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Henry Ford was a farm mechanic who believed a possession should outlast its debt. He sold one car, in any colour, as he famously offered, so long as it was black, engineered so that a farmer could repair it at a kitchen table, and he paid his workers five dollars a day partly so they could afford the thing they built. When customers asked for credit, he resisted for years, then offered a lay-away scheme instead, five dollars a week until the full price was reached, because he believed borrowing corroded people. His customer was somebody to be served once, properly, and then left alone with a machine that worked.
Alfred Sloan, who ran General Motors from 1923, was Ford's opposite in nearly every particular: MIT-trained, managerial, indifferent to driving and devoted to systems, and he saw that Ford had already solved manufacturing, which meant the last unconquered territory was the inside of the customer's head. His customer was a revenue stream that had temporarily stopped flowing. In 1919, GM created the General Motors Acceptance Corporation and invented the car loan, and the invention refused to stay in the showroom: Sears took it to household goods, and Wall Street took it to shares, a deposit down and the rest borrowed against a predicted future value, "on margin," a PCP on equities.
The first great experiment in purchasing the future ended in October 1929. It would not be the last. Sloan's second invention followed as the market saturated: the annual model change, restyling the cars each year so a perfectly good machine would feel old beside the new one. Critics called it planned obsolescence. Sloan preferred "dynamic obsolescence," which is somehow worse. Hold the two inventions to the light: one teaches you to borrow for the car, the other teaches you to tire of it. Credit and disposability, born in the same building, from the same mind, two halves of a single thought, which was that a customer should be kept paying rather than kept satisfied. By 1931, Sloan had buried Ford, and every consumer economy on earth has run on his twin engines since.
Soft focus anti-hero
Something deeper than salesmanship changed in that building. Before Sloan, an object was crystallised. You worked, you saved, and the thing on your drive was a receipt for labour already done. After Sloan, the object became a claim on your future, a certificate of labour not yet performed. Possessions stopped being trophies and became prophecies. And a prophecy, unlike a trophy, can be revised, repossessed, and rolled over, which is the entire modern car market in three verbs.
He built a third machine, and everybody has lived inside it. Sloan arranged GM's brands into a staircase, "a car for every purse and purpose": Chevrolet, then Pontiac, Oldsmobile, Buick, and at the summit Cadillac, so that a customer entered at the bottom in youth and spent a lifetime climbing, the car on the drive announcing precisely which rung of life its owner had reached. It was aspiration given an architecture. Every empire of desire since has been a tribute act: Volkswagen's staircase runs from Škoda to Bugatti, American Express's from green to black, LVMH's is built of entire fashion houses. The textbooks call it brand architecture. It is Sloan's ladder, and it has become the load-bearing structure of consumer life; the purchasable answer to the oldest question there is: 'How am I doing?'
PCP, the instrument that now carries 80% of new cars off Britain's forecourts, with cousins doing the same across the rich world, is Sloan’s invention fused into their final form. You never finance the car, only its predicted three-year depreciation, which keeps the monthly payment seductively low; at the end, there is a balloon payment you are gently steered around, because the profitable path is always the trade-in, the fresh deposit, the next agreement, and around 80% of the people who sign never make the final payment which would turn the car into their property. It is a subscription masquerading as a purchase.
Hire purchase was a debt that turned into ownership. PCP is a form of debt that is reborn every 36 months. And once most cars were rented in three-year increments, a question began to work on the people who build them: why engineer for year twelve of a machine that will be handed back in year three? A former General Motors engineer has claimed the industry deliberately answered, leaning into the lease cycle, designing cars that discourage home maintenance, letting durability slip out of the specification. BMW's 1 Series was, until 2019, the only rear-wheel-drive hatchback on sale, and that was its sole reason for existence. Then it moved onto a cheaper front-wheel-drive platform shared with the Mini, fewer components, no propshaft, because a drivetrain is invisible on a three-year test drive. The company deleted its own point, confident that people renting the badge would not notice. The engineering you cannot feel at handover is the engineering that goes.
