Used Vehicle Trade-in Values Sink, Hit New Vehicle Sales

More #Carmageddon data – and its impact.

This is just relentless: Wholesale prices of used vehicles up to eight years old going through auctions across the US dropped another 1.5% in April from the prior month.

It pushed the seasonally adjusted Used Vehicle Price Index by J.D. Power Valuation Services (formerly known as NADA Used Car Guide) down to 109.9. The 10th month in a row of declines.

The index is down 7.1% year-over-year and down over 13% from its peak in mid-2014. It’s at the lowest level since September 2010, when prices were still spiking from the cash-for-clunkers program which had eliminated a whole generation of often perfectly good cars. In that sense, values are just now beginning to normalize (chart by J.D. Power Valuation Services):

According to the report, “the used market continues to experience negative pressure from a struggling new market.”

This decline in used vehicle values is confirmed by the Consumer Price Index. According to the Bureau of Labor Statistics, used car and truck prices fell 4.6% in April over the past 12 months. It was the only major category with a significant 12-month decline. There were two other major categories with declines, but declines were small: the index for food at home inched down 0.8% and the index for commodities less food and energy inched down 0.6%. So the sharp drop in used vehicle prices stands out.

Will the Fed worry about these used vehicle prices as a sign of deflation? Nope. It’s a sign of an oversupplied and still overpriced market. As prices drop, more buyers will emerge and the oversupply will work its way out of the system, but at the expense of new vehicle sales.

This is already happening. New vehicle sales in April dropped 4.7% year-over-year. For the first four months, sales are down 2.4%. This decline has occurred despite automakers’ record but apparently futile spending on incentives to crank up the market.

Then there’s the problem of consumer debt.

Lenders – including the captives of the automakers – were eager to finance the vehicle boom of the past seven years. This debt has ballooned and some of it, especially at the subprime end, is now defaulting, and lenders are tightening their underwriting standards. The results are already visible.

While total auto loans and leases outstanding still rose in Q1, they rose by “only” $8 billion, less than half of the average quarterly increase over the past five years of $17.5 billion. At its peak, in Q3 2015, total balances soared by $31.8 billion, which was the peak of the auto boom. By these standards, the increase in Q1 this year was anemic:

How did the used-vehicle segments fare in April?

Wholesale prices fell the most for luxury large cars, down 4.4% from March, followed by compact and subcompact cars. The only two segments that gained in April – luxury large SUVs and mid-size pickups – both had lost value in March (-1.8% and -0.6% respectively):

Auction volume of vehicles up to eight years old in April, at 366,909 units, was about flat compared to a year ago. Late-model volume (up to three years old), largely rental cars and lease returns, edged down 1% in April to 224,381. This is a shift from the prior months, when auction volume of those cars had been heavy.

It could be a sign that rental car companies are trying to throttle back the disposition of their fleets in order to not cause prices to plunge further. But that’s hard to imagine, given how hard rental car companies are getting slammed by this market [read… Hertz Gets Crushed after “Even Worse than Expected” Loss].

More likely, it’s a sign of the calendar: the Easter holiday, which slows down the wholesale business, was in April this year. Last year it was in March. This theory is supported by year-to-date late-model volume: at 955,447 units, it’s up 7% from the same period a year ago. So the flood of auction cars is unlikely to abate anytime soon and prices are expected to decline further this year.

These used vehicle price declines and the plethora of late-model vehicles hitting the retail market impacts new vehicle volume and how new vehicle deals are made.

For dealers, the wholesale price drop translates into lower cost. It’s dealer nirvana. Dealers can make more money on used cars than on new cars. And they’re buying these units, and they’re selling them. But these sales are taking sales away from new vehicles piling up on their own lots. That’s how the oversupply problem of used vehicles will be solved: at the expense of new vehicles.

Lower used-vehicle values also impact other aspects of new-vehicle deals. The May edition of the NADA Official Used Car Guide cut its trade-in values on average by 2.8% from a month ago. Trade-in values of subcompact cars got slashed by nearly 5%. This reduces the equity of the trade-in – or more often, it increases its negative equity, which is at a record on average, just when lenders are tightening their lending standards. As a consequence, it will be harder to get new vehicle deals financed, and more customers will be switched to used vehicles…. So it looks like automakers will face a lot more pain.

What the slow crash of classic cars says about the future of other asset classes. Read…  This Is How an Asset Bubble Gets Unwound these Days

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  95 comments for “Used Vehicle Trade-in Values Sink, Hit New Vehicle Sales

  1. Chester Peterson says:

    A classical depreciation figure for the UK was 20% per annum loss or 50% retained after 3 years.

    So when the initial figure of 1.9% per month is given, that’s ~ 20% per annum.

    But I assume the 1.9% figure is generated by the prices of ‘alike’ cars selling a month later, and it’s ~ 2% lower.

    But if baseline depreciation has been lower than expected, is this change simply a movement back to the ‘norm’, and used cars are now depreciating more, but are still ‘overvalued’?

    Either way I’d hate to be someone with an 08-14 ish car who bought it used.
    Used values for stuff in that range make new cars seem ‘good value’

    We also still seem to see dealers with crazy spreads. They want to take 5-10% each way on £15,000-£25,000 cars, taking about £4,000 for basically trading a car!

