We’ve got good economic news, we’ve got bad Prii news, we’ve got news about Rivian’s startup headaches. Who could ask for anything more?
Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.
The CPI Update Is Good News
It’s easy to get lost in the ups and downs of economic news as reported by financial pubs and networks, which has more of a short-term impact on markets and is therefore more relevant for traders than it is for the average person. Unless you are a professional trader or a masochist it’s probably best to ignore it if you don’t find it fun. I find it a little fun.
Yesterday’s “Consumer Price Index” (CPI) release from the Bureau of Labor Statistics is good news and provides a little more useful information. This is highly simplistic, but the CPI report is an imperfect-yet-helpful measure of how much stuff costs and it’s one of the key indicators of inflation/deflation and therefore an indicator of where the economy is going.
BREAKING
BOOM: IT'S COOL:
Headline CPI rises just 0.1%. Core CPI rises just 0.2%
Economists had been looking for a 0.3% headline gain, and a 0.3% core gain.
YOY headline inflation down to just 7.1%
Futures absolutely EXPLODING higher https://t.co/CKafFzS5ys pic.twitter.com/Maoz6lzl9I
— Joe Weisenthal (@TheStalwart) December 13, 2022
People were expecting the report to be higher. It’s lower, which is good because that means that inflation is maybe edging down:
What a chart, from Apollo’s Torsten Slok. #CPI pic.twitter.com/pXidABoMs7
— Carl Quintanilla (@carlquintanilla) December 14, 2022
The hope is that this news encouraged the Federal Reserve to not raise interest rates, meaning that it’ll remain easier for people to borrow money to buy cars and houses (and businesses to borrow money for investments). In reality, interest rates are probably going to go up, but this might be the last rate hike for a while.
The fun thing about the CPI is that it breaks down the cost of stuff into a lot of smaller categories. Here’s the one we care about:
The first seven numbers are month-over-month seasonally adjusted month-over-month changes going back to May and the last one is an unadjusted 12-month change. New vehicle prices are still up 7.2% from where they were a year ago, but they leveled out in November. Used car prices? Those keep dropping and are down 3.3% from a year ago.
Not to be a downer, but that doesn’t mean cars are cheap. They are not. They are still up about 33% compared to normal if depreciation still acted like it was supposed to act. Here’s some good news to end the story:
Now with an update to November CPI, confirmed that 3-month annualized change in average hourly earnings (+5.8%) was stronger than that for CPI (+3.7%) pic.twitter.com/Iai6pEYgUu
— Liz Ann Sonders (@LizAnnSonders) December 14, 2022
As a whole, people are earning wage increases faster than the cost of goods is increasing.
Toyota Doesn’t Expect To Sell A Ton Of New Prii
Here’s a curveball. There’s been a lot of interest in the new 2023 Toyota Prius within our readership. It was the most read-about car from the LA Auto Show. Hell, just this morning we’ve got a new Prius review and new Prius pricing and people seem to be curious.
Is Toyota expecting a huge number of sales from this newly redesigned model? Nope. They’re expecting the opposite. At the same press event Emily was at Toyota execs said they expect to move about 35,000 of the hybrids a month, at least according to Automotive News’s Larry P. Vellequette, who was also at the event (the “P” stands for: Pretty Cool Guy):
Toyota executives told Automotive News here at a media drive that the Japanese automaker saw more than 40,000 hand-raisers on its Toyota.com website alone in just the first few weeks following the reveal of the 2023 Prius on the eve of the Los Angeles Auto Show last month.
[…]
And yet, after spending the first few generations of its life as a cultural touchstone for cutting-edge environmentalism, the Prius is now just another hybrid in a Toyota lineup chock-full of hybrids — albeit one rated at up to 57 mpg and featuring a more powerful 2.0-liter engine. In a declining sedan market, the Toyota Prius will have to compete on equal terms against other hybrid sedans.
It’s a fair point. If you want to look like an environmentalist you’re probably getting an EV. The new Prius is attractive and quicker than the outgoing model and still extremely efficient. It’s also a great solution for people who need a car but don’t have easy access to a home charger. I’m hopeful this is wrong and the new Prius does better than 35,000 a year (assuming they can make more).
You Might Pay For Waymo Self-Driving Car Rides In SF
Reuters with the scoop that Google’s Waymo applied for a permit to charge people to take self-driving taxi rides in San Francisco. Currently, GM’s Cruise is the only company operating fares there with driverless cars. If Waymo follows suit, and it looks like it will, it could go a long way toward autonomy actually making money.
