Cost of Car Ownership

Car ownership is less affordable than ever

The United States was built on the automobile industry. With all his faults, Henry Ford changed America forever. Before his innovations, cars were a play toy for the rich. Ford refined the assembly line to the point where cars were affordable for the masses. Additionally, Ford was one of the first to pay his employees $5 per day, an unheard of wage. His reasoning was that he would run out of customers for his cars if all we had was an under paid working class who owed their soul to the company store so to speak.

Ford also made cars affordable for everyone and pretty much refused to go upscale in any way until forced to do so. This allowed the masses to own cars. During the great depression we had movies and news reels showing the trek from Oklahoma to California in broken down Fords and the struggle people went through trying to survive. You’d figure the Soviet Union would love to show movies of suffering capitalist, but those movies and newsreels were banned as Soviets didn’t want their people to see that the poorest of Americans still had cars!

Throughout the years, all the US car makers had ranges of cars. GM was formed by buying up brands of cars from Chevrolet all the way to Cadillac, the standard of the world. The main point to all this is that there were always affordable cars and most were very easy to repair, with a large aftermarket parts supplier network and of course the you-pick junk yards for those on the edge. Shade tree mechanics abounded with every father and son fixing their own cars. I started working on cars in my teens. It was fun and necessary.

In recent years, all of this has changed. Cars are outrageously expensive and complex. The average new car now sells for over $50k. On a five year payment plan with $10,000 down, that is about $850 per month payment. Less expensive cars are not so easy to find. The venerable F150 pickup one of the top selling vehicles of all times range from $45k to almost $100k. ONE HUNDRED THOUSAND DOLLARS for a pickup!!!

Repair costs for cars have gone through the roof too. Of course, simple mechanical repairs like brakes, exhaust, oil changes, tire and suspension stuff is mostly easy. But even a tire rotation requires a scan tool to tell the car which tire is where for the tire pressure monitors. Want to do your rear brakes? Most cars now have an electric parking brake which needs a scan tool to put the brakes in “service mode”. Let’s not even discuss what happens if you need someone to do real diagnostic work! A friend of mine with a Toyota truck which has been VERY well cared for with all the work being done at a dealer. It started mis-firing. He takes it to the dealer for diagnosis and they find a bad head gasket. Ok, that kind of thing happens. Price to repair? $9,000. What? Here’s another one. On the F150s again (not trying to pick on Ford here), if your tail lights crack and allow some moisture in, not only are you on the hook for $1500 tail lights (each) but also the damage done to other electrical components in the system. Here’s the video for those who want the proof.

Here’s one last crazy repair story. Rivian, you know the gucci electric trucks? Let’s look at what it takes if you dent the truck in the rear.

One stock I’m watching related to all this is Copart. When the insurance companies total a vehicle, they auction it off at Copart. So let’s talk about the insurance rates for vehicles. You think they are stupid? They know if you get into even a minor accident, the repair costs pretty much start at $5k. A minor accident having to replace the airbags and a few front end parts will total a car. When this happens, it goes to COPART. The salvage yards are getting filled with beautiful cars, rust free, which are either mechanically totaled or totaled due to what one might think is a minor accident. Transmissions are commonly between $5000 and $10,000 to replace. If you have a 5 year old car and it needs a transmission. It is basically junk now.

I will take these issues one by one. The price of new cars is first. Car makers have gotten greedy, turning off the production of affordable cars and trucks or loading cheaper cars with excessive options. Car dealers took the C19 as an invitation to jack up the price of cars with market price adjustments, adding BS protection packages costing thousand, etc. Interest rates are another factor but probably beyond anyone’s control at this point.

Next is the government regulations. They are trying to force Electric Vehicles (EVs) down everyone’s throats. GM and Ford are losing money on every EV they sell. The start/stop feature where your car stalls at every traffic light is practically standard. That little bit of fun adds a bunch of cost and repair bills just to save a tablespoon of gas. What about the displacement on demand features where cylinders are deactivated as needed. Sounds great until your lifters fail (talking to you GM) or your car starts burning oil because of it. But it isn’t free to add these features either.

The manufactures are adding massive complexity to the cars now with computers controlling everything on that nice screen in your car. None of this is cheap and is not cheap to repair. Additionally, car companies are keeping the repair parts prices sky high. We mentioned the $1500 taillights and $10,000 transmissions. HOW CAN THIS BE JUSTIFIED? And now there is a move to take everything direct to the manufacturers and eliminate individual dealers. At least now, you can find a dealer to get a “deal” on parts or a new vehicle.

I’m not sure what the game plan on all of this is. All I know is some people are paying $1500 A MONTH for their pickups and getting gutted with insurance and repair expenses. It almost seems like they are trying to destroy the car business in America or make it so expensive to own a car that people just give up. They used to say “What’s good for GM is good for America”. They were right. The middle class earned a decent living, could afford the products they built and enjoy the American Dream. My how things have changed!