    • T.J. says:

      I disagree. Time to trade up! You’ll take a bath on the sale, but you’ll more than make up for it on the buy.

      • Chester Peterson says:

        Trade up to brand new again?

        The issue is the spread dealers offer.

        Ie, M140i BMW.

        You can get a new one for about £27,500 with options etc.

        But at 1.5yr trade in will be about £20,000.

        Try buy a 1.5yr old one for £20,000. Try £25,000.

        You’re back to justifying a brand new one.

        Leases and perpetual customer flipping seem to keep cars in dealer networks too, so you can’t find a private seller who’ll sell for a bit over trade-in price.
        Usually they just play the dealer game and try sell at the retail value.

        So yes you trade up ok, but only ever to new.

        The dealer still makes you pay a good chunk of your due depreciation, but I’ll agree for now they are subsidising used values up, to make trade ups (now heavily discounted) to get people buying.

        But it’s not great for those who liked to own cars at 4yrs > 7yrs for about 1/3rd the depreciation costs!

        Anyone playing that game since 2010 is getting a raw deal.

        • Joe says:

          Your example is for 1.5 yr used, yet you mentioned 08-14 years in the original post. Which is it? 2017-2014 is three years. How does 50% off from new make new seem good value? That doesn’t make any sense.

        • T.J. says:

          I’m advising people with older cars to move up to lightly used. New car market will fall for a while, too, while they sell off supply. I will be FSBO our 2 healthy cars with over 100k miles and be picking up 2 lightly used healthier ones.

  2. Thunderstruck says:

    “It could be a sign that rental car companies are trying to throttle back the disposition of their fleets in order to not cause prices to plunge further.”

    This is an interesting observation. Since most rental fleets are based on leases, how do they “throttle back” when the lease term is finite? Can they be granted an extension, or do they attempt to purchase the vehicle based on residual value?

    Sounds like we’re about due for a new “Cash For Clunkers” program to hoover up all of that excess inventory and render it recyclable scrap.

    • Wolf Richter says:

      The two largest sources of auction cars are rental cars and lease returns. The sentence you quoted referred to rental cars.

      1. Rental cars fall into two categories. Some rental cars are “program cars” (30%?) with guaranteed buyback provisions at the end. So with these units, there is less flexibility as to when to dispose of them. The remainder of the rental cars (70%) are owned by rental car companies (usually by their “bankruptcy-proof” affiliates). They own those units and finance them via debt, and when they decide to sell them, they run them through the auction. Hertz has close to $10 billion of this type of fleet-based debt. They’re not leased. So these units can be sold essentially whenever the rental car company sees fit to sell them.

      2. Lease returns by regular individuals and companies. When the lease it up, these units go back to the leasing company, which then runs them through the auction. There is little flexibility as when they go through the auction.

      • Thunderstruck says:

        “The remainder of the rental cars (70%) are owned by rental car companies (usually by their “bankruptcy-proof” affiliates). They own those units and finance them via debt, and when they decide to sell them, they run them through the auction. Hertz has close to $10 billion of this type of fleet-based debt.”

        That explains a lot. I was under the impression that most of the rental fleet were lease vehicles. That does make a difference if they have actual ownership of the vehicles. I wonder how long they can actually keep those owned units in service before they get to the point where a customer would refuse to rent it?

  3. robt says:

    Oh, good. I could use an upgrade to my 2003 Cadillac DeVille, with 84,000 miles on it, that I bought for $5700 7 years ago with 65,000 miles (new price: $50,000) and which has run like a clock since. Downside: had to do 4 window regulators at 45 dollars each, a chronic failure of that model and others like it (dealer price: 450 dollars – but try it yourself: it’s easy. Bonus: save the old regulators as they can be repaired easily instead of blowing 45 dollars on an off-brand replacement).
    Or maybe I’ll just wait a while longer …

    • Bee says:

      Those Northstars only hold out for so long, robt. Good to hear you’ve had good service on yours though (low miles), as Cadillac was my old favorite brand. I drive the 2006-2011 Cadillac DTS chassis cousin, Buick Lucerne. I’d love a Cadillac but know all of their foibles, which is why I drive Buicks with Buick engines. I’m risk-averse….but those old Cadillacs still light up my eyes.

      • Bookdoc says:

        I started selling Buicks in the Park Ave/LeSabre years. The Lucerne was a lower priced Cadillac with a bulletproof engine. The CXS with the NorthStar V8 was quite a car. We also carried Pontiac and I drove a Grand Prix GXP V8. THAT was quite a car for one that prefers FWD.
        As to now-I retired last year after 21 years selling and managing. The business has gotten to the point that most customers qualify for a set price below invoice deal. The only way to make money is on the trade equity. From what I’ve heard, the loss in trade value on almost everything is killing deals. It doesn’t help that many of the customers have rolled increasing amounts of negative equity and you can only roll over so much. ANY tightening of credit is going to have seismic effects in the auto industry.
        PS. Learn a little about the car business if you are heavy into tesla…

        • Bee says:

          I come from a big GM family, so I know all of those cars well, plus Olds :)
          I’ve been watching the market, too, which is why I read this site—watching, waiting.
          And yes, Tesla also—watching, waiting!

