Thousands of dollars over sticker? I just don’t get this. Something big has changed in the brains of enough (but certainly not all) Americans.
By Wolf Richter for WOLF STREET.
Sales of new “cars” (mostly sedans but also muscle cars, such as the Mustang) dropped to 195,400 vehicles in November, down 45% from November two years ago, and the second lowest sales figure since Adam and Eve, or at least since the 1970s, the extent of the monthly data I have access to. Back in the 1970s and 1980s, “car” sales, which included the now extinct station wagons, regularly exceeded 1 million per month. The lowest car sales in that entire time span occurred in April 2020, when many auto dealers were shut down.
Sales of “trucks” – the booming category of pickup trucks, SUVs, vans, and compact SUVs that are built on what was essentially a car chassis – fell to 805,900 vehicles in November, the second lowest since lockdown-April 2020, and down 23% from November 2019, as buyers strolled through nearly empty dealer lots and were shown prices of thousands of dollars over MSRP, on units that hadn’t even arrived at the dealer yet.
Sales of “cars” have been plunging for years because Americans have lost interest in them and stopped buying them, and the Big Three US automakers, after failing for years to revive interest in them, have abandoned them by killing their sedan models, leaving that segment to Tesla and foreign brands.
I have long called this shift away from cars the era of “Carmageddon.” But the semiconductor shortage has accelerated the trend as automakers are prioritizing their highest-margin and most expensive models, namely loaded trucks and SUVs, at the expense of cars.
Due to the large month-to-month variability and seasonality of auto sales, the industry has long used the Seasonally Adjusted Annual Rate (SAAR) of sales, which adjusts for the number of selling days per month and for seasonal factors and extrapolates those adjusted monthly sales out to a 12-month sales figure.
The SAAR for November for all cars and light trucks combined fell to 12.86 million vehicles, according to the Bureau of Economic Analysis today, down 19% from November 2020, and down 25% from November 2019.
The now widespread practice of selling new vehicles at MSRP or even at thousands of dollars over MSRP, and in some cases at tens of thousands of dollars over MSRP, even at vastly diminished unit-volume, has inflated dollar-revenues and per-vehicle gross-profits. And along with the prioritization of high-end units in the sales mix, the Average Transaction Price (ATP) has spiked.
In November, the ATP hit $44,043, according to J.D. Power estimates, up 18% from November 2020:
Automakers have responded to the semiconductor shortage and the production cuts that it caused by not only prioritizing high-margin high-end models, but also by slashing incentives in terms of dealer incentives and consumer rebates.
The average incentive spending by automakers per vehicle sold dropped to $1,612 in November, according to J.D. Power estimates, down by 65% from November 2019 ($4,538).
As a percent of MSRP, average incentive spending dropped to 3.6% of MSRP, down from 11% of MSRP in November 2019.
This drop in incentive spending means that consumers are having to pay it, plus some. This is the way automakers raise prices because MSRPs are fixed by automakers when they release the new model-year pricing and doesn’t change during the model year. What changes is incentive spending, which is how automakers respond to the market.
To make up for the slashed incentive spending, and to inflate their gross profits further in this crazy market, dealers are sticking additional dealer profit figures – “addendums” or whatever they call them – on the MSRPs.
These ridiculously high prices that consumers eagerly paid – I mean, who’d ever have thought that otherwise astute American car buyers would ever pay thousands of dollars over sticker? – more than overcame the plunge in unit sales volume:
Consumers, according to J.D. Power, forked over $41.1 billion to purchase new vehicles in November, the highest for any November on record, and up by 68% from a year ago.
And dealers’ average gross-profit per unit sold, including Finance and Insurance (F&I) income, soared by 68% from a year ago to a record of $5,164.
In terms of aggregate gross profits from new-vehicle sales, including F&I, this dreary November goes down in dealer history as the most profitable month ever, producing $4.8 billion in gross profits from new vehicle sales, up 226% from November 2019.
And I just don’t get this, it keeps astounding me every day: Why are Americans still buying new vehicles at these crazy prices? Most of these buyers, instead of trading in their current vehicle, could just drive it for a couple more years, which would stop these crazy price increases in their tracks and fill up dealer lots with unsold inventory.
But no. Something big has changed in the brains of enough – but certainly not all – Americans starting last year, and they no longer care about prices, and they’re just buying to buy, and they’re eagerly paying whatever. And in terms of the overall inflation scenario, this is a huge change.
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Yep, I know a few people who have bought recently. They brag about paying less than 5k over sticker price. One of them bought a some new high end model of mustang. Said he traded in a relatively new low mileage camaro and with the trade “only” had to pay 1k over sticker. Dealer was asking 30k over sticker iirc.
Utter insanity. I k ow anecdotes don’t a market make but it’s an illustration in line with this insane market.
Nevermind, buy the effin dip guys. Market dropped 1k points? BTFD! Stonks only go up!
The people you know have become sheeple.
How can my 1979 Corvette, 1997 Expedition, 1999 GMC, 2002 BMW, and 1937 Cord, go everywhere these people drive, but I am the idiot?
