I’d say, prices at wholesale are still idiotic, but slightly less idiotic. Retail prices lag a month or two.
By Wolf Richter for WOLF STREET.
A month ago, when I reported that used vehicle wholesale prices had ticked down just a tiny 1.3% for the first time after the craziest price spike ever, where prices had jumped 48% from a year earlier, I mused, Was This Finally “Peak Insanity” in Used Vehicle Prices? No one knows what might happen next in this crazy overstimulated economy, but we now have the second down-tick in a row.
Today, Manheim, the largest auto auction operator in the US and a unit of Cox Automotive, reported that its Used Vehicle Value Index for July declined by 2.6% from June, the second month-to-month dip after spiking all year, but it was still up 24% from July last year, when the spike was already in full swing, and by 39% from two years ago.
What remains a mystery is why people buy used vehicles at those utterly idiotic prices because for most people a vehicle purchase is discretionary: They can easily drive what they already have for a year or two or three and let this madness blow over. During the Great Recession, people have proven they can do this. But no. Instead, overstimulated buyers were eager accomplices in this madness:
Manheim also said that over the last five weeks, the sub-index for three-year-old vehicles declined by 3.6%.
Retail prices lag whole sales prices by a month or two. So any price declines at the wholesale level now will not make to dealer lots until this fall.
Wholesale prices in July dropped from the insane levels in June across all product categories. The nuttiest price spikers, pickup trucks, which in March and April had booked year-over-year price spikes of over 70% – who exactly bought trucks at these idiotic prices? – dropped the most in July, from June.
These month-to-month declines for the second month in a row chopped down the year-over-year price spikes. And this is starting to form a real trend. The chart below shows the sharply diminishing, but still huge year-over-year price spikes by vehicle segment in April (yellow), May (green), June (purple), and July (red). The prices in July were still idiotic, being between 16% and 26% above the already spiking prices in July last year, but they’re a tad less idiotic than they were a few months ago:
Wholesale volume in July dropped 19% year-over-year to a seasonally adjusted annual rate of 17.0 million vehicles, according to Cox Automotive estimates.
And there was plenty of supply. Wholesale supply in July was 21 days, just below normal levels of 23 days.
Retail sales of used vehicles in July inched up less than 1% from June, but was down 9% year-over-year, at a seasonally adjusted annual rate of 21.5 million vehicles.
Retail supply of used vehicles on dealer lots declined 4.8% by the end of July, to 39 days, when 44 days is considered normal.
Vehicles coming out of the rental fleets are normally a major source of supply to the wholesale market. These vehicles are between one and three years old. But the whole machinery got monkey-wrenched last year when the travel business collapsed, along with two rental car companies – Hertz and Advantage. Rental fleets stopped ordering new vehicles and trimmed what they had.
Then, as the travel business rebounded, rental fleets were in short supply of vehicles and couldn’t get new vehicles from automakers because of the chip shortage, and some fleets started buying vehicles at auction locally, instead of selling vehicles at auction. This contributed to the massive shortage and disruption and price spikes earlier this year.
And it is having a side effect: rental fleet are keeping their “at risk” vehicles much longer and are putting far more miles on them before they sell them at auction.
Rental fleets operate vehicles under two types of scenarios: one, under a program with automakers where they sell their units back to the automaker, and the automaker is at risk for the resale value; and two, where the rental fleets sell the vehicles at auctions or on their own retail lots and take the risk of the resale value. It is these “at risk” vehicles that fleets are keeping longer, and they’re running up the miles.
In July, the average mileage of those “at risk” vehicles sold at auction rose to 88,000 miles, the third month in a row in that range, up by 89% from a year ago. This chart from Cox Automotive’s Q2 presentation shows at risk mileage through June. These high-mileage rental units pose an additional challenge: Not only are retail buyers going to pay out of their nose for them, but they’re also getting a vehicle with 80,000 miles of rental driving on them. This is something that in normal would make you go hmmm.
People trying to buy new vehicles found themselves frustrated by lack of choice and by the puffed-up prices, and many of them walked. Read… New Vehicle Sales Slammed by Semiconductor Shortage, Record Low Inventories, Beginnings of Buyers’ Strike
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Wolf: I have read in several places that the rental car companies have been purchasing used vehicles to replenish their fleets which they shrank in 2020. Could his be part of the explanation here? Wouldn’t one also expect such buying to abate as the summer burst of tourist travel winds down?