It’s one of the jokes of “driverless cars” that most of them still have backup human drivers that sit there in case something goes wrong. It’s a job designed to be replaced by computers. From the article:
Andrew Chatham, a software engineer at Waymo, said the company has updated the software that controls braking and acceleration to reduce shake and overall has surpassed targets for this year in terms of drivability.
The company has made its autonomous driving “more assertive,” Chatham said.
It’ll reportedly take months for approval, but San Francisco is a good test case for driverless cars since it has hills, weird weather, crowded streets, Uncle Jesses, cable cars, and all manner of other challenges.
Building Cars Is Hard, Part 917
Rivian. It’s a cool company. It makes attractive EV trucks/SUVs and Amazon vans. Only some of their forklifts have bed bugs. For all of the hype around other potential electric carmakers it’s notable that Rivian is actually building and delivering cars.
The problem: Building cars is super hard, you guys. Gonna go to Bloomberg (via Yahoo!) for an update on just how much cash it takes to make cars and why the company had to ditch a just-announced tie-up with Mercedes to build vans in Europe:
Rivian has its hands full trying to make R1T pickups and R1S sport utility vehicles for consumers, plus electric delivery vans for Amazon. It’s burning through about $1.5 billion a quarter by operating its lone assembly plant in Illinois at roughly half capacity, yet plans to spend $5 billion on a new factory near Atlanta. CEO RJ Scaringe apparently concluded that, in partnering with Mercedes to jointly produce electric vans in Europe, Rivian would be biting off more than it can chew.
I am sympathetic here. At The Autopian we’re doing video. We’re recording a podcast. We’re writing features. We’re launching memberships. We’re buying crazy cars. It’s a lot. Some days, it’s probably too much. It’s hard to stop. I got a nice email from a reader reminding me it’s my job to prevent David and Jason from burning out. I could… improve there.
The Flush
Are you more or less likely to buy a new Prius than any previous generation one? Would you hold out for the faster PHEV Prime or are you good with the FWD standard hybrid?
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Photos: BLS, Toyota, Rivian, Waymo
You say that the cheapest new Mitsubishi Mirage is out of reach.
And yet at the same time, the top selling vehicles are vehicles that cost much more than a Mirage.
So given that reality, people are not as poor as you’re claiming they are. If they were, then the Mirage would be a top seller.
This is in response to Toecutter’s message
The people that can’t afford a Mirage aren’t buying even more expensive vehicles (as a rule).
Regarding the CPI… this is more bad news for Carvana given how they have a lot of vehicles in stock they overpaid for.
Regarding the Prius… moving 35,000/month is still not bad… that’s 420,000/year.
The problem the Prius has is that it’s not the most efficient go-to green car on the market anymore ever since the Tesla Model S went on sale.
In my view the Prius should be Toyota’s cutting-edge green car. And on that basis, this new Prius should have been a BEV. But it’s not. But it still looks like it will be a very good car. It just won’t be a game-changer like the 1st and 2nd gen Prii were.
The generation of Prius that comes after this one better be a BEV though.
The Flush: I’m just as inclined to buy one of these new Prii even with the smaller (but still bigger than my Fit) trunk. It’s still a roomy hatchback with a low TCO and Toyota reliability. When it comes time to replace my 2008 Honda Fit, a 2010+ Prius will again be on my used car candidate list… as well as the 1st or 2nd gen Fit, Chevy Bolt and other cars.
The last time I was shopping for a car (December 2019), only the 2009 and earlier Prii were within my budget. But those earlier ones have unacceptably small trunks for me… so I ended up with the Fit.
Hey Mark unless I am mistaken the Toyota spokesperson said sales of 35,000 a month. In the end of the article you bemoaned 35,000 a year.
About damn time, although I don’t really believe it unless I see cheap car prices again.
My usual target market, the sub-3k-shitboxes, has seriously dried up.
In my area (northern New England) anything that’s not rusted to swiss cheese yet and has a small chance to pass a state inspection, starts at 5k nowadays.
Which makes me grumpy, since messing with cheap project cars is my main hobby besides small motorcycles, and I can’t ride in the winter.
But even beat-to-hell rusty cars that would’ve went for $3-5-700 in 2019 are going for $2-3k now and I can’t justify blowing that kind of money for a hopeless pile.
