The Chart of Carmageddon.
Prices of used vehicle that were sold in May at wholesale auctions rose 4.0% compared to May last year, according to Manheim, the largest auto-auction house in the US, running about 8 million vehicles through its venues a year. The chart of the Manheim Used Vehicle Value Index, which is adjusted for mix, mileage, and seasonality, shows the two price surges from end of March 2017 and March 2018 that were subsequently only partially unwound. And the 2019 selling season is beginning likewise:
May was the 28th month in a row of year-over-year price gains. This is unusual, as this chart of year-over-year price changes of the Manheim Used Vehicle Value Index shows:
The last time there was such an extended period of year-over-year price gains was from the trough of the Financial Crisis. After prices had collapsed in 2008, they started bouncing off sharply in January 2009.
By the time the “Cash for Clunkers” program started officially on July 1, 2009, used vehicle prices had already recovered to their prior pre-crisis levels (see chart below). But “cash for clunkers” boosted prices further. Congress had appropriated $1 billion that was supposed to last through November. But by July 30, it was gone. Congress appropriated another $2 billion, which was soon gone too.
Car buyers were handed this $3 billion to trade in their “clunkers” and buy a new vehicle. Cash for clunkers was designed to boost new-vehicle sales. The engines of these trade-ins under the program were destroyed and the vehicle was then towed to the salvage yard for parts.
As a side effect, the program destroyed a portion of the most affordable vehicles – another devastating blow to lower-income car buyers in subsequent years. Not only were the most affordable vehicles gone; but by removing this supply from the market, Cash for Clunkers caused the prices up the entire scale of used cars to surge. This included my three-year-old car. Its book value rose month after month, even as the car got older and accumulated miles, something I’d never seen before, and I’d spent many years in the car business.
This effect shows up in the Manheim Used Vehicle Value Index between mid-2009 and mid-2011. The effect started to unwind but never quite got back on trend. Then starting in 2017, we got more price surges:
Last month, all major vehicle categories had year-over-year price gains except vans, according to Manheim. But midsize cars, hot as used vehicles, had the biggest price increases at 6.5% year-over-year, ahead of pickups, which are the hottest thing on the new-vehicle side:
But on the new vehicle side of a dealership, cars are dead. They’re a big force behind what I call Carmageddon. New car sales have been getting crushed since 2014, while sales of “trucks” – pickups, SUVs, crossovers, and vans – have become red-hot. Carmageddon is now in its fifth year. From 2014 through 2018, industry-wide new-car sales have plunged nearly 30% to just 5.5 million units while new “truck” sales have soared 38% to 11.8 million units.
For 2019, new car sales will likely drop to about 4.8 million units and new truck sales – pickups, SUVs, crossovers, and vans – will rise to around 12.4 million units, according to my own estimates based on current numbers:
American consumers seem to fall into two categories: Those that cannot afford new midsized cars are buying them for a fraction of the cost as used cars; and those who can afford them pay some extra to buy new pickups, SUVs, crossovers, and vans.
Wall Street is not complaining about this part of the shift: Profit margins on trucks are huge because Americans are willing to pay a lot extra for large vehicles, even if the cost to the automaker is nearly the same, while profit margins on lower-end cars – not luxury cars – are very tight. It’s getting to the point where automakers are abandoning the classic sales distinctions of “cars” and “trucks” because they no longer really make sense.
But as used vehicles, cars are doing very well – at a fraction of the cost. Many of these used cars are former rental cars that dealers buy at auctions around the country.
And the price surge in used vehicles, as seen in the charts above, also shows up in the average loan amounts taken out per financed used vehicle. According to Federal Reserve data, the average amount of a used car loan taken out in Q4 2018 (latest data available) jumped 5% year-over-year to $18,431 per used vehicle financed:
And average loan terms for used vehicles have been rising for years, as dealers and finance companies are trying to put deals together that consumers can’t afford otherwise, despite historically low interest rates. According to the latest data from the Federal Reserve Board of Governors, the average length of used car loans originated in Q4 has risen to a record 62.2 months:
The Manheim auction data used in the first three charts above describes pricing in the wholesale market. But the retail market is far broader. It includes person-to-person sales of used vehicles, and dealer retail sales of used vehicles. This market has an estimated sales volume of about 40 million vehicles per year – compared to the new vehicle market of around 17 million vehicles a year.
Cox Automotive, which also owns Manheim, estimates that used vehicle sales volume in May fell 4.0% year-over-year, to a seasonally adjusted annual rate of sales of 39.2 million units.
In terms of new vehicles, Cox estimates that sales fell 0.5% to a seasonally adjusted annual rate of 17.3 million vehicles, with car sales plunging 12% year-over-year, in line with Carmageddon; and “truck” sales – pickups, SUVs, crossovers, and vans – rising a weak 5%.
Fleet sales were hot, while retail sales were cold: Cox estimates that in May, sales to rental fleets soared 14% and sales to commercial fleets 12%. This leaves retail sales down 3% in May year over year.
These fleet sales eventually supply the used vehicle market as rental-car companies and commercial fleets cycle through their vehicles by selling them at auction, or as is the case with some rental fleets, by selling them directly to retail customers. And many of these units are cars, and they’ll be a lot more affordable when they sit on dealer lots as used vehicles than as new vehicles.