I mentioned it here and in past articles. It was made a huge deal of in the media, but it’s actually quite common that rental car companies buy cars at the auction here or there, so they can supply rental cars to specific locations when there is a lot of demand at that location. They have been doing this for years. Sometimes they might sell cars on the East Coast and buy somewhere in the West for a local operation. There are many reasons to do this. But earlier this year, they did some more of it to fill local demand. And this caught Bloomberg’s attention.
The big issues that caused the run-up in prices are also explained in this article.
Just checked prices on 2019 in the Los Angeles/ Santa Barbara region for Tacoma TRD Sport 2019.
Base, white, 60,000 miles 35999 was the best price on cars.com
In October 2020 I bought my charcoal gray with leather moonroof special this and that package with 23,000 miles for 32,000
It’s crazy out there.
Retail prices lag wholesale prices by a month or two. So any price declines at the wholesale level now will not make to dealer lots until this fall.
One of the hottest suv is Kia Telluride.
A lot of dealers are asking 10k over msrp in Southern California
But if you can wait for a month or three.. a lot of other dealers in other parts of the country can pre order for less than msrp
I absolutely don’t see this madness continue for long time.
As I indicated in another post, my Lexus IS was totaled while parked. I decided to get a CR-V Hybrid. I scoured dealer sites for inventory. Almost all of them indicated they had inventory but were only showing stock photos. That told me they didn’t have the car. Other’s actually showed pictures of the car they advertised having but I’d have to “click” for the price. That told me they were selling it above MSRP. I stopped by a lot — the window stickers were removed on all new cars. I read Yelp reviews — it was brutal. The games being played. The add-ons one had to buy or no deal. One reviewer wrote that the sales person said, “take these add-ons or find another place to buy your car.” Average markup above MSRP was from 5%-20%. Having recovered from congestive heart failure, I just didn’t want the stress so I shopped Carmax. I found 2 cars I liked one a CV-R — the other a Lexus. They let me take both out alone for as long as I wanted. I decided on the CV-R. 3888 miles. Paid 36,999. The cars perfect. Having owned a number of new cars, my experience is that if there are problems they happen within the first 3000 miles. I did a CARFAX and a free vehiclehistory on the car. The free site provided me with much more data then Carfax did, fyi. It sold 10/20/2020. It’s listed as a one owner car– the only other transaction data is when the car sold to me. So, it seems Carfax bought the car? If it bought the car used, it would show up as a transaction, right? Anyways, I paid almost a new car price for a used car but KBB does list it as a fair price. Carmax was an easy place to buy a car, I got to drive the car I would buy as opposed to a demo. They only game they tried to play was an extended warranty which they drop into the buying process out of the blue with all of the usual fear tactics and a”get the warranty now, or forever hold your peace because you can’t get it later.” I passed. All in all a stress free way to buy a car. I didn’t get ripped off but I didn’t get a deal either. Just my experience. Hey Wolf, you were in the car business — do you think Carmax bought the car new for one of it’s execs knowing full well it would get all of its money back after a year?
“get the warranty now, or forever hold your peace because you can’t get it later.” Is Carmax kidding? I only wish that were true. I get 5 calls per week from people trying to sell me a warranty on my 10-year-old Honda.
I get robocalls about three times a year telling me that the extended warranty is soon to expire on my 69 Impala.
I get these warranty robocalls all the time, as well as ones telling me I have cancer, that I’m being sued, and that I’m going to be arrested for generic “noncompliance”. It’s rather funny.
A new gig on TV is selling repair insurance on cars up to to 20 years old. As I put on WS a while back, this is fraud in plain sight. Nearly all issues requiring a repair are ‘pre-existing’ before they become critical. A coil can unexpectedly fail, but most stuff; brakes, exhaust, clutch etc. go downhill and then must be fixed. The owner knows the repair is coming up: why not buy insurance from this gullible co? But the whole beauty of the biz is, you pay us first, then we decide if we’ll pay you.
Prediction: this scam will collapse in a year or so amidst an avalanche of complaints.
