Contemporaneous Pricing

Drive Time, History

From Younger Reader Daniel D:

As I have watched your frequent auto posts I notice that higher end cars, Farraris and the like, from your youth appear frequently. Many seem in immaculate condition, as I suppose anything of that value is, but it seems the same tier of cars are fairly often seen for those who travel in those circles. These are not mass-market cars like the classic Mustangs of the same era, so their continued existence despite I assume the same level of gleeful driving seems somewhat remarkable. I wonder if you have any perspective on the price at these times as it relates to spending power, as I have not seen anything other than which reflects their value as collectibles. I wonder if this tier of automobile was slightly more accessible as a doctor’s life goal type purchase as opposed to buying a house’s worth that someone else could T-bone. Were higher tier cars at a more accessible price point in the past for the merely well-to-do as opposed to only being a plaything of the rich?

It’s a really good question, with a couple of answers necessary.

Firstly, the issue of price vs. wage level, at various points in history.  I often use the comparison of my own situation in the mid- to late 1970s as an example (using the SA Rand as equal to the US$ in terms of its local buying power, which it was for almost everything except gasoline/petrol).  So:

  • Salary at the Great Big Research Company:  $400 per month
  • Rent for my 1BR 1BA apartment in the heart of the city:  $90 per month
  • Price of a new VW Golf:  $1,200
  • Rickenbacker bass guitar:  $1,100.

Now, the approximate sticker costs during the same time period (and in today’s dollars):

  • Rolls Royce Phantom: $26,000 ($159,700)
  • Dino 246 GT:  $13,900 ($85,375)
  • Porsche 911 S:   $8,675 ($53,280)
  • E-type Jag:  $5,725 ($35,165)
  • Chev Corvette:  $5,192 ($31, 890).

I should point out that the official increase (or decrease, if you will) of the dollar’s value from say 1976 till today is about 5.21, but for automobiles, it’s about a 6.14 – 6.15 multiple.

In actual fact, given that today a Corvette actually costs about $65,000 (double the “official”) and any Ferrari or Rolls is north of a million shows you how unaffordable the upper-end cars have become.

(I remember talking to a doctor friend back in the day, and he commented that buying a Rolls in 1965 and keeping it for 20 years would actually have saved him money, compared with buying a new Merc every five years, even with the maintenance costs included.)

But let’s just stay in the 1970s for a moment, and consider my annual salary as a humble assistant statistician back then was $4,800.  (It was NOT a bad clerical salary at the time.)  If we take that Porsche 911 S as an example, it would have cost me about 1.8x my annual salary.

That same position’s salary in today’s dollars is probably $55,000 per annum, and a “base” 2022 Porsche 911 with only a few options will set you back about $115,000 — or about 2x the annual salary.  Not too far off.

However:  my rent back then constituted about 22% of my monthly salary, whereas rent for the same type of apartment today would account for almost 90% (or more, depending on the city) of my monthly salary — and assuming I moved out to the ‘burbs, it would still account for close to 50% of my nut.

So the takeaway from all this is that a “reasonable” sports car was more within the average Joe’s reach back in the 1970s, whereas those same cars are completely out of reach today.

And yes:  even back then, the truly high-end cars were pretty much accessible only to the very well-to-do, as they are today.  My father was an established civil engineer in the early 1970s, and the Dino would have represented 1.3x of his annual salary — and there was NO WAY he would have considered it.  He chose instead a Mercedes 350SL, at 0.6x, and who would blame him?

By the way, an immaculately-restored Dino 246 GT — Ferrari’s attempt at an “entry-level” car — will now cost you from $350,000 to $stupid.

13 comments

  1. Based on my alcohol laden memory, regular working guys could and did buy new Corvettes (bottom of your scale), but they made sacrifices elsewhere. Such as no recreational boat or nice summer vacation. No one I remember from my parent’s group of friends (all blue collar) drove anything resembling a foreign car. It just wasn’t done. And sportscars (outside the Corvette) weren’t that popular. Now a big block Chevelle? That’s the ticket.

    Early 60’s, my parent’s 3 bedroom house was less than $8k. Mid- to late 60’s, a fully loaded big block musclecar (yes, not a sportscar) could be had for less than $2500, and could actually double as a family car in a pinch since most had full sized back seats. Also remember that no one gave out 5 and 6 year loans for cars since most cars just didn’t last that long! So take that into account. I was looking at trucks and noticed they are now up to 7 year loans. Holy Shiite.

