Home > Critical Thinking, Current Affairs, Dystopia, Musings, Philosophy sans Sophistry, Reason, Secular Religions, Skepticism > Thoughts on Trends in New Automobile Sales and Neoliberalism in USA

Thoughts on Trends in New Automobile Sales and Neoliberalism in USA

While trying to write the next part of my series, about the necessity of being a multi-millionaire under late capitalism, I had an interesting insight which didn’t fit in that series but was, still, very important. In some ways, this is a much belated sequel to one of my older posts about how the increased cost of cars is about late capitalism in action. In that post, I made the observation that the much diminished interest of Millennials, Gen Y etc in car ownership has a lot to do with the deleterious effects of late capitalism aka neoliberalism (specifically its american variant) on their lives. Also, I am not hopeful about late capitalism disappearing without causing far more damage and misery to almost everybody. Things are going to get far worse.. I mean.. interesting.

The first time I considered writing this post was about three years ago when we started hearing about how american automobile manufacturers were going to end the manufacture of everything other than pickup trucks, crossovers and a few high-margin car brands. At that time, the most common explanation floated for this shift centered around how american consumers had fallen out of love with cars and gone for pickup trucks and crossovers. Even at that time, I though this explanation sounded highly dubious- but was just not interested in following it, as this occurred at around same time as election of Trump. But I seldom stop thinking about an idea or topic, even if it is on the backburner.

A few days ago, a number of random occurrences made me seriously revisit this topic. It started with a seemingly random search about the number of automobiles sold in USA by year from 1978 and 2019. It yielded this graph, which displayed some rather interesting information. Note that 16 million vehicles were sold in 1986, when the population of USA was 240 million. Interestingly, 2019 saw the sale of only 16.9 million vehicles at a time when population is 328 million. Do you see the problem? Let me explain.. having an automobile is necessary if you live in almost any part of USA except perhaps NYC, Boston, parts of the Bay Area and a few other cities with OK public transit. Therefore, the ratio of vehicles to population should remain relatively constant.

But it hasn’t! Now somebody like MikeCA might say this has something to do with automobiles lasting much longer nowadays as compared to the mid 1980s. Well.. the increased quality and longevity of cars (especially Asian ones) definitely plays into the lower demand for new cars- but it, as best, can only explain part of the current situation. So what are the other factors I am alluding to? Well.. for starters, truck-chassis based SUVs and pickups increasingly became the main revenue generators for automobile manufacturers- especially american ones after the early 1990s. Then something odd happened after 2009.. old-style SUVs were very quickly supplanted by crossovers, pickup sales remained about constant and car sales after recovering for a few years between 2010-2015, entered a steep decline after 2016.

But what happened in rest of the world. Let us start by talking about countries in the European Union. Long story short, nothing similar occurred in the same time span. Sure.. sales were kinda low in the very early 2000s and between 2008-2012, and there has been a slight overall trend toward decline- but one that is linked to much larger demographic trends. But whichever way you look at it, the overall sales numbers were in same ball-park as USA (12-16 million/year) but there was no equivalent change in the types of vehicles sold. In other words, Europeans kept buying the type of cars they have been buying for decades. The same held for markets such as Japan, South Korea and other Asian countries except China.

China is an interesting case in that it has become the largest market for automobiles for the past decade. Yet, even in this still unsettled market, cars and a small to medium sized crossovers dominate the market. My point is that people in every large market for automobiles, other than USA (and Canada) are buying the same categories of the automobiles they have been buying for decades. So what is so different about USA that it is the only large market to have experienced an actual shift in the type of vehicles sold over past two decades? And what any of this have to do with late capitalism aka neoliberalism?

To understand what I am getting at, we have go back a couple of decades. See.. when I first came here a bit over two decades, I noticed many patterns. The one most relevant to this post concerns who bough new vehicles, which types and at what stage in their life. The brief version is as follows: buying a new car (frequently something from a compact hatchback to medium sedan) was almost like a ritual for most adults after they had got their first decent and somewhat stable job. so, while most people started with hand-me-downs or used cars, they would start buying new cars once they hit one of the supposed markers of “real” adulthood aka a decent job. I never saw anyone buying a new pickup unless their job required it.

While SUVs were a thing in the late 1990s, they were almost always bought by well-off people with kids who lived in McMansions and/or in certain expensive suburbs or exurbs. Almost nobody bought a new SUV as their first new automobile. It also helped that new compact to medium sized cars could be purchased for somewhere between 10-20k, and Japanese ones offered very good value for money. Even a few american ones were perfectly OK, as long you sold them off by the 6th year. My point is that new entry- to mid- level cars of decent to good quality were quite affordable- even for the median incomes of that era. According to most inflation calculators, 1k $ in 1999 is supposedly equal to about 1.5k $ in 2019. You will see why this matters soon.