I mostly worry about the computer infested BMW, but I have backups.
I am serious.
We are a nation of Lindsey Lohan inspired clowns.
I suspect, that when the SHTF, I will be fine.
This surely cannot go on forever.
Given this is a bidding war type situation as you once said on here Wolf: “The winner of a bidding war is always the loser”
Be fun to watch when the music stops.
And “bidding war” seems to suggest a partial answer to Wolf’s remark that something has changed (maybe two things) in people’s minds: 1) a feeling of losing out due to scarcity, in the case of vehicles apparently real, and 2) fear of price “stickiness”.
Or maybe there’s long pent-up (pre-pandemic) demand to have the new and better thing: a kind of hedonic urge that suddenly more people decide to indulge. Changing demographics is part of this puzzle, rent moratoriums and unprecedented numbers unemployed with almost living wage UI compensation must play a part, but the pandemic seems to have let something loose that was already there under the surface.
Or maybe many can’t buy the house they want, and a vehicle seems like the next best thing. Two really expensive, really hard things to buy.
I am not in touch with those doing the buying, I may have entirely the wrong idea. But I think Wolf (and others) are on the right track when they talk about changed consumer attitude/thinking. (I resist saying mentality because that still feels too permanent.)
Your right about the FOMO.
“…..can’t buy the house they want….vehicle seems like next best thing.”
Probably true in this ad driven prestige seeking society for certain wealth brackets.
But I STILL can not get over this tailgate folding gimmick and the ads for it.
Even though it is stupid and worthless, if the ad demonstrated hedonistic driveway show-off pride goes with it, so does the hedonistic cost adjustment…I suppose.
Every time I see one of those GM tailgate ads, it makes me wonder whether GM is offering a tailgate that can be stolen off the street in 20 seconds and that would cost $2K to replace.
It can go on as long as the Fed allows easy access to credit, and the Fed is doing very little to cutail that. Their claim about reigning in inflation is obviously false, since the best/only way to stop inflation is to reduce access to credit.
It is more than easy credit from the FED.
In reading, and commenting, the previous WolfStreet post from yesterday, I mentioned the PPP (Payroll Protection Plan) and the “original” $10,000 EIDL Grant (Economic Injury Disaster Loan).
That was, and is, just the beginning of a huge River Of Cash, from the Government, through the SBA (Small Business Administrator).
My “small” company, and my dealings with this program, since April of last year (2020) can explain were a lot of this spending money has come from.
The first PPP gave ANY business access to Millions of dollars. I personally know of companies that received $2,000,000+ and there was really no need. I was one.
I think Harvard got $8 Million.
I did not receive anywhere near that amount, but I got, free, a substantial PPP amount, that I do not have to pay back nor pay Income Tax on and did not “need”, since I did not close, and my services are in demand. My regular company revenues were more than enough to keep my payroll, but the SBA-Gov did not care. Just show you paid payroll and you can keep the full PPP.
So. If I wanted to buy a new company truck, etc. I can do so with cash. (and then depreciate the company truck…..what a sweet deal).
Then, there is/was also the $10,000 Grant. $1,000 per employee. Free. No tax. No proof of need. That will pay for a few jet skis down here in Florida…….uh huh. (Actually, that is not true. The money must be used for business expenses…but what if I have a company picnic, appreciation party, and need a few jet skis? Hmmm)
When one applied for this $10,000, one automatically was offered a loan, up to $150,000. I was offered the loan. 30 years pay out, at 3.75%. No proof of need. So, what would you do? I took the loan. The paper work was simple. Click and Sign. A week latter $149,000 deposited. (I don’t know what really happened to the $1,000. Some fee or something). Hey, that can get me 2 new F150’s. (2020 pricing).
Then, around April – May of this year, 2021, the SBA (Gov) increased the loan amount to $500,000. Really. No proof of need. Just sign a few more papers. What would you do? So, a week later, $350,000 was dumped into my account. (No $1,000 fee?). At the 2021 Silverado sticker prices of $85,000 @, I can get 4 more company trucks. Cash. Leather and Sun Roof.
Then, around August-September, 2021, somebody at the SBA decided to increase this EIDL Loan to…………$2,000.000, per business you may own, up to $10 Million. No proof needed. No need to show “Disaster” or “Economic Injury”. Fill out a few more forms, show you aren’t a Prince in Nigeria, and voila….a few weeks later an embarrassing huge amount of Federal Reserve Credit Digits ended up in my company account.
Around 3.6 Million businesses have received this Loan (Loan amounts do vary) for a total of $302 BILLION dollars.
So, the Gov has financed these $85,000 Trucks on a payment schedule of 3.75% over 30 years. Sure beats 8 year payment schedule……………..
I knew this was happening as I hangout with a few people who started businesses but holy shit.
Free money cheat right there. I still have an active LLC, I should’ve applied.
This is so sickening that there are just no words. Just filthy excess for those not in need while millions are living on the asphalt with not a dollar to their names. The politicians and bureaucrats responsible for this orgy of cash need to go to prison.