And $5k is too risky to just piss away at a hobby car where there is a real chance I’ll never sell.
Well, we already own a Gen 3 Prius so the probability of us buying a previous-generation model is 1. That said, I could see the Gen 5 being in the running when it comes time to replace Ol’ Whitey. My partner doesn’t really care about cars one way or the other, and she seems to like the Prius just fine, so “the same thing, but better” is probably the default option. If the Gen 5 turns out to be as hard to kill as the Gen 3 (I usually only find out her car needs an oil change after it’s been yelling at her for a few weeks) it’ll be a strong contender. Those things are absolute tanks, can haul a fair bit of crap, and get great gas mileage while doing it.
I love my gen 2 Prius, and if the new one is basically a better looking and performing version of that, which it appears to be, I’m very likely to buy one.
I could totally see myself buying the new Prius.
For one, it’s the perfect sized car, not waaay too wide and tall.
I’m not a fan of the instrument cluster, but it’s not too bad.
It’s the first Toyota is a very long time to make it to production without a stop in the styling department for a beating with the corporate ugly stick. Maybe all those people were working from home during COVID and weren’t aware of the project and it slipped by unscathed.
I could easily live with the base spec FWD, as I happily drive a front drive Golf now. But I might be tempted to treat myself to the PHEV. Since this car is actually small enough it would fit the parking spot where I would be able to charge it at home.
Fortunately, I intend to have several more years of use out of my current car, but this really is the first new vehicle I have seen in a long time that has made me think that this is the way I would go when replacement time comes.
I would definitely consider a Prius for transportation should I need it – depending on how many electronic nannies Toyota installed. For now I take the LIRR and my poor wife dailies a JDM 1996 Toyota Caldina TZ.
“Stop calling it inflation. It is not inflation.
Inflation is when businesses are losing money and the consumer’s dollar isn’t going nearly as far.
Profiteering is when businesses are all posting record profits quarter after quarter and consumers can’t put food on the table.
It’s not fucking inflation. It’s profiteering.”
This. All of this.
It’s entirely analogous to the post-WW II seller’s market. Limited supply, powerful demand: price gouging follows.
There must be something else to that Mercedes-Benz deal, because on the face of it none of Rivian’s reasons for pulling out make any sense whatsoever.
I think it SUCKS that the only way people seem to think they can be seen as an environmentalist is to go full BEV. We have a much better chance at making a real impact NOW with regular hybrids and especially PHEVs. They work for ALL people right now, take a hell of a lot less precious battery material to produce, and save a TON of gas. As it stands, people will continue to make (many valid) excuses why a full BEV does not suit their needs and complain about the high prices (again valid), while they continue to burn a shitload of gas. Most cars should be at least regular hybrids as standard. Whenever it is time to replace my wife’s Highlander, we are going PHEV or at least regular hybrid.
Please excuse me if I do not break out into a little jig over the CPI number. Personally, I am getting my feet set for even harder times. That CPI number is not an accurate indication of the hits we are taking to our wallets, and any modeling they have does not take our very unique situation into account – a largely self-imposed economic slow-down. Being in supply chain, myself, I can tell you the current situation is far from over.
I’m one of the people who thinks the new Prius is cool. I think it’s well styled, it’s reasonably quick, and the fuel economy benefits rock. My current commute varies based on day and has naturally varied over the years based on where I’ve lived and worked…but my one constant has been the EPA city ratings of what I’m driving being pie in the sky level optimistic.
My GTI was rated at 24 city and I was lucky to hit the low 20s while commuting…and the Kona N is rated at a lackluster 20 but frequently returns in the low to mid teens on the two days I’m due in to the office at 9am and have to fight rush hour both ways. Part of me is like “DC’s traffic and streets are so horrific that nothing I drive is going to touch its city ratings” but the other part of me feels some guilt over incinerating dino juice at such a rate. Fortunately both my turbo 4s have been capable of exceeding their highway ratings by 3-5 MPG routinely so it evens out a bit in the long run.
For those reasons a hybrid or PHEV will definitely be under consideration for me next go around…and while I don’t think the Prius will be on my list there’s a chance that the Crown will be. Anyway, 35,000 doesn’t seem low enough to drive the demand to the point of insane markups, but I will give Toyota a hearty FU for the artificial scarcity approach they’re taking with the GRC and I hope they don’t get the wise idea to try it with other stuff. BS like that is a big part of the reason why the market is so bonkers and it puts cars that are supposed to be attainable for the average Joe into rich people territory.
