A total mind-blower. Actual prices skyrocket even as CPI for new vehicles has been flat for 22 years.
By Wolf Richter for WOLF STREET.
I started stirring the pot a few weeks ago with the Toyota Camry, the best-selling car in the US. I compared Camry LE prices for the model years from 1990 through 2020 (now in showrooms) and found that the base MSRP increased by 70% while the CPI for new vehicles increased by only 22%, and more disturbingly, that this 22% increase happened entirely between 1990 and 1997, and that since then, the CPI for new vehicles has been flat with a dip in between. Now I’m going to do the same analysis with the best-selling vehicle of all times in the US, the Ford F-150 pickup truck. And you know what is coming: a total mind-blower.
Price increases consist of at least two factors: The loss of purchasing power of the dollar (inflation, a monetary phenomenon) and the costs of quality improvements, for example going from a 4-speed automatic transmission in 1990 to a shiftable eight-speed-automatic. To isolate the loss of purchasing power of the dollar, the costs of quality improvements are removed from the CPI via “hedonic quality adjustments.”
But that hardly explains the enormously billowing price of the F-150, which totally blew past the Camry’s price increases.
This year, the Camry will clock in with around 340,000 deliveries in the US. Ford’s F-series trucks – from the F-150 through the F-750 medium-duty commercial truck – will get close to 900,000 deliveries. The F-150 has the lion’s share of those deliveries.
Americans have fallen in love with “trucks” in all forms: pickups, SUVs, car-like compact SUVs, and vans. Since 2014, “truck” sales have soared 44%, while car sales have collapsed 40%, a phenomenon I have come to call Carmageddon (my chart of Carmageddon). This shows up in the price gains of the F-150, which totally blow away the price gains of the Camry, which in turn totally blow away the CPI for new vehicles.
The stunning price increases of the F-150 XLT.
The MSRP (manufacturer’s suggested retail price) for the 2020 F-150, now in showrooms, ranges from $28,495 for an XL to… well, I had some fun and specced out a mean piece of equipment on Ford’s website, a 2020 F-150 Limited SuperCrew Cab (4-door) 4X4 with the EcoBoost High Output Engine, electronic 10-speed automatic transmission, and all the bells and whistles I could stick on it. It came to $76,935 MSRP.
There has always been a huge price range between the base version of the F-150 and the top end. Back in the early 1990s, there was the stripped-down “S,” now extinct, plus the XL that still exists, the XLT, which has been the most commonly sold model, plus various high-end versions. For this study, I will stick with the XLT.
For the 1990 model year, the base MSRP of the F-150 XLT was $12,986. In the 2020 model year, it’s $34,160. That’s a price gain of 163%.
Let that sink in for a moment. Over the same period, the CPI for new vehicles (green line, right scale in the chart below) rose just 22%:
Note that from 1990 through 1998, the CPI for new vehicles closely tracked the price increases of the F-150. But this surge in CPI was too disturbing, apparently, and so the CPI methodology was enhanced with aggressive hedonic quality adjustments and other methods to bring CPI down, and it actually fell from 1997 through 2009, even as new vehicle prices were soaring.
Also note the 12.8% jump from the 2003 model to the 2004 model. This was the year of a redesign – “exciting” engine options, “bigger and bolder” exterior, “refined” interior, offering “a revolutionary level of comfort and spaciousness that was unparalleled in a pickup truck,” the Ford enthusiasts at Blue Oval Tech gushed at the time:
Ford thought it could get away with jacking up the base price by nearly 13% — only to end up backing down over the next few years. The MSRP didn’t get back to that price level until 2009. Big price increases following a redesign are common, as is the failure to make them stick in the following years. But this up-and-down was extreme.
Why MSRP?
No one pays MSRP as automakers heap on rebates and incentives and dealers give discounts. But this was also the case in 1990. MSRP and dealer “invoice” are set by the automaker at the beginning of the model year and don’t change for the model year. What changes are the incentives, rebates, and discounts. But MSRP, being fixed for the model year, allows us to approximate year-to-year price changes.
The price face-off: F-150 XLT v. Camry LE.
In 1990, the Camry LE was more expensive ($14,658) than the F-150 XLT ($12,086). In 2001, the F-150 XLT ($20,225) about caught up with the Camry LE ($20,415). And today, the F-150 XLT is 38% more expensive. This chart shows all three: The F-150 XLT (blue columns, left scale), the Camry LE (red squares, left scale), and CPI for new vehicles (green line, right scale):
The theory is that CPI should only track the monetary phenomenon of inflation – the dollar losing purchasing power – when it takes more dollars to buy the same good or service over time. When a truck gets more expensive because it gets bigger and more powerful and safer and more comfortable and what not, the costs of those goodies are not inflation. They’re improvements. So they’re removed from the CPI via these “hedonic quality adjustments.”
And there have been countless “improvements” in safety, performance, comfort, convenience, etc.:
- Engine: The 1990 base XLT came with an antediluvian 4.9-liter inline 6-cylinder engine that produced 150 hp. Today, the base engine is a 3.3-liter V6 that produces 290 hp.
- Automatic transmission: The 1990 XLT came with a 4-speed automatic. Today, the XLT comes with a 6-speed shiftable automatic with three selectable modes (Normal, Tow/Haul, Sport); a 10-speed automatic is available at the high end.
- Wheels went from 15-inch steel to 17-inch aluminum.
- Air conditioning transitioned from basic A/C to a computerized Climate Control System.
- Airbags: From two airbags to a confusingly large number of airbags all around the driver and passenger.
- More goodies that were unheard of in 1990: Tailgate power-lock, pre-collision assist with automatic emergency braking, automatic high beams, fade-to-off interior lighting, WiFi hotspot as part of the entertainment system (from just an AM/FM radio in 1990), rear-view camera with hitch assist (you see the trailer hitch on screen); tire-pressure monitoring system, and on and on.
The additional costs of these quality improvements are estimated and removed from the CPI for new vehicles over time.
But wait…
The Camry too has undergone major redesigns, most recently for the 2018 model year, and it too benefited from myriad improvements in performance, safety, comfort, convenience, etc. Why did its price rise 70% since 1990 compared to 163% for the F-150?
It boils down to this: Americans are in love with trucks and are willing to pay more – a lot more – for pickups than for cars; and this willingness has grown in recent years. This has led to the phenomenon where profit margins for automakers are huge on pickups but slim on cars.
Ford proudly points this out at every earnings call, as it emphasizes how it’s selling ever more high-profit-margin “trucks.” Other automakers are doing the same thing. And this willingness by normally astute American consumers to pay so much for trucks and allow the manufacturer to make such fat profit margins is fairly rare for a mass-produced high-volume item (the iPhone is another example).
When you squint just right at this phenomenon after the costs of the quality improvements have been removed, it looks suspiciously like a big dose of inflation in a special part of the US economy – truck sales – where consumers willingly or even eagerly submit to it even as they fight inflation in other products by switching when the price goes up, thus forcing the seller to back off. But not with trucks apparently.
Used vehicle sales are declining again, after having risen for years. Wholesale prices slip year-over-year for first time in 33 months. But “cars” still dominate “trucks.” Read… What’s Going on in the Used Cars & Trucks v. Carmageddon?
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Does anyone else look at “goodies” as just something else that can break and will be expensive to fix?
I have often fantasized about manufacturing /selling basic, low cost, high quality, very little goodies, easy to fix cars/trucks as next Elon Musk.
And then reality sets in when the whiskey wears off.
I wonder if it’s planned obsolescence?
I will drive my 2001 F-250 into obsolescence then
only 246,000 on it and raring to go
now time to go hookup dump trailer and take load to dump
2banana,
“I have often fantasized about manufacturing /selling basic, low cost, high quality, very little goodies, easy to fix cars/trucks”
This has been tried many times. The irony is that Americans don’t like to buy stripped-down vehicles. Back in the day when I was still in the business, the F-150 S was still available, a stripped-down truck, a work truck, manual windows and locks, 6-cylinder engine, rubber floor mats instead of carpeting, vinyl bench, etc. It was a lot cheaper than the XL and XLT. But we hardly ever sold any except to fleets occasionally. The old Korean-made Ford Festiva used to be that way, and it didn’t sell either though it was a great little hatchback with room in the back and got 50 mpg.
I always bought my trucks like that, rubber mat floors, stick, no sprayed black foam on undercoat, just base truck; never got electric windows, they fail from the dirt, roll up-down manual never fail
I bought a dodge cummins 4×4 turbo diesel, 5.9L it was $18K last time I bought one, now they’re $85k same truck
I just last year bought a new Toyota 4×4 2.8L diesel truck cost $10k in ASIA new, same truck in USA is $60k
I really think the problem here is that people are getting shafted in the USA.
Please don’t tell me about ‘safety’ in ASIA its same-same air bags and all, its the same truck, its just that somehow the USA GOV does this 5X tax, or somebody is adding-value or taking profit from the USA morons
I will also say this comparing the first gen toyota 4×4 say 1986 to now, I mean the things were strong as hell, now they remind me of toys with tiny drive shafts ( really no different than a “go-kart” with 4wd ), 4-wheel drive in name only, I used to be able to pull stumps with 2L land cruisers ( no winch just 4low and pull ), now I can’t pull a stick out of the mud with these new trucks, I’m sure the problem is that people don’t work anymore, or if they do want to work now they just use a bobcat, or a real full-size tractor, but back in the day your truck was your tractor
Frog I’m in Asia( Asia Minor) and a nice new truck costs roughly 40k USD My 2015 VW Tiguan cost me 23k USD but in 2019 would have been more
Agreeing with Frederick. Pls post a link for us all to see this $10K USD pricing. A taxi driver in Vietnam just complained to me that the Corolla he drove (but didn’t own) cost $30K USD, ~$10K more than in USA.
