How Lockdowns Hit U.S. New & Used Vehicle Sales: Beyond Ugly

When the unemployment crisis exploded onto the scene three weeks ago, sales totally collapsed. What’s in store for the industry?

By Wolf Richter for WOLF STREET.

The lockdowns were gradually rolled out state by state, starting in mid-March, and this was when the historic unemployment crisis exploded onto the scene. So it’s the events from mid-March forward that show the new trend. For the whole month of March, total new vehicle sales plunged 37.9% year-over-year, with fleet sales (rental, commercial, and government) down 27.6% and retail sales down 40.5%. In terms of daily retail sales volume, according to estimates by Cox Automotive, early March sales had been well above the sales on the same day of the week, same week last year.

But by March 13, they were below the year-ago-level and then plunged. By April 1, they were down 71% from a year ago. On April 5, sales were down 65.6% from a year ago (chart via Cox Automotive’s quarterly industry presentation; blue line = daily year-over-year change for 2020; green line = daily year-over-year change in 2019; I added the red line):

Even before the Covid-19 lockdowns, new vehicle sales weren’t exactly booming in the US: They’d peaked in 2016 at 17.6 million vehicles, and were lower every year since then. Now come the lockdowns, and according to the first data points for the second half of March and the first five days of April, they will make the 37% collapse during the Financial Crisis, that was spread over three years, look benign.

Here is a four-decade annual chart of how tough the new-vehicle business is even in good times. In 2019, sales were below where they’d been in 2000! This is the glorious trend of the car business in the pre-Covid-19 era. The only way automakers were able to show dollar-sales increases was by selling pricier vehicles, though fewer of them:

The collapse of used-vehicle sales also started March 12.

Total used vehicles sales for the entire month of March plunged 18.4% year-over-year, according to Cox Automotive estimates. On a daily basis, early March sales of used vehicles also had been strong, running well ahead of prior year. But by March 12, they were below the level a year earlier. Then they plunged, and by the end of March were down 68% from a year ago.

They ticked up a smidgen and on April 5 were down 63.5% year-over-year (chart via Cox Automotive industry presentation; the blue line = daily year-over-year change for 2020; green line = daily year-over-year change in 2019; I added the red line):

Lockdowns are still being rolled out in the US. Many auto assembly plants have been shut down – for a slew of reasons, including initially the difficulty to get components, then the health risks, and now the collapse in demand.

The stocks of automakers already got hammered.

Ford [F], which has been going through costly restructuring programs for years to cut expenses, and which recently eliminated its dividend, is down about 50% from a year ago, and down 72% from 2014, to $4.71 a share.

GM [GM], which will likely eliminate its dividend soon, is down 45% from a year ago to $21.30. Shares of Fiat Chrysler Automobiles [FCA] have plunged 51% from a year ago, and 70% from the peak in January 2018, to $7.62. Tesla [TSLA], at $545, remains in la-la-land, though also down 44% from the WTF peak.

The industry – the thousands of new and used vehicle dealers, the automakers, and the component makers – cannot survive for long on the basis of this type of sales collapse, no matter what the bailouts are. This is a healthcare crisis that keeps people at home, and most people are clearly not interested in exposing themselves to Covid-19 to buy a car.

What’s in store for the industry?

Even incentives or a Cash-for-Clunkers program won’t change much until the threat from the pandemic has been sufficiently brought under control. This may happen over the next month or two, with lockdowns being gradually loosened to where more people can carefully go about at least some of their business, while still following all the rules of social distancing.

And there is now a historic jobs crisis underway, of a depth and suddenness that no one has ever seen before. Over a period of two weeks, 10 million unemployment claims were processed and posted. Many more were filed but weren’t processed because the systems couldn’t deal with that tsunami of claims. California Governor Gavin Newsom said on Tuesday that over 3 million unemployment claims had been filed in California alone since the lockdown began though they haven’t all been processed yet. This is playing out across the US. The labor market has essentially collapsed.

The US might end up with 30 million or more unemployed workers. The widely expanded unemployment insurance program is going to soften that blow, but even if people get unemployment insurance, they’re likely not going to make a big-ticket purchase, like buying a car until they’re more certain about their job prospects.

And unemployed people, even if their unemployment insurance roughly matches their prior income, will have a hard time getting a loan or a lease. Some of them are going to be hired back over the next few months, knock on wood, but many won’t be.

And in terms of auto sales, the historic jobs crisis and the economic uncertainty that will follow will see to it that sales will take a long time to get back to the already not very splendid sales levels of 2019.

The value of “suppressing” bank balance-sheet data in a banking crisis to prevent the biggies from yanking their billions out of a weakened bank. Read… New York Fed, FDIC Tout “Opacity in a Banking Crisis” to Keep Corporations, Hedge Funds, PE Firms & Counterparties in the Dark about Weak Banks

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  218 comments for “How Lockdowns Hit U.S. New & Used Vehicle Sales: Beyond Ugly

  1. Crazy Chester says:

    “but even if people get unemployment insurance, they’re likely not going to make a big-ticket purchase, like buying a car until they’re more certain about their job prospects.”

    Hear it? There’s a sudden stillness in the comments section. A WTF moment of ‘where is everybody?’ My guess is, after the rumblings of the past 2 weeks, they’re tucked in fetal positions resulting from having seen the tsunami, still just out to sea, knowing there is no place to run.

    • Wolf Richter says:

      Crazy Chester,

      “Hear it? There’s a sudden stillness in the comments section.”

      You posted your comment three minutes after I published the article, and before it went out on Twitter, and it still hasn’t gone out on my email updates, and it’s in the middle of the night. Good grief, let people sleep.

      • Tony says:

        Haha. This made my night.

      • Dave says:

        Hilarious. Comedy is all timing. Usually when it’s too soon, it’s not funny. But in this case… :)

      • Albieok says:


      • MARK J SPARTZ says:


      • Modalita says:

        Wolf when do we roll out the upvote/down votes on your website? They are made specifically for moments like this

        • Joe Saba says:

          just think before the crisis, some 23% of sub-prime auto loans were delinquent 90 days
          now even good loans will default
          I’ll wait til I see deal of century to buy using my 1 payment plan(cash)
          if they(govt) blow auto bubble then I won’t buy over priced-depreciating asset

        • DawnsEarlyLight says:

          I have enjoyed this website that does not rate comments based on other commenters thumbs. If you have a comment, then just post it!

      • DeerInHeadlights says:


      • Harvey Mushman says:

        That’s why they call him “Crazy Chester”!

      • Jake says:

        Thanks for the reports Wolf, you are among the 5 people that I seriously value regarding opinions in the financial/economic arenas…

    • Chile Rellenos says:

      This is a critical thought.

      The flu of 1918, is not taught, nobody has a clue what went down, I study Econ and 1913 to 1919 is completely missing. Pick up a book on econ, or stock-market, or anything during that era, they might mention WW1, but little is said except “Spanish Flu”, which is because the USA press wasn’t even allowed to mention it in the USA, they could only talk about ‘Spains Flu”.

      They say the reason is that everybody that lived locked it out of their minds 1918-1919 saw some +600K USA citizens die, and that many soldiers and they died of the flu offshore. Everybody had somebody who died, or went mad.

      Thus everybody quit talking about it, and they even quit studying it, and writing about it, thus it can’t even be found in the amnesia pool.

      That will happen now, had a family member die this week, and the entire family is silent.

      • Rcohn says:

        The huge movement of crowded troops only exacerbated the spread of the 1918 flu.And Fleming did not discover antibiotics until 1929. Any bacterial infections were treated by much less effective means; if antibiotics were available, the deaths would have been much lower

      • nick kelly says:

        Last nite on a TV virus question period an email asked if freezing killed the virus.
        The expert said no but I’ll just add: in the 1950’s Canadian specialists traveled to the far North to see if they could cultivate the 1918 flu from frozen corpses. They were successful.

    • Iamafan says:

      Actually in a broader sense, there might be a sudden stillness of a lot of things as we begin to tire and desperation hits on this virus thingy. I have began to shut down the news. Prefer the quietness. It’s like going out after a snow storm. The serenity of stillness.

      • jc says:

        I just took the insurance off two vehicles and I have a third that’s worthless but my daily driver. They can all go as far as I care. I was shopping for a new car up until New York was shutdown. Now I’m thinking, “what was I thinking” I don’t need a new car and for that matter, the perceived need to have a nice new car for road trips is over too. I’m not visiting anybody or any place for a long time to come.

