For generations, working- and middle-class Americans could find an inexpensive, reliable set of wheels to get around. In the 1970s oil crisis, such modest models came to be known as “econoboxes” and surged in popularity, particularly among a large and vibrant middle class.
That era is over.
The average transaction price for a new car now sits around $50,000. In December, it became just about impossible to find one for less than $20,000.
A Honda Civic Hatchback? Most start at $28,000. The Touring Hybrid costs more than $32,000. How about the Chevy Trailblazer? On most lots, its price tag approaches $25,000. The Toyota Corolla? The Hybrid trims start around $26,000. Forget the Chevy Malibu; it was discontinued last year.
While politicians and economists scratch their heads at voters upset about affordability in a decent economy, they seem to somehow miss the fact that for most Americans the purchase of a car has become a debt sentence.
To fix the problem, policymakers must overturn what has been for decades the third rail in American politics. It is time to stop coddling Detroit automakers and accept that “tariff” is not, as President Trump would say, “the most beautiful word in the dictionary” by opening the American market to cars made in China and elsewhere.
People at the bottom of the income scale feel the pain most. Once, they could turn to the used-car lot, but even that has also become a minefield of aging, increasingly repair-prone vehicles with six-figure odometers and five-figure price tags.
For anyone on a budget, an aging car is a trap. Auto repair costs jumped 15 percent in the last year alone, driven by the complexity of modern sensors and labor shortages. An average trip to the mechanic now costs roughly $840, an amount that around 40 percent of Americans likely could not cover with cash they have on hand. When faced with a costly repair, many are forced to choose between paying to fix their vehicle or making their loan payment. Little wonder then that repossessions — the extreme outcome of the modern automobile affordability crisis — roughly doubled in the last five years and are projected to surpass three million by the end of 2026, echoing the peak of the Great Recession.
Losing a car can force you into a state of physical and economic immobility. That is especially true in rural and suburban landscapes where public transit is a ghost.
Yasmin Alexander, a 31-year-old manager at a Little Caesars in Lafayette, La., saved enough money to buy a used 2010 GMC Terrain for $9,000 — a significant investment given her modest income. The car ran for only six months before the engine failed. After a costly attempt at repairs, the vehicle died again before she even made it home.
Public transit in Lafayette could not meet her needs, so Yasmin relies on her boyfriend, who drives for DoorDash, for a 40-minute commute to work each way.
She was willing to tell her story, but the overwhelming majority of people I interviewed felt such a profound sense of social shame associated at being carless that they wouldn’t speak on the record. Over and over, they described the missed play dates and doctor’s appointments, the day-to-day stress of planning a commute and the shame they felt about falling behind their peers.
The death of the econobox has eroded the independence that used to define American life, leaving motorists in a state of permanent financial and mechanical dependency.
It wasn’t always like this. In the postwar era, the middle class was growing fast, and Detroit offered a bevy of stripped down sedans with simple, easy-to-fix mechanics, designed for the average American family. If you’re old enough (or watch MeTV), you may remember the Ford Falcon parked on the streets of Mayberry, the fictional town in “The Andy Griffith Show.” Introduced in 1960, it cost $1,900 — or about four months of median family income. In 1973’s “American Graffiti,” Harrison Ford looked cool in a 1955 Chevrolet 150. The price tag in 1955? $1,900, or around $22,000 in today’s dollars.
Or take the Honda Civic.
Up to 63 horsepower engine and front-wheel drive
First Technology
1972–1979
Lower hood line and more glass for less drag
Fourth Technology
1987–1991
Leather seats are offered for the first time
Eighth Technology
2005–2010
Pandora Radio became an option
Ninth Technology
2011–2017
Up to 200 horsepower engine
Eleventh Technology
2021–At the moment
The first Honda Civic hit the American market in 1973, at the height of the oil crisis. Small, fuel efficient and reliable, it quickly gained a following with families looking to economize. It cost just $2,100, or $15,100 today.
Over time, Honda changed the design. By 1988, the Civic had upgraded suspensions, a more powerful engine, more legroom and cabin space and a sunroof.
Honda added navigational systems and heated seats in the 2000s.
In the 2010s, the Civic had a new sound system with Bluetooth controls and a push-button start.
Today, the cars are more than 3.5 feet longer and 3 times more powerful than the original model. With an average transaction price of over $30,000, they cost almost twice as much in real terms as they did when they were introduced.
What happened? How did a basic necessity of American life become a luxury good? We have to start with a transformation of the economy itself beginning in the late 1970s. While hourly compensation for the typical worker remained nearly stagnant, massive stock market bull runs and rising home equity have enriched the most affluent households. Today, there are so many wealthy people who can afford luxury cars that it simply isn’t that profitable for companies to produce cars for the bottom 40 percent of Americans by income.
That’s part of the reason manufacturers started rolling out so many higher-priced, higher-tech vehicles: The profits generated by an inexpensive car pale in comparison to what can be earned from a souped-up midsize S.U.V. or a light truck. Beginning with the release of its 2001 King Ranch, Ford has rolled out a dizzying array of increasingly elaborate and expensive models of its basic truck, the F-150. The top-of-the line “Platinum Plus” model now boasts massaging front seats and a Bang & Olufsen Unleashed 14-speaker audio system, and often retails for almost $90,000 — compared with $29,000 (adjusted for inflation) for a basic model in 1990. Today, Detroit doesn’t need the average American to buy a car; better to sell affluent households their second S.U.V.
