Wolf Richter with Jim Goddard on This Week in Money:
A wide ranging interview on the auto industry.
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Simply put, people don’t switch cars every year and the industry had been pumping cars as if they did.
Pay cash for low mile (80,000), ten year old vehicle by owner.
Drive until it falls apart.
There is no such thing as a low mile ten year old car, the car has just been driven so much the counter reset and started again. Or it has been tampered with.
Oh, I dunno … have a 1995 Ram diesel truck that had only seventy some thousand miles on it in 2005 (including three trips to Alaska and back).
It now has about 127,000 miles on it and I get unsolicited offers to buy it, quite often.
Every time I grab a load of lumber at a local Mill Sales one of the yard guys says he wants to buy my truck, or one just like it. It is an ’86 Toyota PU with about 200,000 miles on it.
It should be good for another 200,000. I have spent, TOTAL (including a complete body rebuild) $10,000 on it. That includes purchase price, maint, the rebuild, and tires. I could use another windshield and an exhaust rebuild but I am not spending any more on it as the frame is getting dodgy.
My son, with his near new F 150, spends more on maint than I do.
Easy math, for sure.
I’m driving a 2005 Ford 500 that will hit 90,000 in another week or two. I bought it brand new so, I know the mileage is legit.
I saw a 2004 Oldsmobile LeSaber in the Atlanta area with under 40K miles. Sticker price was 5750. Perfect used car with GM 3.8L V6. Lots of good used cars out there.
if you are brave and good with a wrench, you can pickup cars like that for under $1000. go to copart.com and bid. you can filter the auctions and look for donated vehicles. people give away cars to charity when they are liquidating estates. this is where they end up. i’ve seem many a senior citizen special go for the minimum bid.
The only thing that’s safe as milk about used cars is buying them cheap, cheap, cheap or better yet, having people pay you to take them away, then parting them out on Ebay etc.
The average person cannot afford a car. The average person, in 2018, may be driving a car. But the average person cannot afford a car.
Patently false! A year ago I bought a 11 yr old Honda with 75,000 mi. CarFax picks up everything maintenance related, and the car’s odometer readings on CarFax tracked the seller’s driving at 6,000 – 8,000 miles a year. Plus she had receipts for all the oil changes and other service.
There are lots of honest people that sell their used cars. I paid $5,500 for the vehicle and have been very happy.
Think about that for a minute–“the counter (odometer) has been reset” by driving. That means over one million miles. I have driven several cars up to 200K miles that could have made it to 400K, but not 1M. I don’t think resetting the odometer is as easy as it was in the analog days. (Wolf should comment on this, having been in the business–the car business, not the resetting business). There are also other telltale signs such as wear the brake and accelerator pedals that tell you if the mileage on the odometer is suspect.
I have seen many low mileage 10yr old cars. My mother had a 7 series BMW that had about 60K miles, and it was 15 years old, and in perfect condition–she drove it about 15 miles per week for the last 10 years. The stories vary, but for whatever reason, the owners just didn’t use them that much. You have to some searching to find them, and luckily there is not much premium to pay for the low miles due to depreciation in general. The last new car I bought was in 2003, and only used cars since then. I check with the oil change people to make sure the owner did regular service, and have saved thousands over the years. The only problem is that when my car gets to 200K miles, there isn’t much market for it, but I am still financially ahead.
As other commenters have pointed out here, odometer fraud is very difficult to pull off if the buyers pays attention and gets a CarFax on that vehicle (which should be the minimum anyone does before buying a used car).
There are many security features built into modern odometers that make tampering very difficult as well.
But of course if you buy a very old car, something like a 1980 model, all bets are off, and odometer fraud is likely one of the smaller issues you might face.
OK, I will pile on too.
I just sold a 2003 Toyota Camry with 98,000 miles on it.
Just went through this process, and I concur, if the owner didn’t drive there is probably a reason. There is also the misconception that low mile cars are less likely to have problems, while many things, seals and gaskets dry out from lack of use. A car with a lot of miles, esp one owner, reflects positively.