From Google
“In the U.S., a BMW 760Li fetches $140,000 while the average cost of buying the vehicle in Vietnam is $318,000, according to Sai Gon Giai Phong. Similarly buyers will have to pay $61,000 for a Toyota Camry 2.5G vehicle which is priced at roughly $22,000 in the U.S., the same newspaper reported.”
https://www.google.com/search?q=toyota+corolla+vietnam+price&rlz=1C1CHBF_enUS873US873&oq=Toytota+corrola+vietnam+&aqs=chrome.1.69i57j0l5.11519j0j8&sourceid=chrome&ie=UTF-8
Obviously this has a LOT more to with taxes and tariffs than actual costs….
I have bought a Toyota Hilux Revo pickup in Thailand recently
Let me give you some prices:
US$1 = 30 bt
Std Cab = 2 door
Star Cab = 2 door + suicide rear doors
Double Cab = 4 door
Std Cab 2 WD 2.4 Diesel MT 561,000bt => US$18,700
Std Cab 4×4 2.8 Diesel MT 671,000bt => US$22,366
Double Cab 2 WD 2.4 Diesel E MT 810,000 => US$27,000
Double Cab 4×4 2.4 Diesel E+ MT 925,000 => US$30,833
Double Cab 4×4 2.8 Diesel G A/T 1,140,000 =.> US$38,000
Discounts for cash if you push is 6% off those prices.
These pick up trucks can officially carry 2,600 pounds and tow 7,700 pounds.
Toyota diesel engines are undestructable and give 36 USA mpg.
I have seen Toyota Corolla Taxis do more than 1 Million Kms => 600,000+ miles.
I drove BMWs, Mercedes and VW / Audis when I lived in Europe but after ownership of Toyotas in Asia, I would probably only buy a Toyota/Lexus, Honda and possibly a Mazda 3.
European cars are too complicated and expensive (require special tools and software) to repair.
Thanks Cashboy….
They say MSRP $26K, $37K as shown. Not too far off what you are showing, at least relative to Frog.
https://www.toyota.com/tacoma/
Wolf,
Strong article as always but…
1) Why encourage endless, unresolvable hedonic debate (internet eyeball trolling/reader engagement?) by sticking to absurdly varied auto models – my sense is that there is plenty of disturbing inflation in commodity beef prices – and there will be infinitely less work distinguishing between the 1990 models A thru M and the 2020 models A thru Z.
Commodity proteins are standardized to a large extent and it is hard to argue many, if any hedonic adjustments.
And everybody has to eat.
On the other hand, the interest-rate driven inflation component is stripped out – as bad as beef prices are, nobody has to take a loan out (yet) to pay for a ZIRP engorged t-bone.
2) Alternatively, you could go to the other end of the auto spectrum and provide a news you can use service – a close look at the factors behind the *cheapest* new cars for sale in the US.
Since productivity and cost effectiveness will long outlive ZIRP-assisted financial suicide, the stories behind those cars are more important than another batch covering the idiocy of endless auto loan inflation.
@Cas127
Beef vs Camrys and F150s? Yeah, we all have to eat, but man that would be a lot less interesting article. And I bet it would get a lot less than the 170+ comments this one has received so far.
Wolf:
“automatic high beams”
My Dad’s 1958 Cadillac had automatic high beams. You had to drive with 1 hand over it as it shifted up and down with every change in light intensity and reflection.
K
2banana,
I’d manufacture a heavy duty pick up truck with a magneto based straight six, manual trans, no electronics, and 4 wheel drive. Everything would be way over built, and replaceable with common tools. Capable of running a million miles. Ad a diesel option for an engine. Think of the original UPS trucks as a close example.
Make the cab a quiet, comfortable rider, and there is no telling what the market might be for such a vehicle.
No, I haven’t been drinking.
I’d buy one of those. You think these prices increass would exit without the availability of sub-prime credit conditions? This column completely fails to take that into account, although more and more vehicle debt is turning up junk.
I did, drove 150 miles from Boston for 1 of only 2 GMC/Chevy Canyons/Colorados ext cab available with 4 cyl manual transmission near New England. And here I am 9 years and 30,000 miles later, tire pressure sensor light on, airbag light on, neither of which I give a crap about. Wish I could get an Asian 40+ mpg diesel, but that will never happen.
The problem is they would cost $100k now, and back in the day you could get a used ice cream truck, or milk truck for $500
I think the ‘sprinter’ comes close to your design, with the diesels, but they have NEVER been cheap.
The nerd kids love to turn “Sprinters” into hotel-ON-wheels and park them at Google/Amazon, live/sleep RV with real standing room inside
That describes the Jeep J10 pickup that I bought just out of university in 1978 for 5800 USD brand spanking new
agree with that too, credit
my old 84 chevy 3/4 ton was basic,,, 250 straight six, no air, no radio, no electric windows, no electronics, etc…did have the HD auto tranny that never had any work needed in 33 years, and with the wings and sliding rear window, you could adjust the fresh air to any speed you wanted,,, oh, it did have a heater LOL
and, perhaps most important, i knew the name of every part, and could fix them if i were broke,,, which i was some of the time due to the fluctuations of the construction industry as usual since 56 when i first started being a helper
however, it was noisy at highway speeds — solved with ear phones, with or without boombox or FM from phone,,,
The magneto design would be nice to cut back on battery waste, sadly the last vehicle I used with one was an early 90s snowmobile. In the automotive world I don’t think one has been used since the model T. It just would have to be such a massive unit to power a 6 cylinder motor efficiently. If you want a cap and rotor though, ugh screw that.
The downside to diesel is the government bodies that will tax you and fine you into submission or oblivion.
Much like Wolf pointed out from experience, not enough people will buy bare bones vehicles. For reasons like peer pressure, or the lazy side of simple conveniences. Looks at the sales of voice activated trinkets from google, amazon and apple. In home surveillance and portable surveillance that the masses have all bought into.
For an example of where outliers end up in the automotive market place, look over at Tesla. That’s all you need to know.
I’d pay extra for a back up camera, but that’s it. Everything else is useless expensive junk, including the cow hyde.
Oh come on !! … Who doesn’t like being owned by a spankin new ‘with-all-the-perks’ Stasimobile …
Never needed a backup camera Used my eyes for that in those days and never hit any poles or dogs but granted my eyes worked better then
I spend a lot of time repairing the “goodies” on the higher option vehicles in our household.
Besides fuel injection and an electric starter, I also look for air conditioning (We have real weather here, unlike Californians, who don’t know what weather is) and electric windows.
FWIW
re: “… I also look for air conditioning (We have real weather here, unlike Californians, who don’t know what weather is) ”
Obviously, you have never been to California:
North America’s highest temperature ever recorded is 134 degrees Fahrenheit (56.7 degrees Celsius), which occurred at Death Valley, California on July 10, 1913 at Greenland Ranch.
Gets pretty cool in the Sierra Nevada as well.
I live in California, and I will agree with Mean Chicken, Californians do not know what real weather is, and your post just confirms that.
Weather that you have to drive to a very specific part of the state to experience, where no one/few people live, is not the kind of weather being discussed. Weather outside the door of your home is what is being discussed and the vast majority of Californians have no idea what ‘real’ weather is. So much so that very few Californians can handle real weather elsewhere and return to the ‘warm womb’ (as I call it) of CA ASAP whenever they leave.
I prefer real weather myself (grew up in Ohio) even after decades of CA non-weather. Real weather makes life more interesting. I have really enjoyed the rains we had recently, there was even a little bit of thunder one night. Wish we had more.
Anyone know something about the car parts industry? What’s an automaker’s stake in that?
Used to work in distribution as an independent. I stopped working in the after market about nine years ago. At the time the dealerships were trying to takeover the repair market. Makes sense as they stock OE parts. My family has been in the business since the early 1900’s. Used to be independent distributors sold to family owned jobbers, then autozone and advanced and carquest put all the family biz out. Then you sold directly to garages. Really tought to make any money unless you manage to land a state government contract. Everything is made in China also. In the 1990’s you still saw a lot of parts being manufactured in Canada and Mexico.
I have always thought that if a manufacturer produced a normal aspirated vehicle (no turbo or hybrid), chain driven crank-cam with no air bags, manual wind up windows, only an ECU for the engine running, normal key start etc. and where you opened the bonnet (hood for you Americans) and could see and get to the components of the engine and engine auxillaries could be cheap to manufacture and hence sales price.
These vehicles would probably be reliable because of this lack of “technology” and therefore have a high resale value.
But that is no good for manufacturers and dealers that want to sell you a new vehicle and not give the ordinary guy or even garage for that matter the ability to service and repair it.
Been done, just not sold in the US…
https://www.topgear.com/car-news/big-reads/can-flat-pack-truck-save-world
The article is undated but I saved it back in 2016…
lolol, i was just thinking the same thing…. now i feel more sober
You’re 100% spot on. Why would I want all of that extra junk in a new vehicle. Computer controlled AC, the net effect of old vs new is the interior of the vehicle is cooled down. Added comfort? Is it really more comfortable? A person sits on a car seat in 1990 same as 2019, there is no more comfort. And why would someone want a computer monitor built into their dashboard?