The civil penalties for collecting an EIDL loan without any verifiable need is 150% of the loan amount which would need to be repaid immediately. They do require proof of revenue loss that resulted from covid. You can also face criminal penalties for collecting EIDL money you weren’t entitled to. They require you to keep financial records for the entire 30 year repayment period to be submitted to the SBA for review. And they put a lien on any real estate property you own for loans over $100k.
Recipients are very restricted in how they can spend the funds. And they cannot spend EIDL funds on expenses that were paid for with PPP money.
Banks are going to act as whistleblowers for businesses who fraudulently obtained these loans and are not spending them in accordance with the SBA policies.
You make it sound like they are just passing out all this money with no strings attached, but that is not correct. It’s similar to how the EDD distributed unemployment funds indiscriminately and then went after people for repayment plus interest when they found they weren’t actually qualified.
I don’t feel bad for people who did not bother reading the fine print. It’s all fun and games until you end up in prison.
As a “businessman” a response to Alex would be appropriate, or did you just make up the whole damn story to help “prove” our government is ALWAYS stupid? It has that rambling sound of “pretend”…not too “businesslike”
I say you are an obvious liar…prove me wrong….or better yet, just stop doing it here.
=since Adam and Eve, or at least since the 1970s, the extent of the data I have access to=
US car production/sales numbers are collected since 1899.
For me it is Ancient History.
My personal memories reach back only to AMC.
Lets get PhD in Ancient Car History at Wiki University:
“U.S. Automobile Production Figures”
Here is the chart going back to “Adam and Eve”:
Yes,the numbers appear to be correct.
If anyone still remembers long forgotten movie “Blue Collar” (1978) there is an electronic tableau over the interstate in one scene showing car production for 1976.
Richard Pryor, Yaphet Koto, Harvey Keitel.
I was in Detroit summer 71 visiting wife’s pen pal from HS. Saw bumper stickers all over that said, “Hungry? Eat Your Toyota”.
Part of it is the categorization, as you mentioned. I have a small older SUV because I could not find a reliable Toyota station wagon. It’s classified as a truck, but it really isn’t. It’s a car.
It’s an under-powered beefed up station wagon made to look tough. Made of cheap plastic. It’s a Honda, which is supposedly well built, but the side panels aren’t even bolted- they snap on. And off occasionally. I just kick the things back into place every few months or so as they vibrate loose.
As Lynn mentioned, part of the shift from «cars» to «trucks» are about categorization.
A 1990 Chevrolet Caprice Estate and a 2021 Chevrolet Blazer may be one example of “cars” that fill much the same marked niche but are classified different. The modern “truck” is probably more “car” like by todays standard than the old station wagon.😉
I was so upset when Datsun became Nissan. I had an old Datsun 610 station wagon I went on 4wd trails with. We called it the safari wagon. Scraped and beat the crap out of it and it never complained. It basically ran on 3 cylinders for 2 years of road trips and then one day the old transmission died. You just couldn’t kill that thing. It was tougher than most things called a truck today.
The “truck” I have now acts like the princess and the pea on gravel roads. Does have better head room for car camping though.
I also had an old Isuzu hatchback. That thing got about 40MPG. No exaggeration.
My best friend growing up had a Datsun B210 “Honey Bee” that his brother bought for a hundred bucks, then cut the roof off with tin snips. We’d take it off road and jump it and do all sorts of things it was never intended to do, and the car would not stop.
It had a massive coolant leak somewhere, so you could only go an hour or so and then it needed to be filled up with water because it would run dry. Many times we were too far from water and it was running with nothing in the cooling system. The engine never seized up. I am not sure what ever happened to that car but it never stopped running to my knowledge.
Datsun always was Nissan. The corporate name for Datsun in the United States – way back in 1976 when I worked there – was Nissan Motor Company USA.
IIRC, they changed the name to Nissan to standardize the brand worldwide.
One of the *best* Datsun’s was the 510 2 door. Was a heck of a track car when properly modified. The stories of the 610 and the “Horney Bee” are likely from people that didn’t live in the rust belt. The body didn’t last but 4 years. My first Z-car (1973) was on it’s second set of quarter panels by 1977.
A GF had 610 wagon. It’s only weakness was body panels so thin thick brush could dent one. But very cheap and easy to replace, so not much of a “weakness”. I center punched a tree playing road racer, and that did kill it. She never forgave me even though I got her a more expensive VW wagon.
And the trucks doing real work…wow!…I saw them brutalized beyond belief, and they took it all.
Might have been 510….bright yellow and 72, I think. Cute.
Cuv’s should really count as cars as they just station wagons and their car like driving dynamics,
I owned an AMC Gremlin.
We will make less per car but make it up in volume and still hit our profit numbers.
We will make lots more per car but sell alot less cars and still hit our profit numbers.
The problem with “new” is that there is no where to go when sales hit the approaching wall. You can’t just sell 1 car for $1,000,000 to make up for it.