I just paid $5,000 cash for 2005 Toyota Highlander 4wd with 82,000 miles. It’s already broken I with a dented front fender ;-)
> with a dented front fender
The technical term for that is ‘patina’
Get real. Most guys do not want their wife or daughters to be driving a ten-year-old car. In addition, you have no way of knowing how well that car was maintained.
I let my wife drive my nearly 13-year-old 2006 Malibu with 162,000+ miles on it.
Depends on the wife.
God, what a great comment.
LOL. The 1950s called and wants their hysterical men-children back!
You sir, have obviously not met my daughter. A 10 year old car is the only solution, since although not a reckless driver, she never washes or otherwise maintains the car, and it is covered in minor dents and scrapes from poor parking skills, mainly obtained in our garage and driveway. She considers her driving skills to be excellent, since her only wreck was a minor fender-bender–after backing into my car in the driveway.
18 wheelers used to talk about “Harvey Wall-bangers on their CB radios.
You got a “Helen (?) wall-banger”.
Thanks for the insight, my daughter is just completing driving school and will be driving one of our cars shortly. I’m now thinking the 16 year old Honda should be the one. Her other choice is the 8 year old Nissan but since it’s less than 10 years old the wife still has possession…………..
2006 Lincoln Town Car.
80,000 miles of 400,000 possible
$11,000 in 2014. New: tires/brakes/fluids
Have not spent one cent on repairs.
No Electronics junk and real bumpers for this vintage.
Not sure but thinking an alternative strategy is to buy 3-4 year off lease vehicle with lower mileage, i.e. be the 2nd owner for 3-5years while depreciation rates are much less than first few years . Avoid being the 3rd owner because maintentance cost ramp up. Avoid fancy electronics due to obsolescence and maintenance cost.
2005 Subaru Outback purchased new and financed for 3 years
205,000 miles and going strong with not a speck of rust.
Of course I’ve just jinxed myself with this post. Probably won’t make it home from work~!
This can work if you knew the former owner and they can document oil changes. But you are probably referencing older 90’s, early 2000;s Toyotas or Hondas, possibly cars from the 80’s or 90’s with OBD I emissions systems- much more forgiving to pass emissions. On the whole an earlier car was better made, and less emissions and safety oriented (your purchase $ went into making a better car).
Also if someone doesn’t live in the Southwest then corrosion is a major factor.
Today’s cars have complex emissions systems and an older vehicle may need a new Catalytic converter ($2000, must be original OEM to work right), providing you can find a legit mechanic. Struts are now made cheaper, everything is made cheaper today and you may need to invest many thousands to maybe get a ‘newer post 2005’ car to work right.
If you want to know why cars are getting crappier, well that’s probably due to a collapse in profit margins due to automation, as well as all the emissions and new safety features, fuel efficiency.
“If you want to know why cars are getting crappier,…”
We have a car that we bought new 11 years ago. It now has about 130,000 miles on it and is in mint condition. I’ve owned cars all my life. The worst piece of crap I owned was my first car, a ’68 Mustang which I bought in 1976. It was only 8 years old and had 80K on the odometer, and it was falling apart. Every generation of vehicle I bought was far better quality and lasted far longer than the prior generation. This is borne out by industry data that shows that the average age of the US fleet continues to rise as people like us keep driving their vehicles longer and longer because they hold up so much better.
wolf is right but newer cars are a nightmare for diy repairs. a vw beetle will run forever bcause all the parts are still available and you can rebuild it in your driveway with hand tools. a modern vw golf, not so much.
My nephew is an automotive engineer in Detroit, and has been for almost 20 years. He works for a prestigious electronics parts supplier, and ran a testing division for years. When I asked him a few years ago for a recommendation his reply was that all modern vehicles are of very good to excellent quality and owners should expect them last many many years with regular service.
I paraphrase: “There are individual lemons and the occasional nightmare story, but on the whole they don’t make a ‘bad’ car these days. They are all dependable and reliable”.
