Wolf Richter with radio host Jim Goddard on This Week in Money, discussing post-hurricane new- and used-vehicle sales and how to deal with “flood cars” that will be showing up everywhere for years to come. The development of self-driving cars has stirred up enormous activity, but when can we finally buy one, if ever, and what might it look like on the inside?
Starting in mid-November and going through the rest of the year, General Motors, hounded by overcapacity, will close its Detroit-Hamtramck assembly plant and lay off about 1,500 workers. When the plant does resume production, output will be cut by 20%. But some other automakers are doing just fine selling cars. Read…. GM to Lay Off 1,500 More Workers, as its Car Sales Plunge Twice as Fast as Rest of Industry
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You know what people are buying less of? Cars.
You know what people are buying more of? Bicycles.
Public transit ridership is way up too.
A record of 40+ million used vehicles and probably just under 17 million new vehicles will likely be sold in 2017. So that’s still a lot. But yes, compared to prior generations, many urban young people have not yet acquired, and may never acquire a taste for vehicle ownership. And why should they? They have many other options available.
That said, millennial neighbor-girl, who buys everything online, owns a BMW.
Wolf, from my millennial point of view, I would say that the the problem is not that we do not have a taste for cars. The problem is that we cannot afford to buy one.
That’s like the retail decline: MSM will say that we are seeing a cultural change, but no. We are seeing consumers that are way to stressed (financially) to consume.
In my case I do own a car. I managed to buy an used one, free of debt after having been saving for a whole year before leaving my parents’ home.
Anyway, the point being, we have not lost the taste for ownership (car, housing….) it is just that we have already too much debt, crappy jobs and bleak prospects.
Exactly. I hear all this tosh about millennials not interested in owning stuff and are driving a sharing economy. So the desire to be surrounded by your possessions, in place for generations, has suddenly in one generation been snuffed out Complete nonsense. As you say, they have either no job, a crap job, low pay, student debt, extortionate house prices and rents so they just can’t catch a break. If they ever get up the ladder they will want stuff just like before.
“I managed to buy an used one, free of debt after having been saving for a whole year before leaving my parents’ home.”
And that’s SMART. We have gone from a save for purchases before buying with the exception of very expensive items like homes to a borrow for everything and pay someone else a unproductive skim on the economy called “interest” because we can’t delay gratification. It’s the financialization of everything.
Want to reset this messed up system in a way that governments and central banks won’t be able to paper over without destroying their currencies through massive devaluations which would then FORCE the Darwinian bankruptcies that are an essential part of free market capitalism? GET OUT AND STAY OUT OF DEBT as much as humanly possible.
The Undebtors: Sworn Enemies of the Vampires of Debt
http://www.oftwominds.com/blogmar15/undebtors3-15.html
For the bottom 30%, a car/truck/van will be on its last legs and will likely be something you drive little, and live in a lot.
http://www.oregonlive.com/pacific-northwest-news/index.ssf/2017/10/central_oregons_housing_crunch.html
Yeah options like, their legs! And bikes? I’v owned/operated a high end (German, Italian mostly) service and auto sales center two decades. Just in the past two years we buy up almost anything fixable at Mannheim. Why? To help out cash-strapped, student debt laden, millennials get into a car. Any car. Sometimes we carry the cost for them if it someone we know.
Millennials have no money leftover after paying their student loan payment and Portland area rent.
47,000,000 owe about $1.4 Trillion outstanding. The is 13% of the population owing and average of 30 grand. And of those what percentage are millennials? Maybe some of these would have “acquired a taste” for the finer things in life (a basic car) had they not been suckered into the higher-educational racket of the Obama administration. And you’re talking self-driving cars? Pipe dreams.
Obama is not to blame for the education racket; that goes back to Reagan at least and whoever was in charge when student loans were made immune to bankruptcy, which is probably unconstitutional.
Regarding student loans – it has been said that a substantial number of the student loans are fake – that as a result of some kind of scam student loans were granted to people who do not exist…. ?
In Australia some young people are moving out to the country where living is less expensive & setting up a workplace & residence.
In today’s world one can work from almost anywhere – set up shop from almost anywhere.
It could be that this generation of kids reclaim country towns & make them viable city’s again.
Hey Wolf…how about an update on the Fed’s balance sheet. The Oct. 25 numbers are out, and it appears they reduced the mortgage holdings about $5 billion during the week, BUT the balance sheet actually INCREASED for the month of October so far (only one trading day left). Maybe they’re planning a big Halloween blowout!!!!
I’m going to wait until the results are in for the Oct 31 maturity of $8.5 billion in Treasuries the Fed holds. The question is: will the Fed roll over all $8.5 billion (and there is no QE unwind) or will they all $6 billion of them to roll off the balance sheet, which would signify QE unwind is underway. This is going to be the biggest test yet as to whether the Fed is going to do what it said it would do. This should be known in early Nov and I’ll write an update on it.
