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?
Boy you guys get cheap cars a new Corolla here is mid 30s qwe can get a tiny Korean Holden Spark fo 17k but with our worthless kiwi peso most stuff is at least double US prices a well equipped Prius is 65k
Don’t know about the Peso there Bryce, at the moment we’re at US$0.81, just makes the prices we’re charged all the more scandalous…….
These are certainly the same monthly costs, but the 2012 Corolla sure keeps you in debt slavery longer to get that monthly cost — not worth the tradeoff, in my book.
The thing to remember here is, you CAN keep a car for MUCH longer than you used to so a 60 month loan is much more doable than in the past as a mere 6 years for most cars is barely even 1/4 used up, whilst in the past, 60 month loan meant much more life was used up by the end of the loan as that 71 Corolla, if it didn’t rust out first, would perhaps have made it past 100K miles without major issues.
The 87 Tercel would go easily 150K+ before major repairs become an issue and the Corolla, with good car, over 200K easily, assuming never wrecked and not rusted out first.
So, the new Corolla is almost twice as expensive as the old Corolla or Tercel. However, you get air, power windows and gobs of convenience features, more power, more gears in the tranny, more comfort, a LOT more safety, and it won’t rust out from under you in the salt belt.
The better comparison would be with a well-loaded 71 Nova or Dart, which would seem to be a better approximation of the markets served by these very different Toyotas.
So, interest rates are lower, loan terms are longer, and despite the “tightening” of credit in the past couple years, it’s still way easier to get a car loan now than 30-40 years ago. It’s also possible for most people to buy a relatively more expensive car now than in the past.
The question is, is that a good thing? Unless I’m mistaken (not having researched) personal debt is much higher than it used to be, and all told is a more expensive way to live.
I don’t agree. We look at the new corolla as more expensive than the old, but this is not the case. The price of the car to the average worker in 1971 was just as expensive to them as a new car is to us today.
1971 was the year that real wages peaked in the United States. The EPA had been created in 1970, and the economy would never be allowed to grow as fast as the workforce again.
In the case of those who buy the cheapest class of vehicles a fairly large portion of them, relatively speaking, do pay cash. Another fairly large portion of them finance but at higher or much higher than average rates since they have bad credit, and why they are being “forced” into buying a “low cost” car. So I’m not sure that 4% rate is representative.
On the whole though I do agree for the majority of buyers nowadays it is about the monthly payment, which is of course why you can find 72 and 84 month new car loans.
Today’s equivalent of the Tercel EZ “stripper” is the Yaris L 3-door, which starts at $14,115. Even this spartan Yaris comes with A/C, an audio system with a USB port, power locks, ABS/stability control (which car companies were all too eager to skimp on before it became mandatory), and nine airbags.
Cruise isn’t standard, but the wiring is there, so just add a switch for $10 and presto!
Oh, and the Yaris has an IIHS “top pick” rating and a five-star EuroNCAP rating.
As for the Tercel, I’d be scared to hit a beach ball with that thing.
We just got a new Subie Forester. Didn’t want the sunroof, so we got the base model plus 4 speed automatic and with the some gubbage added on (alloy wheels, splashguard, and some kind of bumper cover). Pretty plush as it came (A/C, power windows, remote locks) but without some of the stuff I think we can do without. I don’t need Bluetooth and USB inputs to the stereo and reclining back seats. About 23K out the door.
I had a 2002 Focus ZX5 for about 18K and the Forester is about as well equipped, less the sunroof, but with the AWD and automatic.
I did notice that a lot of the features build on the hardware already there. We got a security system that probably cost a few cents in hardware (if that–the shock sensors are a dealer option) and a few man-weeks of software. Actually, I think the software content is quite high–I joked that it had more computing power than we had at home. With a Pentium 4 as the home desktop, it might not be a joke.
Amusing touch–the cigarette lighter and ashtray are dealer options. No problem, haven’t smoked in almost 30 years. Reminds me of my old MGB which had an aftermarket (I think) lighter.
To get a little closer to Paul’s thinking, we also took a brief look at the 2.0 liter Impreza 2.0i. Maybe a thousand more than that ZX5 (again, a 5 door hatch in both cases), but with AWD and the CVD. Nice content addition for not much money ten years later. (We couldn’t seriously consider the Impreza because we need the ground clearance. If we lived in the city, it’d be a good choice.)
My sister owned a 1975 Corolla… hate to disagree, but my son’s 2009 Corolla was NOT as nice– in fact, the transmission self-destructed! It was replaced under warranty… But hey, what was that we once said about “Toyota Quality”? Both cars, the new and old, have cheap interiors– oh, but the new car has “better” plastic? I am laughing… plastic is plastic is plastic.
Another factor: in ’75, on average, the LONGEST loan was 36 months… by the time I bought my first new car in 1991, the AVERAGE loan was 60 months, with Volvo offering an EIGHT YEAR (96 month) loan! And gas, at 25 cents a gallon in 1970 (equal to $1.46 a gallon in 2012 dollars) WAS really, really cheap!
