1972 Chevy Vega vs. 2015 Toyota Corolla: How do they compare?

From Mark Perry.

"Don Boudreaux posted recently at Cafe Hayek about the first episode of “The Price is Right” in September of 1972 (watch full episode below). In that first episode, one of the prizes was a 1972 Chevy Vega (pictured above), which sold then for $2,746. At the average hourly wage in 1972 of $3.90, it would have taken the average American slightly more than 700 hours of work (or 17.60 weeks and about 4.4 months) to earn enough income (pre-tax) to buy a 1972 Chevy Vega. Don then calculates that a 2015 Toyota Corolla (pictured above), with a retail price today of $16,950, would require about 815 hours of work at today’s average hourly wage of $20.80. Based on that analysis, the “time cost” today of a 2015 Toyota Corolla is 15.75% more expensive than the 1972 Chevy Vega. Don then explains why he thinks most consumers would still select today’s Carolla over yesteryear’s Vega, even though the “time cost” of the Carolla is higher:

I’m confident that lots of people – I believe the great majority – would choose the 2015 Corolla, even though its work-time price is higher than that of the Vega. The reason is that the 2015 Corolla is a luxurious, marvel-filled vehicle compared to the 1972 Vega.  The 2015 Corolla is also much safer than was the 1972 Vega.

Here are some additional reasons that  would support choosing today’s Corolla over a 1972 Chevy Vega, based partly on a 2013 CD post “5 charts showing there’s never been a better time for average Americans to own, operate a car; the ‘good old days’ are now.”

1. Better fuel economy. In 1972, the average fuel economy was only 13.1 miles per gallon; today’s it’s almost double that at 24.2 miles per gallon (MPG) based on EPA data available here. If you drive 12,000 miles per year, the average car today at 24.2 MPG would only use 496 gallons of gas annually, compared to the 916 gallons per year at 13.1 MPG for a 1972 model car. Over a year, that increased fuel economy of today’s cars would save 420 gallons of gas compared to a 1972 model like the Vega, which would translate into annual savings of more than $1,000 at today’s gas price of $2.44 per gallon.

Update: A commenter claims that the Chevy Vega’s fuel economy was better than the 13.1 MPG average for that era. But then so is the Toyota Corolla’s fuel economy (32 MPG) better than the average car today by 32%. The comparison above is for the average fuel economy of an average car in 1972 (13.1 MPG) vs. an average car today (24.2 MPG).

2. Longer life/Increased durability. In the early 1970s, the average age of the passenger cars owned by Americans was only about 5.2 years; today’s it’s 11.4 years, the highest in history. Today’s cars are more dependable, require fewer repairs, and last for many years longer than the cars of 40 years ago.

3. Cheaper financing. To finance the purchase of the 1972 Chevy Vega would have required a car loan with an interest rate of more than 10%. And that was low compared to the peak a decade later when the interest rate for auto financing topped 17% in 1981. In fact, during the entire 20-year period from the early 1970s to the early 1990s, the interest rate on car loans was in double-digits. In contrast, interest rates on car loans today are at the lowest level in at least 50 years, maybe the lowest ever at about 4% (with some banks offering rates as low as 2.5%). Over the life of a 4-year car loan to finance the purchase of today’s $17,000 Corolla with a 20% down payment, a loan at today’s interest rate of 4% would save a borrower more than $1,800 compared to the 10% interest rate that prevailed in 1972.

4. Increased safety. As Don pointed out, today’s cars are much safer than the cars in the early 1970s because of standard safety features today like air bags, high-strength steel in combination with the strategic use of lighter materials that dissipate and redirect crash forces, anti-lock brakes, electronic stability control, and tire pressure monitoring systems. One empirical measure of driving safety is the National Highway Traffic Safety Administration’s quarterly reporting of the “traffic fatality rate per 100 million vehicle miles of travel (VMT).” In the early 1970s, there were more than 4 traffic fatalities per 100 million VMT, and that figure has gradually decreased over time and reached an all-time historical low rate of only 1.02 deaths per 100 million VMT in 2014. By that measure, drivers of today’s cars are 4 times less likely to be involved in a fatal traffic accident than in the early 1970s.

5. More options. Today’s cars include options that are now often standard like power steering, air conditioning, power brakes, power windows, rear window defroster, power adjustable side view mirrors, remote key-less entry, CD players, Bluetooth, navigation systems, airbags, automatic transmission, etc. In 1972, many of those options either weren’t even available (CD players, navigation, airbags) or were available only at a very steep price as a non-standard option, like air conditioning for example.


Bottom Line: Adjusted for quality, durability, safety, features/options, fuel economy, and financing costs, today’s vehicles like a 2015 Toyota Corolla are far superior to cars from the early 1970s like the 1972 Chevy Vega featured in the first episode of The Price is Right in 1972 (watch it below). And relative to wages, today’s cars are much more affordable on average than models from the early 1970s, despite the difference in “time cost” between the Vega and Corolla.

One way to capture that increased affordability of new vehicles is displayed in the chart above which compares the increase in average hourly wages since 1972 (+428%) to the increase in the CPI for new vehicles (adjusted for quality improvements), which has increased by only 167% over the last 42 years, and has been flat for the last 20 years. As I concluded in my previous post, when it comes to owning and operating a vehicle, Americans, including the middle class and low-income groups, have never had it so good. The cars we buy today need fewer repairs and last longer than ever before, they’re more fuel efficient than ever before, our cars and highways are safer than ever before, the financing costs for cars are the lowest in at least 50 years, and the quality-adjusted cost of purchasing a new car has remained almost flat for 20 years while average wages have almost doubled. Despite a lower “time cost” for the 1972 Chevy Vega, I agree with Don that any rational consumer would select today’s Toyota Corolla – the increased fuel economy, lower financing costs, superior quality and durability, increased safety and comfort, superior features would all more than make up for a slightly higher “time cost.”"