The car could have been a “brass hat” (factory exec vehicle) and run on manufacturer/distributor plates or a dealer demo that was not titled. It would then run through the auction on the MSO (Manufacturer Statement of Origin). It could also have been purchased from a local franchised dealer on an MSO.
Since the DMV didn’t title it, it’s considered a “new” vehicle below a certain mile threshold (some states it’s 6,000 miles and can still be sold as “new”).
Eli Katz, that’s what I began to suspect. Thanks for taking the time to write that out.
Sorry, for the sake of clarity — I bought a 2020 Honda CR-V Touring Hybrid for $36,999 The car sold new for about $37,200.
It’s a tough time if your car gets totaled. For anyone else looking at Wolf’s charts it appears prudent not to be a purchaser of cars, homes, boats, crypto, stocks or corporate bonds as prices are way above long term trend.
I was astonished at how packed packed the Carmax was — especially the finance department. One guy was posing by his new orange Camaro — I said something to him about his color coordinated t-shirt — he laughed and said. “How often does a guy get to buy an orange Camaro?”. I thought, “Alot of us are living like there’s no tomorrow.”
burn, et al- would posit that this is only another societal manifestation of the easy-and-encouraged consumer credit sold to the average American family since circa-1980 (subsequently used to offset the flatlining of real wages and export of lower-skill jobs).
may we all find a better day.
Warren Buffett hasn’t given up on stocks yet, so neither should you.
Although in Buffett’s case, his problem is he has such a large sum of money available to him that only large stock purchases make sense. He has said that during the housing crisis of the Great Recession, he would’ve bought lots of homes, but there was no convenient way for him to take title of them.
In terms of stocks, while the better known stocks are flying high, a low of the small-cap stocks are languishing. Some of these are real investments, not just gaseous penny stocks. It’s worth doing research on these to find out if they’re worth investing in.
Just wait until folks actually have to start paying rent, mortgage and student loans again.
And just like that, no one had the money for a car…
Yes, this definitely a contributor, people will be dialing back when the eviction moratorium is rolled back.
Exactly. It’s not difficult at all to see how and why this happened. People don’t have to pay their bills right now. So, they’ve been living large like there’s no tomorrow. It’s repulsive.
Doubtful. They would have poor credit as a result.
How are those people getting financing?
At least if the ads on the radio here are anything to go by, they’ll give you money regardless of what kind of credit you have. There’s one I’ve heard a bunch saying if you make $350/wk they’ll loan you $20k without a credit check.
madness
“How are those people getting financing?”
You clearly have absolutely no clue what’s going on the financing world right now. It’s subprime city. Do your homework.
Forbearance on rent or mortgage due to covid is not marked as a negative on the credit report, that is how.
If there is a moratorium on making payments, how can someone be in default and have it reported to a credit agency?
Given the broader inflation in the rest of the economy I expect the index to slowly decline and settle at, or slightly above, where it was last summer.
I think most people are thinking this way. Housing prices never regressed to the mean after the Great Recession. They dipped a bit and shot back up. Rents didn’t even dip. They just shot up and stayed up. Even in city centers where they’ve declined a bit recently, they’re still way out of whack compared to typical household incomes.
People who waited for a correction to historical norms got burned. People who “bought the dip” made out.
This is what I think is on people’s minds. Get it now before it’s too late. Because during the last go-around the fence-sitters got burned.
But the GFC aftermath was fuelled by cheaper borrowing.
Where will interest rates go to get cheaper borrowing to pay new higher inflated prices?
The only way this is sustainable now is UBI.
GFC aftermath in housing was fueled by the Fed’s MBS purchases, which continues to this day. The Fed made a big show of dialing back its MBS holdings, only to reverse course again during covid. This has been chronicled heavily here at WS.
Now that large rental holdings and auto loans are securitized, there’s nothing but support for artificially high prices.
The Fed can try to raise rates, but they are in a box of their own making. Any substantial increase will blow up all these exotic risk-offloading schemes, which will dry up money from the greater fools who are currently buying them. Then it will have to buy the blown-up garbage to “save” the markets it has been artificially propping up for 35 years now.
Wash, rinse, repeat.
The only difference now is the tight labor market, which exacerbates raw material shortages. Turns out that apps still can’t cut trees, harvest cotton or mine lithium yet. And if an app can’t do it, our economy scratches its head for a “solution”.
