VW Vortex - Volkswagen Forum banner
  • Rejoining the VWVortex Community - Please review the following thread: Here

Status
Not open for further replies.
1 - 20 of 763 Posts

·
Registered
Joined
·
45,398 Posts
Discussion Starter #1
Income Inequality Is Killing Sports Cars


Seems like this has been happening for many years.


Why are attainable enthusiast cars disappearing? Because young working people can no longer afford to buy them



Car fans are tired of being told we can’t have nice things. The ensuing refrain is that the enthusiast market is too small to be sustainable. Given the U.S. population alone has increased by 80 million people over the past 30 years, you’d imagine that potential buyers—of sports cars, of hot hatches, of stylish coupes or tossable roadsters or sneaky-quick sedans—would be more numerous than ever. So why is the market drying up?

To figure out what’s happening, we have to jump back in time. In 1990, the median wage for a young man aged 25 to 34 was $21,393 a year. The original Mazda Miata had just arrived the year before, with a base price of $14,000, and the median house price was just 3.7 times that wage, at $79,100.

Here’s the problem. In 2019, the median wage for the same young man was $42,212. A base 2019 Miata retailed for $26,500—proportionally stable at roughly 65 percent of the median annual wage. The real shocker is housing. In the ensuing years, the median home price has shot up to nearly $325,000 in the U.S. (per the St. Louis Fed, as of October 2020), a full 7.6 times the median annual wage of our young earner. And even if our hypothetical 25-to-34-year-old isn’t trying to buy a house, if he’s renting, he’s likely dealing with astronomical prices, especially if he’s living in a major city—not to mention the unprecedented student loan debt his generation has incurred.

The situation is even worse for young women. In 1990, the median wage for women aged 25 to 34 was $12,589, rising to $35,491 in 2019. And in every age and income bracket, women make less than their male counterparts, putting them at an even steeper disadvantage in terms of buying power.

Americans in this age group are in the prime of their youth, a time when a lack of responsibilities would historically pair with an influx of real adult income. It’s a precious window, a time when many would splurge on a brand-new sports car before children or other practical commitments got in the way. In decades past, one might have expected a new college graduate starting their first grown-up job to choose themselves a flashy new ride as a treat. But with a financial Sword of Damocles hanging above their heads, the young adults of today hesitate to make the same call.

In the last 40 years, wage growth in the U.S. has screeched to a halt. Past decades have seen huge increases in productivity, yet the majority of the extra wealth generated by that more-efficient labor has been siphoned off at the top, with workers seeing few of the spoils. Facing low wages, huge housing costs and unprecedented debt, young people aren’t rushing to buy new cars. They’re still driving hand-me-downs, or spending just enough on a used car to get something that won’t bankrupt them in repairs. Without such penny-pinching measures, the average worker in this age bracket has little hope of ever getting on the property ladder and building up equity for a safe and comfortable retirement.

The statistics bear this out. The average age of the new car buyer has shifted radically upwards in recent years. In 2007, those over 55 made just 31 percent of new car purchases. Ten years later, they made up a full 52 percent of new-car buyers, with younger Americans dropping out of the market in droves.

Of course, automotive diehards always find a way, making do by hooning whatever goes cheap on the used market. The real loss to the scene is the potential enthusiast. I can’t count the number of non-car people that have come to me asking for a recommendation. They’re in the market for a car, and now that they’ve spent a few years in the workforce, they want to treat themselves to something fun. A daring color, perhaps, or a racier engine. Maybe even a convertible or something to take on off-road adventures. I’m always happy to share my knowledge and point them towards a slightly unconventional choice. But break it down for them—the poorer gas mileage, sometimes-shaky reliability, and higher payments and maintenance costs on an “interesting” car—and they’re often left with no real choice. When your financial stability can be obliterated by one unexpected hospital visit, or your job is constantly at risk of being downsized, those vehicular upgrades start to look like liabilities.

Those potential enthusiasts, the young professionals who almost bought a Mini Cooper S or second-hand BMW as a treat? They inevitably end up in a cheap, economical hatchback or practical-seeming crossover. They never head out to Cars and Coffee, or join a car club, or meet up with friends for a Sunday drive through the canyons. They never even dream of attending a track day. Every spare penny they have goes into a savings account they pray will one day be a down payment on a house. The car scene mourns the loss of a new friend it never met, and the hobby grows a little smaller, and a little older, a day at a time.