When a self-crashing car crashes into something, who gets sued?
The ‘owner’ of the car?
The manufacturer of the car?
The software company/companies?
The government, for allowing self-crashing cars?
(Trick question, of course – everyone gets sued.)
I wonder that if these systems are viewed as self-programming artificial intelligence systems, will each individual instance of a self-crashing system itself bear legal liability independently of other parties involved in the inception of the system?
“When a self-crashing car crashes into something, who gets sued?”
Another question: if the choice of your car is to plow into three people on the side of the road or head-on into an oncoming tractor trailer (semi) truck, what will it chose for YOU?
Also, our infrastructure is already wide open to hacking attacks. Imagine what it would be like if the first vehicles to go driverless, cargo trucks, are so attacked. How many days can a city and industry remain functional and fed without trucking? What would happen if private vehicles were hacked and started running off the road or into each other?
It will chose the one with the highest insurance payout for it.
Almost all modern cars are “fly by wire” — steering, acceleration, brakes computer controlled already. It doesn’t necessarily take self-driving features to make them hackable in the way you describe.
Right now wealthy nation-states probably have the ability to hack cars to assassinate people. I don’t think criminal hackers would be interested unless they find a way to make money crashing cars. It’s probably too sophisticated and expensive an attack to be within reach of “for the lulz” hackers.
Sue Citizens United. Because money = votes.
All this talk about self driving cars and yet no one in the last 2000 years or so could improve that most basic of things i.e. the umbrella. Every time I go out in a hard rain, it’s guaranteed I will be soaked even though I have an umbrella. Perhaps everybody else does not have the same problem?
Ok, ok, that’s a bit of a side trip. Here’s the thing though I think true self driving cars are still very far in the future. Forget America. Americans are poor drivers. If a self driving car can navigate roads and congestions in 3rd world countries, then it’s mission accomplished, otherwise it’s just more BS.
Here’s my prediction: true self driving cars would exist the same time the umbrella problem gets solved.
When I taught my daughters to drive I set up a road course with cones in a huge parking lot every sunday. Emergency stops, emergency lane changes, reversing through cones, forward through cones, emergency swerves. Only when I felt they understood the dynamics of a car in an emergency situation did I allow them to drive on the road with me.
Drivers Education is complete TRASH in the USA. So not all US drivers are bad.
P.S. please please please only use the left lane on the highway for PASSING. Drives me batty when someone sits in the left at the speed limit……one of the MAIN causes for accidents. In Europe the aggressively enforce passing lane laws.
Yeah, they are pretty good about staying out of the passing (fast lanes) it in Europe. Esp. Germany on the autobahn. Except for Italy, and all those ridiculous tunnels and zillions of semis on the road.
I’ve was passed more than once, while doing 120mph, right outside Dortmund, Germany. Guy had to be going 150 or faster. German freeways are the best.
In general, people do not understand physics. Next time you’re on the freeway, see how many people are tailgating.
Americans drive like S**T. I was a professional driver for years, and it is much worse now than when I was working. Giving every driver a cellphone is like giving them a pint of bourbon. Then the computer dash console with all those standard dead end menu options. Oh wait how do I get out of this? Half the world is on some kind of med that they can’t tell the brake from the gas and once you get old and lose your license you are finished.
To drive and survive you better have a dash cam and backup cameras to show you where that speeder cutting in and out at 80 mph in the truck lane is about to speed into your blind spot. I have just about given up driving because I want to beat the hell out of these people with a stick.
I’m not sure that I agree that Americans are intrinsically “bad drivers” but I do feel that attitudes to cars and driving in the US leave a lot to be desired.
I was told that at one intersection with traffic lights in the US CCTV cameras were fittted to catch drivers nipping through the red light, resulting in hundreds of traffic tickets. After a few months the cameras were taken down because they interfered with the rights of citizens to live without surveillance.
Whereas in the UK, one in three drivers has been given a ticket this past year for violating a traffic rule, most of which are handed out because of evidence from CCTV cameras.
Ain’t it awful? Yes, but deaths through traffic accidents in the UK are 5.1 per 100,000 vehicles, in the US 12 per 100,000 vehicles.
Regarding traffic accidents in the US vs UK, it looks like US drivers drive about 2.5x more miles per-person than UK drivers so the accident death-rate in the UK seems to be a bit higher when looking at miles driven.
I’m not saying US drivers are better, in my experience, they’re not.
Also, regarding the red-light ticket cameras. Yeah, we get a bit uppity sometimes, I actually stopped visiting a local shopping district when they installed ticket-cameras. I don’t think I was the only one because they didn’t last long.