(This was before Diesel makers like VW got caught).
I’ve lived all over the USA. Cars last forever in California, so your experiences with long lasting cars are not unusual.
It’s the dry heat ( and it’s why they store airplanes in the desert).
True, I never owned a car in a region with harsh long winters. Sea salt yes. My car ownership states include TX, OK, VA (Arlington), and CA.
BTW, we don’t live in the Mojave Desert but in San Francisco, where we’ve experienced “dry heat” for only about six days over the 11 years we’ve been here. We don’t even have AC, though we’re tempted to turn on the heater in July and August :-]
I had my Saturn for 16 years…..! With nearly 300,000 miles… and they just don’t build them like THAT anymore……..
Well yeah, they don’t build Saturns at all.
Was it an 03 Ion? I bought one for something like $11000 new when I first came to the Bay Area. I don’t even think I had to make my first payment until 1-2 months after driving it off the lot.
The DMV sent me a letter eventually saying that since I owned a 1903 auto, no smog test was necessary.
It was a good, functional, car. A Toyota Matrix would have made more sense, but the Toyota dealership on El Camino in Sunnyvale just gave me ‘tude while the Saturn place gave me a deal.
My 2012 Audi A6 just turned 40K miles this month. The dealership sends me email asking if I’d be willing to sell it. I think I’ll keep it another 6 years.
This “We’d love to buy your car” message is the oldest trick in the book. They’re not really interested in buying your car. They’re interested in SELLING you a new car, and trading you out of your current vehicle. Every sale counts. And these things work :-]
We did the same thing — and got regular “We’d like to buy your car message,” first from the dealer where we’d bought the car, and when that dealer disappeared, from a new dealer that had popped up elsewhere…. which tells you that these notes are generated by the manufacturer’s data base, not by the dealer’s data base. And our vehicle isn’t an Audi.
Wait the 6 six years, our primary car tuned 8 and I stopped getting these anymore.
There are a couple of things that I’d like to highlight from the audio.
1) Could the subprime troubles in the US and the “asynchronous growth” in real estate markets around the world signal the start of a long delayed normalization in credit markets? After all even the ICE BofAML Euro High Yield, possibly one of the most telling indicators of financial repression, started to go up last year well before Italian politics could be blamed for it.
Personally I still believe we are looking forward to a lot of air hissing out of the credit bubble at a steady if unspectacular space instead of a single massively disappointing explosion, which given the size of malinvestments that have been accumulated worldwide could last years or even over a decade with periodic accelerations or even a few occasional reversals.
It will be interesting to see how it will impact some industries that have grown dependent on artificially low debt servicing costs, such as commercial fishing and automotive.
2) I have come to believe electric vehicles (EV) have hit a wall when it comes to batteries. This is not so much due to performances: performances are not merely improving but charging times are getting significantly better every three years or so. This is due to costs: high performance batteries are getting more expensive, not cheaper.
EV prices remain not just high but are growing, especially where the new generation of batteries are used.
As the old saying went, you get what you pay for.
EV batteries are getting much cheaper.
Current batteries cost around 25% of what they did back in 2010.
Which vehicles/manufacturers are these?
Nissan upgraded the eNV200 electric van for MY2018 with a brand new 40kWh battery designed and manufactured by AESC (the Nissan-NEC joint venture) which, they claim, should increase range by 75km.
However this also resulted in a €2000 price hike due to the new battery being much more expensive than the previous one.
I have no doubt older batteries are getting cheaper and cheaper: that’s the norm in any industry.
But who really wants the older designs, apart perhaps from fly-by-night Chinese companies manufacturing EV’s for the domestic market?
And there’s another thing at play. Ouside of the usual non-entities paying to get some good press, the market worldwide for EV and hybrid batteries is completely dominated by ten companies, all of them from East Asia.
The top three companies actually account for 73% of all EV batteries sold worldwide, China included, and the largest company alone (Panasonic) owns 45% of the market.
This is hardly conductive for price shocks across the industry, no matter what image Japan Incorporated wants to convey.