        I prefer silence.

        • Paul says:

          Your comment reminded me of the saying about how so many people borrow money to buy things they don’t really want in order to impress people they don’t even like…..

          I am 65, been pretty wealthy the last few decades, but never bought a vehicle for my own use that cost $10,000, and very few have cost over half that.

          Wife, on the other hand, buys new every three years, with options she doesn’t even know how to use, to impress people she doesn’t even like…

        • Joe Saba says:

          got my refi done just prior(beginning feb)
          already made my 1st mortgage payment end march
          would love to have banksters suspend interest so I can make payments that go 100% towards principle

        • Ed says:

          Paul, that is a wise saying. Avoiding that treadmill would improve anyone’s life.

        • DeerInHeadlights says:

          That’s some useful advice there Paul

      • Nobody in a hurry to go back to the job that doesn’t pay a living wage. I suppose Biden wins, only because he keeps the social safety net, (MMT deficit spending) while the other guy says get back to work! You want to resume your prosperous lives, while low income people are getting a vacation, they now have time to reflect on how f**ked up their lives have been. Never saw this virus coming, but when potus said he would bring jobs back from China I assumed the economy would reflect the change, and you would need that job just to survive. Tough on early retirees when their pension fund craters and they head back to the factory at $10 hr. The virus was poetic, even if you have money you can’t go anywhere. I recall the stillness after 9/11, when all air traffic was grounded. Afterwards the people signed up for a blood war they didn’t really want. This time the anger turns inward.

        • Jonas Grimm says:

          Perhaps this time the results will be more constructive…but I doubt it.

        • Raymond Rogers says:

          Hillary and Joe were advocating the opening of the exchanges while Trump said testing and coronavirus care would be free. There are “progressives” that acknowledge as much.

          Not sure about this anger you speak of. The Senate passed a bill 98-0 to screw generations in the biggest potential transfer of wealth the country has ever seen. A good number of people and almost all the media were cheering Bernie for a provision that was already in the bill.

          In terms of the citizenry, the “progressives” and the freedom caucus/economic nationalists, who together vastly outnumber the corporate uniparty, and ideologically talk about opposing stuffing the pockets of giant corporations didnt seem all that bothered that the last monstrosity of a bill passed. The politicians rolled over. The people rolled over. And here I thought the French were the frogs.

          Recipe for Frog Soup

          One American of any political stripe
          One kettle of water
          1tsp of salt per gallon of water


          Heat kettle on medium-high. Add the salt to the water until dissolved. Add in the American. Stir gently while whispering sweet nothings. Pepper with bullshit as desired.

          Serves 1%.

    • nick kelly says:

      It must be the ultimate in contrarian good news cuz the market is on tear upwards as the economy tanks.
      One measure of how weird this is: Jim Cramer is puzzled by the optimism.

    • sierra7 says:

      Crazy Chester (and others)
      Yes. In this case the tide is still receding and millions on shore are staring out to sea wondering what is happening…..Run! Run! Run! For safer ground! (There ain’t gonna be any!)
      (Get some sleep Mr. Richter!)

  2. Frederick says:

    Somebody doesn’t like my message on WS
    I can’t even type anymore too many virus’s
    Wonder who that could be ( sarc off)

  3. Nicholas W says:

    It’s 3:30 AM Wolf, Tony, and Chester. Go to bed.

  4. Sigmund Fraud says:

    You should have said,”Hey, wait a minute Chester, you know I’m a peaceful man.” ‘Cause that’s how the song goes…….

    • weinerdog43 says:

      Dr. Freud, your note made me think about the loss of one of our treasures yesterday, John Prine, due to COVID-19. The musicians and live music are just being hammered.

      The automakers and their suppliers are suffering, but there are others that are even in worse shape. This is going to be a life changing event for millions of people. Good luck and best wishes to all. (Thank you too Wolf.)

      • DR DOOM says:

        There’s a hole in Wall and Broad where all the money goes. He would grin if he was still with us.

        • Portia says:

          The “free” market will survive

          Gov @GovPritzker confirms that the federal ‘Air Bridge’ flights from China, organized by the White House taskforce, are bringing PPE back from China which are then turned over to private companies. The states then have to bid against each other to purchase from those companies.

          — Josh Marshall (@joshtpm) April 7, 2020

        • R Hughes says:

          Para phrased from a great j prine song for those of us who loved his music. Sad loss.

      • lenert says:

        And Ellis Marsalis.

    • A/C in SD says:

      Egads Siggy, that’s an old song that not many will know of. You’re showing your age!
      Lot of folks posting here saying they love the silence, which reminds me of another great oldie, The Sounds of Silence S&G circa 1969. Great stuff.

    • thealicat says:

      Saw the band in concert.
      High times, my man.

    • tcullen says:

      Ok, now you made me spit beer all over my keyboard. Damn you!

  5. Realist says:

    It will be interesting to see how long it will take for the dust to settle. Considering that many people live paycheck to paycheck, what now when it probably will take quite some time before unemployment applications are processed and payout of benefits begin. How many will be evicted not being able to afford their rent ?

    It would be interesting to know whether foodbanks in the US experience a similar decline in donated food as their British colleagues are reported to suffer or not ?

    • MD says:

      I guess those who plan to do the evicting will need to consider whom they are going to replace their current tenants with, given that many are going to be in the same situation?

      Anyway, if you can’t cover three months’ void in rental payment then you shouldn’t be a landlord in the first place, as you clearly don’t have the means…

      • Lisa_Hooker says:

        Being prepared for a 3 month loss of a tenant is simply prudent, even several tenants. The loss of 60-70% of all tenant income within a month is not.

        • HowNow says:

          North Carolina has stopped eviction filings until further notice. (Democratic Governor and Atty. General.) And utility companies can’t shut off services for non-payment, either.

        • HowNow says:

          I’d bet that this’ll make 2Banana’s toe-nails curl.

    • Dave says:

      I also wonder about the long term psychological effects of this situation. Will we see a return to frugality i.e. like the generation that weathered the Great Depression. I have always tried to maintain a debt free existence and drive older paid off cars and no credit card debt. Before this virus hit I was always amazed at how many people afforded expensive houses, fancy cars and lots of travel.

      Will this crisis result in a return to frugality and living well within your means? If we do see this effect, the recovery will be long and slow.

      • Dave says:

        Hi Dave, the psychological and economic damage will do far more damage and last for longer than the Wuhan, Corona and WHO-COVID-19 virus will!

      • IanCad says:

        Hadn’t thought of that but such a reaction seems more than likely.
        “Experience holds a dear school, but a fool will learn from none other.”
        Or, it was something like that Ben Franklin said.

      • Paulo says:


        Re: change in attitudes

        I hope so, because the previous addiction to consumerism has been destroying the planet and the well being of people. Buy buy buy is a hollow drum beat as a reason to exist.

        Who would have thought one of the lowliest (can you call it a life form?) RNA construct has brought civilisation to a grinding halt. On the tube the other day I saw adds of the young and beautiful driving an Audi SUV to the beach and ski hills and doing the revealing contortion of removing a wet suit in the front seat, and Matthew McCounnagy driving his Lincoln SUV to the middle of nowhere just to go ice fishing with a smug and satisfied smile on his face. The auto adds make me want to give up on people.

        5 minutes later a soprano in lockdown stepped out on her Toronto apartment balcony and sang to the empty streets. Now that made me cry and believe there could be hope. So do the falling stats in this article. Imagine, something else taking priority over buying shit.

        • Portia says:

          Seeing as this hospital dearth of PPE was partially brought about by PE ownership of hospitals and clinics, and their skinflint ways with draining assets and keeping inventories low, I wonder what the next wave of stressed asset buying will do to what’s left of infrastructure.

          NY Post today: Hedgies look to capitalize on coronavirus pain à la Warren Buffett
          “Hedge fund billionaires like Nelson Peltz are looking to mimic Warren Buffett’s strategy of investing in distressed companies through preferred shares as the coronavirus wreaks havoc on the economy, The Post has learned.

          Large financial firms like Peltz’s Trian Partners and Howard Marks’ Oaktree Capital Management have been scouring the globe for opportunities to plow large sums of money into companies hurt by shelter-in-place orders in exchange for stock that comes with big dividend payments and warrants to buy new stock at a cheaper rate, sources said.