Inflation is here to stay. I hope you’re prepared to have everything you’ve worked for eaten away like Mrs. Pacman chasing cherries.
It really takes good risk management to ensure success in the markets. What worked last time may not work next time. Buying the dip works until it doesn’t. When you see big runs in asset prices you have to remember real economy long term nominal growth and revenue growth is about 4%. All the asset prices are built off of that meager economic growth plus leverage.
We are in Oahu right now and rented a car for a week. Nissan Sentra older model with some dings. Originally the cost was to be 1000 but after changing pick up date last week it dropped to 500 dollars. The car is definitely an at risk vehicle. It runs well.
Hernando just bought an overpriced house. Hernando is renting an overpriced car. Look no further as to who is driving this bubble. They’re right here on this site.
But Hernando may have gotten a cheap flight to the islands and a bargain hotel room… which makes the $500 paid for a rental car (if it’s a week, it’s $70 per day) pale by comparison.
Or he may have burned “points” and gone for nothing (other than the car, taxes, and fees).
That’s all irrelevant to my point. Hernando is just as responsible as anybody for the ludicrous prices. While the FED and politicians bear ultimate responsibility, without willing participants you cannot have bubbles.
We use Alaska Air and get good deals. We also find decent deals on hotels and air b&b. My kids are young and getting older as am I. I want them to have a small farm and dogs as well as see the world,
That said I share only because I think it supports the current state of the world and us economy that Wolf charts.
I saw in January that massive inflation was on the way because of this website. And now we are where we are. My land was a good deal any time in the past 3 to 5 years, that is why I bought it but also because my kids deserve it.
Same over the pond but maybe with a bit of a time lag.
I bought a used car a few months ago. Just looked online and can see an identical model, colour, a few hundred miles more on the clock and registered just 2 days apart. Price nearly 20% higher. And this one is not even from a main dealer.
One of my best ever investments. Who’d have thought it?
I have a friend who’s a finance officer at a dealership in the Puget Sound area. She’s been in the business for more than 20 years and has never seen increased book values across a wide array of used car makes and models — until now.
What this means is that very few of their buyers are upside down in their trade-ins. What this does is creates sales that would not have been possible before covid. If someone shows up on your lot owing $25k on a car with a book of $20k, it’s very difficult to make that deal. But, if that same car is now worth $25k, now the deal is possible. There’s a substantial segment of the market (I guesstimate 20-25%) made up of buyers who trade out of their cars the instant they find someone who can figure out how to pull them out of their trade. They visit car dealerships every few months simply because they like shopping.
Once this plays itself out, and everyone in that segment has been re-buried in a newer, more expensive car with a longer loan term, the market will settle into a new normal, with prices permanently ratcheted up.
Unless of course there’s a recession, and asset values drop. Which is exactly what happened in 2008.
My Lexus was totaled. They gave me $30K for a car I spent $45K on out the door in 2013. That’s $1875 a year or $156.25/mo.
That’s the best way to figure the value of a car. I had a Jetta I bought for $6000. Three years later I sold it for $2000 when I moved out of the country. $111 a month to own. I am notoriously frugal and cars don’t don’t do anything for me other than transportation. Years ago I stopped buying new cars. They never made me feel any different.
In Florida I have seen people refinance car loans to pull money out. People are paying $20-30k for vehicles with 150-200k miles. We had a 96 silverado trade in with 211k miles it sold in a week for $10k plus. The Ford dealer across the street sold a 90’s f-150 for $32k. The car market has been completely out of touch in Florida for years. Project classic cars that would sell for $1k everywhere else people are paying $6k plus for. It doesn’t matter what you are selling in Florida someone has a fist full of cash to overpay with.
I’m always looking at the second hand vehicle market specifically private party. For the first time since last summer I’m seeing actual price reductions. Up until now you had high firm prices gone within a day or 2. I do scour some dealer sites also and if you remember the price you can see they are starting to reduce also. I’ve been looking for a classic to show my kids how to wench. Unfortunately this category is still nutty. I’ve decided I’m priced out unless I find a deal which would probably be not running.