Americans have been brainwashed about car maintenance just like they have been brainwashed about health care costs. They think they should never pay a dime for their own health care and never put a dime into car maintenance.
I have a 1996 Toyota Camry Wagon with about 150,000, bought new and a 2001 Lincoln LS with 120,000. bought used with about 30k.
Both garage kept their entire lives look better than most cars on the road just a few years. To be fair I have always worked from home, hence the low mileage.
The Lincoln is by far the higher maintenance vehicle. The Toyota, for the most part, is maintenance free.
The Lincoln looks new, runs great, rides great and was one of the safest platforms, along with the older Volvo S80 ever built. I bought the Lincoln because at the time my son, grown now, was beginning to drive. I wanted him in a tank, regardless of the poorer than average record of the mechanical build.
I have to laugh every time I take the Lincoln in for something the average person would consider relatively major. The last problem was an 800.00 leaky valve cover gasket. Admittley not an easy job on this Jaguar ripoff engine and he probably hated to do it. My mechanic says you should get rid of that car, Ford made them disposable. I hate for you to put more money into the car than its worth. lol, really? I just say to him I’ll think about it.
This shows the brainwashing, even of mechanics. What is this Lincoln worth, in reality? What would it cost me to replace it new? 40k? If I bought used what problems would I be fixing on the used car a year down the road, two years. What about all the depreciation?
What would it cost me to replace both of these maintained cars? 70k, 80k?
Even if the engine blew in either car I can right down to the junkyard near me and have a used engine with some warranty attached put in for 2 o 3k. That’s less than a years worth of payments on a new car which most people are now paying off in 7 years.
The junkyard? Really? How embarrassing. Maybe, but my bank account is never embarrassed.
Americans have been brainwashed into thinking cars should never need anything done to them, never break down, and if they do and it costs money, its time to trade them in. They forget there was a time when engines were rebuilt every 30,000 miles, flat tires happened endlessly, kingpins needed changing on and on. A car took care.
Granted, if you trash what you own, never change the oil, fix a dent, wash it, let the power steering pump leak, dont fix the broken shock, drive bald tires, etc etc it may simply become cost prohibitive to fix everything when all the bills hit all at once.
But, if take care of the car you purchase, know exactly what you have done to it and have into it, when something breaks fix it, there is no reason with the technology of the last 20 years ago a car can’t last your lifetime.
PS, in just 3 more years I will be able to register the Camry as an antique and insure it as one. The savings will mount…….lol.
I thought the LS used a variant of Ford’s Modular engines. Also, $800 for a valve cover gasket? That’s a little on the expensive side.
I guess one effect of the so-called “skilled labor shortage” is that there’s a lack of cheap mechanics, driving car repair prices up.
The Lincoln LS shared the same Duratec 30 engine with the Jaguar.
as a guy who drives a 1993 vw van with 270k+ miles, i have to agree.
Do you remember when you checked the oil every gas fill and were surprised if you didn’t need to add a qt of oil every thousand miles? I do. My ’86 doesn’t even need the oil checked and never burns any. But I check anyway, at least every 2-3 weeks. :-)
When I flew piston aircraft for a living I checked the oil every flight. A DHC-2 burns up to 1 gal of 15-50 per hour. We filled them with gallon jugs. A 5 hour trip required a few jugs into the sump, and they were designed so that you could check and add during flight if need be.
Cars are more than reliable. They are bloody marvels and we take them for granted.
Want low mileage cars? Shop at senior centers, retirement homes. Or assisted care
Mother s car a 2007 Camry had a whopping
46k on it
Sold my 2005 Honda Civic with 62, 500 miles on it. Still see
it on the road.
Maintenance is of course mandatory. BUT, where to get it done. Recently the dealership I used to do maintenance wanted to change out the tranny fluid, brake fluid, and coolant: total around $450. Local mechanic, without looking at the fluid conditions, wanted $700 for the same service. He lost!!