This has zero utility for me. I’m more comfortable without all the extraneous crap but would be forced to buy it new. I have to rent vehicles when I travel for work and I hate all the useless junk they keep putting in new vehicles. New turbo charged vehicles actually play exhaust rumble through the speakers to simulate the sound of a naturally aspirated engine – is this actually an improvement? I wonder what the CPI adjustment for piped in exhaust noise is? What improvements? Adding useless crap to a vehicle does not equal improvement.
They’re appliances, like a $30,000 toaster. You put the bread in, push the lever, take out the toast, and never think about it. Anything other than required maintenance is a complete waste of time, toss your time in the same bonfire as your hard earned money. I’d think less than 1 mile out of 100 I’d classify as ‘fun’, like maybe a road trip to Montreal. Yet here we are, bombarded with ads for $80,000 BMW SUVs during football games, basically unrepairable after 10 years.
My car is 1981 model year.
Easy to fix. Parts widely available. Safe and reliable.
The standard trans in the 1990 truck would last the life of the truck. Possible clutch replacement depending on driver’s skill. (I know of two cases where guys who drove with a foot resting on clutch pedal took it out in 30K)
A ten speed auto? Well, we know one thing for sure: it’s going to be doing a LOT of shifting. There are lots of problems with new and not so new trans from several outfits right now: E.g, Audi with dual clutch and Nissan with CVT.
Will this ten speed baby last 200 K? It better, cuz it ‘ll cost a lot more than a clutch to replace.
This is fascinating stuff. Can you do similar work for housing, healthcare, and education?
I’m sure millennials would be interested in education / student loan costs, and older generations would be interested in health care / prescription drug costs (especially since they will depend on CPI for SS payment increases).
Bob Lutz said they make up the losses on electric cars by adding it to trucks and suvs.
Yes they’re all saying it. Truck buyers will be subsidizing EV buyers for the next few years.
Or forever?
I’d love to see an article on that.
They are probably anticipating they’ll need such trucks to carry the US dollars they’ll need to do the weekly shop once inflation really kicks it.
In Weimar Germany they used wheelbarrows but ours could be worse , so yeah, get the truck to be safe Hey is Wolfstreet the modern day equivalent of the shoe shine boy?
I never understood the public’s fascination with pickup trucks. Large gas guzzling vehicles; with poor passenger accommodations; a high step to get in and out of; poor balance with a front heavy rear wheel drive layout; and a large, unsecure open truck bed. I do favor mini vans and small to mid size SUV’s with AWD. My congressional district has the distinction of having the highest proportion of truck and SUV sales in the nation.
Now that marketing has replaced culture, US citizens are much more susceptible to fads than in years past, and they’ll gleefully overpay for phony ‘status’.
Before I did my compendium of religious heresies I did another on historical fads. They’ve been around since before ‘Alcibiades shoes’ were all the rage for Athenian youth in the fourth century BC. There are many examples.
Also Chinese foot binding was another status symbol of the “elite,” which was much more painful and long lasting.
https://en.wikipedia.org/wiki/Sumptuary_law
Just scroll down a short way and read the Ancient Greek law. You have have to admit they were pretty cool folks. It was funny to me, anyway.
Then along comes Calvin and drags that single desert God into it and the mess discussed here is the result.
Also worth noting that slaves were the fossil fuel of the Ancients.
Planet was better off for it, slaves probably weren’t.
Pickups are certainly not made for work anymore. The beds are too short for lumber without putting down the MOTORIZED tailgate (does anyone see that feature aging more than 2 years?). Gas mileage under 20 MPG. $30- to $60k vehicle for hauling rocks, junk or firewood? I don’t think so.
Your generalization is not correct.
6′ bed pickups today have the same bed length (6″) they have always had.
Mine does fine hauling arcade and pinball machines, AV/Laser equipment and SCUBA equipment. Small pickup though, I didn’t need full size plus live in the city so parking is tight. I do wish the fuel economy was better. I expect my next vehicle is likely to be all electric. Friends have lots of Teslas and some other EVs and they are pretty nifty.
Ethan,
Been driving VW diesel pick up trucks for 20+ years…literal death traps, but they will serve to complete 90% of the jobs that a full size would require.
Oh, yeah, my next vehicle will probably be a hearse….
This entire statement is from someone who has not owned, driven or ridden in a pick up truck since 2015. Gas mileage of a modern v8 is on par with the gas mileage of a v6 or turbo 4 cylinder now. Passenger accommodations are better for leg room and head room compared to car or CUV. The truck bed tailgate locks and plenty of dealers offer locking box covers so the box is easily secured if you like.
The modern pickup is an oversized car now, it’s a confusing world.
I live in Thailand and drive a Toyota Pick Up Truck Hilux Double Cab (2.4 ltr 4cyl diesel) that is the best selling vehicle in Thailand (about US$25,000 new). 8 ltrs /100kms = 36 mpg.
Incredibly reliable vehicle.
I would not be surprised if Toyota do not offer this as a smaller truck to the Toyota Tacoma in the USA in the future.
Toyota Hilux pickups are excellent vehicles. If Toyota sold them here they would probably reduce the sales of their more expensive and profitable trucks.
gert7to3:
I would proffer that one of the big selling points of the “modern” pickup trucks is the much better visibility of the road. Also many feel “safer” in such massive piles of metal.
Consolation prizes for those who can’t afford a Mercedes Sprinter (speaking entirely for myself)
Recently, I saw two shiny, recent F-150s parked by adjoining mobile park homes. This suggests that at least some of these sales come from people who’ve given up on a more ambitious goal like house ownership, and redirected their small discretionary income toward a more attainable luxury item in the form of a new full-size truck.
Away from their place of residence this affords them a feeling of not being left behind economically: in traffic they are indiscernible from those more fortunate ones who “own” a standalone house and a higher paying job. Temporarily, they get some dignity, and a feeling of being equal if not better.
In some way, this is understandable, and even forgivable.
This phenomenon is nothing new My father was a dentist in a wealthy NY suburb with a substantial income and drove a VW beetle Our housekeeper who lived on the other side of the tracks sort to speak had her husband pick her up in a pink Cadillac everyday after work I always marveled at that
@Frederick, @a reader:
Yeah, generically it’s called “Pick Up Truck Death” (whether it involves an actual pick up or a pink Caddy), first coined here:
[Rancho Deluxe (1975) Jeff Bridges, Sam Waterston, et al.]
[The “Pick Up Truck Death” Rant (it’s short, not even a minute]
Maybe her husband was a high flyer on Wall St? :)
He was a “high flyer” alright but it was more likely Bourbon Street than Wall
@Frederick….
My Dad owned a successful Landscape Architect/Civil Engineering business. In the early 70s he had lime green Dodge Challenger, but that got totaled. Then he got a light blue VW Beetle the heart of the dark 70s. Then he got a used bronze Porsche 924 in about 1980.
I always got pretty nauseas when I smelled that rubber VW interior.
I’m driving a 2015 VW GTI right now.
My wife also has a 2015 GTI. Tornado Red. She loves it.
Do you know about the APR type upgrade kits?
For ~$800 (computer map) + $800(automatic gear box something or other) = can increase horsepower by almost 100hp.
The dealers even recco it. Gas mileage supposedly improves.
Stage 1 upgrade….
https://www.goapr.com/products/ecu_upgrade_20tsi_gen3_mqb.html
I’ve not done it yet, but likely I will.
Yes, this phenomenon was clear to see in my youth (i.e. the 1970’s) where all the Cadillacs were parked in the slums of a nearby city. It is how the poor and uneducated think.
So, how did the super rich think back then? My father (a banker) had a meeting with a well-known billionaire real estate developer. The developer showed up to the meeting driving alone in a 10-year old Camry. My father inquired why and was told by the developer that he wanted to blend in on the road and not be a target where he would need a driver, a bodyguard, etc. That is how the rich and well educated people thought at that time.
Sounds like your dad’s buddy NEEDS the Chameleon XLE:
:-D
S a good friend of mine worked as a credit manager for a medium sized roofing supply house near NY and the owner a 80 something guy named “ Hy” drove a beat up old wagon and dressed like a homeless person yet was worth 10 or 20 million This was in 1976 true story
Ross Perot drove a Buick when he ran for President back in ’92.
This is how many wealthy people in certain South American countries feel. They are less likely to be kidnapped driving a Toyota Corolla. I also think this is where the U.S. is headed. I hope I am wrong.
I haven’t heard of a good kidnapping in years.
Fast Eddie Lampert was both kidnapped by employees.
Where I live it would cost me like $1300/month extra to buy the same place I rent. Why bother?
If you haven’t bought in the current peak-bubble market, don’t judge.
Wow. A graph is worth a thousand words. Thanks for the great analysis.
Yeah, I kinda got lost in all the boomer hedonics here and forgot about the article. It was a very good graphic clearly showing this forced “hedonic adjustment” on transportation, a requirement to just exist in most places here, along with food and shelter.
Thanks.
But trucks are so much higher now, hood is as high as an average driver, you feel you can just roll over that camry in front of you. Trucks now have like eight headlights running up down and sideways, and the grill screams conspicuous consumption. Wish they had an option for color-matched four-wheeler in the bed, for when you need off-roading you know.
Having read your post, I think I feel the urge to go out and get me a Canyonero!
