Conspiracy . . . or Merely Convenient?

by Eric Peters Recently by Eric Peters: Another Measure of How We've Been Gypped (and Fooled)

Many new cars are optimized for ethanol – “flex-fuel” compatible is how it’s usually described. The problem, of course, is that a majority of cars in service are not optimized for ethanol; many are not even compatible with it.

One effect – intended or not – of the ever-increasing concentration of ethanol in “gas” is to accelerate the retirement of older cars. This can be considered from a number of points of view. First, there’s the economic interests of the car companies; they need to sell new cars at a certain rate in order to remain profitable. The problem (for them) is that for more than 20 years now, the useful life of a new car has been increasing to the point that it’s common to find cars more than 10 or 12 years old in service as daily-drivers. In fact, the average car on the road is now more than eight years old. Rather than buy a new car every six years or so – which was typical in the ’70s – people now routinely hang onto their cars for twice as long. That means – if you factor it out over a lifetime – that the average person buys just two or three new cars vs. four or five.

Even worse – from the standpoint of the car companies – is that a large and growing number of people aren’t buying new cars at all. Because lightly used late-model cars with three or four years (and 30,000 or 40,000 miles) on them still typically have more useful life left in them than a brand-new car had back in the 1970s. By purchasing a used car, one saves a tremendous amount in “up front” costs – and suffers very little in the way of “down-the-road” costs. Or at least, not enough to obviate the huge up-front savings. This has become fairly common knowledge. As a result , new car buying has become less common – and less frequent. From a purely business point-of-view, this is not good news for the car industry, especially in a saturated/mature market without the potential for exponential growth that existed forty or fifty years ago.ethanol 2

So – call it conspiracy theorizing if you like. The fact remains that ethanol is helpful to the car industry because it helps get rid of older cars, thereby creating demand for new ones. This may be a merely coincidental confluence of economic interests and political interference in the economy (i.e., the government’s pushing of ethanol). But the fact remains that the dosing of “gas” with ethanol – in ever-increasing amounts – does serve the economic interests of the automakers.

That sort of thing – what was called derisively “planned obsolescence” back in the ’60s – has probably always been at least a background consideration for large-scale consumer goods producers such as car companies. There is no question, for example, that the automakers perform durability studies to determine exactly how long a given component can be expected to work before it fails or requires repair – if only purposes of warranty coverage.

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