“When times are tough, the thinking switches to the short-term. Many fleets are just fighting for survival.” Read… What Collapsing Orders for Heavy Trucks – Down 71% from a Year Ago – Say about the U-Turn in Trucking
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I’m amazed the AVERAGE used car loan term is 5+ years (the car already has a couple years on it). Looks like somewhat the same phenomena is now happening in used car as previously happened in new cars: absurdly long finance therms to manage increasing acquisition cost.
I’ve recently learned that there exist 144-month auto loans I don’t know how common they actually are but this is sheer insanity.
(sorry…..I couldn’t help it)
Why is that amazing? If an average used car is 18.5k and you add sales tax you are at 20k. That’s 400 a month over 60 months. Used cars pay higher interest and now new cars average 37k before sales tax.
A mortgage is 360 months, so why is 144 month’s unrealistic for a car selling for 50k to 100k? There are plenty of cars and pick up trucks in this category and most people can’t swing 1k a month car payment.
When I got my drivers license 24 to 36 month’s was the norm, and cars were a lot cheaper. Welcome to 2019.
The thing about a mortgage is that over 360 months the thing you’re buying will be going up in value so the heavy interest payments racked up will ultimately be outweighed by the increasing value of the property.
That’s a flawed assumption. We now understand that a house has a shelf live, operating costs, and requires maintenance, and the principle does not always go up in value. The relationship between autos and homes is direct, the more driving time between the home and the urban center the lower the cost of the home, and the more the owner spends on transportation. In theoretical terms off the grid solutions to housing have leveled the value of property formerly based on proximity to work (quickly being obsolesced) and various social needs (which FB now fills). Unlike autos, housing is set for a technological refit which will lower costs. Of course as people can live anywhere it puts more pressure on transportation to get you back. In CA the term homeless really means “motor”homeless. Autos and homes are interchangeable in our society.
House is only going up in value along as interest rates don’t rise and what people can afford each month doesn’t rise “if you cant pay in full you cant afford it” words I live by
Because a car is a depreciating asset, and it was bought because the person “wanted” it, not because he needed it, like the house is a place to live.
The car he traded in was just fine….just “not cool” anymore…
…and cars may be a lot more expensive now, but people also make a lot more now…
Unlike a home, most cars do not appreciate in value.
Your loan over time eventually becomes larger than the value of the car.
By the time you pay off the loan you likely will need another car since the average car is good only until about 100,000 miles or 10 years (whichever is LESS), after that time repair costs really add up to which it is non sensical to keep the car..
Used car dealers are selling vehicles with over 100,000 miles on them and the sheeple are BUYING them on a five year loan, even worse some say 60,000 are low miles, no S***thead, low miles is under 20,000 miles.
I have seen 12 year old cars in a junk yard. As for houses, I live in one that is over 60 yrs old. One item still can be used long after the loans are paid, therefore leaving an opportunity to re-sell the the item, the other one leaves you empty handed with no chance for reimbursement.
This is not just a symptom of increasing, new car prices. This is a symptom of the lack of disposable income: while wages may have increased a little, real inflation (of the things that consumers actually use and need) has increased much more. Even the fake inflation indexes now used show this now.
Americas, who are not members of the parasitic, richest 2% (not all of whom are parasites but most), are in an untenable position. This is shown in the deaths of despair that increase in our younger people every year:
See article in AOL, U.S. death rates from suicides, alcohol and drug overdoses reach all-time high
Unless the parasitic rich are taxed and forced to bear their fair share of the burden of society, indeed taxed more than fairly to compensate for their special treatment from the Fuhrer of the rich and prior, corrupt politicians, this death rate will increase year by year.
The chip manufacturers are going gangbusters in the automotive market. There is much money sloshing around for all these in-car entertainment systems and privacy invading spying “connected” electronics. Someone is paying for all this crap! A simple car with none of the “modern” (ultra expensive to fix) rubbish using modern manufacturing techniques should be just as cheap or cheaper than those bought in the 80s or 90s. Total cost of ownership has massively blown out as you can no longer repair your own property because the electronics are locked down. I don’t want this crap! I don’t want power windows (that trap you in the car if you drive into water), any electronic displays/gauges or any of the other crap. Just give me a simple thing that will get me from point A to point B and that will not immediately stop just because a stupid bit of (encryption locked down) silicon has cracked the shits. A 90s style engine computer is as far as I am prepared to compromise. Modern electronics is crap and has an expected usable lifetime of only 5 years: this is completely by design! “Information is the new oil” and the dumbsumers are paying for the evil corporates to spy on them. Besides, modern cars are ugly as no-one seems to be able to design for aesthetics any more: just an ugly aerodynamic wedge. And, EVs can be made just as simple, with a lot of the extra rubbish completely superfluous. We need to get back to standardized interchangeable automotive components to bring costs back from stratospheric realms: this is actually quite possible, but is a government level thing. It was done during the war so I can’t see why it can’t be done now.
Isn’t it all really the feminisation of cars? Quite superfluous, but oh so comfy and nice.
My car has an extra air bag when my wife rides with me, boom boom!
A thousand thumbs up. Couldn’t agree more.
It gets even worse. In Europe cars now regularly fail the obligatory periodic check (MOT, Controle Technique, APK, TUV…) because some electronic function doesn’t work, for example some black box regulating the emission control system. If a replacement black box is no longer available from the manufacturer, the car can not be repaired, can not pass the test, and is declared “electronic total loss”.
