New cars – this was once part of the American Dream. But it’s now out of
reach for many in the US. “Americans need cars, because
this country is huge.” Cars are quintessential to the American
lifestyle but now unaffordable for millions. Affording a car, the maintenance
of a car and the insurance of a car has become a major challenge,
obstacle, and problem for many, many thousand Americans.
Why is that? We’ll find out. Americans and the automobile –
Cars and America, this is a love affair” – A love affair lasting more than
100 years. A special relationship, driven by the idea of unlimited
mobility and with that - freedom. All right, let’s talk about…
what cars are to Americans. The “Land of the Free” and “Home of the
Brave” – unified in its appetite for more cars populating an ever-expanding
highway and interstate system. “We constitute the greatest country in the
world. Great in resources, and in the vision of our people. Great in accomplishment in the past
and equally great in promise for the future.” The modern United States of America… – “You want an automobile, because it’s the
easiest way to explore this great country.” “I think, if you look back in
the early 1900’s. It’s probably why they created the automobile was,
to get through the different states, especially when the roads and the interstate
network started, in Indiana especially.” Hello from Indianapolis and
from the Indianapolis Motor Speedway, the trademarked racing capital of the world - … All part of the American DNA
- Motorsports and auto shows… So you might ask, why are we in Indianapolis
anyway, when we’re talking about transportation, mobility and the challenges for many
Americans, when it comes to mobility, transportation to afford a car. Indianapolis is
the s-called cross-roads of America and quite literally because major highways from the
US are really crossing in this city here. The last few years have been good
to the US automobile industry. Car manufacturers have been cranking
out new vehicles in greater numbers and at ever higher prices for the last
several years. Profits are up, way up. However, there are some dark clouds on the
horizon for consumers and businesses in the world’s second largest automobile market.
For a growing number of Americans, the equation has become this: No
car – no job – no “American Dream”. Car repair costs, car maintenance, car
insurance – prices rose through the roof within the last two years. Why is that and how
is it all connected? We’re going to find out. Car buyers of all ages, income groups and
of whatever social status are bleeding money – no matter if they buy a new or used car. Things have gotten so out of hand
lately that cars for everybody, mobility for all – has become a struggle, or
become almost entirely unattainable for millions. We are at the 2024 New York auto show, a
staple on the US and international auto show circiut - but before we go inside,
let’s talk about a few important numbers: In 2023 there were 292.3 million vehicles
registered in the US. Those vehicles made for 376 million gallons of gas used per day.
That makes the US the biggest consumer of gasoline, ahead of China, Japan, and Russia.
On average Americans drive a lot – about 41 miles a day - to work, to go shopping, or for a doctor’s
appointment - that’s more than ever before. And when Americans go on vacation inside the
country, 98% of them are doing so by car. Back at the auto show in New York we’re meeting
with Greg Morrison, automotive journalist, and car enthusiast. Greg is the producer
of “bumper2bumper” He tests and evaluates new
cars… all brands, makes and models. Greg has agreed to help us better
understand a few things about what is going on in the US automotive industry,
with auto shows and with US consumers… I did not know it's such a magnet for people, cars are now a luxury item for people. In many cases, yeah $40 -50,000 starting price. When people come here to an autoshow like this Is this an opportunity to touch thier dream, or is it 'I'm shopping for a car that has to be useful economical, good gas milage. Are they doing thier research here or is it touching the candy? It's a little of everything, you can touch the candy, becasue you see cars you know you'll never be able to afford but you get a chance to put your butt in the seat and say 'oh this is nice' And while you might not buy the upscale model you maybe attracted by the brand to go to something a little more afforable. “Affordable!”- that sounds good. The problem:
finding a new and affordable vehicle has become nearly impossible in many cases. The same
is true when in the market for a used car, since interest rates are astronomical, compared
to what they were just a few years ago. That average cost of a new car that’s gone up
substantially in the last, say 5 to 10 years. The average cost of a new car was about $38,000. That
was five years ago. And now it’s up to $45,000. Since 2020, prices for new cars have
on average increased by a whopping 31 percent. The increase for used cars
is even higher and stands at 40 percent. It’s getting very close to the
median income of households in the United Sates. That growth in care
prices came at a time of very low interest rates. But those used car and
new car prices are enormous and it’s a much different thing if you can get zero
per cent-financing, versus 7% financing. Buying a $45,000 car - almost the median yearly
income in the US – and financing the purchase at 7 percent or even higher, adds thousands in
interest payments to the final bill. The result: a growing number of Americans
get into massive dept just to keep up with car payments before in many
cases defaulting in the end after all. “I read that for most Americans
finance cars and it is the second largest expense after the mortgage,
after what they pay for the house.” “The house, the car, college education
for the kids. These are the three big bites. And you’re not financing for three years
anymore. You’re probably financing for five, sometimes seven years. That’s a lot of time