I suspect that battery scarcity will drive up all electrica vehicle prices.
The new Prius is basically the perfect appliance car. But nobody wants an appliance car. They want a government subsidized luxury electric SUV.
My likelihood of considering a Prius went from zero to slight. Curious how these things drive in snow.
I am less likely to buy a Prius now than ever before. It just seems so limiting compared to a Maverick.
“Are you more or less likely to buy a new Prius than any previous generation one? Would you hold out for the faster PHEV Prime or are you good with the FWD standard hybrid?”
Less likely, but only because I already own an ’07, and since I bought it to save money, it would make no sense to spend ~$30k for only 7-8mpg and new technology that I don’t really need. If I did get a new one, the standard would be fine, but the electric range of the PHEV would be nice to have.
In the Prius section – “At the same press event Emily was at Toyota execs said they expect to move about 35,000 of the hybrids a month” – I know you meant per year as mentioned in the last paragraph there. 35k/mo is what all Camrys averaged out to once upon a time, or in the last few years, the RAV4.
I think Toyota is plenty OK with that volume of Prius sales. The RAV4 Hybrid alone seems to be on track to exceed all but the very best ever year of Prius sales in the U.S. (2007, ~181k). The Corolla Hybrid was a bit limited in trim/features for its first few years so it didn’t really steal from the Prius, but expanded its lineup this year. While the new Prius pricing is up a couple grand from the current one, the Corolla hybrid is a couple grand less. Hybrids are commonplace enough that anyone that would have looked to a Prius for a small efficient car, they’ll try to move to the hybrid Corolla now. So the Prius has to be a bit more niche, maybe almost halo, for Toyota’s hybrid lineup as they try to entice people into hybrids in segments like minivans and SUVs where larger displacements/V6s usually dominate.
Plus Corolla Cross Hybrid hits the market soon which won’t have the Prius’ MPG, but does have the same 194hp 2.0L hybrid powertrain and will be priced similarly. No doubt Toyota expects that to be a big volume seller.
I don’t know that I want one, but I am very curious to see how the new Prius drives. If I were to get a hybrid car, it probably would be near top of my list however. With the new Accord lineup so hybrid heavy, for similar money I think I’d stick with the Prius.
It’s nice to see the CPI start coming back down to earth. Unfortunately, the KWIGI (Know What I Got Index) is slower to respond, so it might be 18-24 months before we see some relief there.
The CPI has been understating the real rate of inflation for decades, via hedonic adjustments. We have Alan Greenspan to thank for that. The real on-the-street inflation has consistently been at least two times the official CPI inflation rate since this technique was used. The “quality increases” cited are a subjective measure, whereas the previous method, using nominal values, was an objective measure. A more accurate way to measure the cost of something is to consider how many hours of minimum wage labor and how many hours of median wage labor are required to buy something, and using this as a measure, you will find that since 1972, housing is at least 3x as expensive per square foot today as it was 50 years ago, cars are close to 2x as expensive, college educations 8x as expensive, healthcare 10x as expensive, ect. Basically, real wages are such today that a median wage white collar professional makes LESS than a minimum wage burger flipper or janitor did 50 years ago. In the present day, people use debt to pretend their way to prosperity. This is why we now have two-income households drowning in debt, when it used to be possible for a single income to live comfortably debt free. My dad could afford more things as a janitor making minimum wage in 1972 than I can today as an engineer making more than 5x minimum wage. Using the official CPI numbers to calculate inflation, you would never notice this.
Another useful comparison is to price things in ounces of gold. Consider how much gold an hour of minimum wage labor could purchase in 1972, versus how much gold an hour of minimum wage labor can purchase today. They differ almost by an order of magnitude.
…and THIS is why most people are priced out of owning new cars, and why it is that today, the wealthiest 20% drive the new vehicle market.
I dunno man, there has to be some mechanism for accounting for quality improvements over time. I actually own a 1972MY vehicle, and while I love it, the fact that it cost less in inflation adjusted dollars than a new car today is not super relevant when weighed against the fact that it makes 140 hp from 350 cubic inches, gets 10 mpg, has an AM radio as the extent of its features, and was designed to last perhaps 5 years or 100,000 miles at best.