        • RD Blakeslee says:

          We drove a 1955 Oldsmobile (“Rocket 88” engine) for some years and it was considered comparable to Buicks, in those days.

      • robt says:

        One of my most-loved cars was a 1988 Lincoln Mark VII, which I kept for almost 14 years. Amazingly, that 5 liter Mustang engine was good on gas, too, and was really good performance-wise. I got that car for free when it was about 4 years old with 40K miles; one of the boss’s hand-me-downs. I loved the look of it, maintained it well, and used to get many compliments about it from strangers, young and old alike – though I think historically most Lincolns are pretty ugly and awkward, no matter how many years you go back (or ahead).
        Cadillacs’ styling have mostly looked pretty good, compared to Lincoln. And no problem with the Northstar engine – only a few dollars for an oil-pressure sensor, nothing else.
        I think something a little smaller, but still a Caddy, next time. The way the market may be going it may be hard to resist.
        And I did have a Buick once: a 1956 which I got when still a teen – it was about 3 years old. Not as lucky on that one, though.

        • Bee says:

          My father owned a ’90 Mark VII, it was smoother than a Cadillac, as was my late ’90s Continental. Ford’s electronic/electric gizmos were glitchy though, as was their air-ride. This is why I buy Buick. My next vehicle will likely be a Kia Soul type though.
          Have you driven a smaller Cadillac?! Try before you buy.

      • Paid Minion says:

        My Northstar 2001 Seville STS had 203,000 on it when I sold it a couple of months ago. Still running strong. Always had a little bit of an oil consumption problem, but you never say blue smoke out the tailpipes, even under acceleration.

        Of course, I had to fix the head gasket issue at 135,000 (blew after it sat outside on the coldest day of the year). Spent the big bucks for the “head studs” instead of the “helicoils in the block” That and resealing the upper and lower cylinder block halves cost about $4000, but I figured that was cheap vs. buying new/newer.

        My experience tells me that GM put a lot more thought/care/quality into Sevilles than they ever did on the average Chevy or Pontiac. Especially the paint.

        • Bee says:

          So my Northstar comment was right? Unless you find a $4000 repair on it to be made with “a lot more thought/care/quality”.
          My Buick was built right alongside the Cadillac DTS, so not sure about your Cadillac quality comment.
          When I was doing a lot of highway driving (NEVER AGAIN), I finally sold my Pontiac Grand Prix with just under 300,000 miles (same Buick engine)—the only repairs under the hood were a few sensors, never any costly head gaskets or the like.
          GM failed with Cadillac. Cadillac today might be an even bigger joke. Most of their sedans have 4-cylinder engines?! Cripes!

    • Kf6vci says:

      Q: how much would you expect to realistically get for your 2003 model? About $ 2,000?

      I would keep it! I have a 2002 Mercedes “A-class 1.6” with about 100,000 miles. Am the 2nd owner and it’s value? About $ 700. Lovely, reliable car but with noticeable rust.

      For Germany: I see a glut of driveable cars for < 1.000 €. Some are premium cars. In the UK, one can buy lovely Jaguars like a S-type 3.0 liter model from an OAP, 1 owner, FSH, low milels for about 900 GBP.

      Folks can buy a car and break it when they need a new engine or gearbox etc. A friend'S S-class Merc 500 with LPG conversion is immaculate with lots of new parts. He's asking 2,800 €. There is a glut in the low end (price wise) as well. Wouldn't you agree?

      More people are likely to hang on to their cars for longer or to go for a really cheap but nice old car.

  4. BrianC says:

    Phooey on cars… :)

    I bought a Surly Disc Trucker –
    and a Kona Jake the Snake –

    I commute* and do almost all of my errands by bike now. I’m averaging the purchase of ~16 gallons of gas about every 6 weeks now.

    * About 65 kilometers round trip commute. Less if I take the bike on train for some of the commute.

    Bonus – a full set of tools, for bike repair, doesn’t cost much. Plus you can usually look at the bike and *see* what doesn’t work, and then fix it. Good luck trying that with my full size Chevy pickup…

    • alex in san jose says:

      BrianC – A car is almost a necessity in the US, because of the way the towns and cities were intentionally laid out. It was for a number or reasons, from a push to decentralize the population so Russian bombs wouldn’t kill as many, to good old fashioned “white flight” to the huge profits to be made in making a car a “necessary good”.

      So that car prices, new and used, are coming down in the US is really something. In the US it’s not rare at all for people to go without food, go without water or heat, go without almost anything, just to put gas into their precious car and drive it some more. I’m not sure anyone living outside the US can appreciate how “holy” the car is.

      But public transit ridership is up, bicycle sales are up, and with the younger generation, cars are being seen as what really are: A necessary evil, and a huge pain in the ass.

      I live in an area with a lot of immigrants; a lot of what I call first-generation drivers. They tend to be rather awful as drivers, but one thing I notice is that they see bicyclists. They might do really stupid things in traffic but bicycles are not invisible to them, and generally it’s other drivers of cars they get into tangles with.

      The drivers I *really* watch out for are people of Boomer age and older, generally in American-made cars. They either don’t see bicycles (along with ignoring the presence of anything smaller than their boatmobile) or worse, they’ll see you and aim for you. Over the years I’ve had to conclude that people riding bikes actually angers this segment of the driving public.