If supply died and you manufactured the last new car, you probably could get $1,000,000 for it in a bidding war. ;-)
The “endgame” will arrive when cheap financing has isn’t sustainable and foreign competitors (such as from China) steal most of what little market share the US big three have left. Then they will find margins and volume both collapsing.
P.S., I don’t recall seeing any Chinese brands in the US but have seen it in a new dealer lot in a South American country. Not bad looking cars.
I presume quality needs to improve but if so, will eventually.
Chinese-made Volvos and Buicks have been (and might still be) sold in the US.
Chinese cars badged MG widely available in UK including EV models.
Try an $8 Million Bugatti Centodieci
Sell one, and you are Salesman of the Year !!!
Or the , one only, $18.7 Million Bugatti La Voiture Noire.
I wonder if it’s stuck off Long Beach in a container.
They are making up for it in service and parts prices. I’ve been going to the same Audi dealership for service the last 6 years. In the last year, they increased their hourly labor rate from $157/hr to $215/hr, and they are selling parts for 40% above MSRP. Meanwhile they have very few new and used cars on the lot to choose from.
I finally made the decision to quit going to the Nissan dealer and went to a local shop friends have been using for at least 10 years.
Turns out they have been bought by AAA, along with many other local outfits all over the West. The same guy who had always been there told me most everyone was pretty happy with the wages, benefits, etc. Just having a hell of a time with new computer system.
Anyway, in 1966 the biggest garage in downtown Santa Rosa CA was AAA, and the service trucks also rolled out of there, so it’s not a new thing for them.
Seems to me this might be a good thing as they have the money to afford the new electronic diagnostic tools/training many small garages can’t. AAA is also supposed to be “member-owned” and non profit….at least they send me a voting card once in a while and I tear it up as I don’t know these people, anyway.
Sure going to piss off car manufacturers, but they DESERVE it.
Time will tell if they can change dealer games.
Wolf is sure perfectly trained/experienced to do an article on it….hint, hint.
Local Toyota dealer has added ~$3000 “sealants” on all cars and ~$5000 “sealants” on all trucks.
Remember these scumbags!
“Well, we’ve never done this before. But seeing as it’s special circumstances and all, he says I can knock a hundred dollars off that Trucoat.” -Jerry Lundegaard
Great quote from the movie, “Fargo”
And a great movie too.
Hyundai dealer tried to pull that $3 K sealant crap on me when we bought our last SUV 2 year ago. I told them to walk me thru the process of applying the sealant. Couldn’t do it….said he “sent it out” to be done…..I asked where and give me the phone number of the place. He removed the $3 K fake charge.
These auto dealers are worse than the FED bankers when it comes to outright fraud.
Yes, the sealants.
And don’t forget the ‘warranties’! I tried to convince my daughter not to bother spending several thousand in extras on a leased car, because there was 4 to 5 year manufacturer’s warranty anyway, and most of the time everything’s OK, but no luck convincing her. Yes, it was Toyota, but I suppose it could be any maker.
After 3 years, a window regulator failed. Not covered.
Then she leased another car – again, with ‘warranties’. And ‘sealant’.
If you try to talk sense they just look at you like you’re crazy.
Why would anyone buy an extended warranty on someone else’s car? That’s just nuts.
However, if you purchase one of the newer computers-on-wheels and intend to keep it for any length of time, you’d be wise to consider it. I never bought a vehicle warranty in my life – but I did on the current beast. There’s these plastic connectors that run throughout the car that – when they fail (not if) – require the disassembly of the vehicle interior to replace them. They’re part of the CANBUS that controls every “feature” in the car and most are interconnected. Cost me @$1,000 (as I didn’t pay any profit to the dealer – bought it at cost) to extend it to 8/80 from 3/36. Already paid for itself when the injectors crapped out (that bill was $835 by itself plus the paid for a rental).
Not sure about the current market, but you can buy those manufacturer backed extended warranties over the phone from dealers around the country. I live in AZ and bought mine out of SC from a franchised dealer.
NEVER buy one when you’re “in the box”.
That was some pretty useful info…I hadn’t thought about the fact that probably any same-manufacturer dealer can sell an extended warranty on a given manufacturer’s car.
Nice to have the leverage that choice brings.
Was looking at trucks in Tucson 2010. Think EVERYTHING had had the “Desert Package” for $995 down there. No idea if it was worth it.
Also heat kills batts fast down there…maybe 2 instead of the usual 5 yrs, but gas was dirt cheap, and homes, apts, and eating out was about 1/2 what it was up here.
Sales of new cars, used cars, especially classic cars are all selling at all-time record values. I honestly don’t get it either. The only way I can explain is that new cars are being financed at record low finance rates (so buyers only care about the monthly cost and whether they can afford it, not the absolute cost) and used and classic car markets are typically bought with cash (from the liquidity boom and housing price inflation = wealth effect) or financed (if less than 10 years old) at record low interest rates. One car salesperson I spoke with recently said he loves this market because if a potential buyer doesn’t want to pay the asking price he has complete confidence that another buy will come along within 7-14 days and pay full price!