As Detroit sold more luxury vehicles, the number of inexpensive cars on the market dwindled
Average transaction price by category, adjusted for inflation
It wasn’t just changes in the economy that led carmakers to abandon the econobox. Decades of protectionism enabled this shift.
What started in 1964 as a retaliatory strike against European duties on American poultry grew over time into an impenetrable shield to safeguard domestic automakers’ sales of light trucks and United Auto Workers’ jobs from a rising tide of foreign imports. Both political parties participated; in 1981 the Reagan administration pressured the Japanese government to cap vehicle exports, leading the Japanese to shift to more expensive vehicles that would increase profit. Detroit, naturally, raised prices as well.
Even during the free trade era of NAFTA — initially proposed by President Ronald Reagan, negotiated by President George H.W. Bush and ultimately pushed through by President Bill Clinton — the United States maintained a tariff on imported passenger cars from outside North America. During this period, lawmakers set fuel economy standards for trucks and S.U.V.s that were roughly 6 to 8 miles per gallon less stringent than those for cars. They’d hoped the change would keep costs low for farmers and tradespeople who needed larger engines for heavy work, but it ultimately helped drive Detroit to dump the fuel-efficient sedan for the large, high-profit margin S.U.V.
After the financial crisis of 2008, policymakers turned against globalization and free trade. In his first term, President Trump declared foreign cars a threat to national security and slapped a 25 percent tariff on $250 billion worth of Chinese goods, including auto components and electric vehicles. President Biden doubled down on them, and in his second term, Mr. Trump imposed another sweeping 25 percent tariff on imported automobiles and parts — a policy that was expected to add several thousand dollars to the sticker price of even the most affordable vehicles.
Decades of protectionism shielded Detroit from the robust global competition that would have forced it to match the quality, fuel efficiency and pricing of its foreign rivals — and had the unintended consequence of forcing millions of Americans to pay well above market prices elsewhere in the world.
Just 14 years ago, it was still relatively easy to find a new car for around $25,000 (adjusted for inflation) or less. There were roughly a dozen models to choose from.
Since then, many have been discontinued. Today, there are only four cars available at that price point, and Detroit has no plans to add more.
There is one obvious way to bring more inexpensive cars into the American market: If the Trump administration lifts the embargo on EVs and hybrids made by Chinese automakers and sold worldwide, the number could rise to 11.
Those Chinese cars aren’t just cheaper than the American alternatives. They’re often better. Take BYD’s slightly more upscale Seal sedan. It’s similar to Tesla’s Model 3, introduced nine years ago. But the Seal costs roughly $20,000 less than the Model 3. The Seal’s premium model offers substantially more horsepower, and its battery not only lasts longer, it can also be 80 percent charged in just 37 minutes. The Seal isn’t just a budget alternative; it is a more advanced machine.
Policymakers and critics have long argued that opening the U.S. market to Chinese cars could destroy thousands of American manufacturing jobs, and they point out that the Chinese government subsidizes its electric vehicle companies so heavily that no foreign for-profit auto company can possibly compete in China. Those concerns are valid, but solutions exist. We could allow Chinese automakers to enter the U.S. market provided their cars are manufactured in the U.S., their costs aren’t subsidized by the Chinese government and Chinese automakers satisfy U.S. government security concerns with regard to digital communications.
Canada is already moving in this direction. Two months ago, it slashed the tariffs on some Chinese electric vehicles to 6.1 percent from 100 percent. Soon, Canadians will be able to buy the BYD Dolphin or the Wuling Mini, which are likely to retail for around $20,000 even with tariffs. The United States could do the same.
There are signals that the Trump administration is open to this approach. In a January speech at the Detroit Economic Club, Mr. Trump said Chinese automakers were welcome to sell in the United States, so long as they build American factories and hire American workers. And there are reports that Ford’s chief executive, Jim Farley, has engaged in preliminary talks with administration officials for a potential joint venture with a Chinese partner that ensures that technology is shared and profits remain on U.S. soil — the terms China once imposed on us.
Mr. Trump’s claim that we have the greatest economy in history is pure fiction, but the affordability crisis is not, and it will not recede quietly. The real political test for 2028 will be whether any candidate has the courage to stop treating mobility — both the physical freedom of affordable automobile transportation and the economic promise of upward social movement — as a lost cause.
For decades, the econobox — the cheap, unpretentious, boxy workhorse — was more than just a staple of the American middle class; it offered millions a chance at the American dream. Bringing it back by re-embracing free trade could turn the automobile into what it was always meant to be: not a luxury for the few, but an engine of prosperity for the many.
Clifford Winston is a nonresident senior fellow in the Economic Studies program at the Brookings Institution. He is the author, most recently, of “Market Corrections Not Government Interventions: A Path to Improve the US Economy.”
Illustration by Joanne Joo. Honda Civic photographs provided by carsized.com.
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