What we’re left with is a car culture with a growing hole in the middle. On one side are the zealots, those who’d die before they gave up modding and wrenching, beating the snot out of their latest Craigslist score. On the other side sits the moneyed brigade, rolling around in the latest factory special editions fresh off the dealer lot. To them, there has never been a better time to be a car enthusiast, with factory hot-rods putting up numbers that were once the realm of the fiddly homebrew.

It’s the middle that’s shrinking. Once, a young worker with a rising career could have bought a flashy new ride and started a lifelong obsession. Now, for many, it’s simply too big a risk to take.

The solution is simple, yet inordinately difficult. If we want to welcome more young enthusiasts into the scene, we need wages to rise. The money is there; the problem is how it’s being distributed. If America returned to an income distribution like we had from the 1940s to the 1970s, the median worker would earn an additional $40,000 every year. That money would go a long way to paying down student debts (or medical debts, or credit card debts), securing mortgages, and maybe, just maybe, purchasing a sweet two-door to park in the garage.

It’s no coincidence that the era when American workers had their greatest buying power—1945 to 1974—launched some of the most influential, innovative, and exciting cars in the history of the automobile. The decades since have seen a gradual, slow decline in the market’s appetite for attainable enthusiast cars, and a subsequent unwillingness among automakers to cater to a shrinking customer base. Until economic conditions change, we’re unlikely to gain back what we’ve lost.
.
 

·
Registered
Joined
·
10,081 Posts
Well. Yep.

I'm making about as much as I ever thought I would, and I can't really afford anything new out there now. Instead, I'm pretty much relegated to maintaining the E46.

Even moving down the East coast a bit, to a much smaller city, much less expensive area...it'll still be slim.

I gave my dreams of having more than 2 cars up (and a place to keep them) a long time ago.
 

·
Registered
Joined
·
1,020 Posts
Yea but mortgage rates were 7-8% around 1990 which halves purchasing power. Divide 7.6% over 2x purchasing power of an 8% interest rate vs 2.5% it's 3.8% (2020) vs 3.7% (1990). Am i missing something obvious?
 

·
Registered
Joined
·
4,425 Posts
Everything in the article is all well and good, but seems reluctant to face another part of reality, that young people just don't give a **** about cars, period. Even if they had the money, blowing it on a sports car isn't where 99.9% of people aged 22-35 are going to put it anyway. I mean, I haven't blown my money on a sports car and I'm even a car guy. In fact, I tried to dump my turdgen this summer with no plans to replace.

I'd rather just buy a nice sporty suv and call it a day.
 

·
Registered
Joined
·
2,829 Posts
Google says 1990 base 911 was $58.5 in 2020 thats $116k. So just as unaffordable today lol. In reality today thats a 911 with some options so its slightly better.

The miata is too reasonable imo. You need to be spending $60k plus for the unreasonable sports car they are referring to. Main difference today is COL is higher, rent mortgage and student loans/college is just much more expensive than it used to be. Middle class pay for the most part has stagnated for a while now.
 

·
Registered
Joined
·
6,158 Posts
Well. Yep.

I'm making about as much as I ever thought I would, and I can't really afford anything new out there now. Instead, I'm pretty much relegated to maintaining the E46.

Even moving down the East coast a bit, to a much smaller city, much less expensive area...it'll still be slim.

I gave my dreams of having more than 2 cars up (and a place to keep them) a long time ago.
I have never really given this much thought, but yeah, I'm also in a similar situation.

With the rising cost of reasonably nice housing for my family, and general cost of living for a decent middle class life, even two professional white collar incomes aren't really enough to comfortably buy new cars these days. Yes, we could forego some savings and retirement to spend $1500/mo on new cars. But retiring in our 50s sounds like a much better idea, and if that means we buy $20-25k used cars instead of $40-50k new cars that's fine with me.
 

·
Premium Member
Joined
·
7,759 Posts
Yea but mortgage rates were 7-8% around 1990 which halves purchasing power. Divide 7.6% over 2x purchasing power of an 8% interest rate vs 2.5% it's 3.8% (2020) vs 3.7% (1990). Am i missing something obvious?
Yes, student loan debt and healthcare costs. As well as the huge economic shock the Great Recession had, and increasing global competition for jobs across the board. I'd wager median rents, which are more indicative/relevant to people in this age bracket, have outpaced purchasing power over that time as low rates have forced more growth/profit out of everything investable
 

·
Registered
Joined
·
5,767 Posts
Because young working people also don't care about sports cars or enthusiast oriented vehicles in general. They want the most automated CUV with the biggest touchscreen you can get. THAT is what is killing sports cars; lack of interest.
 