Yeah, cars now last WAY longer than they ever have before and even base models have AC, power windows, door locks, car play, sunroof, 4 wheel disc ABS, etc. We can all SAY we want a stripped out shitbox version, but no one would ever buy an $19K Civic that was like that. It’s proven by the fact that they sold the Fit, which was that, albeit a little smaller, and NO ONE BOUGHT IT. And it was a great car!
This is ALMOST like the ‘Apple computers are overpriced’ argument, except when you compare them spec for spec (albeit that’s hard now with Apple Silicon), they almost always were roughly the same price as an equivalent PC when you took a metal case, glass screen, high res screen, backlit keyboard, good touchpad, etc into account. Apple just chooses not to participate in the sub $500, plastic shitbox market that most people are just fine playing in.
A specced out Hyundai costs very close to as much as an equivalent BMW or Audi. BMW and Audi just choose not to sell an Elantra competitor.
I don’t disagree with your overall point about how well-equipped cars are now, but the Fit was hardly any less stripped out than a comparable Civic. American shoppers never really bought many cars in that segment, and the Fit was a more expensive entry for the segment. It was within a couple grand of a Civic which was roomier, more powerful, and as economical – and you could probably get a Civic out the door for the same or even less (certainly was always the case for Toyota and the Yaris vs. Corolla).
Honda has dropped base trims lately, but I think that’s more motivated by profits if not just directing the limited available chips to higher-profit trims.
It’s just become cheaper to build them all the same way. Even when you could buy a Civic DX without A/C still in the 8th gen 15 years ago, it had power windows -probably because it would have been more expensive to build it with the roll-up winders, vs. say power locks, you just leave off the actuator or whatever. Yet now it’s cheaper to build all trims with push-button start, and just leave off the sensor on the door handle so you still have to click the button…
Do quality improvements really matter as much when the cheapest item available is priced out of reach of the majority of the population, when the average item used to be affordable to the majority of the population? There is something to be said for having a warranty and parts readily available. Average people are becoming increasingly priced out of that.
Today’s new car sales reflect the wishes and desires of the upper 20% of income earners. The used car market better reflects the wishes and desires of those who can’t afford to buy new. Note what retains value, and what doesn’t. Used Tesla Model 3s, Toyota Prius, Honda Civics, and the like, retain their value well, indicating that MOST automobile operators, who can’t afford to buy new, mostly value efficiency, reliability, and low operating cost. There is high demand for those vehicles and with the car market lunacy over the last few years used versions were selling for almost new prices. The high-end luxury SUVs, especially European ones, sell very well, but do not retain their value well by comparison, and end up as land fill fodder, when those resources wasted on making those vehicles could have instead been used to make something fuel efficient and long-lasting.
“Do quality improvements really matter as much when the cheapest item available is priced out of reach of the majority of the population”
They sure do, because with cars more than almost any other consumer good, they trickle down to the lowest stratum of society eventually. The lower income person driving a 15 year old Civic today is a direct beneficiary of Honda making improvements to their vehicles in the decades leading up to 2007. There weren’t a lot of people daily driving 1972 Blazers (or Civics) in 1987.
I also dispute the notion that the *cheapest* item is out of reach for most. The *average* new vehicle skyrocketing in price doesn’t preclude the cheaper vehicles still existing. After all, you can still buy a new Mirage, Civic, Corolla, Prius etc today at a price very comparable to long term trends in vehicle costs whatever the measure.
Nearly half of Americans don’t even have $500 in savings. Even the cheapest new Mitsubishi Mirage is well outside of their reach. With it, so too are warrantees and all of the other perks that come with a new car purchase. When things break on older used cars, they often cost more to fix than the car is worth, which in turn means that someone living paycheck to paycheck ends up in a major bind. They may have to forfeit the vehicle due to local ordinances involving derelict vehicles because they don’t have the money to fix it, or even worse, they may even still be making payments on the vehicle, and now they have no means to get to work.
A 2015 NADA survey found that the average new car buyer made an individual income(NOT household income) of $80,000 a year, which put the average new car buyer in the upper 20% of wage earners for that time period. This is for all new cars, including the least expensive models, on up to the high-end exotics, and everything in between.
When my dad was a janitor making minimum wage, he was able to save for a brand new MGB GT within less than 2 years. He paid cash. As an engineer today making more than 5x minimum wage, it would take me a lot more effort and perseverance to save for a brand new Mazda Miata and pay cash for that.
