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The thing about new vehicle sales in the US is that even in good years, they’re bad, and in bad years, they’re terrible. Motorcycle Exhaust Manifold
In 2022, total new vehicles delivered to retail customers and fleets (dominated by rental fleets), fell by 8% from the already terrible 2021, to 13.7 million vehicles, below where deliveries had been in 1977, down 16.4% from the peak in 2016, and down 20.8% from the prior peak in the year 2000. This makes for 45 years of stagnation with steep plunges in between.
The way automakers have gotten their dollar-revenues to rise over the decades in this environment of stagnating or plunging unit sales is to sell more expensive vehicles, going upscale with ever fancier, more advanced, better-performing, more efficient, better equipped, and safer vehicles – I mean, even the base F-150 pickup truck now has a 10-speed automatic transmission, that kind of thing.
But already years ago, going upscale and ever-higher prices started to contribute to the stagnation as there appears to be a shortage of upscale Americans.
The semiconductor shortages began to bite in late 2020, got a lot worse in 2021, and dragged into 2022, and they’re still going on, though to a lesser extent.
In this environment, when automakers could get the semiconductors they needed, they could build vehicles and sell them, and their sales were strong – Toyota through September 2021, Hyundai and Kia in 2021 and 2022, nice to have great relations with Korean semiconductor makers. And when they ran out of just one of the thousands of semiconductors in a model, they couldn’t build this model, and there was nothing to sell, dealer inventories were depleted, and their sales plunged – Honda and Toyota in 2022. The big US automakers had trouble throughout.
In addition, powered by the surge in gasoline prices in early 2022, vehicle demand suddenly shifted to fuel-efficient vehicles, especially small and mid-size cars and compact SUVs, and to EVs by legacy automakers that they couldn’t build enough of. Supply chains and production weren’t ready at all to accommodate this shift.
So the inventory shortages have shifted in 2022 from pickup trucks and SUVs, which had vanished from dealer lots in 2021 and of which there is now ample supply, to fuel-efficient vehicles, and dealers ran out of those vehicles in 2022.
Overall inventory through November has come up to 1.64 million vehicles, but was still down by 54% from November 2019, according to data from Cox Automotive:
In the classic manner, the MSRP is set before the new model-year vehicles arrive at the dealer and won’t change after that for the entire model year. In normal years, automakers and dealers pile on discounts, dealer incentives, and customer rebates to stimulate sales (Tesla, which sells direct is the exception; it changes prices on its website whenever).
But in 2021 and 2022, these discounts, dealer incentives, and customer rebates vanished, and dealers were able to sell vehicles at thousands of dollars above MSRP, because those Americans that could afford them were suddenly eager to pay whatever, which they rarely do in normal times.
In addition, automakers that could only build a limited number of vehicles due to the chip shortages prioritized their most expensive models, and they drove up prices on them. And so I ended up writing this crazy article: $1,768 a Month, with $10,407 Down, 5% APR, on a Ford Pickup? Update on Q3 New-Vehicle Finance.
And as a result, average transaction prices after all incentives and addendum stickers spiked by 33% in three years, from $34,900 in December 2019 to $46,400 in December 2022, according to J.D. Power. That price spike has now leveled off.
The chart shows the average transaction prices in June and December every year; the green line connects the Decembers. Note also how the normal seasonality – a dip in average transaction prices in mid-year – totally vanished recently:
Note: the first four charts – the big four – are on the same scale to show their relative sales to each other. The remaining three big automakers don’t sell enough to show on these charts, and they got each their own scale.
General Motors: sales rose 2.5% year-over-year to 2.274 million vehicles. But this was down by 26% from its recent peak in 2015, after the plunge in 2020 and 2021, and after the sales declines in each of the four prior years:
Toyota: Through the first half of 2021, Toyota had plenty of supply of semiconductors thanks to its special contracts with its suppliers. But then it ran out too, and by September 2021, it started running out of vehicles. Nevertheless, the strength through the first three quarters in 2021 was enough to make it #1 in the US for the first time ever.
In 2022, after a series of production cuts, inventory vanished, and sales plunged 9.6%, to 2.11 million vehicles, down by 16% from the recent peak in 2015:
Ford: Sales dropped another 2.2% year-over-year, the 7th year-over-year drop in a row. From the recent peak in 2015, sales have plunged 28%:
Stellantis (FCA US): Sales dropped 13% year-over-year and have plunged 32% from the recent peak in 2015:
The charts below of the remaining three big automakers in the US are each on their own scale.
Hyundai-Kia: He who can get the chips can build vehicles and has something to sell. It helps that other Korean companies are global powerhouses in semiconductor production. So Hyundai-Kia sales combined hit an all-time record in 2021 and dipped 1.5% from that record in 2022, to 1.42 million vehicles:
Honda: Similar to Toyota, it was able to get through 2021 in reasonably good shape, but got hit hard by semiconductor shortages in late 2021 and in 2022, and it ran out, and sales collapsed by 33% year-over-year, to less than 1 million vehicles, down by 40% from the peak in 2017:
Nissan: Sales plunged 25% year-over-year to 729,000 and by 54% from the peak in 2017. The company already had massive problems before the pandemic, with sales having dropped 16% in the two years from the peak in 2017 through 2019. The pandemic and chip shortages hammered it further:
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I called a dealer in the beginning of 2022 asking if they had any new Honda Fit Models in stock.
Was laughed at and told they canceled production on the fit, but I could buy an SUV for almost 10,000 more msrp.
Stopping Fit production was a dumb move. Same with the Yaris on Toyotas end.
Just catering to the market, bro. Lot more fats than fits.
For a year, I’ve been trying to find a new kia minivan. Most dealers don’t even have one you can look at. The few that do might have one and they want 5k over sticker.
Kia sales looking okay-ish must be because of the the soul model. It’s a poorly made car, but it’s cheap. Dealers have lots of them and are pricing to get rid of them.
Interesting statistics, but what does it portend down the road for consumers? Higher vehicle prices to continue, collapse, perhaps more mergers? Either way, used cars moving forward will be more expensive and scarce for consumers, as less new one’s are produced and sold, to eventually became used cars.
Let me take a stab at it. Producing new cars is real work and takes real material. Its not a financial product and a lot of price tag comes from production, sales and marketing etc.
