Summary: This article examines the affordability of pickup trucks in the United States over the last 50 years. It compares the time price and monthly payment rate of a 1970 Ford pickup with a modern F150 and some equivalent models from other countries. It concludes that pickups have become between 33 and 53 percent less expensive, depending on the calculation method.
Have pickups become more affordable in the last 50 years? We can start by comparing a pickup built in 1970 to one built today, even though the two are almost as different as a Yugo and a Lexus.
According to the National Auto Dealers Association’s NADAguide, a basic Ford pickup sold for $2,599 in 1970. That year, a U.S. blue-collar worker’s compensation rate (incl. wages and benefits) was $3.93 per hour. Therefore, it took a blue-collar worker 661.3 hours of work to buy a pickup in 1970.
Today, a basic F150 costs $28,940, and a blue-collar worker’s compensation rate is $32.54 per hour. That indicates a time price of 889.4 hours of work – an increase of around 35 percent since 1970.
But Ford pickup trucks have become much higher quality over the last fifty years. A modern F150 gets 22 miles per gallon in the city and 30 miles per gallon on the highway. In 1970, a basic Ford pickup got 12 and 14, respectively. Modern pickups also have longer warranties (i.e., 36 months in 2021 versus 12 months in 1970) and are more reliable, powerful, comfortable, and safe than in 1970.
If we say that pickups today are twice as good as they were in 1970 (a conservative estimate), we should cut the time price of today’s F150 in half to account for the rise in quality. In other words, a pickup of 1970s quality would cost 444.7 hours of work today. That indicates that the time price decreased by 33 percent.
Another factor to consider is that most people don’t pay cash when they buy a new vehicle. Instead, they get a loan. So, the payment is more important than the price. The interest rate on a car loan was around 11.5 percent in 1970. Today, it is 4.25 percent.
A five-year loan translates to monthly payments of $57.16 for a 1970 pickup and $536.25 for the F150. Those numbers are equivalent to monthly payment rates of 14.54 hours of work in 1970 and 16.48 hours of work in 2021 – an increase of 13 percent.
However, if we consider the 2021 model to be 100 percent better than the 1970 model, the 2021 monthly payment falls to 8.24 hours of work (i.e., 43 percent less than the 1970 payment). Put differently, a customer gets 1.76 times more pickup for his or her money today than in 1970.
Another way to calculate pickup affordability is to look at modern cars that are equivalent to the 1970 Ford pickup in quality. India’s Mahindra, China’s Foton and JAC, and Japan’s Toyota still make pickups that are similar to the 1970 Ford model. Those pickups cost around $10,000. At the U.S. blue-collar worker compensation rate of $32.54 an hour, the time price of the above models equals 307 hours of work.
Comparing the 1970 Ford pickup to equivalent modern vehicles suggests that pickups have become 53 percent less expensive. For the time of work required to buy one pickup in 1970, a customer can get 2.12 today. Put differently, pickups have become 112 percent more abundant in the last 50 years.
Thanks to creative innovators, risk-taking entrepreneurs, and global competition, pickups have undergone significant improvements in the last 50 years. Those need to be taken into account when estimating pickup abundance.
