quieter, are safer, and have a slew of standard features that were unavailable if not outright unimaginable back in 2000: GPS, backup cameras, lane sensors, etc.
Given that fuel cost alone seems to account for much of (if not more than) the disparity between the inflation-adjusted average vehicle price from 2000 to 2024, I'm inclined to think that, all-in, cars today cost about the same if not less than they used to. But ymmv.
Service costs are high, but cars just don't break down as often as they used to. Service used to earn a lot of money for car dealers, but it is a much smaller portion these days.
See also:
https://www.coxautoinc.com/market-insights/june-2024-atp-report/
When the pandemic hit, car makers saw they could make money by selling fewer vehicles at higher margins.
Just looking at the average cost of vehicles sold is misleading, because the mix of cars being purchased is very different. A much higher percentage of those sold are SUVs and pickups instead of sedans. People could buy cheaper cars if that was what they wanted.
In 1988 I purchased a new Toyota Camry. At the time, the base model Camry was just under $11k. The base model of a Toyota Camry today is less than $29K. CPI inflation calculator says $11k in 1988 is about $29k today. So basically no change.
That probably holds all the way back to 1970. However, the proportion of base model vehicles sold is lower today than in 1988. When I went looking for a vehicle in 2019 (uninsured motorist decided stopping was optional) it was hard to find a base model vehicle.
It’s always been hard, but I was able to do it then and also more recently.
Yeah, it's this combined with #2.
#1 is not it at all, because #1 is just a function of 2 and 3.
It's the longer lasting cars, plus the cost of new cars. This is especially so if one has been driving a paid off car for five or more years.
Exactly right. I drive a 2007 Chevy HHR. It has been paid off for 13 years and has 220,000 miles on it. My cost averaged out over the 17 years of it's life is very low. I don't have to do math to know that. I plan to drive it until it falls apart underneath me.
My father bought a new car every 5 years. He worked in the shop and knew exactly how long they were built for.
I get a low mileage used car every ten.
Came to say the same thing, cars now last significantly longer
DOT says in 2023 the average age of American cars and trucks were 13.6 years and 11.8 years, respectively. In 2013 it was 11.4 years and 11.3 years respectively.
Some car executive is going to stumble on this post and immediately push their company to start making the crappiest cars possible in order to have them not last as long.
The 1970 ethos.
Back then a driver brought back his Chevrolet Vega with a cracked block and demanded to know how they could sell such a piece of junk.
Salesman said "What do you expect for $2000?"
About then you could get a new Corolla for $1650, and some of them are still on the road.
As Hunter Thompson put it in the early 70s, American cars "were made by junkies in Detroit to teach the rest of us a lesson."
You could distinguish between the two possible causes by looking at the history of number of registered vehicles in proportion to the population. If that number is stable or rising, then improved durability is the answer. If that number is falling, then Americans are becoming less enthusiastic about cars.
or changing demographically. Two parents with 3+ kids probably means more 2+ car households; more retired couples probably means more households with 1-2 cars.
or changing professionally. More folks working from home probably means more households where both breadwinners don't need cars.
or changing geographically. More folks living in cities with transit/walkable commutes also likely means fewer cars.
Indeed. Registration date will answer a lot.
Longer lasting cars. I bought a bottom of the assembly line Nissan Sentra in 2013 (a stick shift). 170000+ miles on it and have had no major repairs, just ordinary wear and tear. I'm amazed.
I was cleaning out my garage and came across my old spark plug gapper. I bought it for my first car back in the 1970s. I used to use it all the time. Spark plugs are supposed to be good for 100,000 miles on my current car, and they never need to be re-gapped. (Does anyone else remember tune-ups?)
Rotor, cap, plugs, timing. Maybe new plug wires. Over and over.
Is this new car sales because my last two cars were certified used off lease cars
Tiresome picking of endpoints. Here is a longer version of the time series.
https://fred.stlouisfed.org/series/ALTSALES
He's picked the absolute peak of sales as the starting point.
Eh. Look at sales per thousand people and it's still a downward trend.
https://fred.stlouisfed.org/graph/?g=1BN2t
Plus public transportation is getting better. As an example, LA is now a place where you don't need a car, if you live relatively close to where you work.
Another possibility is that more people live in cities and don't need as many cars.
Many cars of the past 15 years look alike. A 2010 Subaru Forester looks pretty much like a new one. My 2022 RAV4 resembles the past 10 years of that model. Heck, white SUVs of many makes look pretty much alike. So why buy a new car? I agree with other commenters that cars are better than they used to be. I’m from a generation that remembers opening the windows and turning on the heat to get up a steep grade without boiling over. I haven’t thought about a radiator in years.
Light vehicle sales
Does this include trucks and SUV ?
Yes.
Thanks! That was my question. I'd be interested in knowing how many actual "cars" are being bought, as opposed to pick ups, SUVs, assorted vans, and (anything I've missed).
Or new cars are impossibly expensive. Or an ageing population has more people too old to drive, or retired couples only need one car. Lots of alternative explanations.
I know several 2 or 3-car families who ditched all but one car a few years back because they work from home now and don't need to commute. Maybe all the back-to-the-office stuff will reverse that, but I don't know. Also, the thing about kids these days driving less is true. Why get in a car and go to the mall when you can sit around and chat with friends on Discord?
Definitely cars last longer. There was a reason most adults traded their cars in every 3 years when I was a kid - they were starting to fail, and their bodies were starting to rust through from the winters. I almost never saw a car more than about 5-10 years old until I moved to California. But build quality has gone up since then as well, and even cheap cars can come with 7 year/70,000 mile warranties available, which would have been unheard of in 1970 for even top-tier models. I expect my cars to last for at least 10 years now, if not 20.
And owning a new electric for the last 4 years and seeing how little there is of the normal wear elements that cause failure compared to an internal combustion engine, I expect cars to last even longer going forward, and this trend to continue even before accounting for the growing number of car-share businesses in cities (e.g. ZipCar as well as Uber & its ilk) that make car ownership in urban centers less necessary.
Good thing Americans are losing their love of cars, because they will get even more unaffordable in the near future. The high cost of purchase and the high cost of repairs is going to become much worse when tariffs kick in.
I wonder if the cars of 2000-2010 are going to enjoy a record number of years on the road - they don't turn into rust buckets, and they lack today's extremely expensive technology, so people can afford to repair them repeatedly.
My understanding is that fleet purchases make up a significant portion of new cars. If other workplaces are like all of the places I’ve worked at over 20 years significant effort has been put into reducing fleet size - facilitated by programs that allow for far more effective tracking of usage. Which may explain some of the reduction as well.
Cars last longer for two reasons: manufacturers are making them more durable, and people don't drive them as often because we're all at home on the Internet instead of going out these days. This means the odometer rises more slowly, as does wear and tear.
I'm definitely driving less since Zoom. I still go to the office sometimes but I don't have to be there for every little thing. I have friends who are fully work-from-home.
Hopefully a new pattern of car use emerging. Ideally, small BEV (range of no more than 200 miles) ownership paired with larger, higher-range gas or gas/electric hybrids for longer trips. This whole one-size-must-fit-all car trope is silly and unnecessary.