A 1972 MGB cost $3320. That is 2,075 hours of minimum wage work at the time ($1.60/hr). A Mirage today starts at $16,245, which is 2,240 hours at the current federal minimum wage, which I should note has not been raised in 13 years. Less than 10% more hours.
Many states have a higher minimum….Illinois will be $13/hr on January 1, which would allow you to buy a $29K Miata in 2,240 hours, again, less than 10% higher in 50 years. Given how much better a 2023 Miata is in every way over a 1972 MG, I hardly think that’s an onerous price to pay.
It isn’t shocking to me that new car buyers are on average in the top 20% of incomes, where we argue I think is how long this has been the case. I submit that your father was an outlier; not a lot of minimum wage workers were buying new cars either then or now.
While the number of “hours” dedicated to purchasing the cars hasn’t changed much, there just isn’t as much “hour” left over after paying the bills.
I’m not entirely convinced that the CPI inflation rate is bogus when it comes to cars. Here’s an example: Back in 1995, the Dodge & Plymouth neon were advertised at $12,500 nicely loaded. I was working for Chrysler Corp at that time, and I can tell you that the nicely loaded car was a Highline model (middle of the range) with the 3-speed automatic, A/C, SOHC 132 HP engine, AM/FM/cassette 6-speaker radio, low-back cloth seats, rear defroster, and folding rear seat. A recent high school graduate could probably have bought this car in 1995 if they had a decent job.
If you take a look at the Bureau of Labor Statistics’ CPI Inflation calculator website and check the current (Nov. 2022) value of $12,500 in January of 1995, the calculator returns a value of $24,759.
What can you buy today for just under $25 grand, assuming that you can actually pick it up at MSRP? A 2023 Corolla SE (not a base model) has an MSRP of $25,045 including destination. A 2023 Subaru Crosstrek base with optional CVT stickers at $26,220 with destination. Not bad for the coveted (and therefore more expensive) crossover form factor! Both of these vehicles are light-years ahead of a 1995 neon Highline in every measure!
So is the point that the worker of today can’t afford something like a Corolla SE or a Base CVT Crosstrek? Or that they are unwilling to buy anything but a loaded model?
In 1973 a Teamster doing local metro delivery in Milwaukee made +-$12/hour, 7.5 x the minimum of $1.60. They had a wife and a kid and a car and a house and a teenage…ok wait..got carried away there…some even had a cabin “up nort”. A nice house could be had for around $40,000.
Today the average delivery driver wage in Milwaukee is $18.85, 2.6 x minimum. and far fewer are union. High seniority UPS drivers make $40/hour, 5.5 times minimum. A nice house is $300,000.
So 50 years on that driver is effectively being paid less…but what’s the solution?
There is no solution that isn’t a radical reshaping of how our economy works (or doesn’t) because to everyone on top, it’s working just fine. They can fuck up over and over again and get paid to move on to the next company.
I don’t know, but maybe there should be a cap on profits and a limit to the way comp packages work for executives in that the top position at the company can only make X amount more than the lowest, and that includes non-monetary compensation. IE: If the janitor makes $40K a year, the highest paid executive can only make 10 or 15x that TOTAL. There’s no ‘$1 salary and $4M in stock’ or anything to work around the rules. Maybe also make executives and board members personally liable for criminal misdeeds by the companies also.
Profits are just unpaid wages, essentially. If the company is only allowed to keep 15% of the revenue as profit and you can’t just give them to shareholders or executives or sit on them the way Apple does, maybe it’ll force them to actually pay people what they’re worth.
I’d be happy just to end the Federal Reserve, but the above idea isn’t entirely bad either. Wages of working people are incrementally creeping toward 3rd world levels. Give it another 20 years and they might be there.
The average used car costs what, $28k now? I make what is considered good money by today’s standards, and if I were paying the average mortgage and still had a student loan to worry about, I’d be priced out of even that. $28k is what my dad paid for an 2001 Audi TT Quattro with 225 horsepower back in 2003, and that was a $600/mo payment!
What you have described(when priced in houses), is effectively an 80% hourly pay cut in wages for a delivery driver in the span of 50 years. Meanwhile, productivity per worker has more than doubled since then!