          Buffett, the head of Berkshire Hathaway, is famous for using preferred stock to make billions from companies in dire straits, including Goldman Sachs during the financial crisis. Berkshire’s $5 billion investment in Goldman in 2008, in exchange for stock that yielded a lofty dividend of 10 percent as well as warrants to buy new stock on the cheap, resulted in a $3.7 billion payday in 2011, just three years later.

          “It won’t just be Buffett this time,” one well-known hedge fund manager told The Post. “I spoke to one CEO this week” about just such an investment, the on-the-prowl hedgie said.”

        • Lisa_Hooker says:

          Learning to live comfortably and enjoyable as a tightwad takes time. Those that do usually learn at an early age from their parents. With little prior experience it is not easy to become comfortably frugal in a month or two.

        • rhodium says:

          The thing with consumerism is, if we only produced what we needed, as in food, shelter, clothing, some energy, and whatever other random stuff, then we could meet that supply in the modern economy with far less than half of all working age adults actually working. Unfortunately that would leave the other half of people who need jobs without them and no income so no ability to pay for their needs.

          Unless many of us all went to some low energy subsistence farming style economy, or tried to portion out work so that people only worked necessary jobs for 15-20 hours a week, then because most of us work for the other half of the week if not even more than 40 hours a week we end up creating excess value beyond our needs. We could save it and live extremely frugally, eventually retiring early and letting younger people do all the work, or spend it as discretionary income, thereby working longer in life and per week while giving other people alternatively a job supplying discretionary goods or services (consumerism) for what you can now afford.

          If you’re not poorly paid, then consumerism is tightly intertwined with workaholism. One particularly demented twist in the modern economy though is trying to fuel consumerism by pushing credit on people. I consider that the rotten trade-off for trying to maintain production volume while allowing for wide income inequality. You can’t sustainably have it both ways though

      • Dan Romig says:

        My parents were kids in the Great Depression, and that influenced the way they lived as they were successful adults. That, in turn, influenced me and my sister. Now, sis & I are both in good shape financially, but we are frugal and we stay away from debt.

        I see the same set of values in my two nieces (no kids of my own). I would guess that much of the way people choose to live is based on how they were brought up.

        On the other hand, MC01 recently commented on the probability that BMW’s 5 series cars will or will not go off the show room floor as a result of the economic effects of the pandemic. So I flipped onto BMW’s website. I must say that the new M8 Competition Coupe, at only $150k is tempting. But instead of checking one out at Roger Penske’s dealership in town, I figured it was cheaper (and smarter) to change the oil and wash my twenty-five year old sports car.

        If I change my mind, I’ll bet there’s going to be one waiting for me.

        • MC01 says:

          Dan: BMW has stopped manufacturing at their German assembly lines (where the most expensive cars and motorcycles are made) for two simple reasons.
          First, their vendors in Austria, Italy and Spain were shut down and they were running out of parts. Austrian factories will start reopening next week but it will take them weeks to get back at full speed.
          However this leads to the second reason BMW stopped manufacturing: their lots are literally overflowing with brand new cars as dealerships in Europe were either shut down or used force majeure clauses in their contracts to cut off orders.
          Dingolfing and Munich have literally no more room as brand new 7-Series, M5 etc were assembled right up to the moment the factories were idled.
          All these cars will have to be disposed of eventually. A part will become spare parts and scrap metal, but the rest will have to be sold one way or the other.

          Now a tip: I bought my first BMW motorcycle in 2009, a couple of months after the Financial Crisis peaked. I was actually surprised of the good deal I had with minimal haggling as everybody had told me “BMW never takes a cent off list price”. It may have been the case before, but not when they had warehouses overflowing with unsold motorcycles in their nice little crates. ;-)

        • Willy2 says:

          – People can Always use those cars to live in them when they got kicked out of their houses.

        • Dan Romig says:

          A 2009 BMW motorbike is one I’m familiar with. When my friend was working on the BMW M3, and then Z4 race cars in IMSA, he bought a F800 GS. A very cool bike to ride – anywhere you want to go! Upright seating position and tons of suspension travel. It would be perfect for the cobbled streets of Europe.

          A few months ago, his bike, with nearly 100k, started having electrical gremlins. These were maddening and and unpredictably intermittent.

          But 2012 was the last year that BMW built its vertical twin engines in Germany. Now, they’re made in China for the 850 GS. So my buddy looked around and finally found a sweet, low mile 2012 in Palm Beach, FL and bought it. How do you get it home to Charlotte, NC? Easy, jump on a plane to Fort Lauderdale, catch a bus to the owner who’s selling it, write a check and ride. 1,040 km later, you park it in the garage.

          I gotta give my buddy props as he would not buy a new BMW with a Chinese made motor! He loves his ‘new’ 2012 machine.

        • R Hughes says:

          According to latest Consumer Reports annual auto issue 5 series is one of the most trouble prone models and has been for years. A review shows all of the series have issues, esp when compared to ES, RX so forth of one of their competitors.

          Remember my 733, 735 z3 models with fond thoughts, but that was years ago.

          My bil has 750 il, 2014 or 15 with engine oil design problems. Had extended insurance on buying a 3 year old lease. Engine went kapu. Entire engine was replaced, about 12 k he was told. After windows, electronics, so forth in repair he says going back to LS. Loves the drive but not the unreliability.

      • Jdog says:

        It will be interesting to see the effects on the economy of a sudden dramatic loss of income at a time when the majority of people have already spent large amounts of their future income, that may now never materialize.

        • Bobber says:

          As long as the Fed can print money to keep interest rates low, asset prices might be supported. This is why the stock market remains higher than what many believe is warranted.

          The chase for yield is what caused the bubble in the first place. That reach for yield won’t easily go away if the Fed is able to keep interest rates on investment-grade assets ultra-low.

          To be honest, I wouldn’t be surprised to see the stock market making new highs next year, assuming rates are still rock bottom. I also wouldn’t be surprised to see it down 50% from here. By creating this bubble, the Fed has put the economy on a tightrope – on one side is a serious risk of hyperinflation, the other side is a serious risk of massive deflation.

      • Paul says:

        That is the compositional dilemma.

        What is good for both individuals and the economy long term is bad for the economy short term.

        Even if people understood what they should be doing, and they don’t, it would take most of them a decade to turn it around, and if any significant number came to that realization simultaneously, we would be looking at a severe recession lasting decades.

        • Portia says:

          What is “the economy”? Why is it a separate entity? If we looked at “the economy” as the reflection of individuals’ behavior, it might be more useful, but reveal some realities better preferred hidden by some.

      • S says:

        >>Will we see a return to frugality<<

        Of course we will but it won't last too long. And the stock market will be driven back up to new highs as soon as the storm passes. Macro and mirco fundamentals don't matter because it is all about money flows and destroying savers. I have told some younger people not to bother saving, rather just take on debt and let it be inflated away or forgiven by the guberment.

        There is one trend that might develop and be important to a Boomer who is retiring. They might choose their retirement house to be in a community where people are not living on top of each other in condos or in densely packed neighborhoods where your neighbor's house is 6 feet away. (This is the current neighborhood layout of many new residential developments in south Florida.)

      • Rudolf says:

        A mantra from my parents who lived the Great Depression: Make, Make do, Do without. Been working for me since I was a kid

        • David Reavis says:

          The saying goes:

          “Use it up, wear it out, make it do, do without”

      • Engin-ear says:

        A decade of frugality could bring us to nineteenth century state of things. Those times are described in great details in classic literature.

        Our technical miracles are based on intensive energy and labor consumption. If we slow down the consumption, we’ll certainly lose the speed of progress, will possibly fail to achieve the breaking point for a large set of activities.

        Some technologies will be lost commercially because the will be no point nor possibility in selling products without profits.

        • VintageVNvet says:

          ”A decade of frugality could bring us to nineteenth century state of things. Those times are described in great details in classic literature.”
          Maybe EE,,, but we can hope that a decade of frugality will bring us to the late 1940- early 50ish state of most things being pretty damn efficient, people much more self sufficient and still appreciating the heroes of WW2 (until Korea war, at least) and most people supporting NGOs (think churches, etc.,) helping poor, hoboes, etc., etc.
          Not to condemn advances of equality and others, tech, medical esp., etc., since then, but certainly seems that all or almost all guv mint efforts have been very heavy handed and may have done as much bad as good.

