Sticker Shock & Hedonic Quality Adjustments: How Much Have New-Car Prices Really Risen over Three Decades?

Wages rose with inflation, but not nearly enough to pay for “quality improvements,” which is why working people feel increasingly impoverished.

There are two ways to answer the thorny question: One way, as measured by the official CPI for new vehicles. And the other way, as measured by retail prices. So here are the retail prices, as measured by base MSRP, for one of the bestselling four-door sedans in the US, the Toyota Camry LE, going back to 1990. And in a moment, we’re going to compare this to the official CPI for new vehicles.

The base MSRP for the Camry LE jumped nearly 70% in 30 Years.  

You already knew this: New vehicles have gotten a lot more expensive over the years, regardless of what CPI says. In 1990, the base Camry LE with a four-cylinder engine and automatic transmission came with an MSRP of $14,658. The just-arriving 2020 base Camry LE with a four-cylinder engine and automatic transmission comes with an MSRP of $24,840, up 69.5% from 1990:

The $1,080 jump (+4.7%) in price from the 2017 model year to the 2018 model year was the result of a redesign of the 2018 Camry that included appearance, dimensions (longer, lower, wider), aerodynamics (the sculpted face), and performance (the 2.5 liter 4-cylinder engine was boosted to 203 horsepower and 186 lb-ft of torque).

The purpose of a redesign is multi-fold: To catch up with or leapfrog the competition; to improve sales or keep them from collapsing further; and most importantly, to be able to charge a higher price. The latter doesn’t always work because competition is fierce, but it certainly happened in 2018.

Why use MSRP?

We all know that no one pays MSRP. Automaker heap on rebates and incentives, and dealers give discounts. But this was also the case in 1990. So that’s a constant.

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, depending on market conditions. If dealers drown in inventory, and sales get bogged down, discounts and incentives are increased to move the iron. This can change from one day to the next. But MSRP is fixed for the model year. Nothing is perfect, but using MSRP allows us to approximate price changes.

We also know that once we add an option to the base LE trim package, the MSRP jumps. For example, in 2020, the “starting at” MSRP is $24,840. But the most common models listed on dealer inventories are priced higher because they have more equipment. But that was the case in 1990 as well. Apples to apples, as close as possible: We compare base MSRP of the LE over the years.

How did I get this data?

Erik Senko, a former hedge fund manager and now Adjunct Professor at the Business Dept. of Santa Monica College who teaches investment and personal finance, sent me some amazing new-vehicle pricing data going back decades from a research project that one of his students, Jisoo Kim, submitted. The goal of her project was different from my goal: it was focused on the three top-selling four-door sedans in each model year and included models from GM, Ford, Honda, Nissan, and other brands.

My goal is to show price changes over the years, within the same model, regardless of best-seller status. I focus on the Camry LE because her data set was the most complete over the years for this model, and I only needed to dig up the data for a few years that were missing in her data set when the Camry wasn’t in the top three. I contacted Jisoo Kim to confirm how she’d obtained the data – she’d used various sources available on the internet. This was a lot of digging. Kudos to her.

Price increases are small until suddenly they aren’t.

The chart below shows the year-over-year percent change in the base MSRP of the Camry LE by model year. Note the 4.8% jump in 2018, following the redesign. The years before the redesign, prices were nearly flat. The chart also shows that price increases can be carried too far, causing resistance in the market, whereupon the automaker decides to adjust the MSRP the following year.

Oh no, not CPI!

Another way of looking at new-vehicle price increases over the years – this tends to cause a lot of hollering for good reason – is the official Consumer Price Index for new vehicles, released by the Bureau of Labor Statistics, which uses “hedonic quality adjustments.” The CPI does not attempt to show how costs of living rise. It attempts to show how the price of the same thing or service changes over time, to measure the loss of purchasing power of the dollar.

The Camry LE came with a four-speed automatic transmission in 1990 and today it comes with an electronically regulated, silky-smooth, shiftable, eight-speed automatic transmission. This is an “improvement” of the product, and the costs of this improvement are removed from the CPI in increments as these costs develop over the years – from four-speed to five-speed to six-speed to seven-speed to eight-speed – the “hedonic quality adjustments.”

Which leads to the discrepancy: The base MSRP of a Camry LE today has soared by nearly 70% since 1990, while the CPI for new vehicles has risen only 22% over the same period, and has been flat since 1997.

The chart below shows the MSRP by model year for the Camry LE (blue bars, left scale) and the CPI for new vehicles (red line, right scale). To show the relative changes in a comparable manner, I put them on the same scale, with only a difference in decimals: the MSRP scale runs from 10,000 to 25,000 and the CPI-new-vehicles scale runs from 100 to 250:

If you buy a Camry today, you’re likely to pay around 70% more than in 1990, but according to this data, the dollar with regards to new vehicles has lost only 22% of its value over the time, and the rest of the price increases are attributable to quality improvements.

It could very well be that the costs of the quality improvements have been over-estimated, and as these over-estimated costs are then removed from CPI, it would understate CPI.

But the quality improvements have been enormous over the three decades. Many of the features were unheard-of in 1990 and are now standard across the industry. Since I used the example of the Camry LE, I’ll stick with it.

The Camry LE went from two airbags in 1990 to 10 airbags today. Other safety features include tire-pressure monitoring system, front and rear crumple zones, side-impact bars, energy-absorbing collapsible steering column, stability control system that coordinates antilock brakes and traction control systems to keep the car from flipping, spinning out, and doing other crazy things. Stability control systems were unheard of in 1990, when basic antilock brakes were all the rage.

Power has improved. There is distance pacing cruise control, and myriad other things, many of them unheard-of in 1990, but now nearly standard, including an exterior parking camera at the back of the car that turns on automatically when you put the vehicle in reverse and shows on a screen in the dashboard that you’re about to run over your cat sleeping right behind the car.

As these systems are added to the vehicle over time, their incremental costs are removed from CPI since CPI attempts to measure what the “same thing costs over time.”

However, this leaves the economy – and people – with a problem: While wages have grown in nominal terms, “real” wages adjusted for CPI have been flat for men since the 1970s, and have grown only for women, but from a much lower base. In terms of our time frame here since 1990, “real” household incomes have only grown 22% since 1990, but the cost of a Camry LE has soared 70%.

This is the difference between “inflation” and “cost of living.” Things get better but they get more expensive. But the problem in the logic is that you cannot buy a new 1990 Camry anymore, even if you don’t want all the improvements, and you just want a cheaper car. In other words, wages rose with inflation, but the increase was not sufficient to pay for the quality improvements of everything around us, which makes a big part of the population feel increasingly impoverished.

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  190 comments for “Sticker Shock & Hedonic Quality Adjustments: How Much Have New-Car Prices Really Risen over Three Decades?

  1. Seneca's cliff says:

    Cars are a very good example of Tainter’s theory regarding the collapse of complex civilization. The widespread use of automobiles causes many widespread benefits but many societal and personal problems. Advanced societies always attempt to mitigate these problems in ways that involve greater complexity. So in the example of cars increased traffic deaths is partially solved with more airbags, anti-lock brakes etc. Increased cost of fender benders is partially solved with backup cameras and lane changing gizmos. Depletion and increased cost of fuel leads to fuel injection, and 9 speed transmissions. But these things add to the cost of cars and the increased complexity of the car owning experience. unfortunately these improvements do not put extra income in the buyers pockets (most fuel economy improvements just allow bigger cars with more gadgets to be practical) and thus tend to be a drag on disposable income and create some kind of waterloo in car ownership in the future.

    • Paulo says:

      Excellent comment and excellent article.

      10 airbags? Who needs ten airbags? Whatever. Tomorrow we head off for 12 days in our primo restored ’81 Westie. No airbags, and I’m sure we’ll be just fine.

      New cars offer terrific engine quality and reliability without a doubt. Our 2009 Yaris burns no oil between changes. None. But come on, tire monitoring systems at $300 per valve stem sending unit? Insanity. I have a $5 tire air pressure gauge and actually check the tire tread at the same time. It takes a few minutes. I check the oil and fluids weekly. It takes seconds. The more gizmos people have the lazier and dumber they evolve, imho. We had to special order in crank windows, for God’s sake. People are now too freaking lazy to wind a window open?

      I’ll bet most new vehicle owners do not even know how to check their oil, brake fluid, or coolant levels. New car manuals must now have cards with verbal instructions. “What’s that funny noise”? And, “How much is this going to cost”?

      • California Bob says:

        “… tire monitoring systems at $300 per valve stem sending unit? ”

        Are you getting your blinker fluid changed and muffler bearings replaced for that price? TPMS sensors typically run $20-40/ea., or less (google ‘tpms sensor’).

        Also, you can pick up a nail after you check your tire pressure.