Compare that to a house. The money and work it takes to build a house is only a fraction of the total cost of the house. Most of the other costs (market value, location, neighborhood, land value, features, fees, taxes, permits) are directly proportional to financial speculation, because realtors sell the idea that “Housing is an investment irrespective of value”.
Now QT aims to control speculation. So, as there are many houses held for speculation, housing is now crashing, just like stocks bonds and cryptos.
However QT does nothing to increase production and productivity remains lows. So new car prices may not cool down soon. Used cars may go down only a small amount, but may remain much higher than the inflation corrected value from pre-pandemic.
Well laid out (especially the bit about money supply manipulation not altering supply constraints…would that the obverse had been observed during 20 yrs of ZIRP…) but there is more to the story potentially.
Leaving the chips out of it (for a brief moment) – the fact that the manufacturers generally allowed sales to fall from peaks (despite massive fixed investment) from 1977 suggests that they determined that price inelasticity worked in favor of sub-maximum output.
(In other words, despite resulting volume sales declines, the manufacturers saw it was in their revenue maximizing interest to hold prices steady (instead of dropping them to increase sales). That seems to be the current situation in spades too).
Side note – what also really helps in volume downturns?…the vast availability of credit, which can thoroughly power price spiking. I think that a strong argument can be made that the “manufacturers” have paid much more attention to credit operations for 25+ years than any actual manufacturing operations.
Every quarter that no terribly effective substitutes or workarounds surface, really, really, really makes me want to know the granular specifics of this chips shortage.
We are heading into 2.5 years of this claim.
The Russians are ripping apart imported consumer goods to kludge chips into their domestically built cruise missiles for chrissakes (well within 1 yr), but GM can’t substitute chips after 2.5 yrs?
” but GM can’t substitute chips after 2.5 yrs?”
This phrase is beyond ignorant and stupid. GM sold 2.27 million vehicles in 2022 in the US alone. DIDN’T YOU READ THE ARTICLE???? Each single one of these vehicles has THOUSANDS of chips. There are chips in everything, including the wheels and the trunk lid. If one chip is in short supply, and the component is therefore not delivered to the plant, the vehicle cannot be completed. YOU have no idea how these automakers have struggled to work around the chip shortage, that has led to widespread component shortages. They even built 100s of thousands of vehicles that were incomplete, put them on storage lots, and then finished them when the components arrived. GM and Ford are disclosing those numbers from time to time.
On dog walk late last night (Saturday) noticed a neighbor around the block put to the curb Maytag washer and dryer pair, circa mid-80s.
Garbage / recycling pickup isn’t until Wednesday morning.
Dog walk this (Sunday) morning- they’re gone!
If they were taken out as a pair I kinda doubt it was for repair reasons; perhaps cosmetic reasons involving a remodel? Someone wanting a fashionable stainless steel pedestal type?
My mother still has that vintage pair going strong. Wonder how many chips they have?! Only remember replacing belts and auto dry sensor.
Anyway, my SpeedQueens are fine and I didn’t have any room in my garage last night.
Why isn’t there friend CHINA supplying chips
I’d hardly call recent housing price declines a “crash” but otherwise agree with your post.
Longer term, noticeably tightening credit conditions will mean that few Americans (and people elsewhere) can afford a car at all, new or used. When my mother was growing up in the 50’s, households had one car (and maybe none). Those days will return as the country gets poorer.
Ultimately, no industry or company can sell at prices the customer base can afford, whether it’s a necessity or not.
There were no suburbs and exurbs back in the 1950’s.
More like outer-bands of a collapse/correction. Crash just sexier.
Of course they can,,, and will AF: That’s what design, engineering, (and architecture for construction,) is all about ultimately, and it’s going on constantly these days for homes and other construction. And will go on for vehicles too, WHEN NEED BEE… Just look at the $5-6,000.00 vehicles available elsewhere in the world,,, and eventually such will become acceptable when the nanny state becomes the poverty state you frequently predict is coming— and I agree with that part. ”Laziness is the basis for invention.” is one way to see it,,, cost effectiveness is another, eh?
Ultimately, no industry or company can sell at prices the customer base can afford, whether it’s a necessity or not if production cost is higher.
Prices can go up as long as there is purchasing power, then it stops. If more expensive to make, the product is no longer mande and no longer possible to buy.
Cheaper products may replace more costly products. Skimping quality, usefulness and on.
#VintageVNvet, those $5-6,000.00 vehicles may get available in the USA. Still there may not be one car in each households. Multiple cars in each household may not be common where thay are sold today as people can just afford one car if they can afford a car.
Used car prices have already begun to “adjust”. The small fuel efficient cars are doing just fine. However, some of the manufacturers who “have run out of chips” are offering discounts on their big bombers. A dealer friend of mine offered (in our corporate refugee Faceplant page) to sell his “big bombers” $1,000 back of dealer net (he’s still making money, but…. not nearly as much). Used Tesla’s also appear to be dropping in value (Twitter syndrome?).
I was stalking an X5 (CPO) just to watch prices. The local non-Penske BMW dealer had this one weird duck (odd color, high performance M mit V8 and some features that the spousal unit wanted she wants tush coolers) that he had listed for (get this) $79K – for a 2 now three year old car. He’s had the thing long enough that the tires have taken root into the blacktop (the dash picture shows the outdoor temperature hovering near 100 degrees – we haven’t seen those temps since August-ish and I’m fairly confident it’s been around since June eating floor plan hay). Now? It’s in the mid 50’s last time I looked. Still no love.
Most, if not all, of the new crop of vehicles are throw aways. They cannot be serviced in the true sense of the word. You replace modules, solenoids, DME’s, and “flash” components. The engines have “sloppy” piston rings that can allow gasoline to leak into the oil pan – which is a little hard on the bearings – and the turbos help that process. Many engine components are plastic (radiator tanks, oil pans, valve covers, etc..) that warp and essentially decompose over time from heat, oil, etc.. Complexity beyond necessary.. things like having to remove the intake and exhaust manifolds to get to the starter motor (no you can’t reach it from below). They’re a joke. There will come a day where the Cubans will thank their lucky stars that they never got any of this new iron. We started laughing @2013 wondering who was going to restore these things and what their “collector” value would be (conventional wisdom was “not much”).
