In 1976 – it was another world, wasn’t it? – I bought a Ford Granada in California. I remember the salesman confidently stating, as if he had a serious theory to back up his opinion, that all cars would soon be equipped with an automatic transmission. But you can’t fool an economist so easily. I remember thinking, and maybe arguing, that it came down to consumer preferences. It also depends on budgetary constraints, the second factor in consumer choice. In those days stick-shift cars cost less to buy, in gas, and, I think, in long-term maintenance; compromises had to be made.
According to an interesting the wall street journal history, small demand for sticks is on the rise, even though their cost advantage has disappeared (Rachel Wolfe, “20+ year olds are fueling a gearshift renaissance», March 1, 2023). The new appeal is mostly coming from younger consumers wanting to “take control of their claws” or look cool. Remember that individual preferences are subjective. A mother gave her son a gear stick, saying he was therefore less likely to text while driving. The demand for stick shift transmissions is also increasing in high-end cars. Some highlights of the WSJ:
After decades of decline, three-pedal vehicles are experiencing a small but real resurgence. Manuals accounted for 1.7% of total new vehicle sales in 2023, according to data analytics firm JD Power, down from 1.2% last year and a low of 0.9% in 2021. The Autotrader Market reports a 13% increase in page views for the new Cars Manual in 2023 compared to the same period last year. …
“It’s not so much a statement against electric cars that I’m going to try and enjoy the type of driving that I enjoy the most until I can’t take it anymore,” says Lucas Marcouiller, 26, a salesman. engineering in Warwick, RI, which purchased three manual vehicles.
If my former (or deceased) car salesman forgives me for using him as a teaching scapegoat, one can imagine that his implicit and muddled theory was that decisions on what types of cars to make would soon be made by the government. As we know, politicians and bureaucrats are more rational than consumers. Perhaps the seller, assuming he was also well-versed in the history of economic thought, envisioned the future advocated by Rexford Guy Tugwell, FDR’s then-socialist economist? In a 1932 American Economic Review article, Tugwell wrote:
New industries will not happen as the auto industry did; they will have to be anticipated, defended, made to appear as probably desirable characteristics of the economy as a whole before they can be tackled.
Seriously, compared to government apparatchiks, car salesmen are saints, as long as they don’t want to rule over others. Yet there is one important feature of the world that still seems to elude many of our contemporaries: as long as there is a free market and a small minority of consumers are, for whatever reason, willing to pay for cars with stick shift, they continue to be produced. This is called consumer sovereignty.