Move to Australia and see what the traffic fines are like and you’ll wish that you’d never seen them.
The police here are so busy getting revenue from traffic offences that they can not be bothered with coming out for other crime.
Speed limits can change from 40 to 50 to 60 in a short distance. We have 40 kph zones for school areas that are permanent, some only during school hours,and others only during times when school is in session. Some schools start at different times during the year too.
Talking on a mobile phone while driving is a $500 something fine.
Too many foreigners that don’t know how to drive. Melbourne is so crowded now that there are many cases of road rage.
I thank someone every day type I don’t have to drive anymore to for work.
Traffic tickets are extra tax on the stupid and impatient. I don’t get tickets not because I’m particularly concerned with the letter of the law, but I hate allowing state and cops force extra tax on me. I understand they are necessary to stop bad drivers, but plenty of time cops give ticket not because someone has driven bad, but cause either they have quota to fill or they like the taste of the commission they earn from each ticket.
I didn’t say “Americans” are bad drivers; I said “humans” are — including the fact that we go blind at night, in snowstorms, in fog, when it’s raining hard, etc., while other animals are better equipped to deal with these conditions, and instruments have long ago been able to “see” under those conditions. Then there are individual human weaknesses, such as fatigue, distraction, inebriation…
“Yes, but deaths through traffic accidents in the UK are 5.1 per 100,000 vehicles, in the US 12 per 100,000 vehicles.”
Correlation does not prove causation. You need to show the figures prior to your widespread camera installations and after and even that won’t be adequate as there are all kinds of other factors which could explain variations in traffic deaths.
As a child, I was promised a flying car(1) around first quarter of XXI century , not a fuxxxxg self-driving car.
(1)Blade runner,Back to the future etc
Selfdriving cars, I wonder how they perform during winter conditions with snow and ice, road markings invisible etc …
They’ll be testing and fine-tuning them this winter in the northern US under wintry conditions.
LIDAR and cameras can’t see in rain/snow, and current technology does not allow robot cars to operate solely on radar/ultrasonic sensors.
Also, accumulated snow will create road conditions/contours that conflict with collected 3-D map data.
There will be no ‘fine-tuning’ under these conditions.
Radar can see just fine in snow and rain, so can infrared cameras and other methods. But humans cannot see in heavy rain and snow, no matter what. And they still drive in heavy rain and snow.
Before self driving let’s have automatic speed limit. Your car knows what road is on from sat nav, is told the limit, that’s it. Perhaps a 10 mph leeway but no more.
Bring down excess speed and so goes down the death rate even if a human still drives.
Also makes it easier for the cops to catch miscreants.
Great idea!
Great idea, but traffic tickets are a great source of revenue for state; they want to violate the law so that the revenue stream would continue. Think about it, when you get $600 fine, it’s almost pure profit for the state.
Enforce them for politicians too. They put low limits to fine everybody and ask their driver to speed in the exactly same spots. That disproves the safety argument completely. The argument that a politician has a lot of work to do does not cut it either.
I don’t know how you sell self driving cars to drivers who won’t use cruise control.
I’m curious of the pricing on the self driving cars. Anyone know of any estimates out how much this will add to the price? Or if these will be different models altogether? If a camry is $30k, and $35k for self driving I can’t see people doing that. Especially in this environment. What I imagine is mostly commercial applications?????
Asia’s population will surge by another billion people over the next thirty years. Obviously….there will not be tens of millions of new privately owned cars plying the roads in the dozens of newly rising megacities (of 10+ million people). Self-driving vehicles and fully integrated automated mass transit will revolutionize urban planning and reduce pollution. That is the only solution, and it’s happening right now. The first mass deployment of automated vehicles will take place in Tokyo during the 2020 Olympics, spearheaded by Toyota. The future, as they say, is now.
You’ve never been to Tokyo do you? The future arrived there a long time ago. It’s called a highly efficient train/metro system that carries at least 20 million people daily. It’s not clear how let’s say 5000 cars will make a dent?
The US likes to “think big” i.e. Hyperloop, self driving cars, etc, etc, but they can’t even make the small scale SF Muni work reliably.
Common refrain at SF Muni station: “That board’s been saying that metro line x will arrive in 5 minutes for the last 20 minutes”
That just doesn’t happen in Tokyo or any of the East Asian big cities.
Deep State loves the concept . Already modern cars record driving parameters, letting the vehicle “testify” in court against the person driving it.
Even better for our Totalitarian Oligarchy, central controlled vehicles will be able to be “turned-off” if our wonderful rulers decide there is “civil unrest”.
Or turn off the individual cars of “political undesirables” etc. Love it.