It’s the PPP loans. See above. What they did to this economy and to the average American taxpayer is the greatest ripoff in history. The politicians and bureaucrats should be facing life in prison.
Bought a new Pickup 15 months ago, for $35k plus tax and license. It was back in the midst of the virus panic.
Took it in for routine service recently, (5k miles) and the sales manager said he could get me $48k for it. There was nothing else on the lot except a few used older model pickups. Tempted, but what if prices keep going up? Decided to keep it.
He’d buy yours for $48k, and then you’ll have to pay $60K to replace it :-]
Or $30k next year when the depression sets-in and people will sell anything they can to raise $$. It’s coming. It’s here. Prepare.
Very similar experience for us. We bought a certified preowned vehicle in May 2020 for $36k plus tax and license. We have driven 6k miles since. I was recently offered $48k for it. The % increase is unprecedented for a “depreciating asset”!
And your reasons for not trading it in or selling to the dealership are the same as the reasons people are paying high prices for vehicles. They expect prices to keep going up. Recency bias is the name of the psychological mindset we all suffer from. Our recent experience indicates prices are rising and so we project that experience into the future: we expect prices to continue to rise. We have given birth to the inflation Hydra. Where’s the Odysseus of our day?
Mocha-still lashed to the mast, unlike the rest of the crew…
may we all find a better day.
Movie version became a family favorite. We all like the Cyclops part where he grabbed a guy, chewed him up, and said,”You Greeks are tough”.
Wow this is absolute insanity. Now I’m convinced we just may be at peak bubble.
Well that’s where you’re wrong. It can always get worse. Even if you hit the bottom of the endless abyss, you can always break out a shovel.
It can’t be. I keep on being told this is the “new normal” and apparently contrary to physics, there really is something for nothing.
My shoe-shine boy offered my $15,000 over what I paid for my F150.
He said to invest in Used Cars.
This reinforces the actual relationship between Americans and the Auto industry. The rubes think the industry is there to serve them with the convenience and freedom of motorized personal travel. But like many other things it is just there to strip-mine the customers for profit. They have gotten the junkies hooked on happy motoring so now it is time to crank up the prices and squeeze every nickel from the addicts pockets before moving on to greener pastures, leaving and empty husk behind.
Until the money runs out… how long … who knows…
My opinion by fall 2022 the music will stop unless Biden & FEDrell says everyone is getting a Lambo
A house was easy to walk away from when housing bubble 1 popped. Drop the house keys in the mail box. Done. Autos are even easier to walk away from. Just park it at Wall-Mart . The repo guy with the roll back will put Ol’ Blu, the gps hound dog on its trail when the payments stop. Get’ ER Done.
People have been overextending themselves on cars pre-pandemic, particularly the poorer income levels with bad credit.
I wouldn’t be surprised if we see somewhat of a repo wave over the coming 12-24 months.
How about a post on the auto repo industry, its economics and stats?
Amazing figures! What I don’t understand is why are dealers still bothering to waste money on advertising. One out of four ads on tv seems to be related to selling new or used cars.
There’s inertia. Assuming this inflation is temporary, you want people to go on remembering your make and models. It’s the same reason McDonald’s would go on advertising its brand during mad cow disease — the disease won’t last forever, but you want your name to be renewed in the memory of those customers who will buy later on.
Dealers are given an advertising allowance by the manufacturer. In order to get the money they have to spend it (this isn’t the regional contribution ads – like Blah blah Valley Hupmobile Dealers), for individual store new vehicle advertising.
It’s spend it or lose it. You have to provide documentation to collect the money (performance affidavit from TV / radio / print).
I sometimes get the feeling I’ve just fled a burning house, only to stop on the sidewalk and look back at all of people still inside, laughing, dancing, pouring drinks and demanding that the music be turned up louder.
Don’t they feel the heat and smell the smoke?
I’m mostly in cash and have reduced my living expenses down to basics with a few minor luxuries (and by minor I mean a few bucks a month). I shop sale prices and rarely splurge. I’ve put some home renovations on the back burner.
I’m doing it wrong, aren’t I.
we shall see – hopefully soon enough.
And my feeling is half of the commenters here are like you (myself included :)
None of us know what will happen or when; the best we can do is look at trends and prepare.
It’s always good to spend a lot less than you earn and to make wise investments, taking your risk tolerance into account.
I’m with you. I buy AG/AU as well. And I refuse to pay current prices for these new cars. After looking for three months I’ve decided to wait.
I did a cash-out refi at the end of 2019, fully intending to buy a car pretty quickly after that. Then COVID hit…then the chip shortage…then I decided to wait. I’ll start looking again in summer 2022 IF there’s evidence the chip shortage has abated. Moral of the story? Don’t buy in this market unless you absolutely have to!
If you have kids, usually they consider you’re doing it wrong, and have a laugh about it. They keep in obligatory touch once in a while.
Then you start getting frequent friendly calls when things go wrong.
Cynicism was an ancient philosophy for good reason.