·
Premium Member
Joined
·
18,247 Posts
Everything in the article is all well and good, but seems reluctant to face another part of reality, that young people just don't give a **** about cars, period.
Disagree completely.

Maybe it's living in Detroit, but young people here are quite nutty for cars and the mid-20s demographic is doing silly things with them.

What's different is that not everyone needs a car now. There is ridesharing and such that make it easier to live without one. But the kids who want cars? I know a raft of them personally, and they like cars.
 

·
Registered
Joined
·
3,128 Posts
This is spot on. The fact that a mainstream car magazine is writing about the issue shows how apparent it’s become. Obviously with the shrinking of the enthusiast market, there goes the viability of Road and Track.

Can’t forget that a $30k BRZ is still a huge stretch for most people.
 

·
Registered
2 Turbo Wagons.
Joined
·
14,897 Posts
My wife makes about 20% more than me.
She also works a lot harder than I do, so there might be a connection.

But as a reslut of our income inequality, I don't get to buy nice new tech package equipped sports cars. I have to buy 10 year old Subarus.
 

·
Registered
2016 A6, 2014 X3, 1967 Bus, 1963 356
Joined
·
22,134 Posts
IMO kids born post 2000 and who came of age during the rise of Uber/Lyft are overall less interested in cars for fun and instead see them as just A-B appliances and aren't very interested in ownership of any kind. Yes there are still lots of enthusiasts out there no doubt, but the overall population is dwindling. I'm honestly fine either way as I believe all the best drivers cars have already been built (I'm an analog kind of person for motorsport).
 

·
Registered
Joined
·
6,047 Posts
Car makers don't make cheap sports cars because they make more money selling expensive trucks and SUVs and selling them in much higher volumes.
 

·
Registered
Joined
·
3,128 Posts
IMO kids born post 2000 and who came of age during the rise of Uber/Lyft are overall less interested in cars for fun and instead see them as just A-B appliances and aren't very interested in ownership of any kind. Yes there are still lots of enthusiasts out there no doubt, but the overall population is dwindling. I'm honestly fine either way as I believe all the best drivers cars have already been built (I'm an analog kind of person for motorsport).
I think a correlate question would be:
Would young people be more inclined to buy fun cars if they had more buying power?

Subquestion:
Would this also be changed by the availability of more leisure time?

Both disposable income and free time have gone down tremendously in the last few decades. I remember a study showing if you make an average wage, you essentially have to work without any vacation time to just cover cost of living. Would more people buy Miatas and roadtrip the coast if they had more time off and more money? Would you be more inclined to wrench on your car if you had more time off? Maybe.

Also, if you guys haven’t read the comments on the article, they definitely skew differently than the comments here.
 

·
Registered
Joined
·
7,234 Posts

·
Registered
Joined
·
44,088 Posts
This ins't very surprising. Student loans were completely taken over, administrative costs and insurance are a huge amount of medical bills, and vehicle standards have driven up the costs of the cars themselves. Lots of that is good stuff (I'll happily take my safer if more expensive car, thank you very much) but lots of that is just bureaucratic inefficiency and nonsense, too.
 

·
Registered
2004 ForesterXT 5MT, 2019 Golf R 6MT
Joined
·
42 Posts
Just buy more money. :confused::confused::confused:
income inequality is a problem but it's not what's "killing sports cars". people are choosing to spend or borrow their money for other things, like big 'ol trucks.

Car makers don't make cheap sports cars because they make more money selling expensive trucks and SUVs and selling them in much higher volumes.
 

·
Registered
Joined
·
41,837 Posts
Just buy more money. :confused::confused::confused:
i dont understand this problem at all?




Google says 1990 base 911 was $58.5 in 2020 thats $116k. So just as unaffordable today lol. In reality today thats a 911 with some options so its slightly better.

The miata is too reasonable imo. You need to be spending $60k plus for the unreasonable sports car they are referring to. Main difference today is COL is higher, rent mortgage and student loans/college is just much more expensive than it used to be. Middle class pay for the most part has stagnated for a while now.
but yeah, basically all of this.
 
1 - 20 of 763 Posts
Status
Not open for further replies.
Top