I like the third and fourth hand cash market for cars. It is beyond my comprehension how someone would finance a car purchase at all, let alone for longer than 5 years.
It pays to know how an old carburetor car works. Sparkle spinner, 8 lightning tubes, sparkalators, fuel make-it-happener, and oil with extra vitamins and dinosaurs is all you need.
Forget the extended warranty, get AAA plus and four wrenches.
I stole that sparkalator bit from Vice Grip Garage. That guy resuscitates old dead cars that he buys for nothing using almost nothing but a fresh battery, starter fluid, cheap diesel oil and a boat gas tank, then attempts to drive them home.
These old machines with ladder frames were not built to die. You can add all the newfangled bluegoo and voodoo electronics available to any car in the aftermarket. You can add a screamer crate motor for 5k.
Only problem is that cars from the pre-airbag era are not that safe at at highway speed all compared to a modern car. Still, way safer than a motorcycle.
Yeah, I don’t care about gadgets like automatic folding mirrors, but I am so accustomed to the rear view and bird’s eye camera, blind spot warnings, and so forth, that I won’t drive cars without them anymore.
otishertz,
Old cars and old motorbikes have their place, and always will.
Is my motorbike as safe as my Lexus SUV? No. Can my SUV give me an adrenaline high? Not unless it’s winter and I’m power sliding through snow in AWD with the Blizzaks on — otherwise, nope.
But when cruising on the freeway in 5th gear (six speed gearbox), @ 5,000 rpm (red-line’s at 12,500) she’s at 70 mph. And now, the V4 motor is just ready to sing. She’s got the sweetest sound and smoothest punch when you twist back the throttle. Plus, the electronic driving aids that I can set up in dozens of configurations keep the two-wheel machine at a safer and higher performance level that my old sports bike ever could.
The feeling of being connected to a high-performance bike, motorbike, and/or car is quite enjoyable. New ones are night-and-day above old ones in performance and safety. For example, the stopping power of my bicycle’s disc brakes is incredible.
And Lisa_H,
I hope you can checkout the Lotus carbon fibre track bikes that Great Britain is riding on the velodrome south of Tokyo.
BTW: One week ago, a 2021 BMW M2 Competition with a 6 speed manual gearbox hit the showroom floor of my local dealership. But it only lasted a couple of hours before it was out the door @ $61,650 asking price. Too few and far between, and gone so fast.
Carburetors SUCK. Fuel injection is the only way to go, even if it’s a retrofit. Fuel injection is the single most important advancement in internal combustion engines in the past 30 years. It is almost solely responsible for the massive increase in engine life. Carbureted engines were by and large ready for a rebuild before 100k miles. With electronic fuel injection, 250,000 became a real probability.
“BTW: One week ago, a 2021 BMW M2 Competition with a 6 speed manual gearbox hit the showroom floor of my local dealership. But it only lasted a couple of hours before it was out the door @ $61,650 asking price.”
If you want to buy a vehicle with the worst depreciation of all, buy Eurotrash. I have two family members who bought brand new BMWs, one and M3 and the other an M5, circa 2005 – 2007. By the time both went to sell for something new, the values were in the $6,000 range. New, both of these cars were pushing $70,000.
Depth, not to mention that the repair costs are absurd. I had a friend with a BMW who spent $1,000 to fix a broken taillight. The same repair on my Toyota Camry was $120.
Dan-but we still haven’t figured out how to completely correct for the longest-running, biggest ‘safety’ issue out there, two wheels OR four: pilot error (tough luck for Aprilia at Styria this weekend).
may we all find a better day.
All of this nuttiness in the car market, along with cash offers for houses with no inspection contingency, meme stocks, and the like are symptoms of the same disease. The disease is that people no longer trust the currency as a store of value.
I said last year that we were in the mid to end stages of a crack up boom. I still believe that.
CARMAX is a joke. When I unloaded my 2005 Nissan Sentra with 175,000 miles on it I checked the CARMAX history report. The car was in 9 accidents, all from other maniac drivers and teenagers. The CARMAX history report showed no accidents. The car needed $5,000 worth of deferred repairs to make it driveable. Rather than try to sell it I donated it. Got a $500 tax deduction which I couldn;t use because I’m on standard deduction.
Did any of those accidents go through insurance or result in a police report? That’s the data Carmax pulls from.