to be putting up a monthly payment going.” But wait – there is more… “What people are surprised by now are things
like insurance, the repair costs. Nobody buys a car and thinks about repair and maintenance
costs. But new cars are becoming more expensive to fix. And insurance is going up. So,
these costs are sort of surprising people.” “A couple of things are happening…
With all the technology, insurance costs are going up because it costs more
to repair a car. If it’s been a collision – if you have to adjust your headlight
system, not just the headlight system, but your safety systems and so forth. That’s
more than just putting it on a scale. You have to use high-end computer tech and getting the
parts. That drives up the cost of ownership.” In just one year from 2021 to 2022 insurance
costs have gone up by around 14 percent – and another 20 percent by the end of last
year. That’s up 34 percent combined in just three years - the steepest increase
since the 1970s. At the same time insurance companies report record-breaking
profits thanks to rate increases. And that means - a growing number of so-called
”average Joes” – people who earn an income that just about lets them get by - are getting
crushed when it comes to vehicle ownership and guaranteeing their need for mobility
and affordable transportation options. “Those are the folks, who are really
going to be squeezed in this crunch, not having access to mobility. And without
access to mobility, you don’t have access to employment. Without access to employment,
you cannot take care of your family.” “Public transportation… The public transport
authority in Indianapolis is called IndyGo. Those guys are trying to really do their
best to transport thousands of people, who can’t afford a car to places
they have to be – that be for work, or for shopping, and of course,
also doctor’s appointments. But here’s the thing:
Most importantly to understand is, that public transportation in the United States – if we’re
not talking about New York and the subway there, or maybe San Francisco and the tram system there -
has a challenge and was always challenged. America and Public Transportation – that doesn’t roll off
the tongue as easy as, for example, in Europe.” Public transportation customer
numbers in Indianapolis are not only back where they were before the Covid
19 pandemic – they’ve been rising lately. In 2023, fixed-route ridership was more
than 6.7 million – a 20% increase over 2022. The city is bucking a trend
that sees many metropolitan areas in the US struggling with
rider numbers and with funding… However, even Indianapolis is
facing challenges with shifts in transportation needs for more and
more people who cannot afford a car, but who must respond to changing demands
– if they want to get or keep a job. You’re well set in the metropolitan area, but
then you have the suburbs, and you have new jobs and companies going outside of downtown. This is
not just Indianapolis but all over America. So now you have to bring city folk to the jobs
outside of the city. That’s a challenge…” “It is a challenge. But you know what?
Thanks to great partners, we have been able to do that. We’re able to get people in
the urban core, as you say, out to the burbs, to our neighboring counties where the jobs are,
to the fulfillment centers, good paying jobs.” Enter Nicole. She works as a home
health-aid. Nicole takes care of seniors, elderly clients who need help with all sorts
of things like getting dressed, taking meds, and any minor chores around the house.
We’re joining her on her ride to work this morning. Nicole lives in the suburbs
of Indianapolis, - and her client lives even further from any remotely convenient bus
line Indianapolis Public Transport provides. “You never had a car, or you don’t want a car? “ “I do, but I ain’t had a car though,
but I do want one, eventually…” Untarnished mobility and
with that a chance for more, or better work has so far remained elusive for
Nicole as well as for many others – For them the best way to get to work is by using
what’s called a “micro-transit option”. “So, this is a micro transport program,
and those buses bring people to their jobs, to the doctor or to a pharmacy to pick up
medication. This is for people who don't have transportation, who don't have
cars, who can’t afford bus tickets.” In 2022, 5.7% of adults lacked reliable
transportation for daily living. That’s about 15 million Americans struggling
to get from A to B on a daily basis. The CDC, the Center for Disease Control has just
released new data, and saying that this has become a real, a growing, a bigger problem year after
year. For people who don’t have transportation, they don’t go to the doctors they
should they don’t pick up medication…” “Like here in Indianapolis, they're trying
to rectify this to 4,6,8 people there's place enough space for people in wheelchairs 1,2,3,4
spots, so this so this makes the difference.” Indianapolis councilwoman La Keisha
Jackson came up with a program called “Driven2Success/Pathway Micro
Transit”. Jackson, her staff, guests, and supporters are celebrating
its success and second anniversary. “If we had better transportation, we had
a great public transportation system here, but there are gaps in the services. So if
we could fill those gaps where we could get right demand to where we need to go, instead of
taking several buses or where the buses don't go to for public transportation, to employment,
childcare, to our grocery facilities where we don't have to drag several buses, uh, bags of
food on the on the buses, or we don't have to take 3 or 4 kids or strollers on the buses
and it's raining, then that would help us.” “What do people in the, in the outer world have to understand about what the reality is
for many, many thousands of Americans when it comes to mobility and transportation?”
La Keisha: ”The reality for many people that, uh, what most people don't understand is many
people are one paycheck from being poor in a shelter, out on the streets, homeless, unhoused.
