Supply and Demand. Or, Why I Don't Own a Bronco.


During the pandemic, my husband and I purchased a new condo. We decided in our infinite naïveté to complete a DIY renovation of the condo, and needed to buy a car. The story of the renovation I will have to save for another time, but suffice it to say it was lengthy and expensive. But nonetheless, we needed a car. 

Since I was about 16, I have wanted to own a Ford Bronco. For those who don't know, the Ford Bronco has a cult following, but was discontinued in 1996 and replaced by the Ford Expedition. The Bronco is famous for being driven by OJ Simpson, but outside of that it was developed as a compact off-road SUV and was known as being a good alternative to a Jeep.

During the pandemic, Ford re-launched the Bronco, and demand was immediately higher than production. In part, income was high, shifting the demand curve for all vehicles to the right. Additionally, supply was constrained due to input costs. As a result, supply shifted left, demand shifted right, and prices skyrocketed accordingly. My husband and I put in a pre-order, putting down a deposit for a green Bronco. We waited a few days, until the dealership called us. The friendly man on the other end of the line gave the bad news: the wait would be months, even with the high price we had agreed to. 

So, there we were with a condo that needed renovating and no form of transportation to our name other than a single bicycle. So, we started looking for alternatives. Initially we considered several mid-sized SUVs, including a Volvo and a VW. But, due to pandemic supply chain issues, neither were available. Finally, we landed on a Honda CRV. One was available, so we purchased it. The cost was a little less than the Bronco would have been, but the "coolness factor" just didn't compare. To cope, I told myself we could always trade the CRV in for a Bronco later.

Fast-forward to 2024 and the Bronco continues to be popular. Demand outstrips supply continually and prices have continued to rise. With inflation, prices have risen and niche, luxury goods like SUVs seem to be largely inelastic, at least in the Ford Bronco community.

Today, the Ford Bronco we would have purchased starts at $48,055. Given that we have a paid-off, functional car, shelling out the difference between our trade in value and the cost of a new Bronco now feels prohibitive. So today, the equilibrium price for a Bronco is higher than what I'm willing to pay. I'm part of that triangle of unmet demand. 

The marginal utility I would get from upgrading the CRV to a Bronco is significant psychologically, but I've clearly determined that the opportunity cost of that upgrade is too high. Instead, I think I'll spend that money on MBA tuition, which will hopefully have greater returns for me. 


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