Slow erosion
If you want to know what the same industry builds when its customers keep their cars, look at the Mercedes 190E. In 1982, Mercedes made its first small, affordable car, the Baby Benz, and could not bring itself to build it cheaply: 2 billion Deutschmarks in development, a five-link rear suspension invented specifically for its least expensive model, panels that shut like bank vaults. It became the Düsseldorf taxi with a million miles on the clock, and here is the irony worth savouring: the car that first democratised the badge, through engineering, is now a collector's piece, a bastion of the very exclusivity and build quality it was invented to spread, its values climbing while everything on the forecourt sheds half its worth in three years, its keenest buyers the millennials who were raised on the carousel and are paying premiums for the machines built before it existed.
Forty years later, Mercedes democratised the badge a second time, through finance. The A-Class and its siblings exist to feed the £300-a-month funnel; some 90% of privately bought new Mercedes in Britain leave on PCP. Once the monthly payment became the product, the car beneath it could be built to the monthly: shared platforms, transverse engines, interiors of gloss-black plastic that photograph like luxury and wear like a phone case. The first democratisation was over-engineering. The second is under-owning. The product follows the finance. It was ever thus.
Be fair to the machine, because it gave something real. A new car was a cash possession for most of a century, which meant it was a class possession, and the instalment plan broke that: it put people on ordinary wages into warm, safe, five-star-crash-tested cars instead of £900 hatchbacks with worn brakes and heaters that lied, and none of that is nothing. Sloan's machine achieved something close to the democratisation of aspiration. But the carousel has a darker function, and you can date its British boom precisely: PCP conquered the forecourt in the 2010s, the exact years in which wages stopped rising.
The average British worker earned less in real terms in 2022 than in 2008, and money, meanwhile, was nearly free. Raghuram Rajan, once the IMF's chief economist, named the pattern in his book on the crash: "let them eat credit." When incomes stall, societies do not raise incomes; they expand borrowing so life can go on, making it appear as if incomes are improving. The new car every three years was stagnation's anaesthetic. A frozen payslip is very hard to feel from the driver's seat of a new car, and a country which could no longer afford rising wages discovered it could still afford rising monthly payments. Some of the reasons nobody rioted over the lost decade may be parked, gleaming and unowned, on the nation's driveways.
And in those same years, the staircase gave way because it only worked when the climb was slow, and the rungs were real. Thirty years ago, the badge was still a certificate of an accumulated past. A young man stepping out of a Lamborghini could be explained in only one way: he was in Jamiroquai.
The only explanation
The signal worked precisely because it was ruinously expensive, which has been the entire mechanism of a status symbol since Veblen. The PCP kept the symbol and deleted the entry fee. Anyone with four or five hundred pounds a month can now start at the top of the staircase, and so the staircase has collapsed into a single step, and the star on the bonnet certifies nothing but a direct debit, and everybody half-knows it. Experian data shows 61% of Americans earning over $250,000 drive Hondas, Toyotas, and Fords, while the financed premium badge increasingly signals the opposite of what it was built to say: not arrival but the monthly performance of it. The signal has become an echo of an echo, thinner with each repetition. You know the old story about the two wolves that fight inside every person, and the child who asks which one wins, and the elder who answers: the one you feed. Inside every customer, the same two wolves have always fought, the one that saves and climbs and arrives, and the one that wants it now. Sloan's staircase was built first. His credit spent a century feeding the second, and the fed wolf ate the ladder.
Now look at the ledger, and start at a single desk. A driver arrives to trade in the car three years into the agreement and is pleasantly told that it is worth $7,000 less than what remains owed on it. This is routine: nearly a third of American trade-ins now arrive underwater, averaging $7,183. And the remedy, offered with complete sincerity, is a larger loan on a newer car over a longer term. The cure for unpayable debt is a bigger dose of it. Scale the desk up, and you reach the national accounts: Americans owe $1.68 trillion on their cars. The average payment is $773 a month; one buyer in five is committed to more than $1,000; terms have stretched to seventy-two months as standard, with eighty-four spreading, because lengthening the loan is the only lever that lowers the payment without lowering anybody's revenue.