Third place I went was a hole in the wall, with one employee – the young owner who loves to talk. He actually looked at the brake fluid and showed that there was no condensated water in the reservoir which is the best indicator of needing to be replaced. He actually looked at the engine coolant and showed that there was no discolouration of that fluid, indicating it was still good. He did want to change out the transmission fluid since he had learned that Honda CVT’s have had a problem at 160,000 km (100,000 miles), but that changing the fluid seemed to preclude this problem. We shall see if what he learned has any veracity in about 60,000 km (37,000+ miles). Cost $90 for this service.
Hope he is right, since being able to go for 1200 km (750 miles) on one tank of gas (15 U.S. Gal.) is quite noticeably good for the wallet.
Brake fluid can be swapped at a brake job, and just the bleeding and topping up is adequate. It isn’t drained out and changed, ever. The coolant can be tested, and very rarely needs changing. It is easy enough (takes 5 minutes) to drain a gallon and put a new one in. (There is a small gate valve on the bottom of the rad. Mind your dog as they’ll drink coolant and die). Auto trans and manual trans lube/fluid can be changed out at a 5 minute oil change when you get the oil done, and takes 10 minutes….tops. It is not expensive. Unless you see stains on the ground, for rear wheel drive vehicles, the rear end is checked at the same time as an oil change.
I have never ever heard of anyone actually changing brake fluid. It just isn’t done, and there is no need to do so.
The mechanics you talked to were bandits and should be beaten, imho. I worked at a garage in high school, maintained my vehicles for years, and my buddy is a mechanic.
Great points. It appears you can save a lot of time by avoiding complete flushes. You might have just saved me a lot of time as I do my own maintenance.
I assume the companies that sell the fluids want you to change them as much as possible, hence the misinformation being put out there. Add in the many people that simply repeat what was heard as fact, and you have a case of mass misinformation.
Or, you could get and ride a bike… I’m probably putting 10k a year on my bicycle these days. That includes commuting and most shopping errands.
I keep my truck (’98 Chevy) to haul my sheep shearing equipment and take camping vacations. That’s about it. Most of the time I’m on my bike or taking mass transit.
Ok – I confess, my boys use the truck to get home from school after cross country and track practices.
I’m not keeping track of my mileage on my bike but I ride it a lot, carry groceries, packages to the post office and FedEx, basically almost all transportation needs are filled by my bike, with the rest being bus, train or light rail, etc.
Unless you get a real cheap piece of crap from Target or Wal-Mart, modern bikes are really neat. Modern wheels are amazing; get them trued and they stay trued a long time. Most basic stuff you can do yourself and what you can’t, or don’t feel like doing, your local bike shop will happily do for surprisingly little money.
You get to explore your neighborhood, find neat little shops you didn’t know about, and get to know your town *so* much better. And, people get to know you; you’re a person on a bike, not a shiny scary metal box trying to kill them along with all the other metal boxes. There’s a camaraderie among riders, too.
95%, at least, of cyclists are not those Johhny-Go-Fasts in tutti-frutti Spandex, treating the world as their own personal race track. (Those types have been around as long as there have been bikes; back in the day they were called “scorchers” and were not any more liked) we’re by and large a nice group of folks.
My 2007 Toyota has 220k miles and in super shape. Only thing I’ve had to do, other than maintenance, was a new alternator (failed while in Yukon T., of course). Have a friend in Canada who has one running well at 450k miles (not km, but miles). I’m getting ready to take it up to the Arctic Circle on the new Inuvik-Tuk highway. I drive solo, and I’m a woman.
SpaceX option package for new Tesla Roadster will include ~10 small rocket thrusters arranged seamlessly around car. These rocket engines dramatically improve acceleration, top speed, braking & cornering. Maybe they will even allow a Tesla to fly …
4:29 PM – Jun 9, 2018
So you think it’s a joke right? I assumed it was. But asked if he was joking he says NO!
So it’s clear: he’s nuts.
And the stock goes up. So much for the tech knowledge of stock buyers.