    As for their “continued existence” question, I can’t speak for sportscars. But for anything of high value, you can take a VIN tag from a real Dino and build a whole new car around it and still come out ahead. Today there are more “Hemi Cuda’s” from 1967 on the collector circuit than were ever built by the factory. There’s a whole profession involved in determining real from fake/retro/replica cars in that rarified arena. Don’t believe every pic you see is an authentic survivor car that is still gleefully driven.

  2. The good old days when used cars depreciated rather fast and there were a lot of used Vettes’ and Jags and lesser Brit sports cars that could be picked up for real decent prices, still a bit spendy in today’s dollars but they were plentiful. The other nice thing is they could be repaired in a man’s garage with a decent set of Craftsman tools.

  3. I can speak to sports cars in the 70’s. In my case as a new Consultant Engineer working for a Hydo Power firm my first Porsche ( 914/6) was approximately 70% of my yearly salary, and my first Condo cost $ 14,000. By 1980 that Condo was worth $ 40,000 (thank you Jimmy Carter) and I sold the 914/6 for more than I paid for it and bought a used 1972 911S for $10,000 by using ” California Magic Financing” ( later known as the Savings and Loan Scandal). It was reasonably common at the time to sell your Porsche after driving it for 5 or 6 years for more than you originally paid, assuming you made good choices when ordering and selecting options, had maintained the car properly ( and had the paperwork to prove it ).

    That same 72 911S is now worth of $ 300,000. The same sort of thing happened to some BMW’s – but not to British cars. … and Ferraris are whole separate set of “rules”. The key was and is rarity, They only made 2,100 914/6’s but they sold 125,000 914/4. in the 60′ 70’s and 80’s Porsche only made ~ 4,000 cars a year worldwide. Ferrari only a couple hundred.

    And some of those ultra valuable collector cars are still driven as intended. This past weekend was the Goodwood Revival where the first two rows of GT race was easily worth $ 200 million.

    https://www.youtube.com/watch?v=9Nx8A9FmVoI

  4. re — “…official increase (or decrease, if you will) of the dollar’s value…”
    .
    I question combining ‘dollar’ with ‘value’.
    As I understand the definition, federal reserve bankers’ fiat currency — like any other fiat currency — has zero value.
    Fiat currency comes from the magic money tree existing exclusively in the imaginations of bankers.
    .
    Real-World:
    Fiat currency has an exchange value, as in ‘I exchange an irreplaceable hour of my precious life for us$19.95 in fiat currency (printed at the whim of self-serving (and I think we can all agree, somewhat ‘dim-witted’) federal reserve bankers…)’ so I can then exchange that fistful of worthless for something of value, perhaps a bag of beans and a pinch of salt.
    .
    The foundation of that whole exchange shootin’ match is based on the owner of the beans thinking she can exchange my us$19.95 for a gallon of propane to avoid freezing her tuchus off come November.
    .
    If the propane owner sees no benefit in the exchange, the beans gal shivers… probably wishing she still had her beans.
    .
    The fiat currency game is obviously based on the game of Musical Chairs.
    The last person trying to sit gets stuck freezing and beanless.
    .
    .
    PS:
    1963 Chevrolet Corvette Grand Sport.
    Superformance makes a dandy of a knock-off:
    http://www.superformance.com/factory-models/corvette-grand-sport
    The amount of fiat currency I swap for my matched pair is irrelevant… the stuff falls free free free from the magic money tree.

        1. …. and Superformance does not sell “turnkey” cars they sell rollers. You need to buy an engine separately and have one installed, so the answer to the question of how much is it? – The classic response from any speed shop is usually How fast do you want to go? and how much do you have to spend???

  5. “… an immaculately-restored Dino 246 GT — Ferrari’s attempt at an “entry-level” car — will now cost you from $350,000 to $stupid.”

    And was a mere $14,000 MSRP in 1973.

  6. Seems to me that macroeconomics wins out again.

    The rich have gotten richer. The poor have also gotten richer. Thus the price to earnings ratio has increased to maintain the exclusivity.

  7. It’s *fascinating* to note that housing and luxury goods are proportionally “out of whack” compared to consumer goods across time. What else is out of whack? *college* education.

    My sisters graduated college in ’78 and ’79 respectively, their annual tuition/books/board came to about $1k for the state school, and $1.2k for the private school. Their student debt was more like a car loan and less like a mortgage.

Comments are closed.