Your car is the only piece of technology that gets more expensive, rather than less expensive, over time. Calculators can now be found in a box of cereal. Computers become less expensive every year–desktops can now be purchased for under $500. Automobiles however continue to increase in price.
I’m an anachronism, I know; I think ten THOUSAND dollars is an outrageous sum of money for a car. Think about $10,000—think about what you could do with ten grand if I handed you that money today—the bills you could pay, the Christmas you could have, the sigh of relief you’d feel with that kind of money deposited into your checking account.
Yet you can scarcely get a new vehicle for $10,000 these days; in fact, you need to virtually double that number to purchase any decent family vehicle. But imagine if Ford was still making that 1974 Country Squire your mom schlepped you around in 30 years ago. What if economies of scale were applied to vehicles? What is new since 1974 that I need? Not “want,” but “need.” Anti-lock brakes, shoulder strap seat belts and air bags, should definitely be included, but do we need anything else?
Do we need GPS, on-star, DVD systems, six disc CD changers, power locks and windows (and yet making a small, circular swirling motion with your hand still means “roll down your window.” Do today’s kids know why?), navigation systems, and self-parking systems?
Like most technologies, improvements would eventually be included from extra stock and when economies of scale made it practical. (For instance, today’s new inexpensive computers come with “only” one GB of RAM and 160 GB of storage. You can certainly over pay for the newest technologies, but most buyers don’t do that.) The 2009 Country Squire’s technology might resemble it’s cousin born in 1999, yet it would probably cost around $1000. How about that—a new car, with a warranty for $1000?
Yet the lunacy continues. Today, Lexus is offering technology that will keep a vehicle in the center of your lane. VW offers similar technology. From the Lexus website, “An available Lane Keep Assist system applies steering torque to help the vehicle stay in the center of the lane (provided of course you’re on a road with clearly marked lines). To help keep you from drifting out of your lane when cruise control is in operation, an available Lane Departure Warning System gives an audible warning. After this warning, it takes corrective steering action to help keep you in your lane. When cruise control is not engaged, the system sounds a warning if you drift out of your lane.” Is there any doubt that Detroit will follow suit? Ford is now offering side-view mirrors that can you give you a digital representation of a vehicle in a blind spot (sure, that was easier and less expensive that just removing the blind spot).
Unless you’re still doing bong hits while you drive and steering with your knee (or asking your friend to steer from the passenger seat—don’t ask me how I know; I just do) this seems, once again, like an extreme technological advance. Starting at $34,200 those who would benefit most seem the least likely to be able to afford it.
We rightly criticize Detroit for their current predicament—not because they didn’t know what they were talking about, but because they didn’t have the gumption to be proactive. Let’s face it—they gave us exactly what we wanted. It’s not as if SUVs were sitting on new car sales lots for years and years longing for buyers like the sad pathetic Charlie Brown Christmas tree. SUVs were in demand and Detroit built us SUVs. Detroit said that Americans didn’t want small cars. To a great extent they were right. Every Japanese import gets bigger every year. Note the 1980 and 2009 Honda Accords, pictured. Japan made in-roads with a niche market, not by appealing to the broad desires of Americans.
Detroit’s mistake was in not foreseeing these eventualities. Do you think the Big Three Automakers are discussing a possible ceiling for what Americas will pay for a car? Do they anticipate a day when consumers will revolt and turn to foreign makers who anticipate a paradigm shift in American automotive purchasing? Are they afraid that mass-producing a new vehicle and allowing economies of scale to drive the cost down to nearly impulse purchase prices will spell the end of other product lines? Or is their business model to keep adding technology to the car to continue to drive the price of the vehicles skyward in order to progressively add to corporate profits? (The only technology for which I wait is a car that folds up like George Jetson’s into a briefcase—until then, mommy says I’m a big boy and I can park and stay in my lane all by myself.)
Who’s the moron, though? For now, we are. GM, Ford and Chrysler perpetuate a business model that has wrung profits from the wallets of consumers during the boom years and we keep getting stuck with vehicles that don’t serve our needs. Once again, Detroit’s lack of ingenuity and low tolerance for risk serves the public desire—for now. But if there’s any lesson to be learned from the recent stint in automotive hospice, it’s that giving consumers what they want may not be the best business model after all.