People do still not understand that as buyers of these gizmo-loaded cars, they effectively become hostages of their car’s electronics, and therefore of the manufacturers’ parts supply policy. It is not at all like old cars, where almost any mechanical or electrical part could be replaced or repaired, or even remanufactured or adapted from something else. With these locked-down electronics, if and when the manufacturer decides to stop “support” for a car model, its demise is virtually assured.
Obviously, cars are becoming like phones, you use them for a period prescribed (allowed?) by the manufacturer, and just write them off and throw them away afterward. This might be acceptable to current buyers, but I am from a generation that balks at this kind of pre-programmed obsolescence.
And how this kind of waste rhymes with all the moaning about “saving the planet” is anybody’s guess.
OMG, I just realized that this is a prescription for that crappy Uber/Lyft model. Why own an asset that might be worthless three years after you buy it. Just use our service.
Id be happy of i could remove panels with a #2 phillips. Is that too much to ask?
wow, i thought was the only one who felt this way about new cars! if you get in a crash or as the car ages, the wiring and electronic sensors that are all over the car have a tendency to short to ground causing all kinds of “codes” and you need to be an electrical engineer and programmer in addition to a mechanic to fix the damn thing. pleas just give me an old honda with a stick shift and a sunroof.
I’m with you! Simpler is better, regarding bells and whistles.
Most cars today are shaped like upside down bathtubs. I miss the beauty of the cars long gone.
Still driving my 1962 Fargo 6 cylinder, step-side pickup. Over the years I have replaced the cab floor and back panels, the box, re-skinned the lower doors, and rebuilt the power train. Simple to work on.
When searching for parts at salvage yards etc. I thought that I had best buy two or three of whatever I needed, because the parts were beginning to be hard to find. Almost impossible to find them now at a sensible price.
A few years back I attempted to rebuild a 2006 Chev Silverado P/U that had been involved in an accident. I gave up owing to the high price of parts, the confusing electronics, complicated mix of plastics and metal in the body and frame, and red tape in attempting to re-certify motor vehicle road worthiness stamp of approval.
No thanks to any new vehicle. Simple is much better.
Dr. Ferdinand Porsche designed the Volkswagen (“people’s car”) beetle, a basic no-nonsense people mover which served a generation of drivers; me, included, quite well.
The simplicity which was its hallmark is not possible today, precisely because of gov’mint regulations.
Good or bad, that’s the way it is.
The last computer-free automobile year was 1995. I will own my 1995 Dodge Ram diesel pickup until I die.
Yea, clean air and safe vehicles are stupid.
All quite true, except getting government into the car design business – if you think things are complicated now, just wait for the bureaucrats to get even more involved.
The reason for the present complications ARE because of the government involvement for the last 40 years.
Oh that darned government! Having them worry about gas mileage and clean air and water. It’s just not in the spirit of free thinking, free doing and free polluting. Imagine having a government that requires air standards and water standards for its citizens!
Couldn’t agree more. Fancy electronics are cheap and quickly obsolete. Worthless or worse to me as a car buyer. They’re being used by carmakers to justify high prices at low cost, but wise consumers will start to push back.
If you have a car payment of $500/mo, you need income after all bills of $4000/mo. If you can not pay cash, or 4-5x the payment in monthly income then you can not afford it…
Right on…..safety has greatly increased…but if speed limits were reduced and travel distances increased….the result would be the same.
I remember being able to order your vehicle from the factory. All the Big Three had long lists of options. You could order a Galaxy close to a Caddie, is you liked. Or, like myself, order the vehicle basic. I’ve found in my experience all power windows and power door locks become manual, in time.
Cars are much safer now, but the costs to support that safety are huge, and growing. Soon all cars will have some type of auto-driving software ? I spent a career developing software systems. No thank-you to auto driving, not yet ready to sign-up for those.
then but an old car and restore it, or have someone restore it if you are not capable.
and if not under warranty, any even MINOR repair can quickly approach and exceed $1,000, any repair that involves the engine or transmission — you are looking at $2500 at least.
Also it is hard to find a competent mechanic these days who doesn’t have an ATTITUDE problem, who won’t leave grease stains on the interior, who won’t mess with radio and other presets and who won’t damage the body or paint of the car.. But I guess this is one of the side effects of unemployment at 3.6%
My 2010 Camry is still buzzing along pretty good. Never a problem. Bought it with 20k miles in 2011, nice discount, run up to 170k now and still purring. Low Collision insurance. Think I’ll install new leather seats. Cannot see one reason to buy another car.
You know my Camry is older than yours by about 7 years. But I managed to have fewer miles. Think I’ll just keep that one for another 50K miles if I can.
It seems to be so worth it.
amazing that here in Boston college kids either drive around in very new BMW’s or Audis (or use Uber) despite there being decent (but not as good as NYC) public transport .
My daughter went to MIT and never had a car, and could not have afforded one if she did. I went and picked her up in my 2001 Camry. College students come in all shapes and sizes.
I doubt it would pass inspection in NY or Massachusetts. Emissions equipment are purposely designed to FAIL older cars so you will either pay four figures to a repair shop (see above) or buy a new car..