Most disappointing to me, however, is the fact that I could buy a used Fiat 500, or a used Honda 600, or even a bugeye Austin Healey Sprite, all used but in decent shape, for under $900 back in the day… and these cars all got 30 mpg or better!
Yeah, we now have airbags (btw: you can still die in a crash with airbags) and we have side beam protection, and we have i-pods, but the ACTUAL DRIVING EXPERIENCE really isn’t much better…
I recently drove an old Healey top down, rough and wooly and old… wow… it still is a fun car… just as fun, and much cooler, than a Miata… Yeah, a Miata is reliable… but it has no soul.
So, yes, I agree: we have made “gains”… But, we have also lost a lot over the last four decades. And what we have lost can’t be measured in dollars and cents, but in personality, in uniqueness, in the unspoken feel and smell and sound of those cool old cars.
I know a little about plastic formulations, and I can definitely say that the plastic in an intake manifold isn’t the same plastic as that on the S-10 quick-fall-off glovebox lid. ” I am laughing… plastic is plastic is plastic.” Not so.
I have made this exact point several times here. The difference is even more pronounced in Soviet Canuckistan. For example, my dad bought a left-over 1970 Pontiac Strato-Chief stripper in December 1970 for 3300 Canukistani Pesos, plus 8% tax. That is 19,713 Pesos in 2012. A 2012Civic LX is $20,335 while a DX can be had for $18,376. Even the DX is reasonably equipped and the LX loaded.
A Corolla LE automatic has a $6000 discount for cash and comes in at $22,487 including the 12% VAT we have here. That is a screaming deal for this car.
That Pontiac rusted to to a hulk in five years.
Cars have never been cheaper or better.
I prefer to look at it in terms of affordability by comparing to the number of weeks’ average wage required to purchase. I last remember seeing comparative figures several years ago, and 1970 was still significantly fewer weeks wage to buy the ‘same’ car compared to 1980, 1990 and I think 2000, it might have been later. However car prices have been fairly flat for the last 10-odd years (20 years in some cases) so I wouldn’t be surprised if things have changed in more recent years. Mind you wages have not changed a lot in the last few years either.
I’m changing my name to Clair. I must be clairvoyant. I knew Jack’s story would set Paul off.
They all do; which is why I try to heed their title: Avoidable Contact: Stay Away. I should have.
I quit going to TTAC. Too many idiots arguing politics instead of cars. If I want to argue politics I can go to Fark or the daily kos. We should do a price/features comparison between a new golf and a ’70 Type III fastback.
Copy that, Mark. Karesh is about the last guy there who can make an informed judgement and stick to the point. It’s just loud, trivial and bombastic at TTAC, just like every other car mag & blog.
Interesting comparison, but, taking it even further, it’s worth remembering that most families would not have deemed a 1971 Corolla acceptable as a family car. It was considered a second car at best.
Today a small family (mom, dad, plus one or two children) could easily use a 2012 Corolla as their main car. It also features standard equipment that wasn’t available on a 1971 Cadillac Fleetwood Brougham, or even a 1971 Mercedes S-Class. So the new Corolla could be viewed as a substitute for a 1971 Chevrolet Malibu or even a 1971 Chevrolet Impala. Running those numbers should be quite interesting, too.
There are two flaws with this analysis. The first is that it ignores the opportunity cost. In other words, interest rates on loans may be lower in 2012, but the car buyer also would get a lower interest rate on any investments he/she could otherwise purchase with the money.
The second flaw is that, as others have pointed out, the loans are for different lengths of time. Paul may be using this as a proxy for including in he analysis that cars last a lot longer in 2012, but why not just do the comparison directly?
So if the 1971 Corolla buyer expected the car to last 100k miles, then the cost per mile would be $10,000/100k = 10 cents per mile. The cost of the 1987 Tercel might be $13,000/140k = 9.3 cents per mike. The new Corolla could cost $18,000/180k = 10 cents per mile. Ymmv. So I agree with Paul’s conclusion that these 3 cars all cost about the same, I just disagree with how he got there.
I won’t argue with the economic argument, mostly because I’m terrible with economics to begin with. I will say that given the choice I’d take the ’71 Corolla over the modern iteration any day of the week. I don’t want all the crap that comes standard on the majority of modern automobiles. Power steering? I’d rather get the upper body workout that comes with the unassisted variety. ABS? I’ll downshift. Cruise control? Yeah, it’s called my foot. A/C? I’ll roll the windows down, speaking of which I don’t want power windows, locks, etc., either. Premium sound system? Leave a hole in the dash and I’ll install my own at 1/10th the price of what it costs the manufacturer. Automatic transmission? See ABS; give me a clutch and a stick and leave me be. Offer that car, it will be thousands less than the current Corolla (probably thousands less than your average zero turn lawnmower), and I’ll be the first in line to buy. God I feel like an old man.
Left out of the discussion is replacement part cost.
Automakers long ago gave up on making money on low end cars.
First they concentrated on making money by financing them. In many ways they resembled banks instead of car companies.
More recently, they have turned to replacement parts, parts you can;t buy at the local jobber.