Today the median car in those categories costs somewhere between 15k-30k, which sorta tracks inflation- but is a bit more than what it would have been in a perfect world. But what about incomes? Well.. as it turns out median and mean incomes adjusted for inflation have not really changed between 1999 and 2019- which is a fancy way of saying that a job that paid 30k/year in 1999 would pay 45k today. But there are two problems with this simplistic assumption. Firstly, many of the job which were available to a person in 1999 do not exist today. To make matters worse, people who had a decent stable job in 1999 no longer have a stable job that pays the same, even if they managed to stay in that field. The situation is even worse for new entrants who are stuck in an endless series of low-paying and unstable jobs unlike previous generations.

And it gets even worse. The real cost of living during the intervening two decades has increased far more than the 50% claimed by governmental agencies. Take rents for example. Rents today are somewhere between 2-3 times what they were in 1999, even if the apartment building has been standing there since the mid 1970s. The same is true for house prices. Note that the situation is far more dire in certain coastal metropolitan areas. Then there is the issue of rising costs in higher education. The student loan load of a person graduating from university in 1999 was a fraction of what it is 2019- and those have to be paid. We also cannot forget the insanely high costs of health insurance and high copays of most “healthcare” plans- once gain much higher than in 1999. Long story short, most people between 20-40 are broke or close to it.

And this is why the demand for new average-priced cars aka one of the signifiers of adulthood in USA have dropped so sharply. But what about the continued demand for new pickups and crossovers? Well.. guess who is buying them. Yes, it is almost exclusively Boomers and older Gen-Xers. These are the only two major groups who still have the financial capacity to buy new automobiles and like older people tend to, they buy large and bulky vehicles. Also, part of pickup truck demand is driven by people who have to actually use them for work in flyover country.

In summary the drop in demand for new (average) cars is driven by the same factors responsible for younger generation not having kids, marrying late or never, not buying houses, not eating out in expensive restaurants, not going on expensive vacations etc. They are fucking broke, overstretched, overworked and have no job security. The reason we do not see similar trends if change in automobile type preferences in Europe is that costs of living (housing etc) approximate income much better + healthcare is inexpensive and universal + higher education is inexpensive. The same is true of East-Asian countries such as Japan, South, Korea etc and yes, even China. But murican exceptionalism feels good, on the hole, doesn’t it..

What do you think? Comments?

  1. P Ray
    July 19, 2020 at 9:08 pm

    The other part about buying a new car is especially true when you are a regular/ugly guy trying to attract a girl – or get consideration for a job where presentation is important.

    The blackpill explanation is a lot of guys are waking up to the idea that doing so only signals your willingness to be exploited – so they stop doing it after thinking about it and asking friends and family.

    In other words – this is a booming opportunity for people who can falsify car ownership to present the guy in a better light.

    But also a big admission that job access via presentation of material wealth, is a good way to only make consumer goods companies rich!

    • Just A Programmer
      July 20, 2020 at 4:48 pm

      Rise of leasing explained partly by some tax advantages for business owners but also a way to get more car for the monthly payment than you can buying a car. More car because you own nothing at the end of the lease, and may have multi-thousand excess mileage payment.

      No equity, just interest and depreciation with a hefty profit added in.

  2. ....this blog has gone down in quality as of late...
    July 19, 2020 at 9:38 pm

    You forgot a very important point here…

    ..a huge market has sprung up to exploit ride share drivers with subprime lending and exploitative leasing terms…

    https://www.marketplace.org/2015/05/13/uber-drivers-struggle-pay-subprime-auto-loans/

    Yer welcome….

    • P Ray
      July 19, 2020 at 9:58 pm

      Don’t forget the licensed taxi drivers – many of whom are ethnic – that bought expensive taxi medallions entitling them to carry passengers …
      that became worthless when Uber first took over …

      resulting in a whole lot of suicides (looks like ethnic = deathnic is true)

      and now that Uber is dominant, the drivers get their wages trimmed from the early days …

      Like any good Ponzi scheme, the only people that made money got in early, paid their dues, made their profits and didn’t hang around.

      • ....this blog has gone down in quality as of late...
        July 19, 2020 at 11:04 pm

        y’know, this medallion system doesn’t seem that far off to what Fed Ex does and hat is sell routes to contractors. Routes can easily be valued at half a million. If Fed Ex falls to a competitor or makes serious cages to their business model, the routes could become worth far less…

        ..and in another instance Amazon set-up DSP’s as independent business but DSP’s get fired all the time. DSP owners hope they will have stable routes but Amazon keeps changing the model. They are now moving towards a DSP 2.0 model of smaller business owners. Previously they worked with logistics companies that sometimes worked in multiple states but are now moving towards smaller operators. This is likely due to the fact that there is less regulation for small companies with less than 50 employees. Amazon is trying to have it both ways. Work effectively as a monopoly and get the advantages of being a small business. Of course when drone delivery becomes feasible they will drop the DSP’s….