In January, subprime delinquencies set a 32-year record, surpassing the peaks of the financial crisis. And the payments do not sit still: they are bundled into asset-backed securities with names of magnificent dullness, the Santander Drive Auto Receivables Trusts of the world, and sold to institutional investors, which means millions of people's need to appear successful has been sliced, rated, and lodged in pension funds. If that sentence gives you déjà vu, trust it. This is the third time the same instrument has built the same tower: shares on margin in 1929, houses in 2008, and now the trillions parked on the world's driveways. The delinquency records are already a kind of national account of aspiration, the ledger of people who could not keep up the payments on whom they were pretending to become.
Sloan's instrument did not stay in the showroom, and you do not need statistics to trace it. Follow one person through one ordinary morning. They wake in a flat they rent, to an alarm on a phone they are eleven payments into, under a duvet cover bought in three £13 instalments. The teeth they check in the mirror are financed over twenty-four months. The clothes went on Klarna; the sofa they eat breakfast on belongs, for another year yet, to DFS. They drive a car, they will hand back to a job they need partly to service a degree that was itself a bet on the residual value of a future self, a balloon payment of a person, forecast at eighteen. Nothing this person touched between waking and leaving was theirs, and nothing about the morning struck them as strange. Housing, the one consumer debt that reliably amortises into ownership, drifts generation by generation toward rent, a lease with no balloon at all. An economy that once sold objects has learned to sell the permanent state of almost-owning, and a society's visible prosperity has become a rendering of future labour: households run like leveraged companies, comfort is one missed direct-debit deep.
Advertising diagnosed the whole condition from the inside, in the most famous scene that television has produced about the trade. In Mad Men, Don Draper pitches a slide projector for Kodak, which they name ‘The Carousel,’ recalling the lesson of his first mentor: the most important idea in advertising is ‘new,’ because ‘new’ creates an itch. But there is a deeper bond, he says, nostalgia, which in Greek means the pain from an old wound. The machine in front of him is a carousel, and what it sells is the journey, around and around, "back home again, to a place where we know we are loved."
It is the truest thing anyone has said about why we buy: the itch is for the new, but the ache underneath is for home, for arrival, for the thing that is finally and completely yours. What the century since Sloan has discovered is that the ache is worth more unhealed. A customer who arrives stops paying. So arrival was, with great care and considerable genius, abolished: the balloon you are steered past, the trade-in that resets the clock, the upgrade timed to the tiring battery, the term stretched so the underwater years never end. Draper's carousel goes around and around and back home again. The one we have built goes around and around, and home is the single stop it can never afford to make.
There are still people who step off. Somewhere tonight, a driver is running a car from the strange corridor between the analogue and digital ages, bought outright at twelve years old, depreciation long since absorbed by someone else, a machine kept long enough to know its noises the way you know a person's walk. By every dashboard the industry uses, they are dead money: no agreement, no upgrade path, no monthly. And they own something, which has become the exotic position. But look at what they hold that the carousel cannot sell. The thing is finished. Paid, kept, known, arrived. A life in which nothing is ever finally yours is a life spent in permanent gestation, in the waiting room of itself, always next, never now, and an entire economy has been engineered, with a century of genius, to keep as many people as possible in that room. In a world built so that nobody ever finishes paying for who they are, the most radical thing left to do is to step off the carousel entirely.
See you on the next one.
Refs:
Alfred P. Sloan, My Years with General Motors (1963) — GMAC, the annual model change, "a car for every purse and purpose"
Raghuram Rajan, Fault Lines (2010), chapter one: "Let Them Eat Credit"
Thorstein Veblen, The Theory of the Leisure Class (1899)
Mad Men, "The Wheel" (season one, episode thirteen, 2007)