Whoa, Canyonero!
They are just outright tacky.
Regardless of how a vehicles looks, the drivers have no special rights when on the road-way. We each have our space on the road and responsibilities. Yet you’d think some of these fools thought they had special powers or authority. It’s hilarious and pathetic.
Yeah, buying some instant “Guts and Glory”, or those old Hummer commercials where nobody would dare “kick sand in your face” or make fun of you for eating vegetables really cracked me up. But like you say, it’s pathetic that it worked on enough people.
Ads are too expensive to not work.
You can either have a new car every few years or a nice house that hopefully increase home equity value from principal allocated mortgage payments! But not both! All cars depreciate 30% to 40% in three or four years which eats away your equity!
It makes sense to buy a junk car and have a nice house!! Unless, you’re working three part time jobs or expect to move again for better jobs!
But you can’t have chrome rims on a house can ya?Or Cruz da hood lookin good
Rational economic actors like to waste a lot of money trying to impress people they don’t know and don’t like.
The fields of psychology have revealed that in most all cases when buying a vehicle, it’s to impress one’s self.
Those with a weak ego or who feel vulnerable in a socio-economic jungle are more likely to buy whatever the current over-priced “in” vehicle is. current ford f-x50 junk.
Those who are secure and know that they could easily go and purchase an entire fleet of vehicles will be perfectly content in a well maintained, ten year old Camry.
I’d buy one of those stripped down, last-forever models. except I am dedicated to getting 500,000 out of my 2008 Tacoma, which just hit 330,458 miles. Meanwhile, you think these prices increase would exist without the availability of super easy (sub-prime) credit ? This column fails to take that into account, although more and more vehicle debt is turning up junk – and you have noted this elsewhere.
Some workers stick themselves with long commutes and spend more time-awake in their cars than in their homes. In that case a better vehicle might do more to improve one’s quality of life than a better home.
If you have ever actually used a truck for hard work like hauling hay, or fence posts , or 400 lb sacks of wool you laugh when you see these new 4×4 pickups jacked up so the bed is 4 feet off the ground. Who wants to lift heavy stuff that high. If we had our way back on the farm the bed of our pickup would have been 6″ off the ground. The only thing dumber is a 5 or 6 foot bed, what the heck is that good for anyway. Seems like these new trucks have suffered a hedonic decrease in value if usefullness is considered.
Yes, that’s a good point.
And isn’t it interesting that in today’s world, with certainly more paved roadways paved wider, better and even with wide shoulders compared to say 50-60 years ago find themselves in a predicament. For some reason…… the fantasy need of certain urban dwellers who fear they will suddenly find themselves in some hilly terrain with mud and quick-sand like earth everywhere. Oh-h the horrors.
Why of course one should have four wheel drive, a winch, and 48″ tires when considering that commuter car that will be going from suburb to suburb.
Absolutely pathetic.
All my trucks have been work trucks.
This year I bought a new quality 2002 GMC PU. It has about 90,000 miles on it (150K) I love it. No rust, no squeeks, new tires, new brakes, it even smells new. My son bought a new blingy monstrous Dodge PU, and it is too high for the aluminum tool box he used to have. Nice score for pop! Free tool box and headache rack. The used truck is 2wd, and everyone said it wouldn’t work for me, that I needed 4X4, (which I just got rid of). I used 4 wheel drive maybe once per year and now plan to just stay home if it snows and be careful in the bush. No one had 4X4 in the past except for logging companies. Now, soccer moms think they need it. I use the truck maybe once per week to haul lumber and hope to get another 20 years out of it which will put me in my 80s. :-)
Which leaves me to ask, why on earth do so many people think they need 4X4, let alone all the electronic nonsense? We used to put sand in the back when I was a kid. Worked great, and if you got stuck in a bit of snow you had some traction to shovel under your tires.
Winter tip: This time of year I always carry a few old duroid shingles in the back. If you get stuck you just shove one of those babies under the back tires. Oh, I still have 4 sacks of sand to use. It’s almost Christmas and I used them just once.
Yep. 4×4 is worthless. I’ve been stuck in my own driveway with chains on all 4 wheels in my 2003 dodge.
I drive one of “those” pickups. It has a commanding view of the road in the land of SUVs. Its rides well and has excellent highway stability, is very roomy, and I put a lockable lid on the bed, making it a big trunk. And best, it is safe – no matter how many airbags you have, height and weight conquer all. I probably would have been happy with a Lincoln in the sixties but the landscape is different now. I have other cars (fast ones) in the garage but always drive the pickup. BTW, manufacturers’ rebates and discounts have grown substantially on trucks as prices have gone up. Gotta buy on sale, like at Walgreens.
“And best, it is safe. . .” for you. For everyone else on the road, especially cyclists and pedestrians, your truck is a menace. According to this European study https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3256841/, “lethality was very much higher in the case of a collision with a truck than a car” for pedestrians.
They needed a study for that? What a waste of money. They could have paid me to just point at the front of a truck being taller than a cyclist, and then have me point out a car hood is lower than the seat height of a cyclist.
Study complete, falling on the hood is safer than being plowed in the face by the grill.
Agree,Curt,large modern PU trucks drive and ride like a large luxury vehicle. makes for a very relaxed driving experience especially on the highway. the interior of the new Ram in upper trim levels would look right at home in a Benz. don’t really understand the hate,this is what people want,it’s a free country. if you feel unsafe riding in your honda fit amongst the towering suv’s and trucks,well,that was your choice when you signed that sales contract. myself i just bought a sedan,that’s where you get the super deals and i love the MPG. when my european friends visit the first thing they do is rent a V8 mustang or a Tahoe just to live the american dream for a few weeks but then telling me what backward hicks we are. LOL
Not sure which “ Europeans” you’re talking about but I know from personal experience that Germans love high powered vehicles like Porsche’s Just with the high cost of fuel over there few can truly afford them
Whoever buys a Porsche (which tends to be a little more expensive here than in the US – on top of higher income taxes) has enough money to pay for gas. Also remember that distances are smaller in Germany.
What will make a difference going forward will be CO2. Mercedes may be getting a bill of 3 billions in 2020. Some manufacturers starting to delay US rollouts of electric vehicles in order to get their fleet averages down.
I have both types of vehicles. Taking on routine danger needlessly just to increase the safety of adult strangers who don’t bother to take care of themselves – that doesn’t make you a hero, it makes you stupid. Heroism is about increasing the greater good at a time of genuine need, not making pointless sacrifices.
More to the point, though, the pickup-vs-car debate shows that the regulators are captured, because there’s an obvious public safety benefit to things like matching bumper heights, headlights that don’t needlessly blind oncoming traffic, and so on.
And then there’s the obvious one that the fuel-economy standards apply to “cars” differently than “light trucks” even though the two classes of vehicles are used for identical purposes most of the time. Fuel-efficiency standards should be fleet wide without subdivisions. There’s a market for low-efficiency vehicles, but if trucks were held to proper fuel standards the engineering solution space would look a lot different, people would be even happier to get a great ride AND use 30% less fuel (at no extra cost), AND much of the road rage would subside.
One of the issues is financing which has gone to 5 or more years. So it’s not the cost, but the pmts
Yeah, there’s no way I will take a payment of over $190 a month. I’m currently paying $144 a month and my insurance (because we are an expensive state to get insurance in) is $185. That which I’m told is reasonable here.
Went to a Honda dealer and told them I love the Fit. I’ll buy if the payment is in that ball-park. The wheeler-dealer seemed genuinely perplexed on how I had an affordable payment now. “That won’t be changing” I said, and I left.
I feel sorry for most pickup truck owners. They’ve been brainwashed by their peers and social pressure to look tough and fit in. I guess they can always live in their truck when the economy tanks and their life savings has evaporated, that’s at least some marginal utilitie for their “investment”
I agree God help them if the economy tanks and/ or the oil price spikes like it did in 2008
A 2.8 Duramax diesel on a 2wd Colorado gets 30+ highway mpg. The decision is on the buyer. But if gas goes to $4 a gallon, used V8 trucks will be had for 25 cents on the dollar same as 1970s and the big 3 will be whining about Japan same as the 70s.
In a world of blah, blah, blah, cookie cutter styling, look alike autos that resemble a herd of 10,000 melting Dairy Queen cones, if the pick up truck is supremely more popular, why wouldn’t it’s prices go up? Buick is dumping the boring sedan line altogether.
The days of “we made a million of em, so you’ll have to love them” are disappearing quick. Good riddance.
Ford, and the world Fords with you. Rolls, and you Rolls alone.
Interesting Wolf thanks for the article. Could imagine all electric cars but not trucks. I personally think Ford would go that route, but what do I know. They are making the mustang electric, as a suv. Boy, times are changing. Inflation or high demand or no demand and deflation. The price of a ford truck is a fortune! I worry more about the federal reserve and their repo’s. With certain stocks and certain trucks there are corollations to the herd.
Actually, the auto markets are saturated and not just in the U.S. And manufacturers are selling fewer vehicles in general, but for some, like these ugly suv thingees, they’re asking more money.
Hey, if the manufacturers can get away with it, good for them.
I’ll play the stock of (F)ford and keep driving my 2014 5 speed nissan compact car.
I should have read all the comments before posting. They are an assembly of holier than thou statements about pick up trucks from folks who clearly do not have much experience with, or an interest in their function.