Remember in Massachusetts you pay excise tax every year + $35 a year for inspection sticker…
The auto industry, health care & real estate industries are the THREE largest donators and lobbyests to the NY and MA state legislatures
Hold on, there–I live in MA, and own a 2001 Camry, and my car is exempt from emissions tests. If you want to complain about salt screwing up the autos, fine, but I hardly consider $35 a year an exorbitant amount to pay to register my car each year.
Brent, We bought a Camry LE Maroon in Westborough MA in 2004 had 6000 miles drove in 36 inch of snow and sleet in Boston north suburbs, took a beating from behind by some old person unable to stop, got it if fixed, now after 260,000 miles , it is still chugging along in California, It was paid of long back before the 48 month financing terms ( I think we paid it off in 36 months), who the in the right mind will be paying $500-$700 for 48 or 60 months of financing, there is something not right in our younger generations financial savvy meter.
Why would you have collision on that?
Last time I commented and mention I owned a 2005 Ford Taurus another commenter referred to it as a “babe magnet” presumably out of jest.
On a serious note don’t ZEV credits play into the types of vehicles which can be sold making those desirable vehicles more desirable?
A Taurus was good enough for Bill Gates.
Fewer and fewer people can afford cars. There are really two economies where I live; the fast economy and the slow economy. A good example of fast economies are those making payments on suburban homes, and working in the kind of jobs – also becoming fewer and fewer – that pay well.
A good example is the area around Ringwood and Charcot, major streets here. The lawns around the buildings are “as neat and square as Lego pads” – Douglas Coupland, “Microserfs”. There are no sidewalks because no one walks. If you’re not under 40, good looking, degreed, and have a nice car you are a pariah. Everyone zooms around fast. Zoom! Zoom! They have to rush around to get that money as much and as fast as they can.
Then there’s the slow economy. I’m sure there are a few noble, Thoreau’ian types in it, but most of us are just plain poor. We made the wrong choices, like wasting time in college and choosing a bad field like tech. We don’t have traditional jobs as such, get around on bikes or walking or bus, and paradoxically, it seems like we have more time. We can afford to go slow.
Those in the fast economy seem to actively resent us. How dare I pedal along at less than 10MPH on my bike, when they’ve got to work 60 hours a week to afford the car they’re zooming along in, to zoom to work to afford the car they need to zoom to their job … you get the idea. They’re miserable. When they see me smile and nod to a Mexican ice cream cart pusher, or I and a pedestrian at a stop light smile while we comment on an unusual looking cloud, the zoom-zoomers feel cheated. If they’re working so hard, they should be happy, and we poors should be miserable.
It’s what they’ve been taught all their life. If you work a lot and make a lot of money, that’s how you attain happiness. And if you make bad life choices (electronics instead of English literature or something in my own case) that make you poor, you’re supposed to be miserable.
And this is my theory as to why people in cars are so often so aggressive toward cyclists, pedestrians, anyone who isn’t driving a fairly decent car at least.
How true, it’s why they love to talk about ‘the poor’, ie anything other than really wealthy.
They find the apparent distinction comforting. and it reaffirms that having less (not destitute, mind you, just ‘less’) is a disaster.
Of course, they never ask a ‘poor’ person how they actually feel about life, just assume it must be hell. It helps their self-definition.
The most insecure, anxious person I know made tens of millions in finance, but the unclouded happiness that they thought they’d get just didn’t materialise.
Now, they worry all the time about losing it…..to the poor! I expect them to end up as a miserable, rootless tax exile somewhere.
It’s very instructive knowing the truly rich: you get to see that it’s not a worthwhile aim in life, and is more of a poison than a blessing.
I’ve known some fairly wealthy people. “Miss” Wilder, there in Hawaii Kai, on Oahu, who seemed to know everyone, had a full-size Steinway in her living room, and took me around to places like the newspaper where I had a lead type made of my name, and the Pacific Club. The Spragues, Mr. Sprague being a doctor and having a big house in Manoa, and I don’t know, a handful of people “worth” several millions, and yeah, they don’t seem to be happier than anyone else and in the case of my relatives, seem to be quite a bit less.
Meanwhile the founder of the sect of Buddhism I follow, Shinran, seems to have been a fairly happy fellow. I am more and more attracted to traditional Japanese culture because it’s all about getting the most from very little. That’s how I grew up. Not in the early years, when we were middle-class (as had been Shinran) but as we descended into poverty, I learned to get by on, and appreciate, very little.
We are, after all, a very young culture, and have a lot to learn from the more experienced.
When I was in college in the early 70’s, the University had a guest speaker, who later built a major art museum in the SoCal area, talk to us Finance grads. He knew all about wealth. Don’t remember much what he said except his answer to one student’s question. That question was: How much money is enough ?
His answer was: if money is your goal, you will never have enough. He said you will spend your life either trying to make more money or spend your life trying to maintain the money you’ve made.
Here here! This is a very important point that everyone should take to heart.
About 8 years ago I made $1 million that year. It was kind of a fluke, my normal income with my own wife was only about $40k (we built things that could theoretically be with a lot – but most weren’t).
After making the money, our biggest concern was losing it and going back to how things were. But we were happy before – yes we wanted to upgrade our housing situation, get some non-junky cars, and travel more.
We got to do those things with that money, but about 2 years later we realized that what really made us happy was time, not money.