      • Jon says:


        That is what the sages were telling us in 2009, but five years after the insane Fed policies started, we were back with profligate spending once again.

        • HowNow says:

          Dial back to 1982 during a credit collapse of sorts. People got religion about not having 12 maxed-out credit cards. Testimony on nightly news: “I’m never going into debt again!”

          It wasn’t the fault of the FED. It’s gluttony, plain and simple that got us into the next, then the next, and then the next credit bubble. “Lord grant me the serenity to accept the things we cannot change…”

          Record level of coral bleaching just reported at the Great Barrier Reef. “… and the wisdom to know the difference.”

      • California Bob says:

        re: “Will this crisis result in a return to frugality and living well within your means?”


    • Shiloh1 says:

      Any data or just anecdotes from mortgage servicers with regard to how many people are opting to forebear the April, May, June payments? Especially if such contacts have 700+ credit scores, perhaps cash is king, why pay now if one doesn’t need to?

    • bebe rebozo says:

      I live in a city of about 250,000. The soup kitchens and food banks here have closed their doors. When ever they reopen i will give my govt handout to them. Please consider doing the same.

    • Portia says:

      In my area, the food bank system which includes donations of surplus and slightly outdated foods from farms and grocery stores has already come to a halt about a month ago. You have to call ahead and receive a box outside. I don’t know what they have run out of, but if local farms and stores are no longer contributing meat, eggs and produce, they must be pretty bare.

      • VintageVNvet says:

        In tpa bay area, many restaurants operating delivery/take out only, (including wine and other adult beverages,) but also teaming with NGO/non-profits to deliver prepared foods and groceries, esp to older/elderly most at risk; also seeing many helping hands on non profit basis, special hours at almost every grocery outlet, etc…
        People ARE pulling together, and it certainly seems to this old boy that the younger folks are absolutely doing their share, maybe more!
        We WILL get through this virus event, though some have and will die from it as either a base cause, or just another. I personally told this coveedovey it will just have to get in line behind others been ”knocking on my door” some for decades,,, and will still be looking for a ”superdeal” on my next, 21, pickup, as in 09, mentioned elsewhere!!

    • John Griffith says:

      70% of the people going to our food bank have never been there before. This is a lot bigger than anyone has realized.

  6. Christoph Weise says:

    There is little else that effective to spoil the desire to buy a new car than a pandemic and the resulting lock-downs. The big question however is if that tragedy shall fundamentally change consumer behaviour. Why worrying about a new and expensive car under such circumstances? And certainly not a car from Mr. Musk who spoils the atmosphere with his rockets.

  7. chrislongs says:

    Vehicle lease defaults tolerated as usual repossession / resale process gummed up by the pandemic?

  8. Al Loco says:

    My wifes Kia minivan lease matures may 19th. I vowed to never buy another Kia but the wife kinda likes the new Telluride. 3 days after the IL lockdown (and dealers realized they could stay open because initially they were going to shut down) the calls started, every day. They offered to bring us the car to testdrive. I thought I was in a great spot to negotiate. Nope. Kia finally has a vehicle with real demand and wont come a dollar off Msrp. I guess there are still plenty of people buying $50k suvs.

    • Raging Texan says:

      @Al Loco

      Try again after the excitement over the government checks is over

      I will probably get a truck, but not until all the animal spirits have gone away

    • 2banana says:

      You give up waaaaay too easily.

      Call other Kia dealers within 250 miles.

      Look at similar class vehicles from other manufacturers.

      Let this dealer know what you are doing in a nice way.

      Have a checkbook ready and a firm price.

      Wait until the end of the month when they need to make quotas.


      Play the game.

      • Al Loco says:

        It’s pretty well know that the Telluride is in high demand. For me it’s a way for my wife to give up on it, I never want to own a Kia again and I’m for sure not prepared to start the game for one. I want to buy a used Honda van private party and I already see deals even with the small pool of private party available.

      • VintageVNvet says:

        Exactly SO 2bana; in 2009, the dealer called to tell me they had, finally, received the pick up i wanted, so wife and I drove out there in the old truck- a 2005, the last day of the month, (after sales mgr and i had worked out the deal over the phone;) i had mentioned they would likely try something, and if they did, we were to jump up and head for the exit; they did, we did, and his boss came running out and dropped the price another $K; ended up at half the MSRP!
        And what fun, eh? Happened a year ago very similar, though did not get down so far on this one,,, looking forward to 2021s coming out.

        • 2banana says:

          Well played.

          You have to be willing to get up and leave.

          And every sales person knows that if you leave the showroom floor, odds are you will probably not be coming back.

          I had a similar experience on my last new car just last year.

          We were about $1500 apart. Last few days of the month. I got up and left.

          In the parking lot, the manager comes out and said if you take it today, we will agree to the price.

          The other funny part when I was signing the paperwork, I pulled out my own pen. The paperwork guy asks “Are you an engineer?”

        • Dos Tacos Mas says:

          Got a great car-buying idea from a friend, that works wonderfully! Identify the EXACT car and accessories you want. Print up the description and mail it to dealers within “reasonable” distance, along with a self-addressed postcard. The letter tells them what you are looking for and if they have it, send the postcard back with the out-the-door price and who to contact. Then wait a few days…

        • California Bob says:

          Many/most dealers will do this haggling over email (speeds things up). When I bought a limited edition Mustang in ’08, I pinged 4 nearby dealers: one wanted $15K over list, one wanted $10K over list, one wanted $5K over list and one offered MSRP and ‘threw in’ some interior lighting–‘pimp lights’–which I didn’t really want (they are kinda neat, though). Guess which one I bought from? Of course, I could have gotten the car for less in 6-12 months, but I wanted that car NOW (and I kept it for over 10 years and 135K miles).

        • Socal Rhino says:

          On one car, I printed out the invoice info from CR and went through it line-by-line with the sales manager at around 8:45 PM. Paid a little over invoice (which had some-built in profit I realize).

          For one of the early Hyndais I insisted on the lowball advertised price and did the walk-out thing, got it.

          Luckiest was my CRV, found it on a lot after the next years model, a re-design was out, and they were happy to let it go at just over cost. Wife is still driving that, 16 years later. Can’t believe my luck in finding a lovely partner who is even cheaper than me.

          We are hoping to pick up a CRV hybrid, will wait to see what kind of deal we can get as this plays out.

      • Jason Christensen says:

        You get better deals these days if you finance with them. Then just pay if off the first payment. They’re getting kickback from the banks who expect to collect lots of interest over time. Saying “I only pay cash” these days means they’ll stick to the listed price because they lose the opportunity to get the banks $. I know, I worked in the “tower”.

    • cd says:

      Kia recall on engines had most being in the shop for months, I have rode with many a Kia rep, great guys but they know the value of their car….

      Kia ownership is thumbs down …

      • Al Loco says:

        Yes, I don’t recommend them. The van isn’t that bad but it’s had a few issues. A 100k mile warranty is worth nothing if their dealer support is horrendous, which it is.

        I have found haggling via email is by far the best way. I can shoot out 15 emails in about an hour. I choose for the best price and present to the dealer I prefer. I stay courteous and typically save everyone a ton of time.

  9. Kent says:

    I work for a City government where one of the big issues used to be “we need a new City Hall, ours is 50 years old and it’s busting at the seams with people”. Over the last 2 weeks, we’ve sent just about everyone home to telecommute. We’ve implemented multiple systems to measure productivity pre and post-telecommuting to keep people honest. So far, productivity is up about 7%. Honestly in a range of +18% to -7% depending on the individual and work flow.

    What happens when City leaders decide to focus on telecommuting in the future instead of spending 10’s of millions on new facilities? I’m sure many business leaders are thinking the same thing (and many are already there). Auto sales may be permanently impaired. Not to mention millions going out to a restaurant for lunch with co-workers.

    • VintageVNVet says:

      Good comment, and very good questions Kent!
      Although I have done weekend and partial weeks working from home since for ever, (late 60s era) it was full time starting in 17, and I was NOT a happy camper after just a year or so; really needed to ”touch base” with coworkers and even the boss, etc.
      Too many challenges, at least for this old boy, working from home ONLY.
      And although I certainly hope this event will catalyze the movement toward much more efficient and effective remote working, IMHO the need and desire to work within a team will always be a major factor in every org, guv mint, NGO, or completely private, going forward.