  3. July 20, 2020 at 9:08 pm

    “They are fucking broke, overstretched, overworked and have no job security“.

    True. But this is also vastly true for boomers and late genxers. The vast majority of all ilk are fucking broke, living paycheck to paycheck essentially and in constant incessant fear of loosing their job… or their business, including by far most boomers and genxers. If you maintain being broke by spending more or less, what difference does it make, you’re still broke.

    Symbiotic codependent duplicitous greed imperatives feed the sinkhole. Psychotic capitalism and unbridled materialistic consumerism are mutually self sustaining and mutually inflammatory. One feeds off of and simultaneously increases the other… to an ultimate yet blatantly self evident predictable collapse. The relationship is like two addicts addicted to each other in a mutually self sustaining symbiotic yet repulsive and mutually destructive relationship. The rich despise the broke but ravenously seduce them for credit exploitation and consumption. The broke hate the rich but are infatuated with them to worship and aspire to.

    The vast horde is still desperate to “keep up with the Jones’s”… except those who have no “opportunity” because they are “failing” due to personal “inadequacy” in the context or simply because the dynamic is collapsing. Yet when finding the least “opportunity” they immediately exercise the same will to consume and compete. Creating a communal safety net was never an imperative. Only the promise of one was ever an imperative and only for the purpose of exploitation. Why would it be anything different now?

    The dynamic is collapsing. It is not sustainable, it never could be. America is the greatest whore the world has ever known. The whore is aging out and, as with all old whores, there is no way to rejuvenate her appeal. “God” made everyone equal, everyone can live “the American dream”, send us all your losers and parasites and they too will get rich…. all sold well… for a while…but now, like all bullshit, the sale is over when promises prove false. Far too many now clearly see the folly of both compulsive materialistic consumerism and the ultimately empty pursuit of capitalistic greed. “He who dies with the most toys wins” is no longer an appealing game when everyone is figuring out that it’s no fun to play and no one likes you for playing. “Keeping up with the Jones’s” and emotional slavery to the shopping mall is no longer an appealing game when everyone is figuring out that it destroyed at least two generations. Both ways to play the game are now more recognized for what they really are, narcissistic ego masturbation at the cost of communal and self destruction. The whore has metamorphosed from the stage of infatuation through consummation and now into disgust…. the red pill writ large over all aspects. But so far, there is no new game in town, except maybe the blame and shame game which, when played seriously enough is always won with a death count.

    We are entering a new era. Some people are anxious about loosing the past which has already gone. “Make America great again” is a joke. There is no new direction. Turning the clock back is impossible. Recklessly impulsively lashing out with no realistic vision is equally idiotic. Attempting to emulate or resurrect the past is never the way forward. Blindly and violently defending the delusional ideologies of radical progressives is no way forward either. Both current sociopolitical psychotic paradigms are disasters.

    • Jackers
      July 29, 2020 at 5:29 am

      Great post, dude.

  4. electricangel
    July 26, 2020 at 5:27 am

    “people who had a decent stable job in 1999 no longer have a stable job that pays the same, even if they managed to stay in that field.”

    I work in essentially the same field since then, and make a decent amount of money. The problem I have is that it is no longer “stable.” As a result, I would not take on any long-term mortgages or car loans (though I can afford a car without a loan) for fear that I might go months without another gig (and this was before the lockdowns destroyed my local economy, probably for years).

    I wind up saving about 50-60% of my income as a result. I have to imagine the same thing goes with most better paid people: a radical shift to saving to tide past the times of worry. That’s going to rip the heart out of the debt-based consumption economy.

  5. P Ray
    July 31, 2020 at 4:33 pm

    Don’t forget the neoliberalism of Canada.

    Alberta recently passed Bill 32, which is explained by a commenter:
    Literally we can now work up to 208 hours of overtime and not be compensated anything extra.
    Also your shifts can be 16 hours long as long as you have an 8 hour rest between shifts!
    Oh and they can change your shifts whenever they want to, with no notice so they change it an hour before and you don’t show up, oh well.
    You didn’t show up for work!

    A lot of these “white countries” are becoming the sweatshops that they swore not to return to, but here’s the bonus points – the people most likely to experience this treatment from a “progressive society” are the new, non-white immigrants.

    Remember, conservatives are racist, liberals are stupid.

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