We reinvested what was left into building our own small tech company with the idea that we could generate a stable income and we could have total control and explicitly weren’t going to chase the big money. We were going to chase happiness.
It’s about 6 years later now. The company is still small, but its paying the bills and then some. I can work whenever I want, take off whenever I want (travelled over 2 months last year).
Whenever I talk with most wealthy people the first thing that comes up is “are you planning to sell it?” When i tell them no way, they look at me like I’m crazy. It’s just a completely foreign concept to most people.
I’ve known numerous very wealthy people who have no idea what makes them happy. It ain’t money guys!!
similar situation here in my nyc apartment bldg. i recommend getting a dog for those who have time to properly care for one. because of my dog, i’ve gotten to know many of my neighbors whom i used to zoom past. there is nothing better than watching a toddler squeal with delight, the first time they rub a dog’s belly.
Problem is no one owns anything, nothing. Not even your body, property, it all belongs to big gov. And when people go to trade in their new fancy vehicles, then bad guys, the next owner, etc has all your personal info just from scrolling through the undeleted phone book or plugging in a tablet and downloading the info from your traded vehicle.
Bill Gates famously purchased a Porsche 959 which was promptly impounded by customs for 13 years until he successfully lobbied Congress to pass the “Show and Display” in 1999.
Everything mentioned in this article is proof of how dramatically the value of what we’re allowed to use as money is being destroyed. Increasingly long auto loan terms are a result of the dwindling purchasing power of fiat currencies. The only way to make up for that is with more and more credit (a clever euphemism for debt), paid back over longer and longer periods of time. And the move to larger vehicles is, likewise, being facilitated by ever more generous auto loan terms. (Very few people can afford to buy a car outright these days, to the point that the mere idea has become anachronistic.) Give them enough rope and most people will hang themselves with the debt noose.
This will not end well.
Well said. If you’re not getting a 0% loan or something similar, you are just financing a depreciating asset. Given the terrible returns on leaving money in the bank, I don’t think it is a bad idea to have a hard asset. But not many people can do what we are doing. Median new vehicles were well over $35,000 a few years ago.
weinerdog43 – But if you purchase all cash you aren’t earning 10% annualized in the stock market. Even a 4%-5% auto loan makes more sense than purchasing the car cash.
The Fed saved the economy by making it a no brainer to finance purchases versus hoarding money and paying all cash.
Borrowing at 4% and investing at a 10% return has made many people rich in the past 10 years AND saved the economy.
DJ – Bravo. After losing everything in the crash, I absolutely hate debt in any form.
Car dealers have been blowing out new cars & trucks for a long time. 0% financed at 60 months or huge incentives. The smart thing is always to wait until the next years models start coming in & then the sales really start heating up.
We leased a 2018 VW Jetta late last year when the dealership was already stocked with 2019’s & looking to shed the few 2018’s left inventory . $125/mo for 3 years & a 45,000 mile term. It was the best deal out there by far, & fit our short term plans for low cost all around transportation during our remaining time in California.
Longer term we just bought a 2018 Nissan Titan XD that we plan to pull a trailer & boat with, and as our primary travel vehicle when we retire to Kentucky. Bought it in Spokane, WA & drove it back to the bay area, CA. It only had 146 miles on it so sold as a used vehicle but essentially brand new in every way except the price. MSRP on a new 2019 with the same options is at least $20k more. So there are screaming deals out there to be had. I was willing to scour the entire U.S. to find the one I wanted & there it was. Buying used is always the best bang for the buck or a lease as I mentioned above if it fits your near term plans & lifestyle.
The key on used vehicle longevity is good maintenance. Scheduled oil changes & tire rotations. Keeping it clean inside & out. I do all the maintenance on every vehicle I’ve owned including washing & waxing them & detailing the inside. Fixing everything except major repairs. It’s like anything in life. Take care of it & it’ll take care of you over the years & become a money maker. Not a money taker.
Just out of curiosity, was there any additional downpayment for the VW Jetta under the mentioned conditions?
Well, with regard to Cash for Clunkers, All I’ve got to say is that I consider our hallowed legislators as ‘Asses for Congressional thunkers’ …as it’s ALL about saving the ‘Big Playas’ (Auto Manufacturers) and the top ‘credentialed’ 20% … while the broken boot-straped peons get gipped !
Is this a great country or what !
Is this Used Vehicle Value Index adjusted for inflation?
That “truck” sales almost doubled within 8 years is amazing. I wonder how much fuel consumption went up.
Fuel consumption figures won’t go up a lot because fuel economy in trucks has gotten better and the addition of CUV’s, the 4 cylinder and 6 cylinder SUV’s that have driven the “truck” figures up but they drop the fuel economy numbers down. Keeping the EPA happy is their prime focus, ask VW how dieselgate turned out.
Warren Buffett used to buy a car and keep it ten years. Recently he sold one after owning it seven years. Frequent trading in cars is a drag on finances. Dealers charged fees.
Well, I have been driving my current car since 2002 when I bought it new, a Citroen. For its time it is quite loaded with tech, even by today’s standard quite high tech, 3rd generation active suspension, ie the suspension is continually optimized based on speed, load, style of driving and road conditions. It lowers itself when speed and conditions make a lower ride height optimal, it increases ride height during bad road conditions if needed, in addition I can alter these settings manually. If side wind is felt, then I press a button and the car changes settings in such a way that it does not react to the wind etc.