        • Kaleberg says:

          The typical modern tire pressure monitoring is done using the same sensors that measure wheel rotation speed for anti-lock braking and the like. ABS is a great safety feature. The tire pressure monitoring is done in software.

        • Prairies says:


          ABS sensors and Wheels Pressure sensors are not the same thing.

          You are thinking of “indirect TPMS” – this system does not use wheel pressure sensors. It uses the ABS sensors mounted in the wheel hub assemblies and uses the wheel speed irregularity to alert the driver.

          The sensors being mentioned above are inside the wheel, these are “direct TPMS” sensors and they will tell the vehicle what the exact pressure is in newer models.

          For Paulo:

          A rockauto search for a YAris TPMS sensor is topping out at $50 in Canuck change, I think you got took – stop going to the dealer.

      • Javert, Chip says:

        I suppose if you’re caviler enough, you can consider seat belts a passing fancy.

        Having survived a driver-side t-bone accident, I benefitted from 4 BMW airbags:

        1) Steering column
        2) Forward-facing head-liner bag
        3) Driver-side window bag (this one saved my life; think your head slamming into the driver-side window at 45MPH as a car t-bones you)
        4) Knee/leg-well bag to prevent my sliding down into the knee-well

        There may have been other bags I wasn’t even aware of. I like air bags.

        I could care less about checking oil or other gas-station dude stuff. I expect my BMW to perform 99.9% of the time and let me know before it’s critical that it needs some kind of fluid or gizmo.

      • Intosh says:

        “The more gizmos people have the lazier and dumber they evolve, imho. We had to special order in crank windows, for God’s sake. People are now too freaking lazy to wind a window open?”

        Have you seen hilarious videos circulating on the Internet last week of Tesla owners failing to “summon” their cars from the parking lot? Talk about lazy and dumb…

      • Jest Love says:

        Right on!

      • The way I see it air bags cause more deaths than they save. To this day I can never fathom why they put air bags in a car?

      • Ted says:

        Your post reminds me of another issue: repair costs. I just paid $400 to replace 2 faulty tire pressure sensors (that was at a Lexus dealer, but still…). Cars are more reliable but at the same time there are more things to go bad and repair costs are huge. The increased total cost of ownership today has got to be way more than inflation.

      • A/C in SD says:

        Yep, 1988 Volvo 240 with 435k miles. I love this car and it’s hand crank windows!

      • fajensen says:

        Yeah, Organ Donors don’t need no airbags!

        My wife was torpedoed in the passenger side by a moron jumping a red light, shaping her car, a Ford Mondeo Station car into something like a banana.

        She had some bruises from the seat-belt tighteners and that was it.

        In a not very much older car she would have been seriously injured, probably dead.

        I let the garage check everything, a modern car (that is not a WW) will simply not burn oil, leak brake fluid or evaporate coolants :)

        • Valley Dog says:

          Agree. I was in a crash where a F150 in the opposite direction turned right in front of me on a yield on green. In car crashes, usually the people not at fault are the ones that get the most injuries. My car had airbags and I had broken ribs from my seat belt holding me back. Had I been driving one of those VW vans from the 70s, I’d be in a wheel chair right now.

          While politicians and sheepple focus on gun violence and now vaping products, keep in mind last year, over 40,000 Americans died in vehicle crashes with around 4.5 million serious injuries. Why is nobody talking about car control and taking cars away from people?

      • Gregorio says:

        Yeah, who needs airbags in a Westy when you have the driver and front seat passenger’s legs as your first line of defense?

    • Zantetsu says:

      I’m still trying to figure out why Wolf would write such a long article when all that really happened was the Camry has moved up in vehicle class and thus costs more relative to other vehicles than it did in 1990, which explains every aspect of this article in about 5% of the words.

      If you want a cheap car with few features, but a cheap car with few features. The Camry used to be such a car, but Toyota found it more profitable to slowly move the Camry up in vehicle class over the years. No big whoop.

      Cars are as cheap now as ever, better quality, more reliable, with more features, and safer to boot.

      • Bob says:

        This is exactly correct. a 2019 Camry exceeds a top of the line 1990 Mercedes in many ways. For people who bought a luxury car in 1990, they could gradually move down class over the subsequent 30 years while still maintaining (or even improving) the same functionality and comfort while spending the same amount.

        For the person buying an economy car in 1990, they wouldn’t be able to do the same thing, because there was no opportunity to move down class. You would have to sub in a used car (which is what many have done, and why the average age of vehicles on the road keep going up).

        For this person, replacing each car with a slightly older car every few years would do the same. a 7-year old Civic today costs about the same as a brand new Civic cost in 2000, and is just as reliable, if not more so…..

        • Greg Hamilton says:

          The new Civics are not more reliable than the old Civics. The new Civic automatics are CVTs and the turbo charged engines have oil dilution issues.

        • Gabriel says:

          I am a fire fighter and I have personally witnessed the beneficial results of the increase of safety features in vehicles over the years. A basic new car today is as safe as a luxury car built 30 years ago. For instance, I have seen people walk away from high speed impacts in newer economy cars that they would not have walked away from in the same model car built 30 years ago. From my personal observations, the less expensive economy cars are as safe, or safer than the high end luxury cars from 20-30 years ago.

          Keep in mind that a car accident is not always the fault of the driver. I agree that drivers are as inattentive as ever, and tend to be very unskilled, but you can be the best most attentive driver in the world, and that does not protect you from someone running a red light, and hitting you head on.

          Long story short, newer vehicles are much safer than older vehicles. An unintended consequence of the safety is a higher base price of the same model vehicle.

          In my opinion, I have witnessed fewer fatalities and severe injury accidents due to more newer vehicles on the road. I think this may be partially due to the unintended consequences of the cash for clunkers. Many of the vehicles that were bought back were junky 80’s vehicles. They got you around fine, but if someone crossed the double yellow, you were hosed.

          I am not an engineer, or scientist, and I did not even stay in a Holiday Inn Express last night, but I have personally witnessed a decrease in severe injury and fatality accidents over the last 5-10 years, and I attribute it to the fact that most of the accidents are occurring in newer, safer vehicles, with crumble zones, multiple air bags, and other safety features.

          Just my personal, real time observations.

      • RD Blakeslee says:

        “… bu(y) a cheap car with few features.”

        Name one.

      • Wolf Richter says:


        You “can’t figure out” why I wrote the article because you don’t want to figure it out. You’re hung up on something. So let me explain it to you using a different example.

        The cheapest car that Ford sells today is the Fiesta, with an MSRP “starting at” $14,250. This is about as low as you can go in the US.

        In 1990, the cheapest car that Ford sold was the “Festiva” — a great little car with an MSRP of just over $6,000. The Festiva was about the cheapest car at the time. We advertised them occasionally at $4,999 (ad units we lost a little money on).

        So from cheapest to cheapest MSRP, over those 30 years, you go from about $6,000 to $14,250. That’s an increase of 137%. You CANNOT go down in MSRP from there.

        Over the same period, new vehicle CPI rose 22%.

        But very obviously, today’s Fiesta is a much better and bigger car than the Festiva was in 1990. So part of the 137% price increase was due to quality improvements that have been adjusted out of the CPI measure (via “hedonic quality adjustments”), and part of it was the loss of purchasing power of the dollar, which is the only thing CPI attempts to express.

        To demonstrate that distinction between CPI and actual price increases, and how it works in the real world, is why I wrote the article.

        • Zantetsu says:

          Inflation-adjusted, that $6,000 in 1990 is now $11,500. It’s not far off of today’s Fiesta, and today’s Fiesta is incredibly better in every aspect.

          I appreciate your attempt at trying to explain the difference between CPI and actual price increase, but I just don’t think these examples make the issue actually any clearer.

          Perhaps you’d like to use computers as an example? Or any of the thousands of consumer electronics that we would have paid millions for back in 1990 that we can now get for dollars?

        • Greg Hamilton says:

          That was a great, informative article. A follow up article might be one on car insurance for the same time period. Although many more safety features are standard, they also cost more to fix in a fender bender which can result in higher premiums.

        • char says:

          Are you sure the Ford Fiesta belongs to the cheap car category? Cheapest Fiesta is in the Netherland 17000 Euro’s while the cheapest car is 11000 Euro’s.

          ps where i got the numbers from

          The commercial vehicles are without VAT., Twizy isn’t a car, and i gave the Euro price including VAT because Euro inc VAT is often dollar exc. VAT. But the Netherlands has a lot of added car taxes so prices are likely in Germany (a lot) lower

        • Wolf Richter says:

          In the US, it’s about as low as you can go. And it’s pretty nice, actually, with climate control system, and all kinds of goodies. We Americans LIKE nice big vehicles. And the Fiesta is the bottom end for us. Back in 1990 at our store, we would sell about 2 Festiva’s a month (below $6,000) compared to about 150 F-series trucks (at double to quadruple the price). Spartan, small, cheap economical cars are really hard to sell in the US. Go visit Texas some day and see what’s driving around.