All of the accidents went through the ins companies of the person that hit me. A couple were hit & run which went through my own ins company. CARMAX is joke! CARMAX history reports are a joke. 0 for 9 is not a good record. I wouldn’t buy nothin from those crooks.
Swamp Creature,
CARFAX with an F in the middle:-]
Did you mean CARFAX? CARMAX sells cars.
Maintaining a decent used vehicle is a fraction of replacement cost, either with used or new. Always has been. Preventative maintenance is the way to go. I used to do my own work but for the last 5 years have gone to a reputable shop. (retirement pledge/gift) PM might…..might work out to $100 per month some years. Some years $20-$50 per month. Beats a car payment or paying cash for something that will still require care and attention.
I live downtown and have very limited room to wrench in my garage which is about a foot wider than my old car. I found that it is very economical to hire out work to locals if you know what the work is worth. Most let you bring your own parts (but don’t ask them to fix a botched job).
My favorite shop is at a gas station with a bunch of drift cars and burn marks in the parking lot. They let customers burn off their old tires in the parking lot if they buy tires there. It’s about a block from the NE police precinct where all those thorny rioters were burning dumpsters.
They love to wrench and love the old Impala so much they memed the car on their Instaspam.
Sounds like the kind of place which would destroy my $7,500 transmission in the interest of burnouts. No thanks.
I think you missed the point.
How is it not illegal to simply burn old tyres in the open?!
Maybe some of those buyers are seeing the writing on the wall for their beloved ICE vehicles. ICE vehicles = the new toilet paper?
Buying an ICE is like buying a flip phone when the iPhone was available.
20% of Californians who bough EVs sold them to go back to gas because of the charging hassle.
I’d imagine there were some horseless carriage owners who went back to horses after breaking their arms cranking the starters.
Crackpipe much?
Touchy touchy, DC…
Saw an interesting news video about apartment complexes not allowing EV owners to charge their vehicles in the rental garages due to the central metering on the remote garages.
A woman offered to pay a flat fee for the power use, but was still refused by the property manager.
Might put a hitch in the EV rollout.
Yes, they’re going to have to call an electrician or the utility to put meters on the outlets. If they put smart-meters on it, it will communicate the usage directly to the utility and they don’t even have come by and check it. We’re on a smart meter. They work just fine. No one shows up to read the meter.
I would never even consider an EV unless I had a single family house. Even if your apartment complex has charging spots, there are no guarantees that they’ll be available.
I currently have a hybrid, which I see as a good compromise.
80% bought another EV. That is HUGE loyalty in the car business. It’s practically unheard-of huge loyalty in the car business.
Having worked in manufacturing as a design engineer I will take the under on EV by the dream dates given.
Politicians love utopia ideas, but there are realities like supply chains, market acceptance, return on capital, unintended consequences. I agree you can do nearly anything if you have enough money, but eventually you start having to make tough choices.
Right now we can pay people to stay home and pay people to buy an EV. O be consequence is return on savings is negative. That is a temporary condition.
CA just shut down the Oroville Dam due to low water levels…. which provides water to power the hydro plant downstream.
Ooops.
The gasoline refineries and local gas stations throughout CA that rely on electricity to power their pumps are not going to like that.
El Katz,
I just turned on my light. It’s still working.
Here’s a theory: a wave of bankrupcies is coming.
For many states – people can keep their houses and a car.
So if a bunch of “about to be evicted” people are seeking to declare bankruptcy to nullify the many months of COVID rent they didn’t pay, they’d go out to upgrade their cars/buy a car regardless of cost.
A related theory: the COVID lockdowns traumatized people so badly that they had to go somewhere to “look at a different wall”. Rental car prices were/are brutal – after a couple weekends of that, buying a nice touring car becomes so much more interesting. If you’re paying $100/day plus taxes, it makes a new car (with low interest rate financing) look a lot more attractive.
A 3rd theory: there are significant numbers of double dippers: people who are collecting unemployment but are getting paid “under the table”. Flush with funds, these naive buyers are charging into dealers and buying like the idiots they are.