I intend to keep this one for quite a while yet, because I can wait and see what the direction of car propulson will take, fuel cells, hybrids or battery veichles.
1998 Lexus ES300 mlg 200K+
My highway car.
2000 Hyundai 100K+
2002 Chevy Tahoe 250K+
My tow vehicle and cargo vehicle.
Keep ’em serviced, folks.
I took up car detailing as a hobby now that I am retired. It’s not only very relaxing but it makes my cars last longer and keep their value. Imagine how much money you have plunked into those suckers. At least they shine.
Every single minute spent on anything other than necessary periodic maintenance (oil and filters) and required repair I treat as a complete waste of time. Shoveling my time into the same black hole of worthlessness as my hard earned money. A quick vacuum and wash each year, wax every other. Seems to make zero difference in the ability to serve as a transportation appliance kind of like cleaning the crumbs out of a toaster makes zero difference in the ability to make toast.
It may be a waste of time to you,not to me.
Thanks Wolf! Another great read!
Might be that the new cars are junk. Especially those made by chrysler and any veichle with a cvt. New cars are not made to last or let you do your own repairs. Look at the tesla, its a perfect example of that.
I beg to differ…..
2015 Challenger R/T. Zero problems since new (unless you count a software recall). Greatest road trip car I’ve ever owned. Have done 6-7 650 mile road trips in under 8 hours, while getting 25-26mpg.
My only dilemma is deciding on whether I should trade up to a Hellcat……maybe I’ll compromise, and get an SRT or T/A.
it’s a four year old car using a non-cvt transmission. check back in with us when you hit 10 years or 150k miles.
Since the Challenger came out in 2008, Dodge should have the kinks worked out by now, you would think. So even though it’s FCA (whose brands rank at or near the bottom in reliability rankings), it may do fine.
One rule of thumb for me is that I never buy a model that just came out. I wait until at least Year 3 of the model. By then the carmaker should have most of the kinks worked out.
Good article Wolf… Just returned from SoCal where we rented a 2019 Nissan QX90 SUV, which is really a big 4dr pick up with a full body on it. Did the job well.. 400 miles over 3 days with great viability and protection from the masses with cellphone in full driving mode. Anything less than 75mph and your run over. For grins I checked the Nissan website and saw I could order my own… Starting at $65K…it was a Pick Up Truck…. Anyway my newest personal vehicle is a 2003….
SoCal traffic is no joke. I used to drive from Newport Beach (NewPorsche Beach) to Sandy-Eggo for an electronics swapmeet, and traffic was 75MPH minimum, 90MPH around San Onofre gee I wonder why….
Ford is coming with a gorgeous looking 2020 new hybrid Escape at around $30K.
It look like a Porche, but he filigree grill is a work of art.
Ford is also coming with a new hybrid Explorer at $60K.
Ford is waiting for this turn around 10 years.
Ford will do very well in 2020 and beyond, unless the SPX will stop the party.
If SPX will reach Oct 2018 high, cross the half line,
at 2727 from Feb 6 2018(H) and turn down ==> F sales will drop.
SPX troubles started on this half line and it will happen, F will not escape.
I have confidence that the automakers will produce the cars that people need and they can afford. For the same reason you can’t charge $5 for a loaf of bread, you won’t be selling any. Consumers have leverage, and if a car and truck both sit on the same frame what’s that say? People want the utility? A second reason is that America’s roads are a mess, and you can tear apart a subcompact easily. (another strike against EVs). In my county SANDAG oversees matters of highway infrastructure and they are flat out opposed to new freeway expansion, in favor of rapid transit. The county is still largely rural so it presents problems, but it would seem there is no going back, despite public outcry for more lanes on the I5. You just have to find another way to get to Disneyland.
If you can avoid “trendy” there are still some decently priced new cars to be had.
In many places out in flyover, a new Suburban/Tahoe cost the same as a starter home. What’s worse…….the house is usually cheaper to fix and insure.
Daughter bought a new car last month. Neither one of us could see taking out a 36-48 month loan on a 120k mile car.
I used to buy new, then drive them 10 years/120-150K. (I don’t care who makes it, thats the point that they start nickel and dimeing you to death. Along with the time lost fixing them, either by yourself or taking it to someone).
Car parts are a lot more expensive than they used to be. No more going to the parts store and asking for a “GM Alternator” or “Chevy water pump”, and having that part sitting on the shelf, because that part worked on multiple cars in multiple model years. Parts are now fragmented over 20-30 brands, with multiple different models. Technology has allowed the parts vendors to only stock the most popular parts. Everything else comes from a central warehouse, or the manufacturer, usually after a 2-3 day wait.
Cars are being killed by rust, electronics, suspensions, and transmissions going bad. And the labor it takes to remove 20 pounds of crap from a 10 pound bag. People just dont have the time/tools/space/desire to screw with it.
As far as “simple cars with no electronics”? LOL. Be prepared on fixing it yourself. I was told by a shop who declined to work on my 1973 Dodge, because “……they can’t make any money on it”.
This is not unique to the auto industry. Applies to aircraft too. The General Aviation OEMs figured out a while back that supporting 30 year old airplanes was a lose-lose proposition. So now you are seeing bizjet being grounded and scrapped, because nobody knows how to fix them, and all of the exchange “cores” are worn out.