Social media has a lot to do with these prices. The more obscene the price, the more clicks you’ll get. Rolex bubble prices, relative to other luxury models, reflects this.
Also, apparently everyone and their mother is buying a big pickup truck to become a hotshot driver to take advantage of the truck driver shortage.
For almost a decade or longer the fed has suppressed interest rates……so…..
Folks have learned that saving money is stupid…….
Saved money erodes in value while spent money buys services and material things at what is perceived to be full value……
Cash is being paid as salary at higher and higher rates…..
Jobs are a dime a dozen……no fear of long term unemployment……work from home…..no reason to get up early or to wash up……..
Cash to handed out to anyone for any reason……short on cash…..just claim the shortage and the government will send you more……..
Borrowed cash is available to anyone anywhere
Wait to buy a house until you have a down payment…..what a fool…..should have bought several years ago before prices shot up…….better get in now before they go up more…..
Cars…….buy now because dads car is worth more than he paid for it.
Farmland in Iowa is selling at double a few years ago…..it might be high or it might be your only chance
Yep……thanks Powell……you sure saved us…….from having a dollar worth anything
From the KC Fed:
Fred: If only it was that easy. But I guess it’s nice to dream…
WR said: “And I just don’t get this, it keeps astounding me every day: Why are Americans still buying new vehicles at these crazy prices?”
I believe there is an element of the public that believes they can buy a vehicle at these inflated prices and sell the vehicle back at or very near the bought price in a year or two when they want another new one. They hear this from everybody.
Agree. We looked at the Rav4 Prime (plug in electric hybrid version) recently. MSRP is $40k and what few we could find (in another state) are selling “only” at MSRP. However, 2021 used ones with 5k miles are selling for $50k. Clearly people have discovered a new business model.
Maybe this is what a crack up boom looks like?
Whenever you can borrow below inflation to purchase a hard asset
the price of the hard asset will be inflated
everything the Fed touches is skewed
My brother went to buy a Tesla. He said he would have to wait six months for delivery. It is a model without the autonomous driving features. He invested in TSLA stock over a year ago.
“Cars are overblown, overpriced monstrosities built by oafs for thieves to sell to mental defectives.”
Alan Greenspan,”Capitalism in America”,hardcover edition,page 312
Followed by the chart “Car sales by the Source of Origin” 1931-2011
Now I am trying to figure out:
What is the statement of fact and what is Mr. Greenspan’s flight of poetic imagination ?
Brent-despite the fact that our fellows possessing those qualities exist in every field of human endeavor (just check general reflection on this- particularly economics!-in these always-excellent WS comments), i suspect (not having read the book) it could be that ol’ Al never learned, or was able to get comfortable with, driving (i wonder how he felt about his chauffeurs?)-a simple human fallback of devalue or hate that which you don’t understand…
may we all find a better day.
No,young Alan Greenspan was more like Erroll Flynn rather than old lady driven by chauffeur.According to his bio “The Man Who Knew:The Life and Times of Alan Greenspan” he displayed proclivities to fancy cars and young news anchors…
The quote above in Mr.Greenspan’s book is from 1958 “Look” magazine,time of huge cars with fins,Dial-A-Prayer,Dancing Nuns,God-Is-Just-A-Pal trends.
Brent-while joining you in the figure out, then must reckon we’re all still bozos on this bus (nod to the Firesign Theater)…
may we all find a better day.
“young news anchors…”
Yeah, but it was Andrea Mitchell, whose face looks like a foot.
And Barbara WaWa wasn’t really much either.
So, you can print all the money in the world and still not get the babes.
Federal Government keeps sending out monthly checks to practically
all parents with kids. Until this free money ends it will continue. Why get a discount on a car when you have lots of free money from the party in power.
Not sure, but does this money behave as you describe? Being spent on something other than the pre-kindergarten owner? I don’t really know where most of this money ends up, other than the fact it ends up in some business owner’s pocket. And isn’t that what capitalism is all about?
No. That has nothing to do with Capitalism.
In the Soviet Union, under Marx, when a worker got money, they went and bought Vodka. It ended up in some business owner’s pocket. And isn’t that what Socialism is all about?
In Germany, 1933-1945, when a worker, working at the munition factory, got money, he went and bought Schnitzel and Schnapps and the money ended up in some business owner’s pocket. And, isn’t that what Nazism is all about?
In the Dark Ages, from the collapse of Rome, circa 450 and the invention of the Steam Engine, circa 1750, when a serf got a bit of coin, he would head into town to quaff some warm beer and eat some rotten sausage. The money ended up in some business owner’s pocket. And, isn’t that what Feudalism is all about?
In the movie version, MA misjudged how much his kid wanted money and power….cost him the whole show…his LIFE. Fair trusting types don’t make much of a successful Capitalist, eh?
NBay-and that is what the ‘Capitalists’ (among the many and varied historic operating systems of the human species) have always relied on…
may we all find a better day.
I assume this is all the “dumb” money in the economy.
So does this mean that the “dumb” money hasn’t dried up yet?
