The $25k car is going extinct?

To share an anecdote on the more recent side of the spectrum, I bought a new 2025 Toyota Corolla LE two months ago. It's probably the cheapest vehicle Toyota makes. My cost before tax and title (not sure if that should be included or not) was $23k. It's a pretty great car. Highway averages like 45-50 MPH (25-35 city), it's comfortable, has Car Play, and everything else you'd expect in a car now.

I'll say that the two things I'm used to having in a car that this one doesn't (since it's such a base trim) is automatic seat adjustment (not a big deal, I kind of prefer it since the automatic seats on my last vehicle died) and no remote start.

All that to say that I think that inflation adjusted measure can still get you a fine car. As for the argument about income vs inflation in GP, I have no idea.

I think the problem here is that we are comparing against price inflation (not salary inflation). If every company increased its prices, then that's the inflation. Customers will feel ripped off if their salaries didn't at least match inflation.

In other words, if your salary in 2005 was $50k when Mazda was $13k; then your salary should be $82k for a $22k Mazda3 to be the same price. Currently, a Mazda3 starts at $24k and will probably run at $26-27k: https://www.mazdausa.com/vehicles/mazda3-sedan

> All that to say that I think that inflation adjusted measure can still get you a fine car. As for the argument about income vs inflation in GP, I have no idea.

Kind of. But my understanding is that most salaries haven't caught up to inflation especially in the last few years when the US economy had the worst inflation.

Salary inflation is much trickier to measure because it is confounded by years of experience increasing, getting promotions, etc. The distribution of the working population by seniority also changes over time so it's not self-correcting across the distribution. Assuming you have a good way of measuring it, (salary inflation/price inflation) would be an interesting Financial Quality of Life measure.

The Mazda 3 has gotten nicer too. I test drove one that had a HUD, adaptive cruise control with lane keeping, heated seats and paddle shifters among other features that are standard on all models.

Those are all things that were only available on luxury cars, if at all, in 2005.

In 2025 the base option package would have been a five figure option package in 2005.

You can use real median household income [0] and real median personal income [1] to gauge potential salary inflation (real meaning CPI adjusted).

The median American household and American has gotten significantly richer than in 2005, but in the 2020-23 period, income growth slowed due to the pandemic and the subsequent slow restart of the economy.

The last time we saw similar retractions were during recessions like the 1990-93 recession, the Dot Com Bust, and the Great Recession. Turns out the "vibe check" in the early 2020s were right.

Tl;dr - the median American feels poorer in the early 2020s than they did in 2019, but they have much more earning power than they ever did before 2018. I would not be surprised if this played an outsized role in voter dynamics in the 2024 election

[0] - https://fred.stlouisfed.org/series/MEHOINUSA672N

[1] - https://fred.stlouisfed.org/series/MEPAINUSA672N

>I think the problem here is that we are comparing against price inflation (not salary inflation)

This current period of inflation is caused by the dollar losing its value due to massive over printing by the Federal Reserve. People should feel ripped off, but I think you're directing your anger at the wrong target.

(Just an aside that median household income will of course be affected by the changing composition of households towards multi income families.)

Hence why I also provided personal income, but both data points show a significant correlation between dual-income households since the 1980s, so that is a moot point.

Also, as at this point 1980 is 45 years ago - almost 2 generations, almost like using the 1960s as a frame of reference in 2005.

At this point we've been a country of dual earners in a household for 2 generations now. It's best to assume that is the default given the overlap.

But you should compare the same cars. I bet 13k was for a basic trim, with manual, less powerful engine etc.

Car of 2025 has lots of features even in basic trims.

My first car had no ac, no power steering, no power window, etc. And I'm not that old...

TBF if you go by new-car pricing now, manual has more value than a base-trim automatic. (And the automatic transmissions now are better than the automatics available in 13k cars back then.)

What do you mean by more value? In Europe manual is cheaper than automatic. In USA there are only high-performance vehicles offered with manual. However even then Elantra N is cheaper with manual.

I’m most familiar with Canadian pricing, and since a while, it’s been more common for manuals to be more significantly more expensive than automatic. e.g it’s like $10k extra for a manual Mazda 3 or a Cadillac CT4-V or $15k extra for a manual Mustang. This commonly is because manuals are limited to higher trim levels... but that’s kinda like EVs for some models - even if the trim is upgraded, it’s still $10k more expensive.

But you compare different cars. If you compare the same high performance vehicles (but not luxury) where there are both options - then manual often is the same or cheaper.

For many manual enthusiasts, a Mazda3 GX is effectively the “same car” as a Mazda3 Sport GT, with the significant difference being that the latter has manual transmission.

For me, most of the differences between a GX and a Sport GT, other than the transmission, are about as relevant as the paint colour, so telling me that they’re not comparable is like saying that I can’t compare two cars because the manual version is only available with an expensive quad-coat matte paint job. To me, that fancy paint job isn’t relevant - what’s relevant is that the manual transmission costs $10k more.