Well, upgrading software is not exactly like selling a car with a new paint scheme so I'm not sure the analogy is correct.

Just in the 11 years that I have worked at this company, we have upgraded from DOS, to Windows 3x, WIN95, 98, to NT operating systems. We've modified our installations from floppy based, to CD, to web based distribution. The develoment system has gone from 16 bit, to 32 bit, to .NET based. In addition we have fixed bugs and added features to the software. Also upgraded support for the database from Sybase to SQL 4x, SQL 6x, 7x, 2000 and 2005. So there are other external factors which force us to upgrade the software to keep pace with changing technology. 

Another difference from the car analogy is that our customers pay a maintenance fee which covers the upgrade of the product. This helps us and them stay current and add new features. Thats a totally different model than the auto industry uses.

All that said, there are customers that decide to stay behind on older versions of our software, and we do end up supporting them. We just do our best to encourage them to upgrade. Also, there is a risk for us as a software vendor that when they are faced with a decision for an upgrade, there is always a chance that they will select to go with a competitor. So we are not in the business of forcing customers to upgrade just to get more money out of them, but that is the way this business works (by the way, we sell ERP software and most deals are in the 100K-1M dollar range, just to give you an idea of the business I am in).

Now, I do agree with you that there may be a market for 3rd party support of retired products. In fact we have a channel of 3rd party vendors that resell and support our product and they sometimes do sell support for retired versions.

You know, there may be better ways to sell software, but for now this makes the most sense for our business.