NEW car prices may have grown faster than income, BUT cars last far longer, so there's more market availability at the lower price point. There are more used cars that are reliable for sale.
Covid has us in a weird used car bubble, but generally, once that blip is over we're in an era where reliable cheap cars have far less issues than any time in the past.
Your mental framework of greater reliability leading to a glut of used cars is still theoretical at this point. Used car prices are up 33% from 2001-2022. I don't think it's a sound assumption to believe the rise in car prices is a "blip". The supply chain is as fragile as it ever was. With a move to onshoring (e.g. the chips act), a war with Russia and much-worsening Chinese tensions, I don't see anything but a secular shift in how cars are manufactured.
[0] https://www.bts.gov/content/average-age-automobiles-and-truc...
In terms of mechanical reliability and longevity, this is certainly correct. But I'm really curious what the software side is going to be like, with cars being more and more dependent on the Cloud or other online services. At some point, older APIs and services will be deprecated, effectively disabling the cars. This will be quite extreme with Teslas, of course, but other cars are catching up in terms of requiring a more or less constant Internet connection.