Mine is usually filthy, has never become stuck in mud or snow, hauls up to 7,200 pounds of equipment or whatever, is very quiet, and extremely comfortable on very long highway trips. Oh, and fuel is available at most intersections, parts are widely available, and when I’m done with it after 200,000 miles, I can actually sell it as an operating vehicle.
What others think of my vehicle, me, or what I use it for, is of absolutely no concern.
Agree with you credit, as well as the conclusions of Wolf’s good article: I have been working with pick ups from 1962, owning my own since 71; the older ones were very much less money, noisier by far, etc., but my 84 3/4 ton chevy was running just fine when i sold it last year (for more that it cost new) due to being sickened from fumes (at lights, etc.) and needing air conditioning.
Besides that one, I have owned a new one every couple of years since 89, all smaller, from S-10 to the present 19 RAM 1500 that is, in fact, bigger, heavier, holds more, tows a ton more, and gets better gas mileage on the highway, thou the same around town, and cost 10 times as much as the 84. The 19 has bells and whistles they told me are now mandatory, and a few conveniences but other than that, a Tradesman model, about as simple as the sell them…
TEN TIMES MORE$$$ Crazy!!
Does not take much to entertain us. Love Wolf’s articles.
But the comment section is priceless.
I let the wife know that this time around we even got free psych
evaluation. Hopefully she acknowledges her “weak ego” and lets me
keep my 2000 Ford 7.3
She can sell our 2015 3/4 ton. It is our workhorse, typically hauling 5 days/week. But its not good for our ego or dignity. Will start searching for that 10yr old camry with a hitch for heavy towing.
Yeah we have mark to market, mark to fantasy and mark to CPI… government gets to decide how to compute the later for their payouts.
Just move overseas to somehwhere cheaper, and have convoluted schemes to avoid funding such largess (aka your fair share)… that is unless one is too afraid of being locked up for being productive or some other reason to keep taking it over the barrel.
Not quite 20 years ago, I bought a new and top-end sport bike. The Kawasaki ZRX 1200; it retailed for $7,800.
Soon, I will replace my Kawi with a new top-end sport bike. Ah, but what do I go with? Lot’s of great choices are out there.
$13,000 or just a bit more buys a Honda CB1000R, a Yamaha MT-10 or a Suzuki 1000 Katana.
However, on the Euro side there’s an MV Agusta Brutale 1000 Serie Oro for $46,000, or an Aprilla Tuono V4 1000 for around $17,000 to $20,000 depending on which model one prefers, and the Ducati Monster 1200 at only $15,000.
As it has warmed all the way up to 9 F, and my streets are covered in snow and ice, I reckon I have plenty of time to decide.
Seriously though, ABS and traction control, throttle by wire engine response modes and LED lights are improvements that my beloved old bike doesn’t have.
Get a used Kawa Versus 650 with low miles and get 60,000 problem free miles and 50 mpg for $3000. Been to the backwoods of British Columbia, Oregon coast, Columbia river, and elsewhere on mine.
I bought a new Honda 500 CBX a few years ago, a poor mans adventure bike. I can drive logging roads and it still does 100 mph on the highway. I use it for grocery shopping mostly and leave the truck at home. :-) Those 1200cc crotch rockets pass me, but what for? Crazy fast and dangerous. Remember when a 650 was considered a big big bike? Hey, only 50 years ago! Now, they’re considered to be starter bikes.
Paulo, I hear you on mid sized bikes being utilitarian. Back in my days in college, I rode a Kawi 550 with cafe bars and a 4 into 1 exhaust system. It was fabulous – at the time.
Probably my best “city bike” was an ’81 Honda 750F.
But I am looking for a motor bike that gives me pleasure to ride. I want a bike that easily leaps into highway speed from a stoplight’s right turn onto a four lane road where cars, and big new Ford 150s, are moving along at 70 mph (26th & Hiawatha by the light-rail).
I want a bike that cruises along the Mississippi river comfortably at 30 mph, and I want a bike that can accelerate and decelerate in city traffic – not to ride like an idiot, but to stay safe and in control.
And yes, I want a bike that can provide an adrenaline rush – in the right place at the right time.
My current bike can do all these things, but it is getting worn out, and instead of putting money and time into it, I’d rather upgrade to a new bike. The choices out there are incredible. Much like the choices for a new pick-up truck.
A Chinese bike maker can offer you that for a third of the price.
Still driving my ’89 K100RS — I will never sell it.
Voices told me to support home industry so on a whim I bought 500 shares of Ford. Maybe I’m crazy but it just went up a few dollars. Now the question is will anyone be able to afford their trucks?
This is a great piece of work Wolf.
But I thougt from reading some of your previous articles that you were a true believer in the basis for all these ‘hedonic adjustments’ the CPI used.
You mentioned that car buyers had received better quality and safety and thus the higher prices could be justified in terms of more features.
Or am I misinterpreting something?
Dan,
Yes, you’re misinterpreting things a little.
I do see the need to isolate inflation (the monetary phenomenon) from other effects on prices, such as quality improvements. To separate these two makes sense to me on a conceptual basis, and I have been saying this all along.
I have also said that these hedonic quality adjustments can be applied too aggressively, and in the past, I mentioned some of the ways in which this can happen, and this looks to be the case.
All price increases combined = “cost of living increases,” which are the sum of price increases from inflation (the monetary phenomenon), plus quality improvements, and other factors.
Where it becomes an outright “lie” is when the CPI is used for “cost of living adjustments,” for example, in Social Security and other. CPI does NOT track cost of living increases. It only tracks the monetary phenomenon of inflation.
But in the way trucks are priced, there are clearly other dynamics at work as well which I attempted to clarify in the last few paragraphs.
And then the Queen said, “Let them eat Dog Food.”
Its only a Quality Adjustment.
Not only is dog (and cat) food more expensive, they tax it.
But it’s become the annual Christmas legend story for the media.
Inflation numbers derived from government statistics are a joke.
I keep track of around 60 items that we buy daily in the apartment maintenance department and without any change in quality or design ( if anything the quality has become worse and they fail more often) and in the last three years only the price has jumped by about 20% in average.
Same goes with insurance. And let’s not go to healthcare, houses, education.
Price discovery is vigorously suppressed in the market by the Fed and the government is trying to tell us there is no problem with the heat by tampering with the thermostat.
Yes, the slowly boiling frog being told by the chef that things are really cool in there at <2% inflation per year.
That's why I think property, houses, and hard usable assets will still be of value – the cost of building new homes has been inflating at 5-10% per year for the last two decades or more. Even when the housing price bubble pops, people wanting to build a new home will find it to have hugely increased in cost in 10 years.
Neither are the prices of new homes accurately accounted for in the CPI.
A lot of my friends purchase trucks for the “tax write-off,” which I understand if one legitimately needs a truck for its use. But I don’t understand choosing to over-pay Ford and bank JUST for the privilege of not paying the government.
Let me introduce you to the Advertising Industry (aka, the Mind-Control industry.) They can easily sell people whose school’s lacked funding on the notion that its great to give a corporation money to make sure the government doesn’t get a smaller piece of money. Why, one might say that’s the backbone of America in one example.
How long can this go on? Millennials can’t afford squat and 60k Pickups aren’t happening for them. Generation behind them is smaller still with unknown truck appetite. This is the last hurrah of the boomers and Gen X who are leasing trucks on the cheap with 10k mile yearly allowances or less. Last chance to be a cowboy.
Soon he cost of living for housing and various insurance schemes will put a squeeze on the truck love even if demand is there. Truck market will go back to the 30% or so market share where trucks are needed in commerce.
>How long can this go on?
“Bad credit? Don’t worry, you’re in luck, with a 360 month loan you can roll over at anytime you want to upgrade, you can now afford your monthly payments! If thats too much, we can take the price down if you subscribe to the perpetual loan: half the cost of the 360 month loan and you can just pay it forever every month!”
Problem Solved™
Wow, you mean the government lies to us? Shocking!
I use my Gallon of Milk index. Last time in the store it was $2.79. It was under $2 about a year ago. The CPI says it should go up by 2% a year. Thus, that $2 gallon of milk should go up by $0.04 and now cost $2.04.
So, wow, you mean the government lies to us, which has the benefit that they have to spend less money on people and get more money to spent on Death, Destruction, and Torture and giving lots of Bucks to their Billionaire supporters? Of course it does.
Of course, we can always use the Banker’s Index, which excludes all food and fuel because no Billionaire ever worries about that stuff.
Billy Parsons,
Did your milk get an 8-speed automatic transmission, or any kind of other quality improvements? As you can tell, hedonic quality adjustments are NOT applied to ag commodities. So your thingy about milk doesn’t fit in here at all. It fits into a discussion of ag commodities.
Milk is an ag commodity, like soybeans, with futures trading and the like. So here is a chart of the price of milk in the futures market. Note that 50% collapses followed by 100% surges in price are not uncommon. Milk futures today trade for less than they did in 2008 (click on the chart to enlarge):
And so the retail price of milk also fluctuates widely, up and down. Note that US average price of milk in 2018 ($2.85) was below the price in 1998 of $2.86 (click on chart to enlarge):
https://www.statista.com/statistics/236854/retail-price-of-milk-in-the-united-states/
The retail price of milk has steadily increased in stores, I don’t think I have ever seen a price decrease (except for an occasional sale). And that’s true of most kinds of food that are sold in stores because of consolidation in agribusiness and food companies. They have become oligopolies that always increase prices. Just in the past several months, I have seen significant price increases (10% or more) in the cost of a wide range of food items – this includes canned vegetables and soups, milk, frozen dinners, tea, beef, mayonnaise, and many fresh vegetables.