Related to the above: the foreigners flooding into the US due to Biden are all buying cars. They all come from countries where cars are highly taxed; the high prices of US used cars are relatively cheap to them. I actually know someone who fits this – they are attempting to immigrate to the US. Lawyers are engaged. They sold their 2017 BMW X3 in Brazil, then used to proceed to buy a 2018 F-Pace for $33K. I’m fairly sure this was a major overpayment since a brand new F-Pace is $50K.
A new gig on TV is selling repair insurance on cars up to to 20 years old. As I put on WS a while back, this is fraud in plain sight. Nearly all issues requiring a repair are ‘pre-existing’ before they become critical. A coil can unexpectedly fail, but most stuff; brakes, exhaust, clutch etc. go downhill and then must be fixed. The owner knows the repair is coming up: why not buy insurance from this gullible co? But the whole beauty of the biz is, you pay us first, then we decide if we’ll pay you.
Prediction: this scam will collapse in a year or so amidst an avalanche of complaints.
I saw that one with the fine print on the bottom of the screen about we may or may not….and co pays.
People could just do a revolutionary thing like putting $100 per month into a dedicated savings account for maintenance if they are worried about bills.
I just got back from picking up my work truck from a repair shop. Paid the bill with cash, and now good for another year anyway except for an oil a filter change after Christmas. New brakes all around, a few new lines that were tired, and a PM lookaround. Soooo much cheaper than buying a replacement. It’s a 2002 GMC Sierra with 170,0000 km…about 100K miles. Might replace it in another 10 years or so….and maybe not.
With the U.S. economy possibly approaching the contraction metric by 4th Quarter, 2021, with the deadly combo’s of Variants-21, no stimmies in the mail, rent & mortgage forbearances being wound down, and uber-generous unemployment benefits ceasing, the ability of Americans to overpay for a used vehicle, rental fleet clunker or below 50k mi. single owner rid, will be greatly diminished. It is one thing to make stupid economic decisions in overpaying for an asset (homes included) because you have excess NON-earned cash burning a hole in your pocket and quite another behavior when personal income is constrained and job security is not rock solid. The buyers’ strike or buyers’ priced resistance is just getting started.
I have been looking for a used Ford Escape, low level S model, with conventional 4 banger engine, 2.0L I think, since Fall of 2019. Lost interest in acquiring my3rd ride late last year when prices for 2018 vintage rides just would not come down. And I had to ask myself why would I pay the additional VA personal property tax, auto insurance, and maintenance costs for a 3rd vehicle in my stable when times will eventually get very tough for most Americans.
But the segment I was targeting last year was the S model with non-Ecoboost engine with less than 40k mi. and no more than 3 years old with a little old lady only having driven it to church each Sunday. Those rides were pushing maybe $15k to $16k last Fall which I thought was still overpriced, and are now in the $18k to $20k range. In fact, I have seen some low mileage 2019’s with asking prices above the original list prices when they had 13 miles on them!!
So the used vehicle I was looking at is a good 23% above last year’s pricing, but the vehicles are now one year older than they were for 2018 last year. I will wait and probably have my head examined if I buy a third vehicle. Spent about 15 percent of waking hours in July working on my two existing rides, but my garage is so well insulated that on a 90 degree day if can be around 80 degrees in closed garage. Slab must somewhat cool it from below.
Geez Wolf. The bankers and hedge funds and big corporations have an edge to boost profits, why you beating on the little guy?
I’m afraid the little guy is going to be taken to the cleaners here. Buy high, sell low. If these prices that were prevailing over the past few months go back to the already elevated levels of a year ago (-30% and minus regular depreciation) the little guy is many thousands of dollars upside down in their used pickup after just one year.
The fact the the dealers (for example, AutoNation) are making historic per-vehicle gross profits tells me that the little guy is getting seriously taken to the cleaners.
On new popular SUVs, like Highlander and Pilots, some dealers are suddenly selling for a two or three thousand below MSRP. Just one month ago, you had to pay above MSRP then wait for the vehicle. I have been shopping for a new car for the wifey … that is how I know. The car story is over.
Yep. I reported here a few months ago that the local Toyota dealer had briefly raised their prices to ABOVE msrp. That lasted a week or something. Then, slowly, they started showing discounts on certain models. I just checked inventory today and it’s the highest I’ve seen in the past 6 months.
