As a site largely devoted to the past, we naturally rely on memory. That works fine when it comes to our actual experiences, but often not so well when making big-picture assumptions. One of those is the perpetual bemoaning of how cheap things were once upon a time, whether it’s gas or the price of basic cars. We’ll leave gas for another day, but an article at TTAC today “Avoidable Contact: Airbags Killed The AM Radio Star” falls into the perpetual trap of finding all sorts of excuses why basic cars are more expensive than the good old days: government regulations, along with switch-and-bait tactics by the manufacturers. The real truth is, we’ve never had it so good, or so cheap.
There’s three critical factors in that equation: inflation, interest rates, and vastly improved technology and quality (four factors?) Yes, the approximate transaction price of a 2012 Corolla LE or S (≈$18,000) is somewhat higher than the adjusted price of the 1971 Corolla 1200 ($10,000) and the 1987 Tercel EZ ($13,000), but just exactly how many folks buying basic transportation pay with a check? It’s all in the monthly payment…stupid!
For comparison simplicity, we’ll assume 100% financing (it doesn’t really change materially if the down were the same percentage in each case).
1971 Corolla 1200 (stripper) $1799/$10,000 adjusted – 36 month loan@12% = $332/month (adjusted)
1987 Tercel EZ (stripper) $6495/$13,000 adjusted – 48 month loan @11% = $339/month (adjusted)
2012 Corolla LE or S (nicely equipped, ≈$18,000) – 60 month loan @4% = $332/month
I won’t bore you with all the features of a 2012 Corolla LE (A/C, cruise, Radio/CD/MP3, Tilt steering wheel, power windows and locks, etc…and a host of the usual safety features).
Needless to say, the 2012 Corolla LE is almost impossible to compare to the other two in terms of its comfort, performance, convenience, safety and reliability. And you could probably do even better for your $332/month with other cars, but the Corolla makes a handy frame of reference.
So who’s bemoaning the basic entry-level cars of the past?