Free money IS dumb money
That is why COST to borrow is imperative to good economic decision making
If you look at who buys Treasuries (the wealthy primarily) and who buys stocks (the wealthy primarily) and who buys commodities (ditto) I’m pretty sure the real ‘free money’ is in fact ‘free’ but only for the already rich.
It is not money.
J P Morgan, when asked what money is, he said (something to the effect): “Gold is Money. Everything else is Credit”.
So, yes it is Free. It costs nothing to print, or press the key board.
That is why we are paid “0%” Interest on our pathetic savings. Why should they pay us anything for something they print for free?
The o.1% are not stupid. They are genius. WE are stupid.
But gold doesn’t produce anything?
“And I just don’t get this, it keeps astounding me every day…Something big has changed in the brains of enough – but certainly not all – Americans starting last year…”
To me, this is the crux of the problem. What is going on psychologically in these people? It is like reckless abandonment — beyond reason. Perhaps it is a symptom of “eat, drink, and be merry for tomorrow we die” type of thing.
I don’t know. I’d love to understand this from a psychological perspective, but since psychology isn’t really a science any longer….I guess we’ll never know.
Fundamentally, when one spends money or takes on debt for a discretionary item, it is to feel better. Sometimes it works.
NO money down, no interest for 2 years.
Maybe it can be explained by behavioral psychology. People tend to imitate the behavior of their leaders. Since Fed and politicians splurged, people now behave in the same way. It’s a syndrome. The recklessness of the Fed is reflected in the buyers’ behavior.
“It is like reckless abandonment — beyond reason. Perhaps it is a symptom of ‘eat, drink, and be merry for tomorrow we die’ type of thing.”
I share your impression. The term “nihilism” occurred to me. I could imagine behind all this hides a general loss of trust. “Act responsibly? What for?”
Fed is doing dishonest money whereby savings is worth -5% real. That’s a heck of a lot of nudging to spend instead of save. You go right ahead, I will make do with what I have and try to have some reserves for what comes next.
what was the reinforcement that was removed? :)
“eat, drink, and be merry for tomorrow the Fed will bail us out”
Reckless fiscal abandonment. The current admin is about to make it much worse with more money giveaways. Common sense is evaporating rapidly. Drug abuse skyrocketing, rampant even with the people running this country amuck. Beyond repair me thinks.
What is FUBAR is Congress. It should raise taxes on the real moochers, the 1%. Then it should invest money into productivity enhancing R&D, as well as in-shoring what was off-shored since China entered the WTO. Are capitalists going to do this. Are you kidding? Of course not. What they will do is spend good money following the government ‘trail.’ It is called
‘crowd in.’ ‘Crowd out’ was just one of many myths embedded in our legacy macro.
Capitalism has nothing to do with this,
North Korea, Venezuela, Cuba, Iran, Iraq, Saudi Arabia, China, etc. all operate as Capitalist economies (under Dictatorships politically).
They raise Capital, and with the Capital they build factories, etc. This is referred to as Capitalism. The Capital can be raised and controlled by the State (Communism), or it can be raised and controlled by individual people (Free Enterprise). Money itself is not Political.
It would not be called Moneyism, would it?
Other economic systems are Feudalism, Slavery, Hunter-Gather, Cannibalism, Fishing, etc. which are based on Labor, and not Money (Capital) as the primary driver of the Economy.
I think this flurry of purchasing cars is due to the Corona virus, and lots of people thinking how
lucky they are to be alive and also have some money, so why not have a new car at any price and enjoy life. Who knows how near the end for any of us is with new and more virulent variants surfacing. All it takes is one death in the family from Covid to bring you up short.
People are getting insane trade in valuations due to the chip shortage which allowed them to keep the same relative payments even if over a longer term and are trading up or trading newer…
Credit worthiness doesn’t matter anymore… the behind the scenes financiers are desperate for any yield, regardless of risk…
It appears, in the US, car sales, as a percentage, started a slow slide about the same time the land yachts were downsized for fuel efficiency laws…
I don’t have the numbers but I think anything over ten years old doesn’t have the valuation markup as anything less… I have seen some fine luxury SUVs at 25% of original cost…
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act which cut individual income tax rates (and corporate rates) and doubled the standard deduction (although it did kill other deductions).
It was the latter part of his presidency that my wife and I started seeing brand new pickup trucks and cars on the road. People were feeling a bit richer and confident. The economy was basically good. There was a pep in their step. Then wham! Covid hit and we all did a 180. People watched as their livelihoods vanished in the blink of an eye.
Under President Biden the money gushed. People wanted to get back to the pre covid state of mind. But as Mr. Richter has pointed out, their spending has gone way above and beyond normal behavior.
This parabolic spending is filling an emotional void. Maybe they’re trying to buy some semblance of happiness.
The economy was good? You mean when the fed had to set up overnight repo facilities, which Wolf reported on? Or when the fed was slashing rates after the 2018 taper tantrum?
The tax cuts were another swipe at getting juice out of the orange. The Trump economy was a paper tiger.