I was paying 2.79 for a half gallon if organic back in the 90s because my wife thought it was best for our son He turned out pretty well so maybe it was all worth it We drank at least 10 of those a week between us so it was a real cost consideration
My 1990 Ford F-250 finally died. It had over 400,000 miles. It was my wood hauler. I’m in the market for a replacement. I’ll spend $2000-3000 on another old truck (any domestic, it doesn’t matter as long as it’s a 3/4 ton) with 150k or more on the odometer and the story repeats itself. I like the old domestics as they’re real work trucks, super reliable, and cheap to fix. Thank you Rockauto.com…
When you’re a member of the urban poor,
with a crappy part-time job ( or SSI check ),
” Annual Rent Increase == Inflation Rate “.
Before long, you can’t pay rent;
and “thieving junkie” becomes your profession.
Before long, war breaks out;
the majority “wins” ( e.g. Mao, Pol Pot ).
Time changes very quickly. Lets say a man in 30s today wants to buy a car, he may not know about the manual transmission, rolling windows down and be surprised at only AM/FM stereo. Most of the new cars have automatic transmission and power steering, power windows and heated mirrors and heated seats. So, for a CPI calculation and adjustment feds can use them. Today, 25 year old man ready to buy his first car, might not even recognize those options. If the car is not having USB charger and Bluetooth options, he will not buy it. Also, back up camera is now a must for all cars.
Must say I do appreciate the backup camera. I had to impose capital punishment on one tree in our yard that I kept backing into, some years ago.
When I was a resident, one of the jobs of the resident on call (at this busy trauma center) was to go up to the ICU and look at the STAT nuclear brain scans and write a note in the chart declaring brain death, if that was what the scan showed, on the many victims of head trauma there, so their organs could be harvested ASAP.
The one I remember most was this small toddler boy, his head swathed in bandages. His father had accidentally run over him in the driveway, backing up his truck, crushing his head
Yes backup cameras are priceless
Wireless backup cameras can be easily installed in older vehicles, and although your story is indeed a sad one, more bicyclists are killed in car accidents than unintentionally backing up onto a victim, and yet bike lanes are going up in increasing numbers all across the U.S.
Hedonic CPI price adjustments are a bunch of nonsense, and arbitrary.
The products offered at a particular time in history reflect generally the optimum design and technological expectations at that time. Future improvements are what would be normally expected in the course of competition and technological progress.
CPI should only be considered as government propaganda. Even in this low-inflation era, since 1990 a rule of thumb would be that prices have at least doubled, since 1980 tripled, and since 1970 quintupled, and from 1950s,1960, 10X.
Do these pickups still have a whopping 3 threads holding each tiny spark plug that are prone to blowing out in the overengineered aluminum head overhead cam engines?
I don’t need an 8-speed automatic, either. I’ll keep my Bronco, thanks.
For those of you anticipating rising wages ($15/hr minimum wage?), what happens when millions of India’s citizens are unleashed by global labor arbitration opportunists?
8 speed automatics must cost a fortune to rebuild when they overheat and self destruct which they always do I will keep my standard trans thanks Been there done that
Same here. We drive a2017 Subaru Forrester, the only vehicle in its class offered with a manual transmission.
Like the now extremely dangerous trucking industry.
A maxed-out new Mac Pro costs about the same as a Ford F-150 Raptor ($53,000).
I wonder what the McDonald’s inflation would be. Last I checked the Big Mac was about $6. I remember getting them for $1.25 about 30 years ago. It’s the exact same thing.
Maybe 50 years ago.
Big Macs were a $1.75 back in 1979.
Maybe it’s just me, but I see these truck prices as part of the insanity that comes with every bubble. They should have a flower pot to hold a tulip on the dashboard.
Before I retired in 2013 and moved out of the country, my last car was a 2002 VW Jetta with about 180,000 miles. For many years before that, a 1990 Toyota Camry with similar miles and a lot of dents. I have owned a few new cars in my life, and none of them made me feel any different. Later, I got access to the huge used car auction near me. I sold cheap used cars curbside for years. I drove whatever I had on hand. I also sold new Toyotas for a while. Never understood the whole car mystique.
You’re too rational to understand the car mystique. I believe it was Dieter Zetsche who said if people bought cars based on their needs and not status we would be out of business in a year. (Sorry no I can’t find the link. I do remember reading it in a Truth about Cars article if that helps.)
Another area needing exploring is repair costs…
What do they say about the CPI.
09 FOR 150… 65k needs new ABS unit… proprietary part… only $650 or so not including labor..
At 75k need some bulkhead electrical fitting on trans,,, fluid leak…
Part is 25, but also need another 35 part and 45 trans fluid,,, plus w hrs labor.. another 200 bucks for something that Never should fail…
I bought a Nissan Titan back in 2008 when my employer stopped letting us take the company trucks home but didn’t stop making us essential personnel so if it snowed my car might not be capable of getting me to work to get to my company truck.
Wolf, being in SF, might not factor in the need for 4wd to get around in the winter in much of America. Thing is I see a lot of trucks in Florida where I live now as well as a ton of Jeep Wranglers and there is never snow much less a hill to climb. I’d ‘get it’ if they made a convertible P/U but a sunroof is about as close as you can get on a P/U.
unit472,
When I was in my teens, the people I was living with had a Ford Bronco, the old style, boxy, larger than a Jeep (Jeeps were small then) but shorter than a pickup. I loved driving that thing. Braindead teen that I was, I checked out how well the four-wheel drive worked after a rain storm and drove through a ditch and promptly got it stuck and needed a wrecker to get us out. My date thought I was the biggest moron in the history of mankind. But this is how you can use a 4×4 in an urban area if you’re braindead.
We had one of those Bronco’s, Wolf. 1986 model.
We bought it to replace a Toyota Tercel hatchback that my wife slid on ice, off the road, down a bank onto its side.
Served us very well until 1995, when she retired and we went to a 1995 Subaru Legacy – a small “station wagon”, in those days.
Wolf, you’re in NorCal correct? So you never get snow.
AWD/4X4 is a must for a substantial part of the country. I go a step further and put snow tires on my AWD/4x4s as well.
As I always say, AWD/4X4 is to get going in snow/ice, while snow tires are to stop in snow/ice. And this is applicable in urban areas, rural areas equally so.
A good set of snow tires is $1000 and will last 3 seasons. Worth every penny.
Actually JSRG, it’s the tires that matter most. Unless you are traversing deep snow you don’t need a 4×4 with high clearance.
I live at ‘8500 in the Rockies. I have 2 vehicles: a ’16 Honda Fit with Blizzacks that serves 95% of the conditions and a ’95 Toyota Land Cruiser with snow tires for unplowed conditions. IMO AWD is needed only in the minds of Soccer Moms and the legions of misguided Lesburu owners in my state.
At 8500 feet your snow is light and fluffy. Easiest snow to drive in. You practically don’t even know it’s there. Now at lower elevations, say 2000-3000, in more damp areas, try going uphill when it’s 33 outside and snow/sleet is falling, without AWD. Or better yet the day after, when 1/2 the snow is melted during the day, then freezes over night. You have that nice layer of ice underneath slush. That’s what my winters are like and also the reason everyone here has at least one 4X4/AWD vehicle. It’s also funny to see newly translated Californians arrive with the RWD sedans the first time a serious amount of snow falls. Within a few weeks, those cars are traded in – at a massive loss since nobody wants to buy RWD here – for something more practical like a….you guessed….Subaru :)
An AWD SUV with mud and snow (M+S) tires is the way to go for the busy professional. Plows through anything, makes daily commutes in snow/slush/ice a routine drive without having. to deal with changing to snow tires or putting on chains/cables. You get to bypass lots of the less well equipped drivers by the roadside who got stuck or ran off the road or crashed.
I know, in my youth I crashed my rear wheel drive car in St Louis at the first snow.
When I was in Reno my AWD Honda CRV went thru the slushy highways of Reno and the deep snow pack of the Lake Tahoe mountains easily. When my daughter got a job in Denver I told her she absolutely had to trade her Accord in for an AWD car, and she got a Forrester, in the summertime. It makes a huge difference – driving is easier and simpler and almost like normal driving
On rural WV roads, there is a single paved lane with gravel shoulders for passing oncoming vehicles. In rainy or snowy weather there is not much traction on the shoulders and 4WD is the norm here.
Gandalf:
In ice all bets are off! We had a weather incident several weeks ago in the “2500-3000′” level in the foothills of the CA Sierras. ALL vehicles regardless of what kind of tires, drives etc had REQUIRED chains because of the snow and underlying ice. In a stretch of less than a mile there more than 100 vehicles scattered all across the road (Higway 120). There are times when NO vehicles can travel in such messy conditions. Ice always changes the outcome and the required equipment.
I really appreciate and admire all the great writing and info you produce Wolf.
In reading this post, four words came to mind: peak oil, stranded assets.
It’s not just the oil and resource companies that will have various asset albatross’ hanging around their necks – although I am sure they will find a way to get bailed out and leave us holding the bag.
I’m surprised nobody mentions the last time gas guzzlers were en Vogue. Chevy Suburban? Hummer H2? Anyone? Automakers could NOT be bothered to make a normal car, bubble popped, pump price doubled and…? I’m sure they all learned their lesson after all those bailouts!