        • Dave Chapman says:

          Wolf – Totally agree.
          My first (new) car was a 1978 Toyota Corolla.
          Quite fast, got 30 miles per gallon. Really.
          Excellent car in every way.
          I put 240,000 miles on it.

          Cost, I think $4800, new at a Toyota dealer.

          Is a 2020 Corolla 5 times better than the 1978 model?


        • Ian Davies says:

          Hi Wolf,

          There is some truth to both sides here. Yes you don’t need to buy the Camry now as a lower model car will be probably better than the 1990 Camry. But at the same time the point you are trying to make and one which really burns me is the measure of inflation. If we were not being lied to about CPI, which sets wage increase and pension increases, then we should still be able to buy the damned Camry if we wanted to. And for me this is one of the fundamental issues with our entire economy – the lack of purchasing power due to the deliberate fudging of the numbers and then they wonder why there is no growth.

    • Xabier says:

      Everyone, but everyone, should read Tainter on the collapse of complex civilizations in order to orientate themselves and understand what is happening to our civilization.

      Clear and accessible, not like much academic stuff, and a very robust thesis.

      Buy Tainter, read Wolfstreet, and you have a fair guide to the turbulent times we live in – soon to get more so…..

      When you’ve done that, go fishing or hiking.

      • Trinidad/Cad says:

        I Love your comment! I also happen to agree 100%

        • Naresh says:

          Yes wolf I thank you for explaining this it’s the improvement we are paying for and not is it worth it the new Camry is light years ahead in quality so we are getting great value considering that my chocolate bar had more than increased 3 times in price and shrunk to half its original size

    • HowNow says:

      Just looked up “Seneca’s Cliff”. Great reminder of the profound contributions of the ancient Greeks. How quickly we forget…

      Wolf, you do an amazing job of making economic and business concepts as clear as day. You should consider putting a Principles of Economics textbook together. Just follow the typical TOC, get a co-author with a professorship, and someone to write the end-of-chapter questions. You’ll give economics students an easier time understanding the courses.

    • alex in San Jose AKA Digital Detroit says:

      One of the results we’re seeing now is less and less people actually being able to afford cars. And whenever the powers-that-be want to give a boost to the auto industry, they can just enact another “cash for clunkers” program.

      Honestly cars now are like a friend of mine long ago described one of those “shag wagon” vans, “Like driving your living room around” who cares what’s happening out the windows…

    • NBay says:

      Race car drivers don’t use airbags, just a 5 point harness. Much much safer, cheaper to build, and especially NO repairs needed.

      Nobody ever said when responsible for the kinetic energy of 3-4K lbs of vehicle at 70mph you should be as comfortable (and entertained) as in your living room.
      We still kill 40K on the roads every year…safer? I think not.

  2. Endeavor says:

    But the problem in the logic is that you cannot buy a new 1990 Camry anymore, even if you don’t want all the improvements, and you just want a cheaper car. In other words, wages rose with inflation, but the increase was not sufficient to pay for the quality improvements of everything around us, and people feel increasingly impoverished.

    Especially when they pony up for a $70k pickup taking the place of a mass consumption sedan like the Camry. Only easy credit has allowed this.

    • Patience says:

      Just like TVs they could be cheaper with technology.

      And with any research it shows wages never keep up with inflation, that’s the fact

      • raxadian says:

        Actually TV prices go all over the place. Last time I checked “Dumb” TVs are still being build. But getting one without Wifi is becoming a struggle nowadays.

    • joe saba says:

      But the problem in the logic is that you cannot buy a new 1990 Camry anymore, even if you don’t want all the improvements, and you just want a cheaper car.

      well actually I just buy USED in MY PAID FOR PRICE RANGE
      it’s the 1 payment plan
      always works

      • Bobber says:

        Good point. That new Camry in 1990 might be LESS valuable than a used late model Camry of today, given the quality enhancements over time. It may be fair to compare new car prices in 1990 to used car prices today. Although many people only want new.

        • joe saba says:

          they are FREE(dom) to go broke all on their own
          I’ll pickup bargains with pesky CASH

    • cas127 says:


      “Only easy credit has allowed this.”

      Actually, only *insanely* easy credit/money has allowed this.

      I also think that one vastly under-appreciated change over the last 20 to 30 years is the securitization/tranching of all sorts of receivables (home mortgage payments, auto payments, etc).

      By offloading a *lot* (if not almost all) of the risk from the seller (who is underwriting/signing off on the individual loans) the explosion in securitization has created enormous, repeated incentives for adverse selection in loan approval (ie, “hike the price, loosen the terms, lobby the gvt for near-ZIRP – we’re gonna sell off these sh*t loans anyway…).

      This idiotic dynamic was behind most of the housing bubble – and almost nothing has changed – the sleaze-bags making the “loans” to move the iron really don’t have all that much incentive to make good, long-lived loans.

      (There are some contractual safeguards protecting yield-starved securitization buyers – but nowhere near enough).

      Savers/buyers find it very hard to push back because alternative yields are so minute (thanks corrupt US government).

      The government has no incentive to push back (and is in fact an eager co-conspirator) because of the artificially/temporarily/doomed inflated sales/employment made possible by the systematic debasement of loan underwriting standards.

      US government/corporate incompetence and corruption made many/most US products price non-competitive decades ago (witness decade after decade of trade deficits) – so the US consumer has seen relentless erosion of their buying power.

      But things got so bad about 20 years ago that ripping off the ruined consumer reached its endgame – the consumer had no more to give at historical interest rates and historical terms.

      So the con had to be shifted to include the conning of *savers* – by shifting the risk of sh*tty underwritten home/car/etc loans to savers via securitization/tranching.

      The *qualified* borrower had reached his limit – so *unqualified* borrowers had to be incorporated somehow.

      But that only made sense for the corporate producers/crap loan underwriters/repayment bookies if they could offload the greatly increased risk to doomed-to-be defrauded/defaulted investors (herded into the FI slaughterhouse by ZIRP’ing central banks).

      And despite a historic collapse in home lending standards/results – essentially nothing has changed.

    • Zantetsu says:

      I don’t agree. Almost nobody had a cell phone in 1990. So — throw away your cell phone and your cell phone bill. Maybe do the same for your high speed internet bill since you didn’t have that in 1990 either.

      Suddenly, you have enough money to afford that nice car you want in 2019.

      If you want to live the same as you did in 1990, you can; you can pay roughly the equivalent for the same items that you had in 1990. Except that the items that you actually get will be vastly superior to what you had in 1990.

      • Ethan in NoVA says:

        Remember when it cost money to call across town (Inter-LATA)? Ma Bell remembers.

        I ran a BBS, and remember that a home phone line was at least $20/month in the 90s. And it cost per minute to call from Norfolk VA to Hampton VA, all of 20 miles or so since that was “long distance.”

        • alex in San Jose AKA Digital Detroit says:

          Phone calls were EXPENSIVE as hell back in the 80s! This is what got a lot of kids into ham radio then and earlier; you could talk to your buddies. Also why BBS’s and fax machines and so on were popular. After a while faxes got fast enough that they could transmit a page or two without it being recognized as a call, so it was free.

  3. Nels Nelson says:

    I think one thing missing in your post is what all of these additional features cost at the manufacturing level.

    For example, once manufacturers began making ABS standard on many cars and trucks it cost little to incorporate traction control and then vehicle stability control. Do the hedonic adjustments consider what this would cost if these were offered as an option or what it cost the manufacturer to add them?

    My point, many of the additional features in cars can be added across the entire fleet at very little addition to the variable costs. It is not uncommon to see a manufacturer introduce a new vehicle at a higher price and justify the price increase based on the added content when this content cost them very little at their level but it sure helps their margins.

  4. interesting says:

    Imagine the horror of making the same wages since 1997………no 22% increase in my world.

  5. 2banana says:

    Wages vs car costs + fuel + taxes + insurance

    Over 30 years

  6. Keeper Hill says:

    The heated seats alone worth the increase according to pinhead economists

    • Lisa_Hooker says:

      Bingo. In 12 years of ownership of the same car in northern Illinois I have turned on one of the electrically heated seats approximately 5 times. This “improvement” has really affected my outlook on life.

      No amount of money can buy happiness. Enough money can rent it.

    • Pete in Toronto says:

      But economists like to EXCLUDE food and energy from their calculation of consumer prices changes, supposedly because they are so much more volatile than the other components.