I view it as garbage heap fodder. No matter what the price, they’re all going to the crusher at the same timeframe. So the real question is how much W2 wage slave money am I willing to toss in the crusher after hopefully 15 years?
The entire house of cards is built on money we don’t have spent on features we don’t need.
I enjoy curmudgeonly rants as much as the next guy, but in reality, cars today are much more reliable than they were 20 years ago and definitely more than the halcyon 50s and 60s that everyone likes to talk about. They definitely are not throwaways or else the car companies would be selling many more of them.
The reason you can’t get to many parts easily now is because they pack much more powerful engines and other components into much smaller hoods, leaving more of the vehicle between the axles which leads to much better stability. Those old Cadillacs were called floating boats for a reason.
And those “plastics” last far longer than the steel of yesteryear which used to rust out after a few years.
And we haven’t even gotten to the safety and performance that all that “complexity beyond necessity” gives us.
I do admire the artistry of old car design, but let’s not get too nostalgic about their engineering, which has made staggering advances and continues to do so. (Also, the design has gotten bland because cars are converging on the optimal aerodynamic design, which leaves little room for flourishes)
This speaks to the American appetite for newness and obsession with retail therapy. It’s a success culture ours, and nothing telegraphs success more than imported over-engineered baubles.
Whenever I see a person driving a 15 year-old grocery getter, I always suspect they’re probably loaded but keep it on the DL.
“Interesting statistics, but what does it portend down the road for consumers?”
Owning and driving a vehicle is slowly morphing into a luxury reserved for the well-heeled. The writing is on the wall.
Maybe a structural shift in the market?
Car manufacturers have priced out a significant portion of the population, maintenance/fuel/insurance costs are skyrocketing while wages are not and a large portion can get by with uber type transportation now?
Not Uber. The majority get by with older vehicles and used vehicles. This is quite sustainable since cars are so much more reliable. Buying a car that had 100k miles was insanity maybe 20 years ago. Now, it’ll probably last for several more years without a sweat. Many owners of Japanese cars drive them until 200k without issue.
So buying a new car is now a luxury. But owning reliable transportation is probably about as expensive as before. It’s just that now you buy a used car that lasts you as many miles as a new car did 20 years ago.
My daughter put 500$ deposit on Toyota Highlander hybrid 8 months ago ,called her told her it arrived. But now her 2016 Highlander is worth 7000$ less and interest rate would be 6% .She told them not interested,but salesman said he would keep her on list
She could get a lower rate than that from a credit union and probably make up that lower trade-in value by just selling it herself.
Depends on the sales tax rate and if the trade offsets the net sale price. If sales tax is 8% and her car is worth $20K, she’d have to net $1,400 more just to bust even and deal with the flakes in the meantime.
She certainly could tote her own credit… but there may be finance incentives (aka finance bonus cash) that would reduce the transaction price. But truth be known, you just refi @ the time the first payment comes due.
At what age do people generally buy new cars? 30-50, while coping with children? 50-70 when children are off their hands? Whichever age group it is, I’d love to see a chart of sales per capita in that age group.
Do people simply need fewer cars in the age of Uber, and home delivery services, and Working from Home?
How many people ever buy a brand new car? I’ve done so only once in many decades of driving.
1988: I bought my first new car when I was 25. I bought a Nissan pickup.
2002: I bought my 2nd new car (for my wife) when I was 39. I bought a Toyota Camry.
2003: I bought my 3rd new car when I was 40. I bought a Nissan Frontier pickup.
2018: I bought my 4th new car (for my wife) when I was 55. I bought a Hyundai Sonata.
I was planning on buying a new pickup truck in 2020, but Covid changed my plans. I now have 219,600 miles on my 2003 Nissan pickup truck. I’m not sure when I will replace it, but I might not buy brand new. I might just buy a low mile truck that is a few years old.
I’m a pretty boring guy, none of the cars are very flashy. The Camry and the Sonata a very nice though. My wife and I never had kids.
Like many things in life, the 80/20 rule probably applies. In this case, I’ll guess that 20% of the driving population is responsible for 80% of the new auto sales.
I know several folks that won’t keep a vehicle more than 3 years, and they usually lease. They like having newer vehicles and don’t care that much about saving money. I know many more people who drive their Camrys, Accords, minivans, and pickups into the ground.
I have a 95 Tacoma with 280k. This year it will get a third timing belt, replace the cooling system parts and fix some leaking seals. Much cheaper to repair than buying a new one, less complex so easier to work on, and predates most of the iCrap installed now.
Go buy your bling, kids, and get off my lawn.
My guess would be that on average people with vehicles are simply keeping them longer. I don’t have stats for disposable income but if home prices have been soaring over the years and wages have not then new buyers and renters will be spending a larger proportion on shelter, less on vehicles.
Over the last few decades I believe we’ve also had higher population growth in urban areas, that’s where a lot of the jobs are now, including those nice 6 figure tech jobs and stuff. This is also where public transit/taxi/uber make most sense and cars become more of a luxury, so maybe there actually are fewer drivers overall. I know in Vancouver BC I’ve come across quite a few people who simply rent a car when they want to drive out of town or need to move something across town, they don’t own vehicles. That’s quite a lot different than few decades ago when I was a kid, jobs in manufacturing was still a (dying) thing, people moved into suburbs or smaller cities and everyone including their kids had a vehicle in the driveway (of houses costing a fraction of today).
My layman’s analysis based on anecdotes anyway.
Depends where you live. In Texas they worship the pickup truck. Morons who have never seen a dirt road have 4×4 trucks for their commutes.
This is true, I’ve been lucky enough to work on a project in SA and ofcourse took the opportunity to travel around. Even in SA itself at the time I remember Real Estate going up but selling at a pretty significant discount compared to where I live or anywhere in California or Washington, while still at super low interest at the time, though wages in trades made me do a double take (not in a good way). In Canada it’s not as different as you may think, cities in AB also have plenty of pickups driven by soccer moms and stuff, most smaller towns will be similar, and RE in Alberta for instance also is within reach of the typical working class family.
I guess it would be helpful to see sales numbers for TX specifically, sometimes what we see around us doesn’t match with the millions of others who live in the area. I’d venture a guess places like TX and AB bouey pickup sales. Anecdotally again, I know quite a few people from AB who would love to switch out their trucks but aren’t too keen because of the high prices, few years ago that probably would not have been a hindrance for them.