If your 10 year old airplane (or a derivative of it) are not in “current production”, good luck getting parts. Especially electronics, or “model unique” pieces.
Wait until January 1, 2020. The “ADS-B” mandate goes in effect. It will have the effect of “culling the herd” of 30 year old airplanes.
regarding: “If your 10 year old airplane (or a derivative of it) are not in “current production”, good luck getting parts. Especially electronics, or “model unique” pieces.”
Not really. Good aircraft always have parts available and other companies in other countries often start making new replacement parts. I flew DHC-2 (beavers) for almost 30 years, many built in the ’50s. Some of those machines are now pushing 70 years old. Lots of parts out there for 985s. What I have been seeing are companies like Cessna running from product liability responsibilities. They are loading up operators with directives that are prohibitive, and if they aren’t done, insurance coverage lapses as well as operating certificates.
This is a local company near where I live that keeps the old new and in the air. You might find it interesting. http://www.sealandaviation.com/
Beavers/DC-3s to bizjets = Apples to Watermelons
We are still working thru WWII surplus on R-985 and R-1820 parts.
In the meantime, (approximate) total airframes produced for a few select bizjets:
Citation 500/501 = 679 airframes (over 13-14 years)
Citation 650 = 360 (over 17 years)
Falcon 20 = 512 (over approx 20 years)
Falcon 50 = 372 (over approx 20 years)
These are not “mass production numbers” guaranteed to generate a lot of spare parts. Besides, the same pieces wear out on ALL of them, so when the cores are worn out/scrapped, thats it.
The OEMs are finding that their original vendors went out of business years ago. Even if they are still around, they aren’t interested in building new parts unless they charge 10 times the original price, or sell 500 ship sets.
I stand by my forecast. Almost all of these airplanes will be grounded and scrapped/parted out within the next 36 months, if the ADS-B mandate doesn’t get them first
You can add Falcon 900As and 900Bs to this list. Their early 1990s avionics are going to soon be unsupportable (no parts). A panel upgrade (including FANS and CPDLC) is about $800K US.
Dassault still supports it, as long as you upgrade to the current configuration. Example: Upgrade to electric door retraction (because the original retract mechanism is no longer manufactured). Service Bulletin 459. Price? Over $100K installed. Just to open and close the cabin door
Or you can take a chance that the original door mechanism doesn’t go unservicable on your watch.
Do you spend $2.5M on a old Falcon 900 to do the “C” check, landing gear overhaul, all of the mandatory Service Bulletins, interior and/or paint, on an aircraft whose current market value is about $3-4 million? And still have 30 year old wiring, hydraulic plumbing and actuators?
The market for bizjets is saturated, and not because people don’t want them. The .1%ers that want bizjets all have new ones. The mid sized companies that used to own them are out of business, or have been merged. The 1%ers who want them can’t/won’t buy new, because they can’t afford new airplanes, can’t afford to maintain their old airplanes, and the value of their “old” airplane has fallen. So they go fractional.
I don’t know if you had the occasion to visit the Altenrhein airport, or just drive in front of it: there’s a long row of Falcon 900, with a few original 2000 peppered in, parked on the tarmac. Nobody wants them anymore so they just sit there coccooned while they are being (very slowly) demolished: not only are local labor costs horrendous, but simply put the market for those parts is slowly but steadily drying up.
I think your prediction about the grounding of most older private jets over the next three years will prove correct, but I suspect prohibitively expensive spare parts and service bulletins will be the cause, not the ADS-B mandate. Compared to the other costs ADS-B Out is pocket change.
The Royal Flying Doctors have replaced their Hawker 800XP (introduced in service in the late 90’s) not so much because the airframes have worn out but because keeping those things operative has become ridiculously expensive relative to residual value: I think even when fully outfitted as an air ambulance and with all valid supplemental certificates an 800XP is worth $2 million, may be $2.5 million on a very good day. And it’s still a 20-year old aircraft. The $13 million each they paid for their Pilatus PC24, already fully fitted as air ambulances and with supplemental type certificates are a better deal than keeping the 800XP flying.
Speaking of Pilatus, they are making a small fortune with fractional ownership. The PC12 is the favorite aircraft here in Europe (with the Piper PA46 and Daher TBM families very distant competitors) and a steady trickle of PC24 is being delivered to those who can afford the extra cost. However I don’t think Pilatus will be able to meet their ultra-ambitious targets of selling 4,000 units over the PC24 lifecycle: too much competition from Cessna, Embraer etc and after the first order allocation was sold out in days the second allocation is still half empty.
I think the private jet market will see some huge shakedowns over the next decade, regardless of economic conditions: as it happens so often nowadays manufacturers planned for a growth that could only be maintained for a very brief time and owners will progressively grow wary of escalating ownership costs. Fractional ownership doesn’t need as many units and provides better utilization (the first production PC24, delivered last year to a fractional ownership outfit, has already clocked over 1,700 hours).
We’ll see how things will turn out and how governments will react.
“As far as “simple cars with no electronics”? LOL. Be prepared on fixing it yourself.”
Our local independent garage services a good many 1995 and older vehicles. They are happy to service my ’95 pickup – as a matter of fact, they want to buy it!
NAPA for parts – no problem.