      In the words of Don Coxe, “economists are people who neither eat nor heat”. :)

  7. char says:

    It is a well known feature of some car companies to let their different types of cars go up half a class every redesign. See for example Opel whose cadet ended up with the same wheelbase as their biggest car in the 50’s. Or VW who’s original Golf is the same size as the modern Up!. I don’t know if this is also true for Toyota’s as i live in Europe and Camry’s are rarer than Ferrari’s here but are you sure you are not seeing type-inflation and not price-inflation.

    • char says:

      Checked wikipedia for length, wheelbase, width and height.

      First Avalon was smaller than the latest Camry and the latest Corolla is bigger than the first Camry. So price increase is due to type-inflation, not price inflation. A modern Camry is a Avalon from the 90’s and a modern Corolla is a Camry from 1990.

      ps. With cars there is also brand-inflation. I have been told that Chrysler was once a luxury brand and Volkswagen a people’s car. Than you have the change the Japanese & Korean brands made. But i don’t think Toyota brand value changed much in the last 30 years

      • char says:

        I get $20050 for a corolla LE (whatever that means) so inflation would be 37% since 1990


      I was kind of thinking the same thing. A 1990 Camry is probably about the same size as a Corolla and you can get a Corolla pretty stripped down, pretty comparable to what a 1990 Camry would be. Not sure on the MSRP but I seen them advertise deals on them for around 18k

      • Kaleberg says:

        Honda upgraded the Civic so much that they introduced a cheaper model, the Fit. It even looks like an older Honda Civic.

  8. The auto industry is reeling right now because of low wages and bennies. Union workers are sick and tired of giving up on healthcare and pensions. Now we have foreign auto makers locating to right to work states (LOW WAGES NO BENNIES). Until we quit paying CEO’s millions this problem will not end. Minimum wage should be at 20-26 an hr and then up. Wait till they start including cell technology in autos. We do not need tire pressure monitors either. We are just becoming more dependent on the industry to make it easier for us , I call it being lazy. And yes, buying used is more better.

    • Lisa_Hooker says:

      $20-$26/hour minimum wage is an interesting idea. But, I’m bummed out thinking of $25 Big Macs and $7.50 for a small french fries. Saying nothing about $8,000-$12,000/month for a one-bedroom apartment in an average suburb near the factory.

  9. Clockwork Orange says:

    “In other words, wages rose with inflation, but the increase was not sufficient to pay for the quality improvements of everything around us, which makes a big part of the population feel increasingly impoverished.”

    Point 1.
    So who’s going to enumerate the quality improvements in bananas that warranted a 76% increase from .39/lb in 1990 to.69/lb in 2014 according to anecdotal Morris county library Historic Prices:

    Point 2.
    What about “quality improvements” of workers? They seem to not be reflected in the price of labor. So, either the claim is that why gadgets are “improving” the people making them aren’t; or, as I contend, that people have no pricing power to get compensated for the improvement of their labor.

    So there is that.

    • Wolf Richter says:

      Hedonic quality adjustments are not made to food prices.

      BTW, we buy our bananas at Trader Joe’s for 19 cents each. If you pick nice big bananas, they weigh 1/2 pounds each, or more, and so cost about 34 cents a pound. That’s a deal! If you’re paying 69 cents or 79 cents a pound (our Safeway), you need to start shopping around a little. It’s like paying over MSRP when you buy a car :-]

      • MCH says:


        What does it say that I keep reading hedonic as hedonistic? I actually didn’t know what hedonic meant so I had to look it up. But as I read through your article, I kept thinking about what possible hedonistic upgrades one could provide to a Camry.

        But after I looked up the meaning, it makes me wonder about the economist or the bean counter that decided to use the term hedonic quality adjustments. Made me wonder what he was thinking at the moment when he decided on the term.

        And as for the bananas, I always liked the Costco bananas, then those guys started raising prices until now where I have to make a side trip to TJ’s to indulge satisfy my hedonistic banana cravings.

        Ha, I worked that in, even if it is kind of gross.

        • Wolf Richter says:

          I would very much approve of hedonistic upgrades, for sure, for sure.

        • Xabier says:

          Great car sex would certainly be Hedonistic: but, sadly, I really don’t think we can expect either manufacturers or dealers to provide that as standard…….

      • Nicko2 says:

        I buy locally grown organic bananas, not Ecuadorian pesticide laden bananas that have been in a cargo container and shipped across the ocean. You are what you eat.

        • Wolf Richter says:

          Yes, there are some benefits to living in Egypt.

        • DawnsEarlyLight says:

          Yes, it would be nice to live in a tropical zone. A lot of ‘organic’ bananas consumed in the US are grown much closer than Ecuador (Puerto Rico, Guatemala).

        • Zantetsu says:

          Yes – I eat strong bananas that can survive a trip across the ocean, not wimpy locally grown bananas that would wither away at the first whiff of ocean breeze. That’s why I am strong.

          Just kidding. I don’t eat bananas.

      • Jeff T. says:

        Just last night I finished reading a book Titled “Banana” by Dan Koeppel. Wow. A great read, and an insight into a brutal business, United Fruit, government working for big business, corruption and exploitation of people in banana growing areas. If you like bananas, this is a must read. Bananas are amazing and the history enlightening.

        • TonyT says:

          And if you want a fun time, read O’Henry’s short stories about a banana republic, Cabbages and Kings.

      • Gandalf says:

        Wolf, I believe hedonics are applied to food inflation. The most common example cited in my readings about hedonics is the price of beef, where, under hedonics adjustment, it is assumed that if the price of a specific cut of beef goes up, a “consumer choice” logic in hedonics allows the bureaucrats rigging these numbers to say, hey, people will just switch to a cheaper cut of beef.

        I think that a similar “consumer choice” justification logic is being applied here to cars to suppress the inflation rate of cars.

        That’s why the CPI is fake. Lots of people have been saying that for years, and get thwacked as nuts by the usual pedigreed economists

        Here’s the REAL PROBLEM, the corollary to what’s been going on since 1983 when the CPI first started to get “adjusted” / faked:

        The Fed Fund Rate is roughly based on the Taylor Rule, which has inflation as THE key variable for calculating what the ideal Fed Fund Rate should be.

        If real inflation is indeed much higher than the official CPI or CPE, then the Fed Fund Rate has been far too low for over 30 years now, which would explain the extraordinary asset inflation that has occurred during that time. Just look at the chart of the Shiller PE for the SP 500. At the bottom of the market during the GFC, the Shiller PE was still around 15, which historically used to be when the stock market was in an economic growth period.

        It would also explain the extraordinary inflation in the three economic areas that continue to show 5-10% annual inflation – healthcare, education, and home building.

        Those areas reflect the true rate of inflation in this country when you strip away the hedonics fakery, and when you take away the deflationary aspects of automation and globalization.

      • Living in Hawaii convinced me that smaller bananas have more flavor. I also drove a rusty used “island car” there, with weeds growing on the holes. Toyota Camry. Coincidence?

      • VarAway says:

        Mmm Wolf,

        About bananas?
        Just bought bananas at Walmart at 20 cts a lb.
        Delmonte brand and perfect.
        They must be selling them below cost.
        Figure out the freight alone from Costa Rica to northern

        Great conversation by the way!

  10. Tokyo_Steve says:

    Excellent content, Wolf. Very educational and thought provoking. We spend so much of our time telling our children that there is more to life than money, and then we spend endless hours fretting over how much a safer car is cutting into our wages. This duality can’t be avoided, but I would much prefer that my wife and kid ride in a modern car with all the (perhaps) redundant safety features and the fuel economy. But I’m lucky because I can afford one of these things, and I don’t have to decide between food on the table or transportation. Many thanks to Jisoo Kim also.

  11. Upstate says:

    I remember my brother buying a new Ford Torino in 1969 with a 2 year loan.
    In 1983 I had a 4 year loan on a new Datsun Pickup. And a hot Deal with 9.9 financing.Now loans can be 7 or 8 years, all to buy a new vehicle.

    • roddy6667 says:

      My first car that I bought on payments was a 1980 VW Rabbit. I was young and put 50% down because I had no credit. I paid off the 3 year loan early. First and last car loan.

  12. nick kelly says:

    My nomination for dumbest improvement: an auto that shuts off the motor at a stop, then starts it again when the foot comes off the brake pedal. Last time I heard it, it was an MB SUV along side.

    The goal is obviously a marginal pick up in fuel consumption. Less marginal if the stop is 5 minutes or more but ordinarily…marginal.

    But the massive increase in wear on the starter will be anything but marginal. In typical, but light, stop- and- go urban driving with twenty stops a day the starter will age 20 years in one year.

    I wonder what a new starter installed for that MB runs. Hopefully it’s not quite like the unbelievable gouge on a master cylinder for a Smart Car. That takes the ‘smart’ out of that puppy.

    Starter under warranty? Will they do one every year?

    • nick kelly says:

      To be clear: in normal use all day, with this unit, the starter will be used at least 10- 20 times as often.