Phoenix Metro is full of large pickup trucks.
Never seen a dirt road, never hauled anything, always housed in a garage.
Bought 2 new cars 25 years ago with young family. Haven’t done it since. Seems like engineering job purchasing power has gone steadily down throughout career. Who can afford these? Ugly charts make it look like a rapidly shrinking demographic. And if most buyers can only afford by borrowing a ton, what happens now when money ain’t cheap? That buyer demographic is going to be cut in half from here unless prices come down.
I agree. I think demographics play a big part in the charts shown. Americas largest generation ever, the Boomers (my Generation) have been moving into retirement. For more evidence of this, just look at how Harley Davidson motorcycles are doing. Moving forward I think car companies will be fighting over an ever declining number of buyers.
Harley Davidson is basically an orange and black clown costume brand now.
Hubby and I moved to a townhouse very close to a light rail station in a walkable area.
When I retired, I sold my car. Hubby still has his and works part time, sometimes. He isn’t ready to retire yet but can whenever he wants to do so.
Weather due to age or just no longer wanting to continue working, we can use very good public transportation or call an uber when we want to go anywhere. For long trips we can rent a car.
There just won’t be any need (or probably want) to continue to own a vehicle.
The only thing that kept these price hiking industries alive and gouging for 20 yrs…was ZIRP.
The entire orientation of the auto industry went from Model T (lowest cost via highest sales, and vice versa) to T Bills (save our failing asses, DC Fed).
Most cars nowadays that are within reach of the average buyer could be called the model low T. Just devoid of inspiration and guts unless you’re a transformers fannboi.
“Most cars nowadays . .. .. . could be called the model low T.”
The Nissan Soy – it has a nice ring to it.
“model low T” – I love it! Not much excitement on the road these days. Gray 4 cylinder crossover followed by white 4 cylinder crossover followed by black 4 cylinder crossover followed by gray 4 cylinder crossover to infinity
Can not imagine what auto sales will look like this year with rising interest rates, economic slow down, expiration of 2020 bonus deprecation. (100% tax write off effective January 1) In addition to those looking to purchase an EV.
I‘ve only purchased one new vehicle in my life. My first. I’ve chosen to let someone else take the first year’s depreciation on my vehicles ever since.
The depreciation which used to occur when one drove a new vehicle off the lot was turned upside down by Covid which saw a two to four year old vehicle commanding more than it cost when new. That pre-Covid period was a great time to buy a vehicle, but just like housing, who cares what a car or house is worth if one has to spend a similarly ridiculous amount to replace it. The winners are people who had a second home or a second or third car which could be sold at the inflated prices with no need to replace them.
COVID didn’t do anything. Filthy central bankers and politicians did. It’s and important point to understand and remember.
Me too. Current car is 19 years old. I budget $1000 for repairs and maintenance per year. It’s a big S class Mercedes so it still rides like a dream on a road trip. I use a scooter for daily errands. Used Honda PCX was cheap and a blast to ride.
There was a lady at my work who had 500,000 miles on her Mercedes diesel. Pretty incredible.
Wow, I thought I was the only one driving around in a car that old here. I’ve had the same daily driver since March 2003 (new) and people tell me it still looks new. I wanted a new Z from the Nissan dealer last year, but they wanted $50k markup on top of the $53k MSRP. No thanks. I didn’t realize Nissan sales have been declining that much until I saw this Wolf article…sad as I love their GT and sports cars and those survive only by the other models selling. I’ll probably use my same car as my primary car and buy a used car next for fun…I think I’m done with dealers given my bad experiences in 2020 with Toyota and 2022 with Nissan.
I would love an old 300D sedan. Mercedes hadn’t completely lost their soul back then.
My 93 mercedes E300 D got the fender dented by a delivery truck in the parking lot of my shop. The freight companies insurance adjuster came out for an estimate and I was afraid they would total the car as the Kelly Blue Book price was only $950. But I was surprised to find that the W124 chassis Mercedes have turned the corner and are now considered classics with ordinary ones going for more than $8000 at auction. The insurance company wrote me a check for $3000 and it was only 35% of value. So I can look forward to my daily driver increasing in value from here on in. I figure in two years it will be worth what I paid for it back in 2003 .
I was in the car business on the factory side for several decades. I never bought a new car during all those years… I’d buy the “brass hats” (aka company vehicles) for a discount – back of Black Book. Hard to buy them much cheaper than that.
To illustrate, the technomobile that we currently have is a 2017 with 50K. Got a bonafied offer of $24.5 for it. I paid $27K for it with 4K miles on the clock. To replace it new, like for like, today…. $54K MSRP. Even with the double rabbi discount, it’s more than I’d pay for it… let someone else take the hickey.
Zoomers are living at home “because they can’t afford rents,” but they’ve got $1,500 per month car payments. Welcome to Clown World.
How many zoomers actually have a $1,500 a month car payment? More likely you’ll see younger people with newer cars on a long note as that is only big ticket item they can afford, and a reliable car is the most important possession some people can have. The old Dave Ramsey advice to drive a $1,000 beater car around doesn’t work for a lot of people because 1) there are no $1,000 cars anymore, and 2) a lot of low paying jobs out there where you don’t get a lot of flexibility to have your car repaired whenever it needs. Might as well bite the bullet and buy something new or 1-2 years old that you can finance for 6 or 7 years and drive it to 100,000 miles with no maintenance, as any newer car can easily do.
I really don’t understand how you of all people KNOW who is to blame for all of the problems plaguing the economy, and frequently articulate that point, yet here you are doing a drive by of the younger generation and lower income individuals for economic distortions that no Zoomer had any part in actually creating those policies.
First, you should understand that I feel terribly for the younger generations. They have gotten the absolute shaft. While as a Gen Xer I have lived my entire adult life under the same financial repression, it has only gotten worse with time.
That being said, if Wolf allowed links I would happily provide you a Twitter post that went viral with said Zoomers showing their monthly payment books for their new cars. They were all well over $1,000, with some approaching $2,000. The younger generations have chosen some absolutely reckless borrowing habits.
If you have to live with your parents because you supposedly cannot afford it out on your own, you have no business borrowing so much money for a depreciating asset. There are plenty of $5,000 cars out there. Sure, some ain’t pretty, but that’s life.