      • Kent says:

        I’m with you. I don’t mind telecommuting 2-3 days a week, but I hate the distance between people I work with and often whose company I enjoy.

  10. Dave says:

    Maybe this time around China and Mexico should bail out GM? Last time around GM got bailed out and used some of that money to expand their manufacturing in China. If Mexico and China want to keep those jobs fund them!

    it may not be that simple but it makes sense.

    • Tortilla con Queso says:

      What’s good for GM is good for America? Right? 1950’s

      Now 2020’s GM isn’t even taken seriously, some 30+ years ago they became a loan company, making 15% on high-risk credit, rather than making 5% ROI selling cars.

      GMAC was run until they ran it into the ground, during that time the GM was run into the ground.

      The question begs to be asked. Why in the hell would China or Russia put a penny into this fraud?

  11. Dave says:

    I have a question, “How do you value a company with Zero Sales, Zero Revenue and an Uncertain Future?”. Is the price of those companies shares cheap enough now?

    I’m on a roll this morning :-)

    • RD Blakeslee says:

      Interesting question, because the answer depends on who “you” is (are).

      For the high rollers in the stock “market” (a casino, actually and the players are playing with house money, courtesy of the Fed): Unlimited PRICE (NOT value!) – like WeWork’s price was. Just depends which bet catches on next.

      For others, me for example, the price is zero and the casino is off limits.

    • timbers says:

      Been thinking along those lines, too. Like what’s gonna happen with earnings?

      Will we see an explosion of creative accounting to fraudulate earnings to support the Fed’s Goal #1 to always make the stocks to up?

      Wouldn’t put it past Wall Street to try and claim Covid is a one time event, and creatively back it out of their earnings report.

      • cd says:

        the oxymoron is biotech is least risky and man I’ve been killing it with some pick ups last week

    • Lisa_Hooker says:

      @Dave: The basis for valuing such a company is popularity. Much the same as our election process for political leaders.

      • Dave says:


        Intriguing name!

        Every notice how no one ever says it’s a good time to sell. It’s always buy, buy, buy. If stocks are going up buy more (FOMO). If they drop, average down. If they crash it’s a once in a life time buying opportunity! And of course, Buy the dip.

        I don’t want to just buy the dip, I want to eat the dip with some chips!

  12. Les Francis says:

    I had two sedans and wanted a wagon. Start of March.
    Advertised one of the sedans and sold it. Took a deposit. I then went and bought a wagon.
    Buyer for the car I sold couldn’t go through with the sale – sudden credit crunch. Advertised the sedan again – found another buyer. Before the sale finalised the buyer had lost his job.
    So now I have three cars.
    No hope of selling any for the near distant future. No hope of selling any for a decent value even on eBay.

    • Taco Control says:

      Many talk of inflation, but we can see mostly deflation among the plebes

      No work, no money, lots of junk to sell all at once, much junk chasing a few dollars.

      Massive deflation coming.

      The entire world turns from paper money, all things move towards barter.

      “A man is rich in proportion to the things he can afford not to buy” -Thoreau

      Now is certainly the time for the person without wants to be rich.

  13. aqualech says:

    I feel some bailouts coming……

  14. dj says:

    Where did I read “Everyone deserves a car they cant afford”

  15. Iamafan says:

    Who needs another car now? Where are you going?

    • Bead says:

      I need a car for my sanity. I am going in ever wider circles

    • Lisa_Hooker says:

      I for one am going mad. Not due to any virus, but as a result of current “price discovery” and “markets.” We should develop a new national-sport game with randomly moving goalposts to train our youth. /s

  16. Icanwalk says:


    I assume that the vast majority of Americans have been used to spending all of their paychecks plus money loaned to them by credit card companies? Something like 70% of Americans can’t put their hands on a thousand dollars of emergency cash? Can this be termed as “the velocity of money”? If so, what happens now? The brakes have been put on, and then the velocity has reversed. We have a vacuum. The haves must be a small percentage of the whole. The newly minted have nots must be a large percentage of Americans. The haves can’t spend enough to make up for the have nots not spending. And then there is the fall off of remittances to our neighbors down south. Is this the mess of the century or what?

    • Tim says:

      Yup. Pretty much.

      …. and remember, the only thing the have-nots have more of, is votes.

      In various parts of the world that could get interesting.

    • Coalman says:

      The bottom 20% just became the bottom 40% of the population.

  17. Endeavor says:

    In the US, a vehicle is mostly a necessity but the terms and timing are discretionary. But it is hard to see anything but a long lasting sales gap going forward. Subprime may flourish under the new MMT monetary system while solvent customer choose used. Only Blackrock knows for sure:-).

    • cd says:

      Subprime is not going to do well, all risk has been readjusted, were not buying anything under 660 now, we bought at 525 fica before

      Risk has been mispriced for a decade, expect it to bite back hard now

  18. George W says:

    The consumer demands cars/trucks they can’t really afford.
    GM, Ford Etc build cars/trucks based on the demand in the market.
    Creative Financing allows buyers and seller to reach an agreement.

    Our credit based economy is being tested in many ways.
    The government needs to stay out things and let the free markets work it all out.

    • JC says:

      You’ll love this. I was just let go from the worlds largest RV dealer as part of a workforce reduction plan (they have $3 billion in debt and have been downgraded 3X in the last year). We were offering 15 year RV loans for loan amounts as low as $15K. people with 750 FICOs doing 12 yr loans on 15K was almost standard. I hear 84 month auto loans are common now.

  19. Michael Engel says:

    1) Dr. Claudia Sahn indicate chance for 100% recession.
    2) Wall street predict a 30% – 50% GDP plunge, bad news for F.
    3) If correct, by the end of next year the Chinese GDP will be larger than our, leaving US behind, in the back of the line.
    4) Wuhan opening was celebrated, but their customers are gone.
    5) Front line medical workers will benefit from $Trillions pouring on them, but car dealerships inventory isn’t moving.
    6) Small business owners will try to reopen at 30% – 50% capacity, but
    the US gov give their employees and customers have a great incentive to
    stay home.
    7) There is too much risk out there beyond the house walls. Employment for min wage isn’t a enough reward for the
    risk they take. Workers will become risk avert, thanks to lucrative gov help.
    8) The next recession might be long, coming in waves.
    9) The $trillions spent on health workers and labs will counter the collapse of restaurants and car dealership. Vector up/ vector down. US GDP plunge
    will not be that deep.
    10) Dr. Louis Falo fand Dr. Andrea Gambotto from Pittsburgh school of medicine developed a promising vaccine. Its a patch attached to the skin
    similar to a smoker patch. If FDA confirm, US will build a new arsenal to fight Wuhan.

    • Mark says:

      Most doctors are hunkered down and not doing well now as elective surgeries have been cancelled. This is where the money is made and there are very few cases to be done. Meanwhile, the ER and ICU docs are all on salary – it doesn’t matter if they are 5 patients or 50, they are paid the same.

      Also, the Fed/Treasury are going to print and pump so much money, this may be a recession unlike any other. Unemployment at 20% with negative 20% GDP growth and stocks back at all time highs. The market bottomed on THE DAY the Fed announced QE infinity for a reason.

    • nofreelunch says:

      “Chinese GDP will be larger than our, leaving US behind, in the back of the line” Its GDP per person that counts. Would you rather share $3000 with ten people than $1000 with two people? The country to want to be is Switzerland, with a small population and home to some of the biggest companies in the world.

  20. Alan says:

    My worry is the number of subscribers who are one, or at the most two missed payments away from having landline, cell, internet, cable services (often all of them) cut off, severing all contact outside their rooms of starving, cold, psychologically and physically decompensating bodies – and this is without regard to the Covid infected ones. Here is where the bodies will really start piling up, pets first.

    • lenert says:

      My worry is migrant pickers and meat packing workers getting sick.

    • Lisa_Hooker says:

      T-mobile sent a text providing payment relief and no suspension or late fees until 17 May 2020.

      • Raging Texan says:

        @ Lisa Hooker

        What USA govt and companies are saying “We won’t foreclose, evict, cancel service due to Covid-19 because we are nice”

        What the avg American hears “STOP PAYING ME!!!”

  21. DR DOOM says:

    The ability to have a loan facility using fiat money with no risk and no time value of money for Wall Street is all that matters .Wall Street believes it can get cars manufactured anywhere. Finance is all that matters. They own government and the fed. The 30 million people or more that may lose their jobs does not matter to Wall and Broad . They pay Congress to handle that by passing the costs to the taxpayer.