I gave up years ago trying to use government data for any practical or comparative analysis. I have made one discovery. Government/Big Drug flu vaccine and its effacy tracks with the overall usefulness or accuracy of government data in general.
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I think there are two additional factors for truck pricing:
1. Unlike cars there is 25% tariff on trucks imported into US
2. US F150 size pickups are unique to the US and Canada. The Tundra is only made in US but the Tacoma is the world truck that goes by different names.
In a way you need to get a vehicle for how you drive. I am old and my bones ache. My 15 year old Mercedes S430 is still a better highway cruiser than anything else I have driven. Around town it is too big to zip around.
I enjoyed driving my friends new Honda Ridgeline. She sold a SUV and a pickup and got down to one vehicle. It’s an easy vehicle to drive, has a nice ride and has a small bed for carrying things you don’t want smelling up your car like trash and gasoline. Too pricey for my tastes, but I am not into new vehicles.
I know WF is full of tesla skeptics…. But I think the $40K cybertruck will be a gamechanger.
I’m open to an electric truck. But that thing is so ugly, I can’t ever see myself buying it.
On the other hand, Rivian looks intriguing, assuming it ever gets built.
It won’t be $40k. If I remember right the model 3 still hasn’t been able to hit the $30k mark it was supposed to hit. Also, I hear a rumour the free charging stations will soon be removing the term “free”, bout to find out what charging is worth and if the market will be happy about it.
The way around all this is to buy an older truck and put your money into fixing it up. No brainer really but does require a bit of mechanical knowledge and effort to source a deal relative to the market. For years I’ve been buying Honda EX Accords at $2k, putting maybe a couple grand in them over the next 100k+ miles then selling them for $1k. Same deal on large pickups. Cost per mile on the Hondas come out to about 3 cents plus gas insurance and the rest. Trucks higher maybe but I abuse them more. Still a huge deal relative to new trucks that may not take the work environment.
Exactly. Bought a 2007 F150 XLT three years ago for $4k. Have spent about $1.5 replacing and fixing stuff. My local mechanic works out of a wooden garage on his lot and also owns a 2007 F150 XLT.
Points to note:
The truck has never broken down. Had to limp home a couple of times, but was able to. This ability is why the local tradesmen who buy new tell me they buy Fords.
It has more than paid for itself just with the saved delivery costs and the ability to take a family of five, with luggage, on a 3,000 mile run in comfort.
It still runs book gas mileage after 210,000 miles, and doesn’t burn oil.
My big risk living rurally is someone losing attention and drifting across into my lane for a head-on, or running into some big, dumb animal at night. It happens a lot. A truck is a lifesaver in those circumstances.
Nothing added to the truck since 2007 adds any value at all for me. Hedonics is subjective BS.
Glad to see there are still people with brains on this planet lol.
Your comment about Ford reliability is also interesting in that I’ve been told that by my Ford guys and have experience the same limp mode a couple times with mine and made it home/shop just fine.
I’ve been watching the side of the road and it’s not Fords sitting there the vast majority of the time (like only once in the last 5 years at least.)
That “antediluvian” straight 6 was one of the best engines Ford ever made. Seen a bunch run past 300k and quite a few with over 500k on the clock. Wasn’t going to win any races but it was a good reliable mill with good torque.
Great article wolf!
Agreed. We had 1985 Ford 150 and a 1986 Bronco with that engine.
Used the 150 to haul cattle in a gooseneck trailer. Spent a lot of time in the truck lane going uphill, but we got’em there.
Fake CPI is a way to cut wages. Hedonic adjustments are just a scam to keep ordinary people’s income down. Then any actual value add from technology goes to 1% via monetization schemes. Our role is to wonder wide eyed at their genius and celebrate their god like lifestyles. The Fed, The Treasury, even the Bureau of Statistics are just subsidiaries of Billionaire Inc.
I bought a brand new F250 4×4 in 1973 right after I got out of the army for somewhere around $2,700. Manual windows, 4 speed, rubber mats. The Trek bike I just bought with carbon fiber frame cost just north of $4,000. Yikes!
Interesting comment about the bikes, since those prices seem even more inflated than cars.
In 1998, I bought a new Stumpjumper for about $800, which included high end components (Deore XT, for example). Now if I want something similar, it will probably run me $3000+. And technology in bikes hasn’t really changed that much since then.
The bike itself was stolen a few years ago, and at the time the same model was going for about $300 – $400 used.
Financialization of the Auto Industry. Take a drive across the poorest parts of the Southern USA (I just did). You’ll see new trucks and cars everywhere. Trailer homes with $85k pickups parked in front. Dollar Store parking lots with fully optioned new raised trucks. The run down shack with 3 abandoned not-so-old cars parked next to a brand new F350. Economics PhD not necessary. Four-color charts not required. Don’t dream of some pending righteous financial reckoning. Fine tuning of Auto/Lender’s abuse of a huge vulnerable target population is the Not So New Normal. The liquidity cycle is much longer than your craziest prediction. Bet with and not against the Fed.
I had no idea wages have risen so quickly in the South.
Could be coasters fleeing south & trying to blend in.
I live in rural Midwest. No shortage of trailer homes. I don’t see $85K trucks parked in front of them. Our dollar generals parking lot is not full
of limited edition lifted trucks. Maybe we are just not that “vulnerable”
We do have secondary property owners with “tiny” homes & tricked out Toyota trucks.
Hi Tom,
Wish I could share pictures taken across Alabama, Mississippi, and Arkansas. I even stopped to talk to a few $85k truck owners (best picture is a local discount hamburger joint surrounded by 5 new fully optioned trucks). They reason it makes more sense for them to make payments on a new a new truck than make payments on their 3yr old existing one. Besides lenders make it 100% frictionless to rotate into a new vehicle.
Just got in from the cold. As we hauled our backhoe to the job site & back, we kept our eye out for 85k loaded trucks.
My observations in the Midwest has not changed.
I believe you, just my observations from my little corner of the
world.
I was at a Chevy dealership last week to get an oil change for my ’13 Cruze and I was surprised to see a Chevrolet Sonic, the smallest Chevy, with a sticker price of $24k. Granted, it was made in Austria, but who would pay that kind of money for what looks like a chopped-off old VW Golf? I saw a Camaro with a sticker of ~$50k, which I considered pricey (very wide tires, easier to hit squirrels I suppose) and a Corvette at $85k, which seemed reasonable in comparison to the Sonic and the Camaro. I didn’t look at the sticker of the big Chevy SUV, which is about the size of a small school bus.
For domestic trucks, take 20% off MSRP and that’s what they actually sell for. I should know, my truck that I bought in 2017 was exactly 20% off. And that was done without much negotiating. It’s pretty SOP.
Meant to add…
On the other hand, Toyota trucks go for pretty much MSRP, very little if any discounting.
As a retired accountant I am driving a 2001 F150, 4door, 4wd XLT. Leather is still fine and mechanically it is perfect. Just took it on a trip from Denver to Atlanta and back. The cost to operate this vehicle is nil because it is totally depreciated. I need a truck because I am woodworking hobbyist and need the cargo capacity. Besides, owning a truck makes one popular in the neighborhood. There are those who are too snooty to own a pick-up truck. They equate it with being a backwoods clown. To each his own.
Re “The cost to operate this vehicle is nil because it is totally depreciated.”
Apparently accountants don’t require fuel, oil, tires, brake pads or any sort of insurance? ;)
Or maybe once you retire, the profession allows accountants to forget the difference between capital expenses and operating costs?
Slightly off topic, but I could use some recommendations. I drive a 2017 Subaru BRZ, which I think is just about as much driving performance per dollar there is. I’m making payments on the car, which has a balance of about 16k at 2.9%. The problem? My auto insurance rates went up 38% this year–with no violations or change in address, work, etc. 38% is definitely above the government reported CPI. Mercury says they had a “rate increase.” And I did a rate comparison and they were still lowest. I’m sure my zip (90046) contributes to the high rate, but I want to do something so that I’m not throwing money away. Considering using MetroMile (mileage-based insurance), paying off the loan and removing comprehensive, buying a second property in Idaho and registering the car there…
That’s a lot of work to get around a few $100s. And you’d also be committing insurance fraud. Which is no biggie…..except…if you’re ever involved in a serious accident. And the insurance company will then deny your claim because you lied about where the car was parked.
Agreed. That last one was offered in jest…
Heh. I thought it was a version of people who register their cars in Montana to avoid paying sales tax.
When numbers are hard to make sense of, I just scratch my head.
This week was an amazing one. Slight off topic but it may make you shake your head.
I am a Treasury “investor”. Maybe I should say I just prefer to keep a large portion of my money in “safe” intruments.
Normally, I do what what one is supposed to do, which is unemotionally allocate and dollar cost average. So this year I added 2 Year FRNs in my Treasury Term Lengths to invest in. This month was special.
Someone in the treasury published an auction for the 1-Year 10-Month 0.300% FRN ONE WEEK BEFORE it was already scheduled.
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2019/A_20191212_2.pdf
This means that I might not have the cash to buy it, since I rollover maturing Treasuries from other terms. Even if I wanted to buy it, this announced auction is not even available at Vanguard.
I can’t figure out why the Dept of Treasury can’t even follow it’s own schedule:
https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf
Auction is supposed to be NEXT week, not this week.
Interesting that they kept the issue date the same, they just made a mistake on the auction date.