They should be saving that money instead of blowing it. A new car is one of the worst “investments” there are. Wolf has shown time and again it is 100% a DISCRETIONARY purchase. Nobody “needs” a brand new car.
“Do people simply need fewer cars in the age of Uber, and home delivery services, and Working from Home?”
The answer to your question doesn’t have much to do with discretionary spending.
Uber isn’t a viable business, at least at the fares it charged a few years ago the last time I used it. It’s a taxi service and while it may be economically viable to charge lower fares than traditional taxis, it is or was dependent upon economically ignorant or financially desperate drivers and “free money” from “investors”. “Free” “investor” money is unsustainable because every business eventually has to provide an adequate return.
Not any different for most home delivery. It might be economical in high density areas or for more expensive purchases but not in suburban America for food delivery or a $10 Amazon order.
Working from home is different.
People buy new cars every few years now…
I know it’s crazy, but that’s the idiotic american consumer
People seem to buy new cars more frequently now. Probably due to vanity reasons. I’m not one of them.
Anecdotally, cars last much longer now. Cars in the 1960’s and 1970’s were lucky to make 100K miles. I see cars today lasting up to 300K miles.
Back then it was the body and interior that seemed to fall apart.
My parents were a one car family in the 1960’s. In 1968, my dad bought a used second car to get to work. It was a 1960 Rambler. After 8 years, the car was completely rusted and the interior seat springs were poking out. The rust was so bad that my parents put plywood down on the rear floor to keep the kids from falling through the gaping hole in the floor. My parent sold their primary 1966 new Impala in 1971 after 5 years due to rust and the interior falling apart (falling headliner, cracked dashboard).
The oldest car I currently own is a 2000 Ford Expedition with no rust and the interior is still good after almost 200K miles in 23 years. We just use it to haul big messy stuff now. It was our family car, then our son’s car to get to high school, and now it is cheaper than renting a UHaul.
I appreciate cars last longer now so I don’t have to sell before 15 years.
Yep, it’s vanity, keeping up with neighbors, the need for new things etc. Cars are a means of transportation, and often hold a lot of emotional weight for their drivers.
Case in point: I’m 34, currently own 4 cars not including my wife’s little commuter thing. I’m a fanatic so to speak, but on a budget. Newest car is a 2008 Jeep Cherokee Diesel(Mercedes turbodiesel). Second oldest is an 07 Jaguar XKR coupe. Third is an 05 Jeep Liberty diesel. Forth is a 1972 Dodge Challenger 340 Rallye. Which one do you think I paid the most for? Which one would I would never part with? The Challenger. It’s the only car I’ve paid more than 20k for and it’s also the only car that will probably never lose value(it’s almost doubled in value since I bought it).
You CAN be a baller on a budget, my Jag turns tons of heads and was purchased for a mere 15k. Low miles too. It’s just that most people don’t have the discipline to save a few sheckles and pay cash for a highly depreciated car. They look at the monthly payment only and that’s how much car they can afford. I keep a fleet of older cars running just fine and they serve my purpose, but I cannot imagine paying $600, $800, or $1000/month for a pickup truck or a BeeEmTroubleYou.
dearieme, I haven’t bought a new car since the first and only time in 1988. I have no intention of repeating the experience.
I don’t know if it is all the people flooding into Florida, but people are still paying insane prices for 10-15 year old vehicles with 150-200K miles. Older vehicles under $6k sell in days.
Yes, including the ones who aren’t here legally. The illegal immigrants will continue to cause inflation to increase more than it would have if the border were still secure. No one wants to talk about it, but it’s a fact.
Interesting thought, and you could be right. What is the source of your “facts”, please?
Just think of all the money borrowed or invented to pay for converted motels, food stamps, language teachers, and all other life support needs and living expenses for millions of “migrants”. George Soros isn’t paying for his policies. We are almost ready for Cloward-Piven and The Great Reset causing economic collapse, Techno- Feudalism, Total Dependency on the Govt, the China Model and Total Control by the Elite.
He makes up his facts and then says “that’s a fact”.
Do you really fail to see how artificially goosed demand via illegal immigration would cause price spikes in something, like, say…housing rents (illegals have to live someplace, just like US citizens and habitually ignored legal resident aliens).
How about Ismael Huazo-Jardinez and his Chevy Avalanche for starters? Read a bit about him. It’s a really maddening tale of what’s really going on. All of these illegals buy and drive vehicles. How do you think they get around? To think they are not competition for all resources is a fool’s errand.
“He makes up his facts and then says “that’s a fact”.”
I’m trying to understand how somebody like yourself could fail to comprehend how all humans, regardless of who they are, are sharing the same resources that all of us need to survive.
You are correct. English is rapidly becoming a second language in Tampa. The people that are coming into Tampa are not learning English, they instead are forming cities in cities. I had to deal with an entire commercial electrical and heating and AC crew and not a single person spoke English. Most of the delivery drivers cannot read or speak English. Majority of commercial and retail customers can’t speak English. Since most deal in cash the cars at the lower end of the price regardless of condition go fast. The last private sale car I bought I had to use google translate because the person didn’t speak English.
They are labor scabs, brought here by the wealthy special interests – BOTH PARTIES – to drive down wages and replace American workers.
Tampa is a dangerous place to drive. A lot of car sales “stimulated” by the people who cause severe accidents by blatantly disregarding every single traffic law. They can do this because there is absolutely 0 enforcement of these laws anyways, and the roads are overflowing because the county approves every mega apartment complex plan that comes across their desk without requiring appropriate impact fees to build the infrastructure to support them.
Illegal aliens are now the ones responsible for vehicle inflation?? Did you not even read what Wolf wrote?
For the most part, anything that runs and tracks decently is worth $5K-ish. My daughter was gifted a car from a friend last March. She’s dumped about $3K into it and, while it’s sun baked and dinged up from airport parking lots, it’s a solid runner and has a lot of new components that makes it drive *as new*. She has been offered $7K for it by a shade tree mechanic known by her “friend-boy”…. even with the failed clear coat and hatcheted sides.
Is it possible for auto manufacturers to re-design their cars to rely less on chips or particular types of chips that have shortages?
