Month: September 2022

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.