  22. Willy2 says:

    – I inmediately thought: Falling US Trade Deficit because A LOT OF those cars are produced south of our border (with Mexico).
    – And that at a time when the US budget deficit is going through the ceiling. OMG & Ouch.

  23. Clete says:

    Question: Are the credit card issuers cutting off (or lowering) credit lines for borrowers? I haven’t seen anything but thought this might make sense (for them to hedge their risk) while hindering the eventual recovery.

  24. Matt says:

    Doesn’t matter. Market is up.

  25. Max says:

    Thank you again Wolf-fantastic objective articles/summaries and such wonderful commentary !

    Greetings from Australia.

  26. Cobalt Programmer says:

    Whenever Wolf posts an article about car sales, the comments are typical as follows

    1. [I]… already have a 20 year old car that runs fine, well maintained and vague promises like,…never buy another car.

    2. … son or granddaughter brought a new car 2020 model, loaded with lot of electronics but lack even a basic cassette player…

    3. All the big trucks have higher price, low MPG and no value

    4. Anecdotal information about how the lots are always full or empty depending on their town.

    5. SPX, technical analysis, how fed diluted the money, why to store physical gold and so on…

  27. Bobber says:

    What about all the people who already bought an overpriced car and are now unemployed. Are defaults going to skyrocket? I heard Ford and GM make most of their profit from financing. It appears that will not be a source of losses.

    I bought a little Ford last year at $8. Now I’m down almost 50% just a few months later. I won’t be doubling down on this stock. I think Ford and GM are clear BK risks given all the debt on the balance sheets, fixed costs, and what looks to be negative cash flow in years ahead.

    Plus, you have the long-term structural hurdles like people working from home more, carbon concerns, and future infrastructure bills that may further mass transit options.

  28. Bobber says:

    Correction: in 1st paragraph, change “that will not be a source of losses” to “that will now be a source of losses”.

  29. Phoenix_Ikki says:

    Funny, you wouldn’t know things are this bad if you look at the market for the last couple of days. Melt up mode back on, Tesla still around $550 a share, Toyota still expensive and stock only at May 2019 level.

    I guess traders and the market thing COVID19 is over now, we’re on our V shape recovery to buying more cars and this will blow over in no time…gotta love that optimism.

    • Bobber says:

      If the investing alternatives are overpriced RE and fixed income paying 1%, the reach for yield will continue to provide some support to the stock market.

      People expecting a 50% stock price drop from here should ask themselves whether that is a realistic expectation if rates stay below 1%.

      • VeryAmused says:

        People not expecting a 50% stock price drop from here should ask themselves whether the massive amount of debt and malinvestment the world is loaded with was sustainable before the virus let alone after.

        • Bobber says:

          If you want to be rich like a banker you need to think like one. You may think your used car is worth $10,000, but if the Fed prints $20,000 and gives it to you, your car is worth $20,000. Very simple.

          In essence, that is what the Fed is doing in the credit markets.

          Nothing has a market price these days. The price is what the government dictates.

        • VeryAmused says:

          Here we have average Joe. Average Joe has a job were his wages have gone up 10% in a decade while the real cost of living has gone up 50%. Bankers let average Joe take out tons of loans he can’t really afford because the banker was given the power to conjure credit from thin air. Average Joe is living on the edge of a credit ledge like never before.

          Along comes a black swan and take average Joe out of commission for a bit. The bankers are given the power to extend even more credit to average Joe.

          Average Joe takes this opportunity to take on more credit which pushes him right off the ledge.

          The price is not what the government dictates it is the price that can be pushed on average Joe until he breaks.

          In essence, that is what the Fed is doing in the credit markets.

          You can ignore reality but you cannot long ignore the consequences of ignoring reality.

          But I agree that the bankers will get richer.

        • Bobber says:

          Very Amused,

          I don’t agree. The Fed is printing money and giving it away, not just giving out loans that will never be repaid.

          It works like this. The government runs a $2T deficit, the Fed buys that debt for cash. The Fed essentially retires that debt by leaving it on its balance sheet forever. End result: government spending it paid for with $2T printed money, each and every year. Some call it MMT. Some call it debt monetization. I like to call it money printing.

          Generally, the lucky recipients of all this money printing are targets of excess federal spending (defense, SS, Medicare, etc.), plus those who’ve been getting the big tax breaks (i.e., corporations and shareholders).

      • Phoenix_Ikki says:

        50% stock price drop might not be realistic but at this current level, I would say also not realistic as well consider many companies will have close to nothing in revenue over the next quarter or more, yet we’re still treating like this is all over. Using the simple Buffett indicator, you can see how overvalue this market is now and even at last month’s low, we’re still looking at comparable to end of 2018 low. From a board market perspective it’s not cheap by any means.

        But I get it, up is down, down is up. Just read an article saying now is a good time to buy a car so all is well, 10M filed for unemployment but I guess this level of optimism will assume everyone will rush out to buy a new car once they get their job back.

      • VeryAmused says:

        The worst thing the CB of the world have done is make people believe that debt no longer matters.

        If debt no longer matters then concept of valuation no longer matters.

        Rest assured that the concept of valuation still matters biggly.

        I think the world is going to get a big wake up call shortly.

  30. Charlie says:

    lenert “my worry is migrant pickers and meat packing workers getting sick”

    Even though meat packing is an “essential business”, some workers are getting sick, but health controls have already being implemented. But the effect is slowing down processing. Cattle futures markets have been discounting that effect for a month now, trading at unprecedented levels of $15 to $20/cwt under the cash market. We have effectively driven out the “long” in the cattle futures making the futures market disconnected to the cash market, and making it irrelevant to manage risk today.

  31. Michael Engel says:

    1) Risk avert employees will hunker in the bunkers for a while.
    2) Inflation will delete US gov benefit. Gov entitlements will become
    3) Health & tech sector employees and the gov elite will get raises, but the rest, at the bottom, on furlough, isolated at home, can’t.
    4) Some will suffer starvation and dehydration, but the rest will
    be forced to get out of their bunkers and join the leading sectors.
    5) From serving filet mignon and alcohol, those on min wages will join an army of subway stations, hospitals and buildings cleansing.
    6) A new army of security guards protecting from Wuhan virus & cyber.

    • Jon says:

      US economy is driven 70% by consumer spending. If the consumers are not spending for whatever reason: job loss, job insecurity or hunkering down, then the economy goes down. If it happens even the tech workers would be impacted. I don’t see how are they immune. BTW: I am a tech worker.

  32. LouisDeLaSmart says:

    My suspition is that airports, bus and train stations will be shut down for good and for a long time coming. Simply, due to the confined space and recirculating air this mode of transport has a high infection spreading potential. But once the borders open sometime in June in Europe, it will be for cars and cars only. Hence we will see a lot of cars moving soon, with the used vehicle market being the dominant for no other reason then monetary considerations.
    In the long term regarding the “new car market”, in Europe we should see a significant move to EVs in the next 5 years with BMW leading the charge with 12 new models by 2025. In the short term it’s definitevly going to be a bad year for all car sales, except luxury of course.
    A crisis is a great time to adjust pricing in overcompetitive markets and use the disruption to impose new industry trends. And get some of that “bailout money”!

    • Jon says:

      The gas prices have fallen big time and I see the incentive to go for EV is less because of this.
      I am a numbers guys, and when gas was at $4 in CA, it’d have made some sense with a stretch to buy EV but not anymore.

      I’d assume EV sales would go down with time.

      • LouisDeLaSmart says:

        And the Germans are good at numbers. They are also good at making laws prohibiting non-EVs entry into the city, and enabling the system to clearly favour the use of EVs…Let’s say a 100% tax on registration for vehicles older then 8 years.

        • Jon says:

          But Germany is not a big market ofr car manufacturers I guess. Unless the EV car prices come in line with ICE and there is a charging infrastructure, I don’t see EV as a viable option for many.

