Someday, we’ll be able to move around in flying cars and bring to life those Star Wars highways in the skies. I’ve been making presentations recently to inform those interested about the monumental advancements in personal mobility coming in the very near future.
Until then, taking excellent care of our vehicles is smart. Cars today are built to last … and last, leading to an increase in the average age of the fleet over the last two decades from 8.5 years to now over 12.5 years. That represents a 50% increase in the average age of the fleet in just 20 short years!
The auto industry and government at all levels must do much more to help hold down the cost of buying, owning, driving and parking motor vehicles for entry-level and less-affluent car buyers. We should all urge all industry and government leaders to collaborate effectively on ways to reduce the price of vehicles, especially entry-level starter vehicles. Otherwise, society risks making it impossible for would-be car buyers to access essential mobility, forcing them toward less convenient alternatives like transit, bus, bike and walking … anything but cars.
Governments and environmentalists everywhere are trying to push people out of cars. The ever-increasing cost of vehicle ownership is assisting them. Vehicle owners who believe their cars are essential should push back. The auto industry should provide the facts they need to push back.
There are multiple factors behind high prices:
- Transitioning to electric-powered technology is pricey: Battery electric vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVS), and pure hybrids are all more expensive. The lowest-priced ones cost more than traditional Internal Combustion Engine (ICE)-powered cars.
- All cars are more expensive due to general across-the-board inflation.
- Interest rates are high because of efforts by the Federal Reserve to curb inflation. The result is sky-high financing terms.
- Fuel to power cars, including gas, diesel and electricity, is more costly than it was pre-Covid.
- New auto factory union contracts will increase production costs across all lines, even in non-union plants, as all must remain competitive to attract, hire and retain workers.
- Car insurance costs have grown rapidly because it costs more for new cars to replace in total-loss claims, and to repair when the vehicle is not totaled. There also are higher costs related to more frequent and intense hail damage.
- Pre-COVID (2019 to early 2020), the average transaction price for a new vehicle in the U.S. was $33,000. Today it is about $48,000 (current figures change frequently). Gas and diesel-powered cars are, on average, about $15,000 less than EVs. That will change as some automakers are dramatically reducing their new car prices in a bid for increased market share. Except for Tesla’s price-slashing to gain market share, there has been little or no movement in the average $15,000 disparity between ICE and EV. For the foreseeable future, there will continue to be competition between ICE and electric vehicles.
- Every automaker once had entry-level, affordable cars for first-time buyers, including students, military and lower-income buyers. Some automakers no longer offer cars, but only pickups, vans and SUVs. The last new car available in the United States priced under $20,000 (Mitsubishi Galant) will cease export to the U.S. market. Others costing less than $20,000 have added options as standard equipment that boost their lowest MSRP to $25,000.
- Reports in automotive and consumer publications say electric vehicle sales are flattening and inventory is starting to pile up on dealer lots.
- The whole industry has swung from a lack of inventory due to Covid-inspired supply-chain problems to a glut of inventory that is now fueling factory incentives. However, almost none of the vehicles being offered are entry-level vehicles.
To thrive, the industry must help entry-level buyers, especially younger consumers struggling to establish lives already burdened by high housing costs and student loans. Owning a car is about both convenience but also enjoying the freedom to move. If we shut them out of ownership there’s a very real chance they’ll never come back.
Tim Jackson is the author of the forthcoming book “Dude, where’s my flying car?”