Compared to these automakers, Tesla sells just a small number vehicles, and they used different chips to begin with.
Tesla didn’t just “use different chips.” They designed their own chips – probably the only car company in the world to do so.
The issue is process nodes. Big carmakers have been using chips with seriously outdated manufacturing processes, like 90 nm which came online commercially in 2003. GM et al effectively outsourced the cost of semiconductor production for so long that their business has become unprofitable for the chipmakers, who can replace some equipment and make 10x return on their billion dollar chip fab from a customer with a more modern design.
The chip design and validation cycle is about two years, meaning we will see chips from newer processes coming out later this year, which have been designed by the in-house teams that the big carmakers have brought to bear on the problem.
I personally won’t likely ever buy a 2024 model of any car. I’ll give them a year or two to iron out the kinks.
Of course it is. Do we need absolutely vehicles with hundred plus sensors, microchips, mini circuit boards for functions which most able bodied drivers can perform effortlessly? Other than for the powertrain – engine, emissions, transmission, brakes, we can dispense with practically all of them. Current functions ……………………………………………..Legacy solution Multizone Climate control with infinite temperature setting Heater and AC knob Automating headlight switch manual headlight switch Automatic rain sensing windshield wipers ….. manual switch Heated steering wheel….. Gloves ? Heated seats ……………………………………….. Turn on heater, clothes Obstruction sensing power windows … Crank handles? Load sensing shocks …………………….. Plain old shock absorbers
Just to name few features which became “indispensable” in newer cars. I am not opposing any of these high tech creature comfort items. If one wants them, pay for them. Sure, if you want active road sensing suspension, 20 forward and 5 reverse speed transmissions, great. Pay for it and you get it! Same time, manufacturers should offer the low cost, legacy options. As ordinary F150’s approach $60,000 MSRP, if a lower cost, stripped down version exists for $25,000 less, there will be many takers. Chip shortage? Very easily circumvented by low tech, manual features – same features that performed adequately for nearly 100 years, before high tech infiltrated nearly every facet of auto mobile functions.
All great charts, but I continue to disagree as to the overall drop in sales that are the result of chip shortages, especially in the last 6-9 months.
Increasingly, 50-70% of the country can’t afford to buy a new vehicle. so they’re buying more used cars instead.
The US manufacturers, at least, are using this opportunity to reset the buying process for EVs. There won’t be hardly any inventory on the lot. You’ll buy and then come back some number of days later to pick up your new, way overpriced vehicle.
Resetting the buying process? You fail to consider some variables. One is customer want… a dealer will rarely let someone go off the lot without tryig to shove him into a vehicle in inventory. Why? Deposits and “deals” are what we called “hunting licenses”. You take the deal and see who beats it.
Manufacturing plants have a “sweet spot” for production. You think cars are expensive now, wait until it’s “just in time”. A factory that has to produce 30,000 cars per month to turn a profit with a pre-determined mix, cannot survive at a low price point. So…. they raise the wholesale price (remember the increases in MSRP when the government handouts for EV started?) to compensate for the lower volume.
To do it “days later” requires what’s termed a “bailment pool” where dealers pluck units out of manufacturer owned inventory to satisfy customer demand. It’s been tried before and has failed miserably. None of this is a new idea – just done with flashy websites vs. paper. Manufacturers hate to own inventory because they don’t get paid for it until it sells – lots of frozen capital. The current model is that they can build cars out the wazoo, shove them down the franchisee’s throat, and then write themselves a check out of the dealers’ open line of credit that is a mandatory part of their dealer agreement in order to continue on as a dealer (which is also known as a floor plan). No floor plan? Termination can come quick for “breach” of the dealer agreement. (I know… I terminated several in my glorious career for that very reason. Got sued and won.)
What would likely happen is that a customer would have zero input into the configuration of their car. Look to BMW’s concept of subscription services. They’d build one vehicle….. your choice of black with black guts or white with black guts (for plant emissions – metallic paints throw a lot more pollution than solids – saves money on material and “smokestack scrubbing”)… and they’re all the same basic spec. You want heated seats? $30 a month for a subscription. Same with blind spot sensors, air conditioning, on down the line. They can shut them on and off over the air via telematics. So pay up or else.
Rivian won a challenge by Illinois who wanted to kill their direct to consumer model. This is also being considered by others (Honda and Sony announced a partnership… wonder if they’ll call it Betamax?) to try and remove the middleman… and take that profit for themselves to offset the production cost issues.
Thank you for your insightful comments here.
I hope BMW and other car/motorbike manufacturers get it shoved up their backside for, “You want heated seats? $30 a month for subscription.”
When I write the check and purchase a machine, it had better be a finished product — not something with a service agreement that’s akin to being extorted month by month in order to use said machine.
I take it you aren’t in the great plains. Autostart is $30 on my car, 2019 model. It would be awfully nice to have my car heating up before I go out there when it is -20, but I’m not going to pay those assholes.
Errr, sorry. Remote start. It’s been a long day.
One mile west of the Mississippi river between the MSP airport and downtown Minneapolis, where we just got 15 inches of heavy wet snow this mid-week that clogged things up a bit.
Castrol Edge full synth 0W-20 in the hybrid AWD SUV, and Blizzaks. She’s good to go, eh? But no, not gonna run my machines unless I am with them; theft and such makes it unwise where I live.
And Thursday morning, I gave my neighbor a lift to work so he could play — in the Minnesota Orchestra’s 11:00 am performance. Got stuck at the edge of his driveway and the street with no snow tires on his Accord. It took three neighbors’ help to push him back into the garage. Oh well …
How many days until the spring equinox?
Car manufacturers should use this opportunity to reset the distribution model. It is an utter waste of resources to produce 60 to 100 days of car inventory, dump them on the dealers and let them figure out how to deal with it. The technology exist for car manufacturers to produce cars to order, using JIT – just in time inventory management methods. Manufacturers should focus on manufacturing systems that enable them to manufacture and deliver to dealers cars in maximum 21 days from order date. This is very feasible. Further, manufactures should have moved forcefully against price gouging dealers. Adding $10,000 market adjustment prices to ordinary vehicles prices does absolutely nothing to promote brand loyalty. All the profit ends up in the dealers pockets. Factory receives no benefit. In fact, the factory/brand loses money because sales volume drops.