    • cd says:

      luxury will feel the heat, trust me…..the wealth destruction event was aimed at them…..

      no one is buying cars but car people think this will be a comeback like after cash for clunkers….good luck…..14 trillion in debt and the repricing of risk is put an end to car buying as we know it…

  33. PE will start strip mining some of these companies for their assets. After at least a decade of malinvestment these are bloated, irrelevant corporate bureaucracies. (BA) At the top is the banking industry. Held up by government because people actually store their sovereign currency (USG owned money) in these places. Auto makers make more profit on loan programs than cars. The great financial unwind is going to destroy them. The corporate HY market is not bouncing the way Fed envisioned (after a 4T gimmick). The lag shows up as a temporary lull in the drop in energy prices. That is 4T they WILL NOT GET PAID BACK (unlike the GFC). Fed will have to destroy Treasuries (making QE style swaps) to save Corporates or the greatest deflation in history will unfold.

    • Synergy says:

      They can strip mine all they want. If people are not getting paid to buy their junk what’s it worth?

  34. Iamafan says:

    Have you noticed all the $$ billions in Cash Management Bills the Treasury has been auctioning like there is no tomorrow?

    I got tired of adding them up.

    But since these are about 40 to 154 days only, then about $$$ billions will be MATURING soon. Since money is growing faster than water, where the heck will the Treasury get the money to pay and redeem them??? Oh, that’s easy, they will just issue more and more.

    Am I the only one who’s thinking disaster other than the virus? I hope not.

  35. CreditGB says:

    A quote by Jimmy from Brooklyn: “Hey, moron, ya shut the f’ing economy down, what the fxxx did ya think was gonna happen…?”

  36. kingcrab says:

    Wolf — many people, like myself are on “temporary” layoff. I filed for unemployment — in CA, but will have my job back when the lockdown is lifted. There are likely a very large percentage of new filers in this same scenario

    • VeryAmused says:

      Would you mind telling us what your job entails and how you know your job will be available after the lockdown is lifted?

      • kingcrab says:

        IT for a manufacturing company — we will not be going out of business so most employees will be hired back

      • Bobber says:

        I know of a capable operations manager in the food supply business that was let go last week, after working five or more years for the company. The culprit is likely reduced restaurant activity.

        I also have a relative that is taking forced time off from an airline.

    • Wolf Richter says:

      I hope so. Otherwise we’d have 30 million or more newly unemployed when all this has finally run its course, and that number would decline only slowly over years, and that would be a fiasco no one even wants to imagine. But if there are 30 million newly unemployed by the time this is all said and done, and 80% of them get their jobs back in the following months, that leaves 6 million newly unemployed. And that’s still a terrible deal.

  37. David G LA says:

    My 2018 VW GOLF was totaled in a crash in LA Sunday morning. (A guy in a Toyota pick up made a left turn into traffic from a stop sign – I hit rear tire panel. Was determined he is 100 percent at fault)

    Looking at prices on line – no discounts or reductions or specials. WHAT THE HECK?

    I’m thinking I should wait 3-6 weeks before buying. or – maybe try that web site that lets you take over a lease – get one with a few months remaining. then purchase a new car (or slightly used) in November.

    • cd says:

      wait it out and remember never to buy a car at the start of the month, the thursday before the end of the month is optimum….I work with dealers across the country, they are scared and the flooring they have right now should make them freak out…..even service is down 70%….that is what pays all the bills, salaries and lights…..not sales….they don’t make anything off new, some off used and now finance companies have to jack their tiered rates up, risk is off in auto land

  38. Iamafan says:

    Can someone recommend a town whee I don’t need a car to buy food, go to the pharmacy, or visit a good doctor. I am hoping to find one where I can live the rest of my retired life.

    • LouisDeLaSmart says:


      • Iamafan says:

        Where? I’m interested seriously.

        • The Original Colorado Kid says:

          Glenwood springs, Colorado if you live in the area near Sayer Park. Very nice town.

        • Iamafan says:

          Thank you. Will street view now.

        • LouisDeLaSmart says:

          Netherlands, just about any city. Sweeden, Malmo. No car needed. Denmark, Copenhagen. Barcelona, Spain. Just in general in Europe, unless you are in a rural place, you can manage without a car. It’s convenient to own one for the weekends. But you dont have too.

    • Just about any (civilized) place has grocery delivery, and medical transport. A car is no longer a necessity. If you have a spouse who can drive, or a roommate, or a caregiver, to help you out it is even better. If you really want to live alone then assisted living might be the thing. While everything is shutdown neighbors are ready to help. Just a question of making the connections. You might have everything you need right where you are.

      • Iamafan says:

        The problem is I can’t just get out and walk to important places. I might look up places downtown and see what’s for sale. I don’t need assisted living yet. Just want to be more independent. What good is all this money?

    • VintageVNvet says:

      Other than the ”a good doctor” part, there are many places in small town USA where ya can walk for food, pharmacy, and library,,, many docs now in USA, now so afraid of law suit that they no longer make house calls,,,LOL

    • Cas127 says:

      You might want to try out

      They can generate/rank various locations for “walkability” using various metrics.

      I have not done a deep dive into their methodology or tried a multi-metric search like yours, but it might be worth a look.

      • Dan Romig says:

        Minneapolis is # 1on Bike Score with a 83.5 rating. Portland is a close # 2. I’m not sure why, but Chicago is # 3, then Denver and San Francisco is # 5.

        It is not fun biking in the winter with snow, ice and wet salt on the roads in Minneapolis. We are a bike friendly town though. Lots of trails and bike lanes on main thoroughfare roads.

        This probably won’t help Imafan, but a few houses down the road, I have a bike lane direct to the Mississippi, and two blocks away, there’s one direct to downtown.

    • Clete says:

      Iamafan: don’t laugh, but look at the 33904 ZIP code in southwest Florida. You can buy a house for 200K or a condo for less, and drug stores, groceries, farmers market (Nov-May) and a bunch of banks, doctors, and restaurants are within walking distance…and it’s year-round walkable, since there’s no snow.

      • cd says:

        and bugs, more bugs, hurricanes, humidity, sheeple and a state that will be underwater at some point….no thanks….

    • Wolf Richter says:


      San Francisco works great in that respect. Manhattan works great too (we didn’t even have a car when we lived there). And there are other places like this. So if you’re wealthy, and you want to retire somewhere where you can effortlessly spend your kids’ inheritance, those towns might work for you :-]

    • Lisa_Hooker says:

      Pistoia, about 20 miles west of Florence. Walk to everything and the food is fresher and the wine better and cheaper. Low on tourists. Take the train to Florence and the rest of Italy. (You will need the loan of a car to bring home a 25 liter jug.)

  39. NY Geezer says:

    Just thinking. Some of the deceased Covid-19 victims must have had cars that are now being offered for resale somewhere. I know used cars are generally reconditioned before sale, but does this reconditioning disinfect all the places the virus might hide, especially the heating and air conditioning tubes and vents. Assuming Covid-19 information is disclosed and I doubt it would be, would the new buyer get a deep discount to re-disinfect it?

    • Iamafan says:

      I have a fogger made in Korea for that.

      • Cas127 says:

        Could you post an Amazon link (or other ID info) for that Korean fogger? I have never heard of such a product for used cars.

  40. Michael Engel says:

    1) The officer ordered “follow me”, got out of the trenches and charged the enemy. The fearful troops stayed in the bunkers, clapped their hands and laughed.
    2) The death of the US economy is more dangerous than death of 20K senior citizens. Premier Xi will be laughing over our open grave. China GDP will leave us behind and we will never come back.
    3) After Nov 2020, US gov should change its soothing behavior.
    4) From “no fault of their own” to ==> you are on your own.
    5) Encourage employment // suppress entitlements & unemployment.
    6) A ceo encouraging his employees to stay home, on furlough, protecting them with with benefits to duck, is building a huge cost center do nothing all day that will go BK. He will never be able to order his people
    to get out of the safety, because there is too much risk out there, they can get shot. Instead :
    7) US reliance on industrial China must fade. US should become self sufficient. Its not punishment. The globalization era is over !!
    8) Build a large strike force to defend against the Wuhan multi forms hazards.
    9) Most Wuhan victims belong to two type of groups :
    a) A religious sect that mingle among themselves, disobeyed US gov
    orders and blindly follow their leaders orders.
    b) The obese and a whole spectrum of people with chronic disease.
    10 ) Encourage black and Latinos to grow & sell god food, organic food grown in empty warehouses surrounding their inner cities.