      Maybe they remember gas rationing during WWII or grew up hearing tales of it. Maybe they associate Americans riding bicycles with some push toward Socialism (remember the Chinese ride bikes! And the Indians!). For some reason, a person riding a bike seems to be an affront to them, as if it’s a declaration that growing up, earning money, and pumping all of it you can into a car isn’t the be-all and end-all of life.

      I’ve been out with riding groups – not racers, just riders – and these types were always trying to clip us. There is no live and let-live, to them it’s a low-level war. Thank God they’re slowly but surely dying off.

      I know a bike can’t take the place of a pickup truck, but you can always hire someone to transport something large for you, or rent a truck from Home Depot.

      • RD Blakeslee says:

        “Boomer age and older, generally in American-made cars. They either don’t see bicycles (along with ignoring the presence of anything smaller than their boatmobile) or worse, they’ll see you and aim for you.”

        I’m 86 – gotten a few of you m’self.


      • Paid Minion says:

        “Boomers and older”

        Wrong. The word is “older”, no matter what generation. Old people don’t see as well. It’s a fact, not some conspiracy. You might as well argue about the sun rising in the east, or the fact that young people always think old people are idiots.

        I can’t wait until millenials start hitting 60, and start hearing from the 20-30 year olds how they are the reason the world sucks.

        As far as bikes, you should thank us drivers for paying for all of the roads you guys clog up, and do it tax free.

        • Ace says:

          Yeah, I was a biker for many years, but a good portion of the bikers on the road in Pittsburgh, where I lived for 10 years, thought the rules of the road didn’t apply to them. And you should see how they deal with people walking on sidewalks. I definitely look out for bikes, but they need to practice what they preach as well.

        • alex in san jose says:

          Paid Minion – it’s cars that clog up the roads, and roads suitable for cars begin and end with bicycles, look up the “Good Roads” movement of the late 1800s

          It’s been proven over and over that bicyclists pay more than their fair share toward road maintenance.

          The sky is blue, old people are idiots, and in other news …

      • thelocalpragmatist says:

        Riding groups…. The problem with groups of riders is that, in many cases, they tend to take up a full lane of travel…I have more than once been behind a group, travelling at 15 mph in a 40 mph no pass zone…a sea of “spandexed asses”, refusing to pull over for traffic, making what can only be a political statement…”we have rights, too”. Well, obstructing traffic brings it own set of circumstances…show some consideration and pull over, or accept the consequences of your arrogance.

        Sorry for the extremely “off Topic” comment.

        • Wolf Richter says:

          It seems you’re uninformed about the traffic code: riders ARE traffic. Like it or not: they have largely the same rights and obligations as motorized vehicles. They do NOT have to pull over to let cars pass. And they have right to a traffic lane (unless there is a bike lane, in which case they have to use the bike lane). There are a few exceptions, for example, riders (similar to slow-moving agricultural implements) aren’t allowed on the expressway.

        • thelocalpragmatist says:

          The issue is not their legality, but their personal arrogance that feels they can obstruct traffic with impunity… it is question of consideration. A vehicle driving 15mph in a 40mph Zone is subject, at least in California, to a citation for obstructing traffic. The incident in question was on a rural road with no turnouts and a double-yellow no pass zone for almost 12 miles…very twisty and curvy. My issue with the riders was not their right to be on the road, but rather their arrogance, their lack of civility.

          As far as being uninformed regarding the traffic code…I was a police officer in another life, in a galaxy far, far away….

        • Wolf Richter says:

          I think it would be very helpful if both sides are respectful of the other and courteous to the other.

          In accidents involving cars and cyclists, cyclists rarely end up killing the driver. However, the reverse is common. And even when cyclists survive these collisions, they end up being injured pretty badly. So the equation is not well balanced, and drivers need to take special care when near a cyclist and give them enough room.

    • vegeholic says:

      27 years ago we bought a house near my work and close to shopping so we almost never need the car. we walk/bike/bus everywhere, it’s cheap, it’s fun, and you don’t waste time looking for a parking place. plus i took a course at UBI in oregon on bike maintenance and frame building so you can fix everything yourself. history will not be kind toward our pervasive obsession with cars. if you wanted a system to use up nonrenewable resources at the maximum possible rate, you really could not improve on our present way of life.

  5. nick kelly says:

    Re: consumer debt. In my small blueish collar city (90K) there has been an explosion of consumer debt advisers that negotiate a proposal with creditors. A typical ad reads: Cut debt by up to 80% without bankruptcy.
    They have billboard ads, bus bench ads, etc.

    Supposedly you have to go through a licensed negotiator with a $1500 fee, but I know a lady who did herself, with some advice from a friendly govt worker (the govt has a site re: program. )
    She got 80K down to 35.
    Step one is to open a new bank account that none of the creditors can access.
    In Canada this program is limited to debt from 20K to 250K.
    Doing it bumps your credit rating down to second lowest (just above bankrupt) but if you stick with program you can emerge in 3 years.
    And after all it is credit that gets people in trouble.

    My point is not so much to sell the idea but to point that this quick cheap alternative to bankruptcy is one of the fastest growing businesses around here.

    • chip javert says:


      What exactly is “a new bank account that none of the creditors can access”? Didn’t know there was such a (legal) thing.