1) S. Korea beat Japan. Women are crazy about Santa Fe for $45K and Forte for $23K. Forte used to be $13K few years ago, but the competition disappeared. Women threatened to divorce their husbands if they don’t get their Nissan Rouge, but now it’s all about Santa. 2) China is the biggest car market in the world. China indigenous innovation policy force US, European, and Japanese co to form JV in China, transferring knowledge. 4) Ford, GM and WV are fully committed to EV. 5) If the stock market plunge below Oct low, in stepping stones, China might get these JV for 25 cents/ dollar, becoming self sufficient in 2025, exporting cars to the world, including Europe and US. China is for free trade, against building a wall.
And Lotus Cars Limited makes some very nice sports cars in Norfolk, England. This guy named Colin Chapman founded the company 75 years ago. They raced in Formula One with Jim Clark, Stirling Moss and Ayrton Senna. Plus, Lotus revolutionized both Indy car and Formula One chassis design.
But times change, you know? Since 2017, Lotus is 51% owned by Geely Auto in China & 49% owned by Etika Auto in Malaysia.
However, Lotus does make some very advanced carbon-fibre fixed-gear bicycles for velodrome racing, so they got that going, which is nice.
Was at many sports car races in mid fifties to early sixties, both pro and SCCA, pit crew and spectator, and never saw a Lotus actually finish a race. Heard similar stories from owners into the eighties. Course my first, an early ’56 Triumph TR-3 never saw a repair facility it didn’t want to stop at either. LOL Something about a proper Englishman always needing to spend the picnic puttering with the Wentworths, eh what?
The sad part is that the Hyundai’s and Kia’s are junque. Look at the engine problems they’re having and the customer complaints because Kia has tried to schmeek the customer with hidden fine print in the “product update” notices as they are trying to avoid a recall. Do a search. Lotsa PO’d people.
Yup. Had a run of horrid luck with all these models about 5 years ago. Brand new Forte, struck oil inside of its first 500 miles. Dealer said under the plastic cover it looked like a crime scene. They ‘fixed’ it, claiming delay as a Kia corprate rep had to come check it out to approve a motor replacement because it was clearly a manufacturing/factory line error. They say a lot of things so who knows, probably crashed it in the lot and needed a few extra days to repair. But it did strike oil again a thousand miles later. Kia must have Margarita Fridays on the factory line.
Replaced that with a Rogue, funny enough, and it never ran right. Crawled under to change the oil and noticed a crime scene of a different matter with a hefty price tag. Stayed quiet and unloaded it asap on trade in for an Elentra whose tranny failed within a week. Been throwing a lot of salt over my left shoulder since getting my current ride.
“China is for free trade”.
I work at a Honda factory. We’re still in supply chain hell. It’s not just chips, it’s things as simple as steering knuckles and side airbags that we cannot reliably procure. We stop production early at least one day per week because we’ve run out of something. Management lowered daily production goals and we still cannot consistently hit them. For a few months now, I have not had to work full-time because we’ve had voluntary days off due to parts shortages.
Due to the “decades of stagnation,” at some point don’t we start to run out of used cars? Or is the overall demand for vehicles going down over time? Population growth is slowing, but it is still rising.
The same phenomena that was caused by “cash for clunkers”. The feed stock of good, serviceable, inexpensive vehicles were destroyed and used car prices skyrocketed – which hurt the lower income folks the most.
The downfall of this country is MBA’s, lawyers, and bean counters.
You realize that bean counters just provide information to the MBA’s and other parties and don’t actually make the decisions, right?
The information they provide is skewed by their tunnel vision. New vehicle sales are not practical decisions, they’re emotional. No one *needs* a new car. They want one. Bean counters are notorious for missing that gene.
The company I worked for had passion and innovation as part of it’s early DNA. Build a product people want and the profits will follow.
Then some genius frat boy MBA douche nozzle comes along, and with his beannie friend, convinces management to chase profit vs. innovation.
The result is mediocre products that no one wants at a premium price. They try to market their way out of the problem… and end up throwing incentive money at it to mitigate the problem they created… blaming the sales side for the failure.
I cannot count the number of parts bin *innovations* that I’ve witnessed first had. I called them “the answer to a question no one asked”. Overpriced sports cars to assuage someone’s ego. Great car. Wrong price. Especially when the street creds don’t exist to ask $100K plus for a vehicle. A more visceral vehicle could have (and has) been produced. It didn’t sell because it had no soul.
Which goes back to the original thought…. cars are an emotional purchase. One buys a specific model – not because they need it, but because they want it.
Those stories sound like weak management trying to point fingers at employees for their bad decisions.
Or, maybe companies actually need to make money to survive long term and cannot rely simply on passion.
This explains part of it — the average age of vehicles in operation. It doubled since the late 1970s:
That’s a genius graph, right there.
1) In the 80’s the chart is flat. The economy was booming, people dumped their old large cars from the sixties and the 70’s and bought more fuel efficient cars from Japan. 2) The cash for clunker program started in July 2009 and ended few months later, when the money was gone, didn’t dent the chart. 3) The trend is up. Car prices are too expensive for consumers, unprofitable for mfg. Consumers buy impaired & affordable Kia, because it all there is and it serve their needs. 4) Hyundai / Kia is the only chart moving up. Defective engines, production delays, don’t deter customers, because there is nothing else. The competition is gone. 5) A systemic change is coming to the car business.
1) yes. And Chrysler went from hulking dinosaurs to k-cars during that era.
Cash for clunkers is a current policy in California.
5) A systemic change is coming to the car business.
This is at least 40 years overdue.
I bought LT puts on GM about a year ago after Mary Barra said GM was moving 100% to EVs by 2030. I sense the US government will have to bail GM out again if they follow this policy. Toyota appears to be the only large car manufacturer that has not taken the pledge to go all-in on EVs.
On a side note, our only car was flooded by Hurricane Ian, so my wife and I shopped for a new Lexus SUV. Our local dealer in Naples quoted us $10k over the same car’s price in Tampa. So we bought the Lexus in Tampa.
Unless western countries mostly or entirely ban foreign competition, many “legacy” auto makers are going to disappear, including the US “Big 3”.
Perpetually shrinking your way to (higher) profitability isn’t a permanently sustainable business model.