A good start would be to have our currency backed by something tangible(used to be backed by gold and silver, but that was done away with with the end of Bretton Woods), and to go back to the old method of calculating inflation so that wages and entitlements like Social Security could be adjusted accordingly and with greater accuracy to real-world conditions. Stop the endless money printing and taxpayer-funded corporate bailouts as well.
But there is no magic bullet solution at this point. This country is on the path to collapse, due to decisions made long before I was born.
“A more accurate way to measure the cost of something is to consider how many hours of minimum wage labor and how many hours of median wage labor are required to buy something”
This willfully ignores the social changes that have occurred over time.
Changing from typical households having a single income to having two incomes changes what a unit of income is. The cost of living is always going to be some deviation away from typical household income. Trying to frame it in terms of the value of an hour of individual work is just denial of that reality.
If single incomes have to bid for resources against dual incomes, they’re going to lose out. But the cause of the “problem” (it’s not really a problem – it’s a cultural choice we’ve made) is that we’ve normalized two income households.
“…and THIS is why most people are priced out of owning new cars”
Still no. Even my explanation above isn’t enough to explain this. There isn’t one reason. New cars have become unaffordable for a combination of reasons. Some of which have to do with inflation, and culture, and monetary policy. But also because we don’t have a free market for vehicles and we’ve chosen to mandate in significantly higher prices.
“Another useful comparison is to price things in ounces of gold.”
This is the most incorrect thing you said. The price of gold is not well correlated to inflation. It’s driven by politics and speculation and supply changes and half a dozen other things.
https://www.nber.org/system/files/working_papers/w18706/w18706.pdf
The point is that an hour of work today buys significantly less than an hour of work did 50 years ago, even though worker productivity has more than doubled within that time frame. Or alternatively, prices on everything are significantly higher than they were 50 years ago. Whichever way you want to skin that cat. The hedonic adjustments over the decades have obfuscated the situation and turned inflation from an objective measurement to a subjective one, which is then twisted to favor the establishment narrative dujour. This means that for a two-income household, just to afford the basics, more time is dedicated to employment, and less to everything else, than with the one-income households of the past. But we’re being told things are better than ever. The available polling data on how people feel about the direction their country is headed doesn’t show the same optimism.
https://apnorc.org/projects/bipartisan-dissatisfaction-with-the-direction-of-the-country-and-the-economy/
Social changes aside, if inflation-adjusted hourly wages remain steady or improve, which is what the official numbers are telling us has happened, then that means two incomes today should definitely be able to enjoy a higher purchasing power than one income could 50 years ago. But when you look at the cost of housing per square foot, healthcare, college, or even quality unadulterated food, this isn’t the case. This is a large reason why most people are in debt. Without debt, they can’t afford anything, because wages ae no longer commensurate with the cost of the living standard to which people have become accustomed. All of the technological advancements made since then, the smart phones, the computers, the gadget-laden new cars, do not make up for the fact that the necessities are becoming increasingly expensive in terms of the amount of labor required to obtain the requisite money to afford them. There are no shortage of people living very modestly, working harder than ever, and living paycheck to paycheck while drowning in debt to do so, when 50 years ago, one income would have provided a comfortable living.
To me, I highly doubt the inflation calculator is accounting for new phones and computers every 5-6 years (designed obsolescence!), new dehumidifier every 2-4 years (even with two replaced under the 1 year warranty), and new clothes washer every 7 years. These essential things used-to last a lot longer, and now do not.
How about internet access? This is a new expense in our lives that is REQUIRED for work and school. Health insurance? Not covering as much as it used-to. Auto repair? Only going up with more advanced features.
Yes, you can buy cheap food, but good, healthy food is going up quickly.
Home and car purchase prices are just one example of the current cost of living climate.
The Prius is a car that many people would buy if we were purely rational creatures.
Speaking as someone who is rarely rational when it comes to cars, and who is glad that car companies make vehicles for non-rational people, I have exactly the same interest in this generation as in any other.
I am a bit surprised they bothered with another generation, perhaps the taxi and rideshare sales provide a solid floor.
I bought a 2014 Honda Insight (in 2015, but still new) based on purely rational points. It was the best car I ever really owned. And I absolutely hated every minute of it after the initial week or two of ‘NEW CAR!’ endorphins wore off. It got 45mpg, cost me a cool $17Gs out the door brand new for a specc’d out model, never once had anything break on it other than needing tires at 35K miles. I had it for 6 years because I couldn’t justify getting rid of it seeing as I drove to client sites for work and got reimbursed for mileage. At 54 on up to the current 65c a mile, I was profiting HEAVILY on it so getting something better just didn’t make sense.