To me, if the Treasury can get this messed up, you can just imagine the other numbers coming out from other departments.
In all fairness, they actually sent a notification:
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2019/BPD_SPL_20191212_1.pdf
But why make it early, when the 2,5,and 7 year note auction dates that happen the same week was UNCHANGED?
Apparently Vanguard did not get the notice since the auction isn’t available at their site.
I’m the oddball here I know, but I like driving new cars/trucks, with the latest safety and tech features. I also have my 30 year old classic sports car, which is great fun to drive. But man, it screams OUT OF DATE every time I get into it. For a Sunday drive here and there it’s fine, but you quickly miss the basics like a backup camera, heated seats, parking sensors, modern sound system, etc which are now standard on every car sold.
My new cars are also always under warranty and the odds of anything major breaking and leaving me stranded are virtually 0. It’s worth spending a few bucks a year to ride in modern comfort.
There are 3 things you should never scrimp on…TVs, cars and beds. You can go cheap, but life’s short, enjoy it.
Just Some Random Guy,
OK, I hafta admit, when it comes to getting free advice on how to live your life, nothing beats the comments here.
“There are 3 things you should never scrimp on…TVs, cars and beds. You can go cheap, but life’s short, enjoy it.”
• I haven’t owned a TV in decades because we don’t watch TV;
• I used to enjoy driving, but now it’s just a chore. I’d rather walk if it’s within walking distance. So any half-way decent car is fine (our next car will be exactly that, and this from a guy who owned two 5-series).
• In terms of the bed, it’s not the mattress that is important to me, but my wife.
All of the above for the very same reasons you pointed out: “life’s short, enjoy it.”
Ha. Exactly Wolf. I don’t need comfort driving around. I prefer the comfort of that extra $50K in my bank account or going to other base-line expenses. And I learned to parallel park just fine in high school. ;-)
“refined” interior, offering “a revolutionary level of comfort and spaciousness that was unparalleled in a pickup truck,”
A far cry from the humble F-150 my brother bought around 1985 or so. That charcoal gray beauty featured a two-door non-extended cab, bench seat, stick shift, manual locks, manual windows, and a radio. But it had a roomy bed that you could actually haul stuff in, including furniture. These “trucks” today are really mostly truck-like luxury passenger vehicles. With the four-door crew cab, you can haul more people than you can stuff. I see tons of guys buying these ‘trucks’ and never hauling or towing a darned thing. And they are gigantic! Like cartoonishly so. Compare the front ends of today’s F-150 to the front end of the 2000s to the front of the 1990s, and you’ll see trucks first beefing up and then overdosing on steroids. I see tons of guys buying these ‘trucks’ and never hauling or towing a darned thing.
“I see tons of guys buying these ‘trucks’ and never hauling or towing a darned thing.”
You watch these “guys” 24/7 and know what they do with their trucks every day? I hear this stuff from truck haters all the time. Things like I see F150s on the freeway with nobody in it but some guy commuting to work. Uhm yeah, and then that same guy tows a boat or RV on the weekends. Do you see Porsches in bumper to bumper traffic as well? I guess their owners never drive them fast either, right?
Wow dude, struck a nerve? Where did I say I ‘hate’ trucks? Go stick words in someone else’s mouth.
And yeah, my eyes work. I see those same trucks sitting in the driveways weekend after weekend never towing squat. But hey, if you want to way overpay for a luxury ‘truck’ that hauls less in its bed than its 30-year old ancestor, be my guest. You do you, bro.
(Interesting, though, that you compare the use of these Frankentrucks to that of another overpriced vanity vehicle, the Porsche…)
Right, the luxury truck market is about evading CAFE standards for regular autos, not about hauling stuff at an affordable price.
I have a 2017 Toyota Hilux Revo Pick Up Truck Double Cab 2.4 Diesel 2 WD in Thailand.
It is used as a truck and car:
Going to the supermarket 6 miles away to do fortnightly shopping and refill gas bottle.
Going on holiday 400 miles to the seaside.
Taking 16 labourers and tools to the farm 1.5 miles away.
Taking 3,000 lb of rice from the farm.
Towing 7,000 lb Kubota on a trailer.
The bed is only 5’2″ wide x 5′ 1″ long on the double cab and 7′ 8″ long on the single cab.
Your American trucks look so much bigger and your Toyota Tacoma seems the best mid pick up in the USA from what I read.
Is hauling a requirement?
I tried a long bed with a single cab…duramax.
Might be ok with a gooseneck, but was to light on the
backend hauling trailer.
Head on with my 2000 v.s. my 2015….the 2000 would demolish.
Mine are work trucks. We have been known to take weekends off and leave them in our driveways.
The vehicle market is close to its “iPod” moment: the time when the marketing gimmicks on the current crop of road-gadgets wear so thin that someone punctures the hype with a pin and puts out a practical vehicle that has only the features people really need, at 1/3 the price of the current bling. Something that just works and does the job so cleanly that it even becomes a status symbol DESPITE not being conspicuous in its consumption.
It will have these features:
– all-wheel drive with ground clearance of a small pickup
– seat height (easy entry/exit) of a crossover SUV
– basic safety suite incl. antilock brakes, backup camera, airbags (by law)
– a few USB ports so your personal electronics can be recharged.
– hybrid powertrain with small battery so you can get 50 mpg at no extra cost
– sedan seating for 2 in front and 2-3 in back
– options for car-type trunk, SUV-type cargo bay, or pickup-like cargo bed.
– options for heating (not needed much in the south) or a/c (not needed much in the north) or both. Note that some combo of heating or a/c is required to prevent window fogging in many kinds of cool damp weather, common even in California.
– not much else, because nothing else is really worth the sticker shock, or can be duplicated at lower cost and better performance by personal electronics. (For instance, you don’t need a rear entertainment system, just bring the iPad. You don’t need built-in fancy speakers for $1000 extra, just a USB port and a place to stick your bluetooth portable audio system that you already own (and can upgrade whenever you like).
The changeover will be driven by the next wave of manufacturing quality improvements which enable new vehicles to last for 300,000 miles or more, and lifestyle changes which reduce most people’s need to drive more than 10,000 miles/year, which means the vehicle will last for 30 years, which makes it a lifetime purchase like a home. As with a home, you’ll want to be able to upgrade and retrofit, not be stuck with the same thing for 30 years. So the vehicle interior will become like tires are today – interchangeable components that you can add/remove on your own.
People on social security do not need to buy cars so stop complaining about hedonic adjustments
Wow what great read I love your article on inflation and the comparison with another “best-seller” car.
There’s different type of buyers, lot of those trucks are for commercial / business/sideline job use (I would think more than 50%?), so they buy the larger model and just put it against the business and use it as their toy hauler and that is absolulety fine.
But let’s face it many of the remaining people are
the type of people who drink the Kool-Aid of Marketing and Excessive Consumerism to keep up with the Jonesses. They need to have a truck, because the neighbor has one and it has to be “bigger, better-looking, extra-king-cab etc…”, the financially uneducated don’t care about debt, inflation and all that mumbo-jumbo, so that would include…0% of your readership :).
This is the easiest one yet. Supply and demand. They can charge whatever the hell they want for these now, everyone and their mother is driving one. Even here in Florida half the time I am surrounded by pickups at every stop light.
And if you are in other Southern states not tainted and polluted by left wing Northerners, for instance Louisiana, Alabama and Texas, well, the pickup is the new Camry.
If fuel ever doubles again prices will adjust fast…..
It amazes me that you can spend more than $80K on a pickup truck, but it amazes me more that people actually do it…
i bought a well equipped diesel ram 3500 4×4 in 2004 for $40k out the door. i saw the price on that same truck last year and holy cow…add on sales tax for calif, 8% and i’ll call that prison sex. i’ll buy a replacement in oregon and save $30-40 grand on another ram diesel with low miles
i also drive a 94 f150xl with what i call the “heater and keys” option package. the thing is a short bed half ton so it’s pretty useless for any real truck work but the straight 6 seems to run on with never a stutter. terrible mileage but the lumber rack is nice for the long stock. it i could replace it with a similar rig that got better mileage like maybe a small diesel i would consider that. i need NO electronics or cameras or heated seats…just heater and keys. if it had a user serviceable engine that would be a plus.
The CPI should be answering the question,” What’s the cheapest reliable new vehicle that people can use to get to work?” If that price goes up then the CPI should go up accordingly.
I’ve always driven a light truck bought new, you know the ones with a fundamentally different look, lighter and smaller than the big American pickups. At one time Datsun, Toyota and Mazda offered these and also Ford with the Ranger, but the last time I had to replace my light truck no company in Canada was offering such a vehicle for sale and I had to go secondhand to avoid buying a big one. Without doing any research I’m sure that light trucks are still available from the same companies in the developing world.
OK: In 1990, the cheapest new car to go to work in was likely the Ford Festiva with an MSRP of $6,300. Today the cheapest car (or among the cheapest cars) to go to work in is the Ford Fiesta, with an MSRP of $14,260. That’s a price increase of 126%.
But yes, if new cars get too expensive, you can step down to used car then to used clunker then to bicycle, and finally to just walking. I walk nearly everywhere around town and it’s great and very healthy. But that’s in San Francisco. It’s not the ideal solution for Dallas, for example.
I will be contributing to “carmageddon” with my next vehicle purchase (though it won’t be new, since I always buy used vehicles) just because as I get older it’s harder and harder to get down into/up out of my sedan.