Maybe car companies can make the transition without a government backstop, but I am pessimistic. At some point in time you are going to be making, marketing and servicing half EV and half IC and that is going to be expensive to manage.
They’re all hedging their bets behind the scenes. Mr. Toyoda is the only one with the balls to tell the truth. They’re not all in, regardless of what they babble in public. It’s nothing more than virtue signalling.
There’s still an investment by several manufacturers in hydrogen…. the infrastructure for that is weaker than that of EV’s… but that could change.
Mr. Toyoda and his underlings totally f***ed up, totally missed the ball on EVs. Now they’re behind by years, and they’re desperately trying to catch up. They bet on hydrogen and lost. And they know it.
Now they’re spending billions of dollars on developing EVs, but they’re so far behind it’s no longer funny. GM is almost as far behind. EVs are the only segment where there is actual sales growth. Everything else is declining.
All I know is the car lots around here are full of pickups and large SUV’s. The same lots have a very limited amount small vehicles. Also, most of the newer cars are Kia or Hyndai. This all happened in the last year.
About 8 years ago I bought a used 2005 Camry that had around 45000 miles on it, I paid $9k and still have it and sadly it just turned 75k. I’ve never had an issue, never had a time up, bought new tires and changed oil regular. I don’t need or want a car with thousands of chips connected to problems.
“I paid $9k and still have it and sadly it just turned 75k.”
That’s nothing to be sad about. 75k miles on a Camry is nothing. My wife’s old Camry had well over 350,000 miles. During that time, we had to replace the timing belt, the clutch, and electric window controls.
My 2003 Nissan Frontier 2wd has 219,500 miles. It is still on the original clutch. The interior is starting to fall apart, for example the manual window crank handles, and the sun visors. I had to have the water pump replaced once. It just passed smog (Southern California). But I must admit, I feel like I am pushing my luck on long drives. It still suites my needs perfectly, just getting a bit old. After years of little pickups getting bigger and bigger, I am happy to see the automakers are now starting to focus on small pickups again.
I bought a 2004 Nissan Frontier 4sd long bed RD new. It lasted until 210K in 2018 when I traded it in. I admit with the 4 spd I used to pound it pretty hard. But even then I think yours is on borrowed time. Probably could look around for a good deal in a full sized pick up now that prices are down.
Prices will be dropping hard by summer as supply chain sorting nears completion.
For example: Ford Transit adding third production shift in April or sooner.
They do not hire people to build nothing.
Expensive cars make a lot of new friendships. It doesn’t matter if u like your new friend or not, u need their car.
With the data on domestics and imports, was curious how the luxury manufacturers–Porsche/Audi/BMW are doing now in terms of sales. I sold my Porsche in September, felt I got more than it was worth for it. Guess there’s still some free money sloshing around.
BMW had big problems with its supply chains, and dealers ran way low in 2022. This is getting better now, but supply “in inventories and in transit” is still very low (as of November). One of their additional issues was wiring harnesses made in Ukraine.
Porsche and Audi now seem to have plenty of supply.
https://wolfstreet.com/2022/12/14/rising-but-still-low-new-vehicle-inventory-tangled-up-by-shift-in-demand-from-trucks-now-lots-of- supply-to-fuel-efficient-cars-very-little-supply/
Have an 8 y/o car with 22,000 miles on it. See no reason to get another one. Since Covid I went from driving a few thousand miles a year to a couple of hundred. I now walk 10 miles a day.
Healthier, happier and a few extra dollars in pocket from gas savings.
Yes! Walking as transportation is fabulous. Two birds with one stone: free transportation and free exercise. As a freebee thrown in on top: no-hassle-parking, which is a biggie in San Francisco. I walk nearly everywhere (except to Costco because I don’t want to carry 150 pounds of stuff home). I’m a horror show for the auto industry and gasoline retailers. But the wife drives 20 miles to work every day.
If I lived where you do, I’d walk, too. It’s a fantastic place to walk around.
I am cringing as I write this drivel, since I hope someone will benefit from it, but… I drive 33.7 miles to work. After researching electric vehicles, I found the Nissan Leaf has a simple measurement of battery life. A new Leaf has 12 bars, which drops to 11 bars below 85% battery capacity. Nissan will sell you a new battery at 8 bars. The biggest factor in the economics of an electric car is the cost of the battery ($6000 for an older Leaf, without labor). Used electric vehicles are priced very similar to ICE (internal combustion engine) vehicles based on year, mileage and condition (but not battery life). So searching Autotrader all over the U.S., I found a 2011 Nissan Leaf in SanDiego with a 12 Bar battery for $6000. I bought it and found the market to ship it to Florida was extremely competitive ($800). The way to preserve the battery life involve 1) always using 110 volts to charge (Level 1 charging), 2) never charge over 80%, and 3) drive slow and steady, never using the disc brakes but always regenerative braking. Thermal management of the battery is important, but I live in Florida so there is not much I can do about it. This vehicle with a 10 bar battery will still be worth $6000. I figure I will save $6000 in gas minus electricity in two years (my employer is giving me a 110 volt outlet at work, but I figure 60% of the electricity will be at my house). There is the cost of registration and insurance, tires, wipers and the 12 volt battery, but electric cars are really simple the the electric motor is likely to work well for a long time.
Global warming is real and electric cars really are the future. I am looking forward to not going to Sam’s Club to fill up every week.
I’ll let you know how it goes.
So if you see a 2011 Electric Blue Nissan Leaf driving the speed limit between Melbourne Beach and Vero Beach with the license plate WLFSTRT, it’s me.
Cars are to stupid to equalize all this financial bs. Dude you looking for a car? Me to but ain’t going to buy one. What a old rehash of an old financial indicator? Me thinks litterbugs outside a grocery store will be a better indicator.
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The ECB reacts to raging inflation, unloads a massive chunk of assets, hikes rates.
Are we seeing the psychological effects of layoff-stories everywhere that replaced labor-shortage-stories, though the labor market overall hasn’t changed much?
The Fed’s cumulative losses reached $20.5 billion.
Wait a minute… It still “believes in” crypto? Is crypto now a religion that a bank “believes in?” FDIC, are you reading this?
Many of these announced layoffs are in the future and won’t be in the US and won’t impact the US labor market. But we got data on actual layoffs and discharges in the US today.
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