Dear Elon: there is no problem reaching the high velocity of the tiny rocket gases but there is a prob with the volume needed to deflect a car.
And we haven’t even thought about all the controls.
Job One: license a high volume outfit like Hyundai to build the 3.
With Captain Queeg at the wheel, the downturn could hit next week.
Jay Leno had a rocket-motorcycle of some type, and it tended to melt the paint of anyone’s car that wasn’t far, far back behind it.
Is Muskie this crazy?
Just announced on CNN; Tesla to cut thousands of jobs in ‘drive to profitability’
“…rocket-motorcycle of some type…” – You’re probably referring to the MTT Turbine Superbike (https://en.wikipedia.org/wiki/MTT_Turbine_Superbike).
Actually saw him riding this to the Rock Store in LA and it’s a pretty awesome ride. Another owner described riding one as “like being pushed along by the finger of God!”
Cars come with a printed maintenance schedule in the owner’s documentation. Or you can get the info online with a quick search. People should take the time to read it and follow it.
How many of you posters have actually looked at your car’s owners manual and read and followed the maintenance schedule? When I ask my educated and successful friends that question, I get blank stares.
Dealerships SUCK. Wolf discussed their absurd pricing methods a bit, but these dipsh/ts need to realize how things work in 2018. WE SHOP FOR BEST PRICE, ONLINE. Can’t stand their gimmicks and price schemes. If they listed their d@mn price up front, it’d help me get in the door. It’s 2018, I don’t do bullsh/t. They could have sold me 2 or 3 new cars by now, but they refuse to be straightforward—one always lists full MSRP, one lists all the imaginary rebates, etc.
I’d like to take this moment to give GM service centers a shout out: YOU SUCK. Your lies were caught and I refuse to buy another GM clunker EVER again. I will buy a Dodge before I step foot on a GM lot for any reason. GM, you screwed me for the last time! I can’t wait to let everyone know how I got hosed (literally) and thus bought a Dodge, or, shriek!, one of them foreign jobs.
Good interview, Thanks Wolf
I think the automakers are signalling recession
Remember, those aren’t subprime loans. They’re “near prime” loans.
Lending irresponsible amounts of money to people who are manifestly non-creditworthy. What could go wrong?
Months ago, I saw not 1 but 2 Mercedes S-600 cars on Gumtree UK @ 1,000 GBP ($ 1,4xx) each. Just the bi-turbo alone should recoup the price of the full car!
Had a ’91 4-banger Toyota 2 door pickup truck bought from my neighbor with honest almost 400 k miles. The cylinder head was never off. But he had been changing the oil every 3,000 miles. And it had its 2nd automatic transmission.
Sadly, I let the wrong people drive (= abuse) it and it ended up blowing blue smoke. Never fixed it. But the built quality was good.
With my ’89 Ford F-150, I encountered a corrupt garage. They really fleeced me, saying they replaced all breakes – with USED ones. Yeah, they did nothing and just collected 2 grand. Mind a good garage when you stick with a brand.
Personally, I see used car prices fall dramatically.
“A corrupt garage”
Bought my first diesel Pick-up…a Chevy, from a wealthy friend. The vehicle was at a garage having the clutch replaced (at 70,000 miles), and I picked it up at the garage (Grants Pass, Oregon). Less than two thousand miles later, I was in a corner when I heard what must have been a police siren behind me…nothing. Determined that it was the transmission howling. Discovered that the garage my buddy used had put ATF in the transmission rather than 90wt.
My friend used that garage exclusively…every rattle and shake traced down and corrected. He was a revenue stream, and clueless.
OT: am in Northern Thailand now, working a lowly paid job. Am renting an old Honda motor scooter. For some commuters and city dwellers, small displacement motorcycles might be both fun and economical.
It has EFI. Took it to Honda for a service. Paid about $ 7. It gets 1xx miles per gallon. Park anywhere…
The rent is about $ 30 a month. Honda was selling their 125 cc Innova aka “Wave” with semi automatic for around $ 2,500 in the UK. Those often last for 100,000 miles.