      • Zantetsu says:

        Gee … I wonder if they design it to be able to handle that knowing that that is the kind of usage it will face? Ya think maybe?

        • Prairies says:

          The simple answer for GMC/Chev is that they DON’T. The local dealer was having issues with starters failing under warranty before they even switched to this auto shut off. The main units with issues have the starter mounted under the intake manifold, constantly exposed to high temperatures. I think they were trying to avoid the high heat of the exhaust but forgot the open air made it easier to cool off.

          Just because an engineer designed it recently doesn’t make it better than the previous designs. Sometimes people make mistakes.

        • Zantetsu says:

          Maybe GMC/Chevrolet don’t, but why would you ever buy those brands of cars? You’re just asking for reliability issues.

          And anyway, the discussion was about starters for cars specifically designed for idle engine shut-off. Problems that GMC and Chevy starters have had in engines not designed for idle engine shut-off are completely irrelevant.

        • Prairies says:

          You can’t pick and choose brands just because you don’t like them, GMC and Ford are on top of the sales list. Therefore they have more units in the market and make for solid argument cases that will affect more people than a Tesla.

          GMC also does use auto shut off in the new vehicles equipped with these faulty starter designs that were acting up prior. I wouldn’t guarantee they won’t have the same problems. I always give these designs a few years to iron out the kinks, by the third revision cycle they tend to be fairly bug free.

      • elysianfield says:

        The Government, of course, mandates fuel economy…doesn’t regulate component longevity…not an issue for them.

    • char says:

      a) Decrease in fuel consumption is small but not marginal.but that is true for almost all increases in efficiency.
      b) Stops the engine so no tailpipe emission were it counts, near zebra crossings and where people sit in cars
      c) Start-stop starters are designed for it so probably lives longer than the old ones. It is semi standard in Europe.

      • char says:

        Forgot the main one. If you stopped and the engine is off you don’t have vibrations. Those vibrations are maddening if you’re used to Start-Stop so it is for a Mercedes a very good improvement

        ps. There is also less sound pollution.

        • nick kelly says:

          You must be very sensitive to vibrations. I have NEVER heard anyone mention this. A new MB vibrates?
          As for designing a starter motor that lasts an order of magnitude longer….

        • char says:

          A car with a running engine vibrates, even a Mercedes. If you can’t tell if an engine is running than you should see a doctor.

      • wkevinw says:

        Old rule of thumb used to be ~1 min. of run time or less prevented, don’t stop the engine. (total costs including wear and tear, not worth it.)

        It almost certainly does reduce pollution. The newer cars run and start so well that no gas pedal action is needed. The computer(s) take care of needed starting conditions if needed.

    • roddy6667 says:

      I drove my friend’s Saab 96 a few times back in the early Seventies. Besides FWD, it had a couple of other things you don’t see much. It had a two cycle, three cylinder engine. You put oil into a small tank separate from the gas tank. When you were going downhill, the engine speed went to an idle and the clutch was disengaged. After the bottom of the hill, it all resumed. The car was great in snow. It ruled the ice racing world at the Great Lakes. It also left a trail of blue smoke and a smell like a chain saw.

      • RD Blakeslee says:

        Owned, I dunno, five or six of those late fifties – early sixties vintage Saabs.

        Their handling was ahead of their time by many years. Stable understeer, in all road conditions. Rock-solid unibody with (IMO) beautiful lines.

        Woefully low engine torque, though.

      • Lisa_Hooker says:

        Yup. Dad had a German DKW three-cylinder two-stroke in the late ’60s. Great car. Wish I had one now.

    • SwissKev says:

      There are some places here in Europe where it used to be mandatory to shut off the engine at red lights. I believe this could be the origin of this?

      • char says:

        Not for normal red light. Only for open bridges etc, red lights what takes a long time and it is only a suggestion.

    • panatomic-x says:

      actually, the goal is improving the mpg number fot the cafe regulations. most cars have a way to turn it off with a hidden function. it’s crap like this that keeps me from replacing my 1993 van.

    • fajensen says:

      It is part of the ‘Euro 6’ standard for limiting emissions; the engine must not idle for more than 1 minute. If your car is not ‘Euro 6’ compliant you won’t be allowed to drive it into most city centres (yes, they do check the registration with cameras and they can send the fines automatically too).

      People use public transport at lot more here, driving and parking in cities sucks and it is expensive. Best avoided, when one can.

    • Dave Kunkel says:

      My daughter has one of those MBs that shut off at every stop. She found that “feature” can be turned off.

    • Maximus Minimus says:

      That’s due to some California regulation. It appears to be also in effect in elsewher, but luckily not in my jurisdiction. Another one is high engine rpm on startup – to warm up the catalytic converter.

  13. Assuming those upgrades were government mandated, and I would say that as long as the government tests these vehicles and rates them that is the case, then government should be responsible for the excess inflation. So what exactly has USG done to make it easier to afford one of these improved cars? Makes sense that healthcare should be more affordable, the driver is less likely to end up in the ER. Should cost less to own and operate one of these, certainly taxes and registration fees have not gone up, or gasoline. Insurance costs should be lower. Of course none of these things is true. (Crude oil is up 140%) The operating cost of an automobile is very nearly the purchase cost, even at zero APR. So buying one of these is just half the liability. On the other hand a share of Microsoft is up 35000% since 1990 so one share at 75 cents would have done the trick.

  14. Bob Hoye says:

    I don’t think it is a good comparison.
    The current Camry is a vastly superior car to the same named model in 1990.
    The comparison could be to a mid-sized competitively priced car today.
    Which I don’t know, without looking further into it.

    • Wolf Richter says:

      The Camry was a good mid-size sedan back then. But yes of course, the current Camry is vastly superior to the 1990 Camry. THAT WAS THE POINT OF THE ARTICLE.

      • zoomev says:

        I’ve been looking for a new car since last April and can’t bring myself to pay $30k+ for a car that will eventually go to zero.

        A Camry isn’t a Camry anymore. It hasn’t been since the first one.
        It’s all delusion/perception, as is everything.

        I think the question needs to be asked if these comparisons would be better made based on attributes.

        A quick check shows a 2020 Nissan Versa @ $14k is very close in wheelbase, overall length, HP even weight. It also has a backup camera, stability control, lane departure warning and a lot of airbags.

        • Wolf Richter says:


          We just rented a Versa. It’s fine but SPARTAN. This is the low end. It had all the electronics, the backup camera, the infotainment center, but it was noisy and under-powered (revving up the engine to 4-5,000 rpm just to go up the slope on cruise control on I-80 from Salt Lake east, with just us two lightweights in the car), kind of made us nervous… just spartan for a modern car. Don’t even think about comparing it to the Camry. Not in the same category of car. It competes with the Ford Fiesta. The very low end of the lineup.

        • alex in San Jose AKA Digital Detroit says:

          I’ve ridden in a Versa and talked to someone who had one, and the consensus is it feels like a tin can. It’s a car I could like, as it is very utilitarian.

      • cas127 says:


        “the current Camry is vastly superior to the 1990 Camry”

        Okay – but as you note, no one can buy a much cheaper, marginally less wonderful 1990-type Camry – even though I think millions and millions of wage-stagnated Americans would love to.

        Leaving aside government-mandated safety enhancements, the real question is why auto makers (US makers most of all) are seemingly 100% addicted to selling $40k tricked-out SUVs/trucks (trucks! for chrissakes…) rather than being able to progressively improve the efficient manufacture of $15k cars.

        Of course, the question more or less answers itself – selling overpriced SUVs/trucks to unqualified buyers (then selling the rotten receivables to yield starved investors) is a helluva lot easier than actually improving the manufacturing process and providing for the long-term lowering of car prices.

        But that is the mentality of the drugged-out sociopath, not an adult trying to sustain a society that is going to last more than 7 years.

        And even if the US makers are more or less committed to being drugged-out sociopaths at this point, the question is why some overseas maker (forced to be more efficient due to lower local/international incomes…and the lack of a psychotic securitization market) really hasn’t moved aggressively into the $15k market in the US.

  15. PressGaneyMustDie says:

    Thank you to Jisoo Kim. Mundane details like the price over time of a commodity base trim automobile are the bedrock of personal finance literature and behavioral economics.

  16. Max Power says:

    Just a few observations…

    If you take out the years 1990-1994, the price increase of the Camry is a lot tamer.

    MPG in both the 4-cyl and 6-cyl Camry variants has improved drastically, going from about 22 and 19 combined to 34 and 26 combined, and with the engine providing more power.

    The current Camry comes with standard safety systems you could only dream of in 1990. In particular, the inclusion of a Collision Avoidance System (what Toyota calls “safety sense”) . My past two cars have had a similar system and I can tell you that in the past six years it has probably saved me once or twice from serious accidents. I can’t even put a price on that. I would not dare purchase a vehicle nowadays without a CAS (or at the very least a Forward Collision Warning System).