So, if it's between transportation and eating, they're going to eat. If it's between
transportation and paying the rent and the mortgage, they're going to pay the rent, or
the mortgage. We address social determinants of health, and transportation is one of the social
determinants of health. And it's needed.” Transportation is many things. Access to
public transportation and micro transport options are an ever-growing and important
part of it – even in the United States. But mobility in this county comes back to one
critical component: the car and access to it. That’s why affordability plays such
an important role – for everybody. “Affordability is sort of semi formally defined
as roughly being 15% of your household income for, not a car, but for overall transportation costs.
And so, it turns out most Americans do buy cars, need cars to go to work, um, and to earn a living
or to spend on the earnings if they have to go someplace to take a break, to go to a theater or
go to eat something, they still have to drive.” That’s why the future of the
car determines a lot in ‘all things transportation’ - and with that,
the future of the American lifestyle, the country’s social structure
and of course its economy. So, what will this future look like?
What is the fix for America’s car affordability and personal transportation crisis? Design for Dreaming (General
Motors /Library of Congress) “I dreamed last night…
where tomorrow meets today.” We visit the SILO Auto Club in
Indianapolis and Mike Simmons, the owner. At first he started SILO – an upscale parking
space for even more upscale vehicles - as a hobby… Simmons, a classic car enthusiast,
now runs SILO as a business, that also functions as a social club for a
growing number of other lovers of classic, exotic and luxury cars – all equipped with
‘good old’ internal combustion engines. America’s proclaimed ongoing EV revolution hasn’t
reached SILO, and Mike Simmons – at least not yet. “I've not been as drawn to the electrification
of the industry from as a hobbyist or really even as a consumer. But I also get the, the
fossil fuel argument, I get global warming, I get why there are reasons why we need to move
away from fossil fuels and that it's all good.” Bad news for Simmons… - Electrical Vehicles, or EVs, soon with autonomous driving, are
the future, the automobile industry says. Experts add that all of the above will change
how we transport, how we get around better, faster and foremost – cheaper.
The US government is spending billions on furthering the EV
transformation on American roadways. However, the number of EVs sold in the
US last year fell behind expectations. Only 1.2 million battery operated electric vehicles and just 190 thousand
plug-in-hybrids sold in 2023. That’s just a fraction of overall vehicle sales.
In comparison a total of 15.5 million NEW vehicles were sold in the US in 2023. Roughly 12
percent more than in the previous year. On top of that - used car sales
totaled 35.9 million last year. “I can hardly wait for this dream to come true”
Yes, those numbers will change significantly in the next 10 to 15 years, industry
experts and policy makers say. But for now, US legacy car makers need
big sales of internal combustion engine vehicles at high prices and with the
best-possible profit margins. Here’s why… “For the legacy carmakers, they have
to be able to make good profits on the internal combustion engine
vehicles, because those good profits are needed to be able to supply
the much-desired free cash flow that's, um, demanded by the growth and ever hungry
electric vehicles side of the business.” For consumers, for potential car
buyers, for all people who want and need an affordable car to be their
choice of transportation, that’s bad news… Prices for new and used cars will likely
remain high or get even worse for the foreseeable future. The same goes for
repair, maintenance, and insurance costs. Real affordable mobility – so critical for
millions in the US – a non-starter, right? “This is a question uh, that I think will
be solved in a uniquely American way. And by that, I mean in a way in which America has
seen before, this will be solved by innovation on technology on two fronts. So innovation on
the technology front and innovation on the, on the market facing front and, at the end of
the day, everything else will fall into place. So, I do firmly believe that free
markets will be the solution to this. And the free markets, um,
free market solution will come by that pent up demand. As vehicles
become more and more unaffordable, um, there will be a demand for an extremely low
cost, highly affordable vehicle, and there will be a shake out here and consolidation that will
have to follow, to be able to make that happen.” Until then, affordable mobility for all can be
achieved only through subsidies, some experts say. “I think where we are right now, is we’re
sort of in the discovery and diagnosis phase of these new high costs of driving. We’re
going to see the policy. Responses come out over the next few years. The most
direct thing we could do and the fastest thing we could do would be simply
subsidize people being able to drive.” A monthly cheque from the government
so all people can get to work, go shopping and keep their doctor’s
appointments – as a quick fix - why not? And in the future… – say goodbye to
Individual car ownership entirely. All vehicles will be electric and
self-driving – ready to be used via a government sponsored basic subscription model, available anytime and anywhere, with a click
– and yes, there will be an app for that. Smart vehicles’, as in safe, economical,
affordable, and accessible to all people, made possible by financial subsidies and incentives
from the government… Sweet dreams? Who knows! However, this will shake out – it’s going to
be a loooong way to get…, well, …anywhere. What do you think? Let us know in the comments,
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