Also Rock Auto and good old Amazon.
“Car parts are a lot more expensive than they used to be. No more going to the parts store and asking for a “GM Alternator” or “Chevy water pump”, and having that part sitting on the shelf, because that part worked on multiple cars in multiple model years. Parts are now fragmented over 20-30 brands, with multiple different models. Technology has allowed the parts vendors to only stock the most popular parts. Everything else comes from a central warehouse, or the manufacturer, usually after a 2-3 day wait.”
I went to the nearby Napa Auto Parts store and they had a points set for a Chevy ‘Stovebolt 6’ in a 1946 Chevy two-ton truck on the shelf.
It is/was enjoyable reading about commentor’s cars/trucks. It so reflects personality, POV, and economic circumstances; not the vehicle so much, but the reasons and background explanations in the comments.
My first official steady paycheque job was working in a small mechanic’s shop/gas station when I was 15, (1972). One day, I dented the door on a piece of crap old hand painted orange flatbed truck while backing it out of the service bay after doing a grease job on it. My boss sat me down and said, “Listen, this truck is crap, I know it and now I have to fix the door. But someone’s vehicle is always important to them no matter what they say. Plus, it is most likely the 2nd biggest purchase they will ever make in their life, after their home”.
Which leads me to my personal car comment. I was going to buy a new truck this year to replace my ’86 Toyota PU. I even had an agreement to sell the engine out of it. I was as committed as dickering with the sales dept over my son’s discount rate on a 2019 Ranger to be ordered in. Instead, I backed away and put in a brand spanking new rebuilt engine in my ’81 Westfalia, and replaced all drive components, brakes, etc. I spent $11,000 cdn on it and it is like new. It is now worth 10-$15,000 more than I have invested in it. It is loaded up with our gear, and on this Wed we head out to northern Vancouver Island for the first of our local fishing and beachcombing trips. That new truck? Well, I’m keeping the old beater and will just insure it for 3 months every summer to launch my fishing boat on the slippery boat ramp. The ramp requires a 4X4. $200/year. Building materials? I’ll use my son’s truck or pay delivery fees which is cheaper than buying that ‘needed’ replacement.
Oregon beaches this fall, next summer south Canol Road, Yukon. Fishing trips, picnics. Regular preventative maintenance something old is cheaper than buying new by an unknown large factor, plus…I get to keep my savings and have fun doing so. Besides, the van is fun and my wife likes it. The only thing left to buy is a pro-pipeline decal for the back window, and a, “Powered by Alberta Oil”. I don’t want to be in a remake of Easy Rider when we head east into Alberta. :-)
i’ve spent more on my westy than i could every sell it for but nobody makes anything like them anymore. i’m headed to the finger lakes region in july with my daughter and the dog. you can’t put a price on that.
About thirty years ago, the wife and I headed East through Alberta and I saw the Rockies for the first time from the ground; I had flown over them while in military service.
Thence North to Dawson City Yukon, to see if we could find any records of my Grandfather’s time there, mining gold circa 1898-99.
Vehicle was a 1956 Bronco towing an old Airstream. Average speeds: Bronco 60 MPH, Airstream 59.99 It was shedding little underparts along the way. Roads were REAL rough, back then.
My oldest work truck is Ford 2000 7.3
No life of leisure pulling the occasional boat or camper.
Just keeps on going. Gets same mpg as my newest work truck
2017 cummings. And I do not have to add def to the 7.3
In the 60s, 70s, 80s US workers were loaded with money thanks to worker’s benefits, they owned exotic cars, has sex on the beach, racing, etc…fast forward this to 2019 and we have to read a long – and very accurate – article about pathetic “check engine light”–> on –> used cars…:) ….How about outsourcing more jobs to India and China?
I have a new car now and bought my first car in 1974. In the 70’s cars rusted as you collected them from the dealer, they were badly made and maintenance cost a fortune in time if you did it yourself and money if the dealer did it. New cars are great, the electronics are fantastic, they don’t breakdown so much, they practically drive themselves. The problem is indeed the cost of buying them and that, like the previous comment says, is more about income and wages and cost of living than about cars themselves.
In 1978, my father bought me a new Plymouth Volare. It was a truly terrible, unreliable car without any of the safety devices we take for granted. He paid $4,000, which in today’s dollars would be about 15-16 grand. Can someone buy a decent new car for that today? Yes, most definitely — it will come with a long warranty, air bags, a better radio, and all kinds of other nice things my Volare lacked, AND it will almost certainly be more reliable than that Plymouth. In 1988 I bought the best car I have ever owned — a Honda Prelude — for $14,300, about $30,000 in today’s dollars. Because of carmegeddon, it’s hard to find a comparable car — perhaps as Golf GTI or Audi 3 for performance or a nicer Camry for reliability. The GTI would cost less than 30k, the Audi 3 more, the Camry nearly the same. The GTI would come with a 6 year warranty. I guess all of this is to say that I don’t think price inflation is the issue; the problem is the combination of wage stagnation and a lack of financial literacy that leads people to get way over their heads with terrible car loans that they should never sign for.
If you look for a good deal, there’s still new cars available for reasonable prices. I bought a 2009 VW Jetta new for $16,000. Seven years later, I bought a 2016 VW Jetta for $17,000. And the latter one has more options, being a higher trim level. Its sticker price was $23,500.