  17. Petunia says:

    GE announced it was cutting pensions in the future for its workers. The pension crisis is now here for real and future incomes will be falling further. Remember 10K people are retiring every day to a lower income and standard of living. GE is only kick starting what has been expected for years now.

    Expect car prices and real estate to be in a downward spiral from here on out.

    • Nicko2 says:

      Perhaps in second tier American towns and cities; American infrastructure is crumbling away just as it’s tax base is greying — what is needed are immigrants and investment.

      • Petunia says:

        Immigration is largely the reason why retirees have lower incomes. Immigration lowered the income of current retirees to the point they could not save enough to retire. More immigrants are a net negative because they reproduce by large numbers and current retirees will still be paying to educate “the children.”

        • Harrold says:

          Yes, immigrants caused the baby boomers to spend all of their money on toys.

        • Zantetsu says:

          Are you kidding me? Are you actually suggesting that retirees pay more to support young immigrants than the reverse?

          Who do you think will be taking care of all of those retirees when they are wearing diapers again?

        • Petunia says:


          Being a Latina and living in cities with large immigrant populations I can tell you are the one living in lalaland. Immigrants, even legal ones, largely operate outside the system because they live in minority communities. Working off the books, sending money back home, scamming the govt out of food stamps, earned income credits, working on tourist visas… net they don’t contribute as much as they cost and they know it, which is why they come.

      • RagnarD says:

        Immigrants ?
        Do u mean ones with IQs >120 or <80?
        Or does it not really matter?

        Oh, I almost forgot to ask….what is wealth and how is it created?

      • Dave Chapman says:

        Sicko2 – Boy, are you wrong!

        H1-B visas exist to push down wages.
        L-1, TN-1, W-1, OPT, and the rest of the alphabet soup are the same thing.

        Anyone who says that immigration benefits the average American is delusional or is a Lobbyist.

        Are you a Lobbyist?

    • Endeavor says:

      Petunia, As a demographics fan for economic predictions, I feel the same way. But near open borders may change our minds.

      • Petunia says:

        Look at Europe, the future is in full display.

        • wkevinw says:

          Look at CA. It’s a perfect example. Their neo-feudal system says it all. Enormous income and wealth disparity.

          Service (read servant) economy from the immigrant population. Along with it, vanishing middle class, social welfare (= social degradation) to infinity and beyond. Poor public schools. This is all because of their government policies.

          CA has the highest percentage of people in poverty of any state. That single stat cancels any other positive economic stat you could name.

        • Dave Chapman says:

          Petunia – Do you mean the rape epidemic in Sweden, or are you thinking about something else?

  18. Mike G says:

    Quality-wise, the 1993 Camry (XV10) was way ahead of the previous model, automotive journalists at the time compared it to the E-Class Mercedes — very smooth and quiet, double door insulation, quality materials throughout.
    Today’s Camry may be superior on paper, but the XV10 was the high-water mark in terms of the Camry being ahead of its competition at the time.
    As the yen soared in the mid-90s Toyota went on a cost-cutting binge, and the subsequent model (XV20) that came out in 1997 was inferior, most obviously in interior materials.

  19. Setarcos says:

    Good stuff. According to my wife, without anti-lock brakes, my current sedan would have been totally scrapped and several people likely severely injured. Hard to put a price or value on that.

    • ft says:

      I learned to modulate manually long before anti-lock brakes were available and have yet to have them help me in a hard stop.

      • wkevinw says:

        Yes, but a lot of people can’t do that.

        I am not even sure that people are aware that the only thing anti-lock brakes do is make sure you have some control over the direction during braking- not that they help you stop faster.

      • Happy1 says:

        ABS modulates the brakes much faster and better than any human can. It is a major step forward and the only one of the hedonic improvements since 1990 that is worth anything to me.

  20. ft says:

    I bought a Camry-equivalent sedan in 1972 for 46% of my annual income. A Camry in 2014, the last year I worked, would have been 24% of my annual income. A Camry now would be 39% of my annual income. Just another way of looking at it.

    • Wolf Richter says:


      You have to compare your annual income-to-Camry-ratio in 1972 to a 30-year-old today, and see what their annual income-to-Camry-ratio is today.

      The idea is that when as you get older and more experienced, you make more money. At 30, you bought a Camry. At 40, you bought a BMW 5-series. And at 50, you bought something crazy. And at 60, today, you bought an F-350 Crew Cab 4×4 dually for $100k because you can. That’s the idea in America. So you need to compare what the median 30-year hold could afford back in the day, and what they can afford now.

      • cas127 says:

        “And at 60, today, you bought an F-350 Crew Cab 4×4 dually for $100k because you can”

        And because you hate your children.

        Or…because you can shift a sh*t loan into the securitized receivables market.

        But the real question is, as it was with the housing bubble, who buys the lower tranches of these sh*t securitizations?

        And without suckers buying the lower tranches, the securitizations as a whole can’t be sold.

        After the mass financial executions of 2008/2009, is there really a big market of buyers for paper that yields 8% to 10% a year (wheee!!!) and defaults (with a 100% loss) in 5 years?

        As it was 10 to 15 years ago, the crucial question of the age is – Who Buys This Sh*t?

      • ft says:

        Wolf, digging for a comparison, I come up with my stepson who, at the same age (24) as I was in 1972, bought a 2013 Honda Civic SI for 190% of his annual income, complete with 7 year loan that made the real total even higher.

        My salary over the years kept up with inflation but not much more, so my progression of vehicles is a bit more modest than you suggest. The 5-series I had at 40 was a used Honda Civic. The crazy car at 50 was a Miata which, when I got done modifying it, was crazy fast. The truck at 60 was a regular cab short bed 2wd Silverado with rubber floor mats.

        Current car is a 2018 Subaru WRX which cost me 48% of my annual income. So I’m just about back where I started.

        There’s a bunch of us out here who look forward to seeing what you come up with every day. Thank you for what you do.

  21. Marcus says:

    Do durability and/or resale value factor into the equation for hedonic adjustments?

    • D.J. says:

      In a world that runs on counterfeit money (which is what fiat currencies are) and fractional reserve banking, wages fall further and further behind the cost of goods and services over time. The ever-increasing shortfall is made up for by ever-expanding amounts of credit. Eventually, even that isn’t enough and the prices of goods and services completely outstrip the ability of wage earners to pay for them. What follows is a complete collapse of the currency system involved. The prices of cars outstripping the ability of people to pay for them (evidenced by the ever-lengthening term of auto loans) is a harbinger of what’s to come.

      • Kent says:

        Banks were all fractional reserve on the gold standard too. And the fractional reserve, in the form of bank notes, were fiat money at the time. The gold “reserves” at the time, were unregulated. So you had no idea if there really were any.

        What has really changed over time is the communication mechanisms which allowed inter-bank transfers to go from fairly local activities to become global. So that a run on the bank in 1790 might wipe out a farming community where today it can cause a global depression.

  22. Beardawg says:

    Great examination of inflation vs paying for ingenuity. Would be interested to know if a 2020 Camry depreciates at the same rate as a 1990, 2000 or 2010. You would think not since parts are more resilient nowadays. But….another reason depreciation is less today (if it is) would be because demand is higher for the 3-10 year old used card, likely due to income vs new car cost disparities as highlighted in this article.

  23. RIPP says:

    And so it begins…[_]?

  24. Jos Oskam says:

    It seems that everybody is swooning about how the Camry, and cars in general, have improved over the years. Personally, I wonder if the word “improved” should not be nuanced a bit here.

    Of course, the modern Camry has more gears in its automatic box, and a wagonload of electronic gimmickry to aid the driver in all kinds of real and imagined emergencies. Like no longer having to look around you when backing up and never having to bend over to check the tires. And, the horror, actually having to open the hood to check the oil or washer fluid.

    But the “improvements” come at a price which is not completely reflected in the MSRP.

    A 1990 Camry can be repaired by any reasonably competent car mechanic. Problems are easily diagnosed and can be fixed with readily available parts. The occasional small accident involving bumpers or headlights is not a financial disaster. And best of all, a 1990 Camry is now almost 30 years old, and with reasonable maintenance can probably be kept on the road for another 30. Heck, no reason why it can’t run forever.

    A 2019 Camry is chock full of complicated mechanics, electronic gizmos and all kinds of gadgetry. Most problems can only be addressed by a dealer with the aid of special tools and measuring equipment. Damage one of these ultra-modern headlights or one of these sensor-laden bumpers and the cost of the replacement part plus labour will hit you like a ton of bricks. Insurance premiums are already rising because insurers balk at the hideous cost of repairing damage to modern cars. Last but not least, the car will only run as long as the manufacturer is able and willing to supply parts. If one of these electronic black boxes fails and there is no longer a replacement available, it’s the end of the line for that car. There’s even a name for this: “electronic total loss”.