Americans were sold the ‘middle class’ fantasy of home and car ownership…only now it has turned into a nightmare of unafordable lifestyle and debt. A new paradigm is needed.
“turned into a nightmare of unafordable lifestyle and debt.”
“A new paradigm is needed.”
And automated cars won’t help either of those, simply CHOOSING to stay out of DEBT will. It’s called personal responsibility for one’s own life.
And marco is absolutely correct that things like automated cars which can track everywhere you go and can remotely be prevented from going anywhere are setting us up for the physical side of what Snowden defined as something we already have on the Internet side – a turnkey tyranny. Add to that the remote shutting off of your ability to pay for anything in a cashless society. A few smarter than usual people are even getting concerned about things like facial recognition in iPhones:
New iPhone brings face recognition (and fears) to the masses
https://phys.org/news/2017-10-iphone-recognition-masses.html
It hasn’t been an unafordable nightmare fantasy for this American.
I’ve just had to plan my way out of the city, live in the country.
The old paradigm works very well, for those who apply the real estate truism “location, location, location”.
When wil we be able to buy autonomous cars ?
When the infrastructure across the nation is in place and Ai has reached a level where autonomous is actually viable versus public transportation rather than a technology for technology’s sake novelty
And when will that happen ? Assuming the present realty … just about the time that hell freezes over .. which by then will be too late
Ford “beats” on earnings based on sales of “massive trucks” most of which require years of financing. What happens if “non-performing loans” on those six-year loans becomes an issue as our oligarch-pillaged economy goes deeper into recession – especially if a new conflict in the Middle East causes oil (and gas) prices to surge?
https://news.thestreet.com/independent/story/14361021/1/ford-surges-on-q3-earnings-beat.html
Ford’s global sales inched up 1% in Q3 year-over-year. GM’s global sales fell 13%. Nothing to write home about.
As long as self driving cars are so depending on the Cloud, using them remains a risk Remember we are in 2017 the year were EVERYTHING got hacked. Either they start to make self driving cars really safe or hacking scandals will make it so even idiots who thought investing in something like Juicero was a good idea not go for this.
There are many unanswered questions. I spent 25 years in technology–including defense including electronic warfare advanced programs and a broad smattering across the spectrum (including star wars) on the Armed Services Committee, materials, software and the internet including information security. This has not even gotten close to passing through Murphy’s Law like most systems. Cars are already fragile enough but they are self reliant. Someone mentioned hacking. This is a huge problem. Another is if someone wants to take out, or threaten to take out GPS. That will be cornerstone. Say North Korea threatens to take out GPS satellites? Then what do you do? Just the threat alone would cause us to hugely vulnerable. Or how do you drive on a farm or off road. Many people like Wolf and Mish talk about this as though it were some panacea, but as Prof Gordon observed in The Rise and Fall of American Productivity, we are past most of the real productivity improvement that really did something and that is why productivity growth is so dismal. this will have many less benefits than are thought, but it is forced on us like Obamacare. It will be difficult to make it incremental, not all at once as any huge technological improvement that provides real productivity should.
Why are we doing this? Because tech companies can tout and pretend to sell a bunch more chips, cameras, AI, etc and it raises their stock value, but what do you get? One thing the government gets is total control of people outside of their homes. And if you note in the Bay Area, for example, the diamond lanes are going to be made open for other Fast Track so that the wealthy can benfit more from networks that should be for everyone with equal access like power and sewage systems. And the government will be able to shut down whatever and whoever they want and let whoever they want go ahead.
I was waiting to come into SFO once from San Diego. I was sitting on the ground for 5 hours because Barack Obama decided to do a fund raiser in SF. SFO was essentially shut down. They can do this to freeways.
It is somewhat counter-intuitive, but my take is that most city-dwellers will NOT be buying cars anymore, once autonomous vehicles becomes conveniently available for hire using your mobile phone.
Uber (human) drivers will give way to AI-driven vehicles and it will be far cheaper for city-dwellers to use on-demand Uber transport, rather than pay for petrol, insurance, maintenance costs, parking costs etc. of car ownership in the cities.
For those in the suburbs or far away from mainstream cities, they may still purchase their utility vehicles and trucks to get around, but clearly, this segment is only a minority in all the developed countries.
It therefore stand to reason that the entire private car vehicle industry will soon have their equivalent of the Minksy moment and be following in the footsteps of the recent oil crash.
Transportation is a service, you don’t own you rent, and you only pay for what you need, (just like Cable was supposed to be) My grocer wants to deliver, Home Depot wants to deliver, Amazon wants to put me on the drone flight path. I can get a van ride to the MD, a shuttle to airport. Some people consider a day stuck at home a punishment, but attitudes change.