      • kam says:

        “A bank account that no one can access”? In your wife’s or a trusted friends name.

        For a couple- spend your money and have your wife save hers in a separate account. It all depends on the circumstances you have.

      • nick kelly says:

        If one of your creditors comes to your bank and says ‘pay me’ of course they won’t. That could only happen with a court order.
        Most people with high credit card debt have auto debit- the new account stops that.

        BTW: I am advising a relative to go this route. He is a on a pension that can’t be attached anyway and has repeatedly asked for a lower interest rate (at 19%)
        Remember the big slide in interest rates courtesy of central banks?
        None of that went to credit cards. They went to as high as 29 during the big 80’s run up in base rates and never lowered them when those rates plunged.

        Along with the sub-prime auto ghouls- I say f%ck- em.

    • Frederick says:

      The new America Run up a lot of debt then default with the help of some shyster leaving the other guy out in the cold NICE thing to be proud of there Kelly The same thing goes for you crazy loons obviously

      • kam says:


        I don’t believe running away from your debts is a moral action. But “moral hazard”- a soft-ball way of saying high crimes in banking, is right before everyone’s eyes. With $4.5 Trillion Fed Reserve debt and $20 Trillion (plus) government debt it is political leadership that is providing the cavalier attitude that is displayed daily before the American people.
        With ill-gotten money in the hands of a select few chasing interest (rents) on conjured money, they capture people that shouldn’t and can’t pay back the loans.
        Notwithstanding deadbeats.

        • Kent says:

          Financial debt is just a contract between two parties. Morality plays no part. Both parties go in knowing that losses will be incurred if the borrower can’t or won’t pay it back. Profits will be had if it is paid back. No different than betting on a horse race.

    • Kent says:

      Why is that any better than bankruptcy?

  6. RD Blakeslee says:

    I worked in Cadillac’s production inspection department in 1950. Fins were born modest, rounded and low – decadence was yet to come.

    Foreign auto manufacturing had not recovered from WWII yet and Cadillac was the standard of the world.

  7. Lee says:

    So what’s happening in the ‘luxury’ bracket for used car prices? You know the Porsches, high end Mercs , and BMW’s

    Are they being whacked as well?

    We could use some of those nifty falling car prices here in Oz.

    Prices here for both new and used cars are still ridiculous and much, much higher than in the USA. My SWAG is at least 50% more even after adjusting for exchange rates.

    • Vespa P200E says:

      I bought a used 2014 Boxster 2 weeks ago from a private seller. Decided to give myself a nice BD gift.

      Seller paid little under $50k for a certified loaded 2 yr old car shy of 10k miles 9 months ago. I paid little under $40k with 21k miles. Original sticker almost 3 yrs ago was $72k so it lost 45%. I should have waited 6-12 months for a better deal but the price was right and right options so bit the bullet.

  8. David back again... says:

    Wolf, values today are above the 2005 – 2006 pre-crash frenzy and still above historic levels over the past 20 years – values took off in ’11 and came back down in ’16. What am I looking at incorrectly? Looks like a temporary value bubble is deflating – though not yet crashing.

    Debt, on the other hand, needs to stop growing. It is too high. It is more than double where we were in 2005 and yet I doubt overall income has doubled – that means vehicle debt now constitutes a far higher percentage of income than it did pre-crash. A slowing of debt acceleration seems like a promising thing. This debt needs to come down, otherwise consumers will be holding those vehicles for longer period and future vehicle sales (the future just might be now) will be adversely impacted. Those loans have to be paid or written off and if written off those borrowers have to be shifted to sub prime in the next cycle.


  9. rob from london says:

    I for one would like to hear more from RD Blakeslee.

    The stories I have heard from people who worked in the heyday of auto production (wasn’t Detroit supposed to have peaked about the same time as the height of tail fins) are legendary. Re. not buying a vehicle produced on a Friday or Monday etc. It’s no wonder the cars from the mid seventies to late eighties were generally shite. The drinking and drug consumption by the proles on the assembly line was epic.

    • Bookdoc says:

      As I worked in the business, I did get to tour a couple of plants about 10 years apart. The newer one was almost completely robotic with people making sure the machines were running right and supplied. It seemed like about a quarter of the people were on quality control.
      The Germans and the Japanese got a jump on us-they were able to rebuild from scratch and kept improving. Once the American manufacturers roboticized, the quality issues were impressively lower. Buick ranked among the most reliable most of the 13 years I sold them.

      • Paid Minion says:

        This “Germany/Japan started from scratch” doesn’t tell the whole story.

        One of the things found by the “Strategic Bombing Survey” was that tooling could be (and was) protected/relocated. Most of the “bombed out” buildings were “final assembly” buildings. Cheaper and easier to replace than tooling.

        Final assembly can be done (and was done) about anywhere, even out in the woods. Maybe not as efficiently as in a nice climate controlled factory (especially at night or bad weather), but it can be done

        Our factories may not have been “bombed out”, but much of it was “worn out”, thanks to being worn into the ground, with no replacements available during the war. The railroads, for example, went on a buying binge in 1946-49 to replace rolling stock worn out during the war, especially passenger cars. The government scrapped all kinds of stuff acquired during the war, because they knew that pennies on the dollar sales of surplus equipment would kill the sales of new stuff.