    I wonder how the general public will feel about these “improved” cars 30 years from now. When the integrated on-board super electronics, navigation and entertainment systems have become as old-fashioned as PC-XT’s. When all kinds of electrical gremlins start raising their ugly heads and mechanics simply can’t find what causes them. When every forced visit to the dealer costs a fortune. When certain pieces are only available at kings ransom prices. Or worse, no longer available at all, resulting in the car having to be scrapped. I’ve seen that happen already.

    It wouldn’t surprise me if by then, a lot more people would look jealously at one of these (by then) 60 year old Camry’s still going strong.

    • Ensign_Nemo says:

      I own a 2004 VW Jetta, and I’ve put more money into repairs than the price I paid for it third-hand about seven years ago.

      The latest problem was a bad sensor for the ABS system. The mechanic pointed out that I could just get by with three tires with good auto brakes and one with just manual braking, but I didn’t want to feel responsible if there was an accident and I had skimped on repairing the brakes. That was over $250 to change one tiny part.

      I’ve joked that I’m buying a new car, one part at time, with the mechanics.

      The newer cars are stuffed full of electronic stuff, some of which is of questionable value such as rear-view cameras, that will generate more revenue in replacement parts over the next dozen years than the manufacturer made by selling the car in the first place.

      The new economic model for carmakers seems to be to break even on the initial sale price, and then make a large fortune on the financing, and a small fortune on the spare parts.

    • Zantetsu says:

      99% of people will say it’s vastly improved, your own personal lamentations aside.

      • Jos Oskam says:


        Argumentum ad populum. I can play that game too.
        99% of people are too shortsighted to look farther than the bling.

        • Zantetsu says:

          Dude, he LITERALLY wondered:

          I wonder how the general public will feel about these “improved” cars 30 years from now.

          So I answered his question. That’s how people will feel. I am not making an argument, I am making a prediction.

    • Greg Hamilton says:

      Good points. An additional one is automatic transmissions with lifetime automatic transmission fluid. The transmission fluid lasts the the life of the transmission. You can change the transmission fluids on these lifetime transmissions, but it is prone to error, is subject to the temperature of the fluid, and unless you are doing it yourself or you trust your mechanic, it will not likely be performed correctly.

  25. marmico says:

    For production and nonsupervisory workers it took 1437 hours of work @ $10.20 per hour to purchase the 1990 Camry and 1080 hours of work @ $23.00 per hour to purchase the 2020 Camry.

    That’s 357 hours or 25% less hours worked to purchase a better “quality adjusted” car.

    • cas127 says:


      Okay…but now do the math using overall US household median incomes – which have stagnated over the last 20 years – in contrast to the increasing price of a Camry (or a $40k pickup that really can’t actually haul anything…)

      • marmico says:

        The 1990 Camry price of $15,000 divided by 1990 median annual household income of ~$30,000 ($2500 per month) equals ~6.0 months of income. The 2020 Camry price of $25,000 divided by 2018 median annual household income of ~$63,000 ($5250 per month) equals ~4.8 months of income.

        There is no sticker shock.

        • Wolf Richter says:


          If you look at the tiered household incomes, you will get a dose of reality about incomes in America. The top 20% of household incomes don’t buy a Camry. But they’re the ones that made the household income gains. The top 40% did OK too. For the lower 40% (brown line, second from the bottom) and the lower 60% (gray line, third line from the bottom) of households it’s a different story. Note that 50% represents the median, and the lower 60% includes the 10% above the median:

        • cas127 says:


          Useful chart – but I think that the gvt’s claim that median HH income increased from 51k in 2012 to 63k in 2018 bears a *lot* of looking into.

          20% to 25% increase over those 6 years – given the history of 2001 – 2011?

          Maybe – but I’d like to double check the size of the universe of HH’s the gvt is counting to calculate the median.

          For instance, if increasing poverty reduces the rate of HH formation (ie, roommates doubling up, adult children living with parents, etc.) then it is possible that “median income” per HH has increased (because more incomes are concentrated in one HH – but not in a way that any of the parties prefer).

          I’m pretty sure that HH formation fell off a cliff for a long time during the downturn and I wonder how that impacted median income per HH.

          Also, the gvt can also play definitional games (to wit, see “unemployment” rates).

          During a downturn, do increased “zero income” HH’s (living off savings) get *excluded* from the median HH *income* calculations?

          The median can be significantly hiked by excluding the “zero” members of the calculation set.

          And, in a bad recession, a *lot* of HH’s fell into the “zero income” set – perhaps creating a false elevation of the median according to the gvt’s definition.

          I’m not sure this is the case – but it is worth looking into.

          The gvt is far from adverse to cooking the books to understate crises.

  26. David Hall says:

    The average age of a car in 1990 was 7.8 years. Today the average age of a car is 11.8 years. That is an increase of about 50% since 1990.

    I paid more for my car, but it may last longer.

    • cas127 says:


      “I paid more for my car, but it may last longer.”

      Or maybe (like tens of millions of Americans) you *have* to make it last longer – because new car price inflation has been absurd relative to stagnating incomes.

      Spit-and-baling-wire is not the symbol of a technologically/economically advancing nation.

  27. unit472 says:

    Improving auto safety is a cost well worth bearing. Auto deaths in 1960 were 36,399 ( US population 180 million). In 2016 37,461 ( US population 320 million). Putting this is some context, during the height of the Vietnam War ( Tet Offensive early 1968) US combat deaths rose to 500 per week for just a few weeks but it was enough to end public support for the war. On April1, 1945 the Battle of Okinawa began and raged on until June 22. US combat deaths about 14,000! That was enough to convince President Truman to drop Atomic bombs on Japan.

    Saving lives is always a good investment. In 1960 seat belts were an option. Dashboards were made of steel and steering columns were a spear aimed at the drivers chest. We complain about rising healthcare costs but going through the windshield was a sure way to incur some heavy duty emergency room expenses ( if you survived) even in 1960.

  28. Silvergirl says:

    I love my car. I have a 2002 Toyota 4-Runner. That is the last year they had chrome bumpers. I intend to keep it at least 20 years. I don’t see anything out there to compare to it.

    • Kerry says:

      I love my 2005 V-8 4WD Sport edition 4Runner. I would not trade it even up for a new one. Plastic parts everywhere on the new ones. In almost 15 years, just one unscheduled maintenance. A right front wheel bearing…

  29. Jeremy says:

    On an MSRP basis, that Camry went up around 2% per year, which is within the boundaries typically set by central banks (i.e. they don’t care, and won’t react).

    However, if wages go up by 2% (*) in a given year, central banks worry about wage inflation, and typically tighten in order to tamp it down.

    This is why wages haven’t kept up with inflation.

    * Up here in Canada, wage inflation is running at 2.8% this year (significantly higher than normal) and our central bank is fretting because it hampers their ability to loosen if need be.

  30. Michael Engel says:

    1) From the 1980’s til 2000 all indices, including Camry LE prices, moved sharply higher.
    2) From Jan 2000 Camry price moved from 20,400 to
    24,800 in 2020.
    3) In the last 20Y Camry price was increased by 4,400, plus 21%, or under 1% per year.
    4) From Jan 2000 til Oct 2019 Camry did only slightly better than the Nikkei, DAXK, CAC & FTSE.

  31. trubull says:

    Yes but i still see early 90s Toyotas on the road! no many domestic vehicles of that age – if any

  32. c smith says:

    When we (finally) have vehicles that can drive themselves, I’ll be looking for a WHOPPER of an hedonic adjustment. And why not? If I can spend hours sleeping, reading, having sex or whatever instead of driving, isn’t this a gigantic life improvement? In the end, all we have is our time.

  33. R2D2 says:

    US wages and disposable income have fallen because millions of low and mid jobs have been sent overseas to China, Mexico and elsewhere!

    US has caused its own decline.

    UK and Old Europe have the same problem!

    That car that was once made in Detroit (US) or Coventry (UK), and employed 20 people to build it, is now made in Shenzhen (China), leaving zero jobs in the West.

    That big TV that was once made in Texas is now made in China. The well-paid Texas jobs are gone.

    Outsourcing = downsizing.

  34. Il Capo says:

    Guys, you can buy something closer to a 1990 Camry today: a 2019 Corolla. The L AT version is MRSP: $19600, ~ 33% above the prices of the 1990 Camry and much better all around.

    The reality is that cars models grow bigger along time so apples to apples need not be done based on the same model but based on similar dimensions.