A generic sealed beam might have run you $6 in the old days. Now, just the plastic shroud costs hundreds. The list goes on.
This probably has also affected insurance costs as well, with so many body parts being exclusive dealer items.
Maybe someone out there can provide some data on this. Focusing strictly on entry level models, how much revenue comes from sales, how much from finance, how much from replacement parts. And how have these revenue streams changed over the years.
Roughly 30 years ago Wheels magazine did an article on building a Holden Camira (J-body) from parts – would have cost over $100k. I’m guessing the car would have been $6-8k at the time.
I think these are excellent points.
Certainly from the dealer side, the profits are really to be made in servicing the cars as well as financing and extended protection plans. We bought a Civic recently and the F&I man pushed the HondaCare extended plan really hard and tried to scare us with the projected replacement costs of major components.
Body work and other parts are also expensive, too.
Paul, you should have posted this analysis (flawed or not) in the comments on TTAC. This is not the place for it. With that out of the way…
Jack’s article laments the demise of the basic, no-frills car. His premise is that we are forced to pay more for little conveniences that we can easily do without. He is dead wrong. The definition of `no-frills’ has surely changed to include MP3 players and power windows, just like it changed long ago to include electric starters, windscreen wipers, reclining seats and coil-spring suspension. The future no-frills car will surely have ABS, and there is nothing wrong with that. Many people *demand* power windows, and while I can’t get my beloved bench seats any more, I sure as hell am not going back to roll-up windows. No power windows=no sale. Just ask Nissan, whose example Baruth quoted.
You err on the other side. You point out that the 2012 Corolla is `well equipped’, and equally cheap as the cars of old. It is neither. The 2012 Corolla is as much a stripper by 2012 standards as the strippers of 1987. `Well-equipped’ today means all independent suspension with electronic ride control, eight speed auto, fully adjustable powered seats, all-in-one diagnostic, communication and entertainment system, and climate control. Having power windows is taken for granted. Safety features always have to be comparable to class. Just as Tercel had a `all-steel safety roof’ that wasn’t advertised, having crumple zones today is part of the deal. ABS today is as natural as `four wheel hydraulic brakes’, then ‘booster assisted POWER brakes’, then ‘disc brakes’, and so on.
What doubly damns this comparison is the fact that aside from the name, the 2012 Corolla is a fundamentally different beast than the ’71 car. The basic premise of segmentation, size, is wildly different. 2012 rides on a 102.9” wheelbase, compared to 91.9” in 71. A foot of difference in wheelbase alone! A comparable modern car is the Chevy/Daewoo Spark. A 92-94” wheelbase, with a NA 4cyl petrol or 3cyl economical diesel, front wheel drive, and seating for four. It has AC, roll-up windows, power steering, power brakes, no CD/Radio, and costs between Rs.350000 and Rs.550000 ($7000-$11000). The top variant has power windows, ABS, climate control, and MP3 player. The ride and handling, even in the lowest variant, will lick the ’71 Corolla. It will compete with an early BMW. *This* is cheap! Is it available in the US? Probably not. Just because the US market does not want *small* cars anymore, cheap or otherwise. Heck, if I could afford a bigger car, I wouldn’t drive a Spark. It is *too* small. The current Corolla hits the sweet spot for size, and thence it will remain. Nothing to do with being a stripper or being nice.
Flawed or not, the main point I was trying to make is that there is a reason why the Corolla class is such a large one: it really is very affordable, in terms of how the majority of buyers make their budget decision: monthly payment. Until very recently, anything less than a Corolla-class car was seen as a “penalty box”; that may be changing a bit more recently. In fact, just two or three years ago, I consistently saw ads for Camrys at about $18k.
So the point is that for a typical modest monthly car-loan budget, what is available for that is considerable, and drastically different than what that same budget bought decades ago.
Keep these articles coming Paul! I for one enjoy reading them and it is painfully obvious that others do as well.
There is no such thing as a Corolla-class. A ’71 Corolla class is the Indian A-segment car. It is *still* a (much better) penalty box, but cheap. A 2012 Corolla (not yet available here) is a C+ segment car (larger, more standard features). The fact that Toyota has slapped the same name on both cars (cashing in on the earlier car’s success) does not make them comparable. That comparison is the flaw in this article, no doubt due to Toyota sticking the same name on several unrelated categories of cars. You arrive at the correct conclusion, but through incorrect reasoning. Financial changes give the appearance of comparability, but that is another issue altogether.
Jack is wrong about new cars being more expensive. A new A-segmenter (Chevy Spark) is safer *and* loaded with features as compared to a ’71 example (like an older Corolla), and is as cheap, or cheaper, while getting better mileage. A new C-segmenter (like the newer Corolla) is much better than an older C-segmenter (like other commenters mentioned, a Pontiac or Plymouth), and is safer, more featureful, and cheaper.
GM probably saw a market opening for a good A-segmenter in USA when they announced the Spark’s availability, but the recent failure of Fiat 500 and VW Up seems to have put a damper on those plans. The category of vehicle a ’71 Corolla belonged to does not exist in the USA anymore.