        As far as buildings, the money is in the tools, not the building. The Big 3 ended up moving final assembly into many of these formerly government owned manufacturing plants. (Willow Run, Fairfax for a couple of examples)

        (Which shows how stupid the locals are when they sell “industrial revenue bonds”. They end up paying for the tooling and the building, but only hold title to the building. The tooling can be relocated.)

  10. chip javert says:

    rob from london

    Be interested to see your list of high-quality British cars (from any era).

    And if you’re going to throw Rolls Royce at me, I’ll throw Reliant Robin right back.

    ps: I did own a 1992 Jaguar XJ-S, so I have some experience here.

  11. robt says:

    Talking about impacting new vehicle sales: just saw a TV ad for Dodge pickups for 25% off – up to 18,000 dollar discount.
    What’s even scarier is that a pickup truck would list for 72,000 dollars …

    • Bee says:

      I went to coffee with a former coworker recently. This person drove their spouse’s big fancy GMC diesel pickup. “We need something to haul the camper!”
      Spouse started high-paying job and they quickly put a Cowboy Cadillac on payments.

      “My god, these people really DO exist,” I said to myself.

    • Wolf Richter says:

      Makes you wonder just how fat those profit margins are.

      • JB says:

        i am always looking for cause and effect relationships .
        Could the increase in sales of tow-able recreational vehicles (e.g. campers, boats, trailers and the like) keep the sales of trucks strong? I know of cases where a person had to upgrade his truck to tow/launch/load his new boat. Ouch ! look at the chart; midsize pickups had an increase in wholesale value . also aren’t some RV’s built on a truck chassis ?

        • polecat says:

          I’m going to keep driving my moderately beat-up mid-90’s Ranger (paid approx. $6,500 used 12yrs. ago) PU until it kicks the bucket, which, at the current rate of use, will be after I’m dead …

          $72,000 list …. for a Humongous shiny new Status Symbol Pickup !!

          no thanks

        • RD Blakeslee says:

          “…aren’t some RV’s built on a truck chassis ?”

          Actual RVs are. So-called “crossovers” are not.

        • Paid Minion says:

          Lots of people towing stuff around here.

          Nice (relatively) used Dodge Cummins and F-250/350s are still getting huge numbers around here, even with 100K plus miles.

          Along with the people towing hobby trailers, there’s a big demand from all kinds of small businesses/contractors. Even with all of the “funny money” discounts, a new Dodge or Ford diesel is still over $50K.

          One of the reasons I’m divorced is that the ex refused to acknowledge that the cost of owning horses was insane. And got even crazier, if you started looking at the costs to move them around. Forget renting tow rigs and trailers, there aren’t none available when you want to haul them.

          You don’t own horses. The horses own you.

    • RD Blakeslee says:


      My 1995 250 Dodge Laramie w/Cummins diesel (all the raspberries) cost 28K and is low milage for its age – 128K.

      Locals keep asking me if I’d sell it.

      Tell ’em: “Nope! It’ll last me out” (I’m 86).

      P.S. All the raspberries continue to work just fine and have become a blessing for this decrepit old man – power windows, power seat adjust, etc.

  12. Desert rat says:

    “The index is down 7.1% year-over-year and down over 13% from its peak in mid-2014.”

    Since 2014 was the all time peak it sounds like a return to normal to me. This is called price discovery and it is a very very normal part of all markets.

    There are no losers here, except the sub-prime people who want new cars in the next year or two. I don’t know why the continual emphasis on calamity.

    The car companies making the loans are savvy and knew exactly what would happen.

    Cheer up!

    • RD Blakeslee says:

      “The car companies making the loans are savvy and knew exactly what would happen.” – D.r.

      These days? Subaru dealer in Christainsburg, VA (true of other/all Subaru dealers? I don’t know) places it’s loans with J.P.Morgan Chase, serviced by Chase online. I asked the Subaru loan officer (if that’s his title) who pays the interest? He didn’t understand at first, and said (Your loan is 0% interest”) I said “I know, that’s my rate, but ol’ J.P. don’t lend without interest”. He then told me Subaru has a contract with J.P.Morgan Chase which pays them a flat fee per contract. Interesting.

      BTW, I’ve been bragging on my beloved 1999 GMC Suburban – thought she would last me out, too. But she died, so the current glutted new-car inventory and resultant incentive landscape coincided with my need and we bought a new car (first purchase, new or old , in 18 years). Four years, zero interest, everything included, even the licensing and titling fees.
      Why, when I could’ve paid cash? Because committing cash for future payments earns you the deflation rate on your savings that amounts to virtual income.

      • TJ Martin says:

        Its the same out here Colorado way .. the epicenter of Subaru sales . 0 down – 0% interest ( for up to six years ) just sign on the bottom line and drive away in your new Subie … all tied to JP Morgan .

        Honestly of all the current potential #carmageddons this one shocks me the most . As Wolf can confirm just a couple of years ago Subaru was having difficulty keeping their inventory up with their sales .. yet here they are a couple of years later with a glut of inventory .. 0 down .. 0% interest multi year loans etc

        • RD Blakeslee says:

          What’s your point?

        • TJ Martin – On the Subaru Check Craigs List, Almost every Subbie for sale needs a head gasket. Two of our friends have them sitting in their driveway Vehicle Value (Almost equal to) Head gasket job….