    • Social Nationalist says:

      Once again, you fail. China has been becoming less meaningful for US production since 2008 aka industries have already been moving out of there for over a decade. China is much more financially important for US liquidity on the business side via its consumers. This is what you don’t understand. Breaking up means less access to this market, means less liquidity. Self-sufficiency means rationing. Period. The age of abundance means the age of debt. When its gone, capitalism may be as well. It really is the scientific revolution artifact. The cities are built, the industries are automated, the consumer markets fully matured. There is no other area for this function to go. All driven by Science.

  41. Just Some Random Guy says:

    And yet there are zero deals to be had out there. I’m shopping for a new truck, dealers aren’t budging on prices. Corona? What Corona? They know a bailout is coming so there’s no need to panic sell.

  42. Iamafan says:

    I have NEVER seen Treasury Auctions of these sizes. Not even during the 08-09 crisis.

    Week of 4/6 to 4/10
    April 07, 2020 80B 4-Week Bill
    April 07, 2020 60B 8-Week Bill
    April 07, 2020 40B 154-Day CMB
    April 08, 2020 60B 43-Day CMB
    April 08, 2020 45B 69-Day CMB* 9127962V0
    April 09, 2020 40B 119-Day CMB
    April 09, 2020 54B 13-Week Bill
    April 09, 2020 45B 26-Week Bill
    April 09, 2020 45B 40-Day CMB* 9127962M0
    April 09, 2020 40B 103-Day CMB* 9127963F4
    April 09, 2020 40B 119-Day CMB* 912796WZ8
    *new this week

    Week of 4/13 to 4/17
    April 14, 2020 90B 4-Week Bill **increased by 10B
    April 14, 2020 70B 8-Week Bill **increased by 10B
    April 14, 2020 40B 154-Day CMB* 9127963Y3
    April 15, 2020 40B 3-Year Note
    April 15, 2020 25B 9-Year 10-Month Note
    April 15, 2020 17B 29-Year 10-Month Bond
    April 16, 2020 ~54B 13-Week Bill(estimate) 912796SZ3
    April 16, 2020 ~45B 26-Week Bill (estimate) 9127962R9
    *new this week

    • lenert says:

      Mint the 100 year!

      • Cas127 says:

        The 10 yr will be enough…by then we will be using the “old dollar” for toilet paper…when the endless print has its inevitable consequence, DC will disavow the greenback, and move on to a new scrip.

  43. lenert says:

    3500 rental cars burned up at a Florida airport last week. Expect more car fires?

    • Clete says:

      That airport (RSW) just happens to be very close to Hertz HQ. I’m not saying, I’m just saying.

  44. Just Some Random Guy says:

    Dow is above 23K, up about 30% from the low in the 18,000s. Investors have quickly realized the world is not ending after all. And auto makers have realized that as well, which is why there are no fire sales. They will wait it out a month or two, until the pent up demand is unleashed. Same with housing.

    • Wolf Richter says:

      Investors have realized that the Fed is buying everything, directly and indirectly, including the worst crap and old bicycles. That’s THE ONLY THING the rally is telling you.

      • Just Some Random Guy says:

        Maybe. But whatever it is, the great depression many here are predicting is not happening.

        • VeryAmused says:

          This is a fed hopium induced bull trap at the beginning of a severe recession.

  45. DeerInHeadlights says:

    FED’s FOMC notes from latest meeting :

    “Several directors agreed that the “healthy state of the US banking system” and the virus’s “temporary nature” set the current downturn apart from the 2008 financial crisis.”

    Of course who can forget Bernanke’s Jan 2008 comment:

    “The Federal Reserve is not currently forecasting a recession.”

    History repeating itself?

    I’m sure Wolf will have something to say about the latest FOMC.

    • Iamafan says:

      My life lesson: I don’t listen to people in gov’t I did NOT vote for. I read few blogs that I like. The TV is off but some yt channels amuse me like the cartoons.

    • Lisa_Hooker says:

      “the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost” – circa 2002

  46. John says:

    Is the stock market going to separated from the fundamentals, or Main Street from Wall Street? Auto stocks were up.

    • Jon says:

      I think stock market is already detached from main street.
      No real reason for the stock market to go up. It’d be interesting to how long this can continue on .

    • DeerInHeadlights says:

      FOMO is a powerful thing…can cloud one’s senses for sure. I wouldn’t be surprised if smart money going into the market right now is doing that with stops set. What does that mean? It means if it were to go down again, the cascading stops triggering will give us a line straight enough to violate our ‘straight-line’ dictum here!

    • Lisa_Hooker says:

      The stock market will go up as long as there are at least two speculators bidding against each other.

  47. Michael Engel says:

    US 10Y : the Mar 9th(L) @ 0.318, the lowest ever.
    In the following day it moved slightly higher to 1.283 on Mar 20,
    leaving behind x3 selling tails.
    No good !!

  48. VeryAmused says:

    This is sort of off topic, but…

    There is simply no way this level of inequality combined with everything inflated debt laden madness can be kept going for any further length of time unless TPTB start permanently giving people money for breathing (UBI).

    They have “temporarily” started this with the government extending “unemployment benefits” to people who did not previously qualify and upping the amount since the original amount no longer covers “the lack of inflation” inflation.

    This is just supercalifragilisticexpialidocious level crazy.

    • doug says:

      early innings of crazy. hang on. and keep thinking about more superlatives.

    • michael says:

      Welcome to the revised Cloward-Piven Strategy

      • Joe in LA says:

        That’s so true! You’ve obviously got a great memory for the leftist classics.

    • cesqy says:

      A Mary Poppins economy. Everybody’s a winner, buy and hold.

    • Lisa_Hooker says:

      UBI won’t solve anything, people always argue about money. Now, a UBO, with that people would at least have smiles on their faces.

  49. Iamafan says:

    And the Fed’s trillions hasn’t solved this:

    Even the bloated banks reserves does not make banks want to lend cheap to those who probably won’t pay them back. No free lunch.

  50. Michael Engel says:

    1) Write off 2020 GDP. Perhaps even 2021/ 22. Tomorrow will be the worst negative pulse in the last 90 years.
    2) US GDP will sunk, but it might be a positive surprise.
    US economy definitely dived like never before, but this data shouldn’t be used for political gains. We should stay resilient and united.
    3) In the next x3 Qt US GDP might popup, but still in negative territory.
    4) Prepare for Wuhan round II that send US GDP to a test, to a higher low.
    5) The rise from underwater to positive territory might take years.
    6) When the panic will be over we will be prepared to survive even more deadly threats. This round is not too bad !!!
    7) Wuhan virus will be a part of a growing enemy threats that an hurt or
    destroy US.
    8) Kill US economy is much worse than 30K senior citizens dead.
    9) Certain sectors will never come back to their previous strength, but new sectors will replace them.
    10) Its clear that the US is shift from an aggressive expansion to defensive mode. The process of building a wall to protect our nation from the outside world will cont in the next 50Y.

  51. WES says:

    After reading here that now is a great time to be buying car, I rushed out and tried to buy 2 cars!

    Unfortunately, due to the coronavirus crisis, the dealer said there was a limit of 1 car per family!

      • Lisa_Hooker says:

        I am awaiting my $1200 check so I can go out and buy a new Volkswagen like the one I bought for $1200 in 1964. There have been a lot of improvements and hedonic adjustments – but $23,000 worth?

  52. SCS says:

    The local dealerships that visit weekly are doing very well on the used side, with plenty of supply still available at auction. The new car side is taking a beating but still moving some product with the lower rates being offered.

    What I have noticed, like others here, is that they are not being discounted very heavily. I’ts my thought that they might be trying to retain some inventory since it’s anybody’s guess when more might arrive. Better to use the floor plan in hopes of a greater gain and to look like they are still open instead of having an empty lot.

    GM had a few week shutdown that stopped/slowed deliveries here for over a month. Now all of the majors are shut down at once. According to one of the transport drivers, the only vehicles being delivered currently are what is being cleared out of the pipeline/ports. One of the euro assembly plants here shut down this week, not because of the flu, but due to component supply.

    My best guess is that some more 2020’s will go out this year to use up the parts, but I personally don’t expect to see a lot of action til the 2021’s start arriving.

    Thanks Wolf for running this site. I’ve learned quite a bit from your articles the past few years and from the perspectives in the comment sections that follow.
    Top Quality!

  53. Greg Franks says:

    Hii Wolf, would the overall decline in the number of units sold over the last two decades be attributed to increased quality in the manufacturing of cars? I recall cars from the last century lasting about 3 years before they were destined to the scrap yard.

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