    1990 Camry
    Wheelbase: 2,620 mm (103.1 in)
    Length: Sedan: 4,780 mm (188.2 in)
    Width: 1,770 mm (69.7 in)

    2019 Corolla:

    Wheelbase:Sedan/wagon: 2,700 mm (106.3 in) (international);
    Length: Sedan: 4,640 mm (182.7 in) (international);
    Width: Sedan: 1,780 mm (70.1 in) (international)

    While the 2019 Corolla is slightly shorter it has more usable space given its longer wheelbase and it being wider.

    • Wolf Richter says:

      But you could buy a Corolla in 1990 for $8,700 MSRP.

      • char says:

        Type-inflation, or more correct type-deflation.

        If car companies would be restaurants they would have three sizes of coke. 200ml, 300ml & 450ml. In 1990 they would have called them S,M & L and in 2020 they would have called them XS, S & L

      • Il Capo says:

        A 1990 Corolla is equivalent (in size, broadly speaking) to a present day Yaris Sedan not a current Corolla. Forget the names of the models and compare by size. Current Yaris Sedan is MRSP $15650, so even with the adjusted model there is a 79% increase in this segment, unlike in the Camry segment.

    • Greg Hamilton says:

      The new Corolla has a CVT automatic which is not likely to last as long as a conventional automatic which older Corollas had.

      • Kerry says:

        That is why you get the manual…

        • Zantetsu says:

          That is getting harder and harder to do. There are a very few new cars these days with a manual option.

          Soon enough, there will be none, but hopefully by that time I can just give up driving altogether and let my self-driving electric car do it for me. Because there is no way in the world I am buying an automatic transmission! I compromised on that for my ex-wife for far too long, now I am free again and never going back …

      • Zantetsu says:

        But it will get better fuel economy. Why do you keep making specific arguments about specific features instead of looking at the overall picture? A 2019 automatic Camry is better than a 1990 automatic Camry overall, much better, period.

  35. IslandTeal says:

    Interesting article.. Thanks Wolf.. My 2 Grandsons both drive 90’s era ES300 as college commute vehicles. Hate to think what it would be like if Toyota /Lexus hadn’t made such durable run for ever vehicles during that time. Both were bought used w 100K+ miles. Think about buying the used 2020 versions and the cost associated.

  36. KGC says:

    To me the major point is that purchasing power has not kept up with true cost of goods. And while the CPI is quite willing to use “improvements” to material items to show the actual prices keeping pace with the growth of inflation (which is monitored by the CPI among other things, so really how is that helpful) what it fails to do is add in the increased technological abilities and productiveness of the workforce to level this out.

    If you used the same type of adjustments and applied them to the average worker I think you’d find that wages have actually declined. The workforce of 1990 (for the most part) would be unable to handle the requirements of the workplace without incremental “improvements”. No one is paying those workers for this increased ability.

    I keep trying to explain to the younger members of my family that they are going to struggle to maintain the standard of living they enjoy today unless they can position themselves to make a higher level of income than their parents currently enjoy. They have trouble grasping that…

    • GirlInOC says:

      “what it fails to do is add in the increased technological abilities and productiveness of the workforce to level this out.”

      Bingo. That’s exactly what I don’t understand. At what point in the standardization of an “improvement” is it no longer considered an extra “cost”…are airbags still considered “improvements” worthy of tacking on extra costs? When will technology and automation create an even playing field for these “improvements” and are we seeing drops in prices due to the fact that some of these things are now the status quo in modern technology and engineering? I think any excuse to squeeze out a profit and businesses will justify it.

  37. tommy runner says:

    ‘Hedonic quality adjustments are not made to food prices’ but if they were,
    i saw what you did there wolf.. a successful demonstration of ‘hedonic adj’ (using tj’s banana) its all in the slight of hand and delivery.. bravo!

  38. Kaleberg says:

    To be fair, cars last longer than they used to and require less maintenance. Cars used to rust out, require regular tune ups, and all sorts of components used to fail regularly. Modern cars also burn less fuel even after accounting for performance, weight and size increases. That has to factor in somewhere. If nothing else, it means that they have higher resale value.

    MotorSports had an article pitting a Honda minivan against some vintage sports cars, including a Porsche “Bathtub”. The minivan outperformed them, was easy to drive and got 30 mpg. Oh yeah, it had a DVD player.

  39. Kerry says:

    The worst part of all the driving nannies, people in general pay less attention to driving…

  40. gorbachev says:

    My lease for a rav 4 is 400 a month all taxes in.

    Today i nearly rear ended a car but the warning

    thing came on and I was able to apply the

    brakes in time. That warning thing saved two hospital

    visits and the car repairs that would have gone

    along with it.In the accounting for price increases

    is there no room for money saved by the tech


    • Bobber says:

      You may be a careless driver if you had to rely on the warning system. Think about it.

      • Zantetsu says:

        You may be a careless driver and not have a warning system to bail you out. Think about it.

  41. lisa says:

    Great article! Ireally like my 2011 Honda Element, but sure am saving up for a 2017 or so Audi with the Virtual Cockpit- love it!! The new conveniences are great- especially the backup cameras, and blind-spot beepers!

    • GirlInOC says:

      I LOVE my backup camera. I’m not sure why people shun them so much…it has a great range and warns me of a tot running after a ball from quite a bit away. I also love my air-conditioned seats. So do my thighs on a sweltering hot summer day. #leatherseatsandsummersdonotmix #improvementsforthebootynotthewallet

  42. Wisdom Seeker says:

    There’s another, somewhat approximate way to measure the cost of driving a vehicle: look at Federal and/or corporate reimbursement rates for people using private vehicles for government (or corporate) work. This folds in a combination of “typical” vehicle replacement cost, fuel cost, and political lag.

    The current rate is $0.58 per mile. The rate in 1995 was $0.30 per mile.

    There were significant increases from 2004-2005 due to rising fuel prices.

    The dataset is here:

    • Zantetsu says:

      That was probably a reaction to people abusing that writeoff, so they limited it. I really don’t know though, just a guess, feel free to educate me on what the reason is that they did not keep up with inflation with that writeoff.

  43. Math Geek says:

    The original CPI was indeed set up to see how the price of the same thing changes over time. Reagan and Clinton finished that off a long time ago. Nowadays, the logic behind the CPI is that goods are replaced in the ‘basket’ by alternatives when the price of the original good has risen so freakin high that nobody can afford it any more. Then the CPI is used to tell the people (who can’t afford what they used to afford) that they shouldn’t expect a price of living increase in wages or payments because see, hocus-pocus, don’t follow the hands too closely, there is no inflation. See, there really is magic in the world.

  44. LibDis says:

    I’ve got a 1996 Camry Wagon with 170k on it. At the time it was an expensive car, sticker at about 26K.

    It has always garage kept. Kept the car in top shape. It amazes me to drive around and see garages packed to the ceiling with crap people hoard while there 40k vehicle sits out in the sun. wind and rain.

    When something breaks or needs attention I do it, almost always against the prevailing advice. Id say on average I spend maybe 500.00 a year on upkeep. Some years little to nothing, others big tickets.

    The engine,tranny and ac have never been touched, run as good as new. Toyota was at the peak of engineering. The new cars are not built this good and as they age, the electronics are nightmares. The new CVT transmissions are crap too, for the most part.

    Like last year the valve cover gaskets were leaking, had been for years, but finally time to do something about it, needed new radiator the original was deteriorating, leaking crankcase seal, timing belt, water pump and a few other items etc etc. The total was $1700.00.

    ‘Well, I don’t know if you want to put that kind of money in a car this old. It’s probably more than its worth! I’d think about buying a new one”

    “Haha, yeah, well, just do it, the car is sentimental.”

    And I laugh all the way to the bank……… Even if the car only lasted another year I would still be way ahead of the game over the cost of new, or the cost of someone elses neglected used car.

    This is a concept people in a disposable society just cannot understand.

    Thats ok. You get up on Monday morning to make the payments on those two new cars sitting in your driveway. I am sleeping in…..

  45. Pasha says:


    I believe the only automatic transmission available for the Toyota Camry in 1990 was a 4-speed and not a 5-speed.

    • Wolf Richter says:

      Yes, you’re probably correct. I’m trying to think back now. Three-speed automatics used to be all you could get, and then maybe late 80s, the “four-speed overdrive” automatic was new and became all the rage. So five-speeds didn’t show up until much later.

  46. Cashboy says:

    I have always thought that if a car manufacturer built a basic car with no ABS, no airbags, no cruise control, hand window winders no complicated electronics, have an engine bay where you could (without spending one hour removing plastic panels that generally break), get to the engine components would be cheap to manufactue and could therefore be sold competatively. The vehicle would be lighter and more economical and appeal to DIY people and therfore have a higher long term residual value.

    • char says:

      People who can do DIY on a car are on the whole car nuts. They don’t want a cheap car. And the cheapest car for a DIY-er is a 20 year old car. They are nearly free but need a lot of DIY. So there is no real market for a DIY new car.

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