I finally found my unicorn. A low mileage (12K miles), 9 month old demo unit 2020 Mini Clubman JCW (300hp version) for $34K. Sticker was $49K, and this car belonged to the regional Mini rep as his company car, meaning it was fully serviced at dealers and never really beat on. I bought it and have been in love for the past nearly 2 years. I had always wanted one, but couldn’t justify the cost for the 228hp versions, and once the 300hp was announced, I couldn’t justify $50K for a Mini. This was the best of both worlds. So much so that I was on vacation and had a well optioned out Rav4 for a week. Couldn’t wait to get back in my own car. Had to use my wife’s 2019 Mini S for a few days, and while you’d think they’d be similar, they’re not at all. The regular Mini is like a GTI in that it’s quick and twitchy. The Clubman is more like an S4 in that it’s deliberate and powerful.
Anyways, that’s just my way of saying that being rational doesn’t always make people satisfied, even when they know that it’s the right thing to do.
The fact that you took the time to type that out (and that I’d venture to say that most people on this site could tell a similar story) explains perfectly what I was trying to say.
…wait, the guy who owns a Viper is implying he might not always be rational when it comes to cars?! NO WAY!
….all jokes aside I agree with both of you. Having an emotional connection to cars is what separates enthusiasts from normies, and neither of you have to even begin to justify your choices to the guy who drives an overboosted, rough riding, farting, torque steering CUV that no one other than car blog frequenters could pick out of a lineup. I like to have SOME level of rationality to my cars (thus my love of hot hatchbacks) but if I was forced to drive something that was solely about being as rational as possible I’d probably take the bus instead.
With its practical hatchback body style, understressed/long lasting powertrain, and low price relative to performance peers, I’d argue more people should consider Vipers as their rational choice. 🙂
Well when you put it that way….
honestly at this point, it is a bit surprising they could not just remove the gas tank and gas engine and add a few more batteries, maybe a second drive motor and sell these for about the same price. surely they have had enough time to be really good at getting prius batteries and motors, and they are already plug in hybrid, I believe. so if they could make a sub 30K all electric, that would probably be more likely for people not to pass up. Toyota reputation helps a ton in this arena and they offer No BEV as of yet.
In practice it’s not that easy. Unless you want a very short-legged EV which probably won’t fly with the American market’s range anxiety fears then you need to add more than just ‘a few more’ batteries. Which adds a lot of weight that now you need to redesign the suspension to handle. Also beef up the power delivery and battery charging systems if you want it to meet modern EV expectations and not just be 10 years late to competing with the Nissan Leaf.
My wife loved her old Prius (which also protected her in a nasty t-bone collision) and I want a PHEV. I didn’t like the way the old Prius drove, but it sounds like that’s no longer a problem. The Prius Prime will be on our shopping list in a few years.
I hope the new Prius Prime adopts the improvements listed in the Prius review. The current Prime was panned in reviews as very much an economy car experience. My wife loved her Gen1 Prius, but I think we’re getting too old for that cheap car ride. We need to find something better for our return to hybrid technology.
I was planning to shoot for an upper-end Honda Accord Hybrid. Looks like the Prius might be back on the table.
I still need to drive my father’s Camery Hybrid to see how that fits my expectations.
“Are you more or less likely to buy a new Prius than any previous generation one? Would you hold out for the faster PHEV Prime or are you good with the FWD standard hybrid?”
It looks a little more comfortable, but I’m not particularly likely to buy one. If I did, I’d probably want the Prime. I currently daily a PHEV (Kia Niro) and I like my electric commute.
If I am going to buy a Prius, it is going to be the Prime. Perhaps I’ll get vanity plates that simply say Optimus. The Prius Prime would be perfect for my daily commute. The review pointed out the front license plate block and now I can’t un-see it. I didn’t notice any mounting holes; is it one of those deals where you drill into the bumper?
I am the same amount likely to buy a Prius. I like my Miata, and I like my truck. No real need for one.
If you’re asking whether or not I’d prefer the newest one over a previous gen, I’d definitely like the newer one. Not a huge fan of Emily’s turtle-car (although, like her, I do kinda appreciate it for what it was and how long it stayed what it was.)