          I was also looking at the curve change at the cash for clunkers time period. If it did make a big kick up, it sure seems to have lasted a while before falling…. I’m wondering if CFC was not a factor in the turn up…..?

        • nick kelly says:

          Lots of head gasket issues on low miles. Bro just had one done on Forester with less than 100k- $3000

      • TJ Martin says:

        You asked the question ..

        ” true of other/all Subaru dealers? ” …

        and I gave the answer .. going a bit deeper into the history . Capice ?

  13. walter map says:

    The Bentley is electric, with an engine with only 1/100th the moving parts of an IC engine. It came with an open-ended warranty and could last a couple of million km easy.

    Believe it or not, EVs will soon largely replace ICs on simple economics:

    I’m good.

    • TJ Martin says:

      ” Believe it or not, EVs will soon largely replace ICs on simple economics ”

      Oh really ? – Looked into the cost of replacing those batteries ? – Had a look see at ehe excessive complexity of systems and computers needed to keep on EV running ? – Seen what the manufacturing costs versus the final sales price is ? ( every EV sold today is sold at a moderate to substantial loss ) – Had a look see as to what the maintenance costs on EV’s are in comparison to an ICE ? – Seen what the projected lifespan of ANY EV being made today REALLY is versus the propaganda you’ve been fed [ less than five years / 50,000 miles ] – etc – et al – ad nauseam .. emphasis on the nauseam

      Yessirree thems some might fine ‘ simple ‘ economics indeed .. simple .. as in simple minded

      Suffice it to say on the best of days EV’s are a pie in the sky pipe dream verging on becoming the transportation con job of the 20th / 21st century perpetrated upon an uninformed verging on delusional public making the mistake of thinking they’re helping to solve a problem [ pollution etc ] when in fact the manufacture , purchase and use of an EV only serves to exacerbate the problem … albeit in someone else’s backyard .

      • Wolf Richter says:

        Bet against EVs at your own risk. Just because you close your eyes to them doesn’t mean they’re not real.

        • TJ Martin says:

          With all due respect .. Tell you what Wolf . A gentleman’s bet [ if we knew each other personally I’d be laying a few grand on the line ] I’ll lay odds that in ten years or less [ most likely less ] EV’s will of become a thing of the past , irrelevant and totally redundant . But before you take me up on that bet you’d be well advised to know I’ve got the likes of .. BMW/MINI , Toyota/Lexus , Nissan/Renault/Infiniti , Daimler-Mercedes as well as VW-Audi all in my court … along with I might add the twenty story tall gorilla in the room .. Big Oil ;-)

          Hydrogen Wolf . That .. is the future of the automobile …assuming the automobile has a future that is .

        • Wolf Richter says:

          I worked with hydrogen fuel cells in 2000. They work great. UnitedTech had a prototype bus running on it. But hydrogen is a terrible material for all kinds of reason, including that it must be compressed to insane levels to get any kinds of energy density and that it then seeps through metals and fittings and causes all kinds of problems… And most importantly, while there is a lot of hydrogen, it needs to be broken off from other atoms, such as carbon or oxygen, and this is an expensive and energy consuming procedure. So hydrogen is EXPENSIVE.

        • Paid Minion says:

          “IC will vanish in eight years”

          Let me know where I can place that bet. Even with the PTB propping up EVs every way they can, while at the same time stabbing the IC guys in the back every chance they get (see the bad press on diesels re: exhaust emissions).

          And no, buying Tesla or GM stock isn’t a straight bet.

        • walter map says:

          RE: hydrogen.

          As you know, IC engines have prevailed because the high energy density and ease of transport of fossil fuels more than compensates for their relatively low efficiency. Hydrogen seems destined for applications which allow for bulk storage, say, from generation from excess peak wind and solar.

          But like I said, those engineers are a right clever bunch:

          University of Houston physicists have discovered a catalyst that can split water into hydrogen and oxygen, composed of easily available, low-cost materials and operating far more efficiently than previous catalysts.

          Read more at:

        • Lee says:

          They’ll work great in urban areas with good infrastructure to recharge along with reasonable electricity prices.

          Cities such as Tokyo, Osaka, and Nagoya would be those kinds of cities.

          Here in Oz we have a number of problems that work against EV’s:

          1. The high cost of electricity. Yeah prices are up and going up again. Wholesale prices are up around 25% compared to last year because of the closure of the biggest coal fired power plant in Victoria. Don’t get me started on that subject.

          2. Long distances between the major cities. ICE works in those situations.

          Years ago I did some consulting work on a project for a large Japanese company related to recharging batteries via braking.

          At that time the numbers didn’t add up – way ahead of its time. I wonder if they stack up now?

        • Realist says:

          The most interesting aspect of EVs are the demands they will cause on electrical grid when/if the numbers of EVs will increase. Consider the state of the US or UK electrical grids ….

        • Wolf Richter says:

          Most EV are and will be charged at night (set on a timer, when rates are the cheapest, say, 1-3 AM) when demand on the grid is super-low. Utilities actually love EVs because they create demand when there is no demand.