DC
No one wants the new Toyotas with their screen that blocks your vision out of the front window crating a blind spot. I found out you can spend about $1,000 for some aftermarket company get rid of the screen. Add that to the price of the car if you are dumb enough to buy one of these lemons.
Swamp-not an issue on our new Venza, but perhaps it’s the exception…
may we all find a better day.
Yep, here in Houston the car dealer TV ads are back, big time. And the big multi-make lot here on the north side of Houston has had the owner and his fat daughter hawking Ram pickups under MSRP and with “lifetime” maintenance. I haven’t seen them hawking cars for over a year and a half now.
6 months is a long time in the car auto world. I anticipate by mid winter a lot of these dealerships are going to be begging for customers. Every single dealership I follow is showing a massive build in inventory right now.
“car auto”
Haha, my proofreading needs much improvement.
It will get real interesting in December, I am expecting all bad news in 4Q- pain across the entire board.
The dealers will have plenty of inventory with 3 months of slow sales, and a tax bill on each unsold unit on the lot. Smart buyers should be disgusted and abstain from participating in this circus after watching the over MSRP glutton fest. The stimmie buyers will be hiding from the repo man and probably living in that $80K pickup truck, since they cant find a place to rent with that fresh eviction. Floor plan financing companies will have the lawyers on stand by to seize property.
A real s4!t sandwich, and everyone will have to take a bite.
There is no rabbit to pull or hat to pull it from.
There’s a business opportunity in there Tim retrofitting all those $80k live-in pickup trucks with solar panels. ;-)
1) Take my wife, I will pay u.
2) Take my WTI, I will pay u $40/b
3) Manheim, take my impaired F-150s, F will pay u.
4) AMZN “REAL” dividends are minus 4%. Future cash flow will be down.
5) WB : a great company profit grow without investing a dime, or very
little.
6) Rheir value grow, because their positive “REAL” accumulated dividends
They will form a bubble. AMZN accumulated dividends will form an anti
bubble.
7) NY’s top is a toxic waste, radiate all over the place, MeMe will pay u.
Ca might be paying others to take their excess energy, when the
sun is shining, because shutting down power plants are more expensive
than paying.
I bought a car with a V8 that had 140,000 miles for $5500 very recently. Am happy with this purchase and feel more confident with reliability of a V8 versus a turbocharged 4 cylinder at high mileage.
The price increases were skewed towards the newer, more expensive vehicles. None of these stimmie addicts were jonesing for a $3,500 used car. They wanted the $45,000 new SUV.
If you’ve checked Carmax’s offer to sell them your old, used car, check again—they’ve dropped 50% on the ones I looked up a couple months ago.
RUH ROH!
I’ve noted the dropping used prices (and huge increase in number of late-model pickup-truck private-party ads) the past several weeks if you’ve watched my comments here ;) If they weren’t removed, that is…
It isnt hard to understand why this is happening. People have used their stimmie money to buy a car they needed. And more people are not using public transport. The people who are buying cars are the people who can least afford a car, so they are buying used, which is actually a smart decision if you get a good price.
There is also a lack of good deals on new cars due to the chip shortage.
This isnt rocket science, it is basic economics of supply and demand. But all the factors that are causing it are temporary. Watch for the car market to return to normal within the next six months, as this all washes through our system and in six months from now, the economy is reeling again, due to all the jobs lost that are not coming back.
As a grown-up I have always purchased used luxury cars with cash to avoid the worst hit of depreciation and have no car payments. I also use cars to teach lessons to my kids about taking care of our possessions and the concept of opportunity cost, aka instead of buying a new car for $60K i buy a used car for $30K and leave the other $30K in the market to keep working for me.
I have roughly calculated that over the past 25 years during which time I have purchased 3 cars, I am plus $240K net in investments due to buying used versus new, after factoring in taxes, registration, insurance, maintenance and resale value. My goal is to ultimately hit $1 million net investment value on the money I saved going used instead of new.
I currently drive a 12 year old Lexus with 221K miles. I was about to sell it and buy an SUV earlier this year, then the mad spike came and now I’m on the sidelines. I believe there will be a better time in the not too distant future.
Purely, completely, meaninglessly anecdotal…but the Dealers who were ghosting me 2-3 months ago are blowing up my phone and email now.