To add onto a lot of the other comments here about efficiency, ECMs, etc, the big difference was the oil crisis of the 70s combined with the emissions regulations implemented since 1975 (put into place in 1970.
ELI5: We make gasoline from oil, and during the 1970s the prices of oil not only started to go up a lot but also became more and more unreliable, leading to people even waiting in line just to put gas in their cars, or only being able to get some on certain days. The U.S. also put into place a plan to help stop the pollution from cars, especially because they were still using gasoline with lead in it. Part of how those emissions laws would work was making manufacturers install catalytic converters onto cars, which did not work with leaded gasoline. At the same time, Americans were beginning to look for cars that got better mileage because of how expensive it was getting.
Car manufacturers knew that they had to do what these laws said, but also they had all these engines sitting around, and the tools to make them, and decided to just put the new emissions required catalytic converters onto the same engines that they were using before, and also making them run on unleaded gasoline, both of which reduce the power output of an engine and system designed to not use those. This meant the engine couldn’t breathe as well, didn’t make as much power from the fuel, and it would be a long time for the big American car manufacturers to design new engines and systems that were following the new laws, and that would get better mileage. From there the engines got smaller and more efficient (for the most part).
Little addition maybe outside ELI5:
“For one thing, there’s the issue of the actual rating process. Before 1971, engines were factory rated using a process defined by the Society of Automotive Engineers as ‘Gross’ horsepower. This figure was calculated on a test stand with no intake, exhaust or power-robbing accessories attached. After 1971, power levels dropped as manufacturers re-rated engines using the SAE’s ‘Net’ process, which added intake and exhaust restrictions and the load of engine accessories, like the alternator and power-steering pump. ” [Source](https://www.autoblog.com/2013/08/15/modern-vs-vintage-horsepower-through-the-years/)
Not answering the “why” of this question but just some more context I always found interesting when people talk about the big numbers.
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