I think the main reason for this is people stopped buying SUVs and Trucks. And those used to make up a very large proportion of car sales.
And the reason for that is simple really. Price of gas makes SUVs drop like a rock in value, and make used cars a lot more affordable. Why would I spend 40K for a new SUV, if I can get a 2 year old model for 20K
Bingo. My dad just bought a car last month. The dealers we went to all said "You can't get a Prius or a Fit with less than a 6 month wait - nobody has any in stock." Meanwhile their lots were completely full-up with SUVs that they can't sell.
Used Honda Civic, it had just come in earlier that day. Civics and Corollas still seem to have a decent supply (at least here in Massachusetts), but the smaller cars were all gone.
"In 1914, an assembly line worker could buy a Model T with four months' pay.[18]"
4 months pay for an average American making $45k/year is $15k. (Not including taxes, but I'm not sure if they're included in the Model-T figures above.)
I recently asked my parents how much they paid for their first cars, and IIRC the answer was about $3k on a $6k/year salary, for 6 months of pay. (This was around 1970.) It'd seem that cars were more expensive then.
I don't know what kind of cars your parents got, but they could have spent less. In 1970 a VW Beetle was selling for (I just looked this up) $1,874. The median household income in those days was $8,734, so that's 21%.
Nowadays the median income is $48,000 and the cheapest new car available is a shade under $11,000, so it's near-as-dammit the same.
Of course, even the cheapest car available today (a Hyundai Accent) is vastly superior to a 1970 Beetle in just about every way. Hell, it even has six airbags and anti-lock braking.
Volvo and a Toyota Corona, IIRC (not counting the lemons that my dad bought in grad school...one of them cost only $99). They wanted to be safe, which I think is still a concern among young people today.
And yeah, it seems like the cost of a car as a fraction of median income has remained remarkably stable since 1918 or so. The Model-T's price dropped by about 35% in the first couple years after it was introduced, so it should also have been about 20-25% of a year's salary by then.
Price of gas as a percentage of household income is significantly lower now than it was in the 70s, even with today's $4/gal. Remember that in inflation-adjusted terms, gas prices in 1973 were about $3.30. Figure in 50% or so real wage growth since then and we'd need about $5/gal gas to equal then.
actual costs of ownership were higher or lower now or then though
lol
My current car has 40K miles and has never been in the shop except for routine maintenance.
My last car had 100K miles without a lick of trouble.
35 years ago, it was not a question of "if" you had trouble, but "when". This was before front wheel drive, fuel injection, electronic ignition, imbedded computers, and manufacturer warranties. A $3000 car would normally cost at least another $3000 in repairs during its lifetime. (Unless it was a Pinto or Corvair that blew up) Factor in lost time broken down (without a cellphone of course), tow fees, and lost wages, and we forget how easy we have it now.
Only in the US, as far as I know. I was actually shocked when I came here at the extent to which borrowing money to pay for a car is seen as normal. Personally I still tend to think that real estate is the only thing worth borrowing money to buy, and that if you can't afford a $20,000 new car you should buy a $3000 used car.
As a side effect, I see a lot more new cars on the road here than in Australia. Also, used cars depreciate a lot faster.
I don't think it is a bad move per se. Mining companies buy machinery on credit, and this machinery depreciates. But in the context of a consumer, I agree, it's surprising. It's short-sighted.
To put it in the same context, there's lots of jobs out there that essentially require a car - the job is in an area poorly served by mass transit, or its a job that requires visiting clients' offices. It's clearly not short-sighted then.
In addition, up until the recent gas price increase, there was a perceived tradeoff between living in a small apartment in the center of a city, or living in a larger, cheaper house in the suburbs. The total cost of car+house was generally perceived as paying less for more versus the inner-city apartment.
Finally, if you have children, there's going to be tons of activities (sports, summer camp, etc.) that basically require a car. It's an investment in their future.
Also, used cars depreciate a lot faster. I'm guessing you mean compared to used cars in the US, because generally I hear that new cars depreciate the most in the first two years.
I would have thought they're just about cheaper than they've ever been in relation to wages. I can't find numbers right now, but I'm pretty sure I've read such figures in the past.
And the reason for that is simple really. Price of gas makes SUVs drop like a rock in value, and make used cars a lot more affordable. Why would I spend 40K for a new SUV, if I can get a 2 year old model for 20K