    • TJ Martin says:

      PS; I forgot to add .. what Bentley EV ? At present Bentley does not offer an EV having only a prototype in the wings they are considering placing into production depending on what future direction their minders ( VW-Audi ) decide upon in light of all of VW-Audi’s recent financial etc ills

      • walter map says:

        Retrofitting is a goodness. Those engineers are a clever bunch.

        • nick kelly says:

          If anyone can split water into hydrogen and oxygen on a NET energy savings, then ALL energy issues are solved. No need for fusion. Just burn the hydrogen in the oxygen and capture the energy.
          But the process whatever it is will use more energy than recombining the two products.

    • Kent says:

      My next car will be an EV (drive a Honda Civic now). This article is accurate in that batteries will double power density in the next couple of years making EVs comparable in performance to ICE cars. Prices will come down as production ramps up and the economics will crush the ICE age.

      But I disagree on the “transportation as a service” thing a la Uber. I live in the ‘burbs and I’m accustomed to the convenience of having my car on hand to go now. I can’t imagine waiting 20 minutes for my Uber car to roll around every time I want to go somewhere. Might work in the cities though, especially for those who can get most of what they want in their hood or use subways. And only need a car occasionally.

      Invest in copper and aluminum. They will be bottlenecks to the mass production of electric motors. Short the fracking industry. They will be crushed as oil prices collapse. Assuming you can wait a decade of course.

      • RD Blakeslee says:

        “I can’t imagine waiting 20 minutes for my Uber car to roll around every time I want to go somewhere.”

        Several hour’s waiting to charge?

        • Kent says:

          With my lifestyle, there are plenty of hours between 9 PM and 6 AM for charging. A little too married to come rollin’ in at 2:00 AM after a night of skirt chasing and drinking.

          But to each his own. I suspect a few ICE cars will still be around for decades that meet specific needs. I have no problem with that. But I expect them to be very expensive as the supporting infrastructure begins to wain.

      • Jon says:

        I drive an EV and you can’t compare the smoothness of cheap EV with an ICE engine.
        My EV is literally free because taxpayers pay for it.

        I can’t imagine driving anything else than EV

        • TJ Martin says:

          Ahhh … but we tax payers will no longer be paying for it . Read the budget proposal in congress . No further incentives subsidies govt guaranteed loans etc for EV’s … so hasta la bye bye … and enjoy the short life of your EV as well as the humongous bill coming your way to replace those Li’s

        • Paid Minion says:

          I guess its a generational thing. You young guys have lived with crap, squirrel in a treadmills cars/engines too long.

          Nothing sounds like a solid liftered, 302 Chevrolet at 6-7000rpm thru four gear changes.

          I’ve owned/driven a bunch of “real cars” over the years. Somehow, the “thrill” of driving a glorified golf cart has zero appeal to me. From the reaction of various 20 somethings around here, it’s not that the car mystique is dead. It’s that the economy has priced them out of the market.

          You will take my Challenger R/T when you pry my cold dead fingers from the wheel. And then, you will have to fight my kids over it.

        • Maximus Minimus says:

          Electricity rates will go up when the EV market reaches say 25%. And night time rates will be no more. The atmosphere will not be cleaner as the electricity is produced the old fashion way. Not that I think it will not happen. Reason has never been a match for hype and hopium.

        • Realist says:

          What will a replacement battery cost ? I suspect that the value of EVs of certain age in the future will collapse. As the car ages, the mileage you’ll get for each recharge will shrink.

      • Maximus Minimus says:

        Bottlenecks to the mass acceptance of EV will be increasing costs of batteries as is already evident by rising prices of lithium.
        But if you are a younger generation, this will be just one scarcity to deal with in your lifetime. Enjoy it till you can.

  14. Bobber says:

    I don’t know why we have such attachment to cars. When I buy from a person in the used market, I always compliment their car, look them in the eye, tell them I’ll take good care of it, and then they always agree to a price way lower than anticipated. I keep my word about taking good care of the car.

    People like knowing their cars will be cared for, even when they don’t own them anymore.

    • Paid Minion says:

      There are a lot of memories tied up in our cars.

      I’d never have met my (now) ex-wife, and my three daughters wouldn’t be here, were it not for the car I owned in 1977. (Long story, but true). Did a lot of “road trips” and “exhibitions of acceleration” (legal and illegal), met a lot of people who are still friends because of it (in the Land of the Chevy, the Mopar guys had to stick together).

      Sold it in 1984, to my everlasting regret. At the time, there was going to be a better/faster “replacement” that, due to the demands of domestication, never seemed to happen.

      I’d sacrifice a bunch for a chance to get it back. For starters, i’d do all the things to it that I wanted to do in 1977-84, but had no money to do at the time

    • T.J., not TJ says:

      Pssst… We were going to take less money, anyway. We just want to split the difference between the dealer trade in and dealer sale price.

      – FSBO car seller

  15. walter map says:

    From the London Financial Times: ‘The Big Green Bang: how renewable energy became unstoppable.’

    In other news, the CEO of Royal Dutch Shell, Europe’s largest company, declared in a recent speech that the transition to a low-carbon economy is not just “unstoppable.” It is a necessity that “must be embraced”.

    One more. Last month, Denmark’s Dong Energy, the world’s largest provider of offshore wind farms, won a German power auction without needing any subsidies.

    Renewable energy naysayers are invited to place their bets.

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