A pronounced cycle of car sales in the 1950s is explained in terms of
styling competition and consumer preferences. An oligopolistic industry
concentrated on non-price competition, and responded to perceived consumer
demand for styling and status, with an accelerated product cycle. Demand was
shifting from higher price-and-status models, to the feature-loaded high end of
'low-price' models. This suggests a consumer preference for sensual
gratification rather than status. But feature competition was eventually
constrained by the physical limitations of car size and power, which created a
competitive impasse. Upwards feature drift also opened up a gap at the bottom
of market. This gap was invaded by imports. Consumer feature fatigue was
expressed in buyers' strike in 1958, but Detroit responded nimbly with the new
compacts in 1959. There is also evidence that rapid depreciation of new cars,
explained by Akerlof in terms of a 'market for lemons' is also found in used
cars sold by dealers, and is likely to represent the value of dealer
distribution and warranty services.