If he took COVID seriously and sold MAGA masks instead of being divider in chief, he’d be on his second term now.
What is considered an economic success to certain individuals is viewed as a failure in the eyes of others.
For us, life was good. Still is.
Uh, the money started gushing under Trump.
Rocky-as stated at their inception, clock was, and presume still is, eventually running out on those individual tax reductions…
may we all find a better day.
Had a billionaires purchasing agent in the store this past summer bought
his kinfolk a preowned ride
Often in life timing is everything.
We paid cash for our ‘new’ car bought in early September 2019 just after the model year changed. It had way more features than we wanted but the dealer was really eager to get it off his lot to make space for Next Years Models.
So … needless to say … we got a really sweet deal for less money than we thought we were going to pay.
What a difference two years made.
When my in-laws brag about their newfound wealth via Robinhood, then go buy an overpriced PU, I see some explanation. They never invested or suffered a bear market. Heck the just opened an account cause everyone else – metaphorically – is doing it. As long as the market goes up,everyone is a rock star. Like everyone rushing to one side of the boat – well the boat sinks. Or everyone rushes to the otherside and sells all the stocks. I’ll take a Prius any day. Low MSRP low gas expense. A vehicle is a tool and the only attention I get on the highway is from people that cut me off and flip me the bird. Not a status symbol.
If you and all the other Prius drivers would at least drive the speed limit we’ll stop flipping you off.
People believe what they see.
They saw prices on lumber go crazy. They saw houses shooting to the moon. They saw meat double. They saw empty toilet paper shelves.
Then they saw every single dealer with skeleton inventories and waiting lists. They’d seen it before and they knew what it meant. Act now or forever lose out.
That’s just how the mind works.
Ancient used mobile homes spiked in prices too, just FYI. The one asset that everyone thought isn’t an asset turned out to be an asset after 2020 rolled around.
This is permanent. Constrained resources ensure it. So does the rising cost of blue collar labor. People are dropping out of the labor force like crazy. Pricing is set at the margins, like it or not.
Good point. Just not convince that resources are actually constrained. For example, Copper is up a buck or 33%. Yet Romex is up 350%, so we say supply shortage. Yet Home Depot is getting outrageous money for that Romex and the profits reflect it. So Companies are gouging where they can. And as long as people feel wealthy they shall pay. I think commodities will go down same as after 2008. My “conspiracy” theory is that hedgies bought lots of futures contracts and drove up the price. So Manufacturers need to pay the piper. Fed free money made this possible. Just a theory but what else explains such wild moves in copper, lumber, corn, etc. Corn is still corn. Wheat is still wheat. This too shall pass.
True enough on gouging power.
But I’ll still argue that the existence of monopolies with the power to gouge are the predictable result of resource constraints. When there’s no other way to grow despite unrelenting demand, the only option is to acquire competitors and other actors in one’s vertical market.
Supply chain disruptions are only possible when the global chain is so heavily monopolized that only one or two suppliers serve the entire world. Otherwise, there would be competitors happy to step in to fill the void.
Record corporate profits show that companies are price gouging.
Welcome to Agenda 2030!!
You will have nothing and you will like it!!
You will rent your living quarters and the clothes on your back!!
And life will never be better…
Because you are alive, and not dead!!!
Forgot to add…. financing goes out at least 6-7 years now compared to the 3-4 that I remember. So more truck same payment. Surprise surprise many people never learned to understand the present value of money. This may explain a piece of it.
Wait until the BBB passes and everybody can get $15k off the base $40k Ford F150 Lightning. Waiting line until 2026.
If you think inflation is about to rocket into the stratosphere, one of the smartest things you can do is buy a new vehicle on credit (second only to taking out a big mortgage). Your savings wont be worth anything in a couple years anyway, so get ’em spent while they buy something, and lever up on debt!
And for years and years, that’s precisely what doomsayers have been saying – that all this federal spending would creating runaway inflation. And now that it’s here the Fed has been calling it ‘transitory’ and the Biden administration has been dialing up plans to print and spend more money to make the problem worse as quickly as possible.
So why not get that new truck now while you still can?
Saving for retirement was for the boomers. Now it’s “What retirement?” The government’s going to take all your savings between now and then anyway, either by inflation or devaluation or taxation of wealth or taxation of unrealized capital gains or whatever. They’re not going to let you have your parent’s retirement, the only retirement you’ll get is a state-funded one, so there’s no point in saving now only to have it taken away later.
It’s about lifestyle now, because later we’re all poor together.
To 60% of the population the stock market is a rigged game they can’t possibly win, it exists to transfer wealth from the protected class to the political class in exchange for protection, and from the political class to the donor class via preferential legislation.
Yes, the doom sayers don’t have their facts straight either. Those hoping for the “big crash” around the corner are too blind to see that we are in the big event now, it is a painful spike upwards due to the devaluation of the dollar.
yeah keep buying tsla and aapl calls on margin. you just can’t lose!
I have never bought a thing on margin, never will. ~15% of my taxable portfolio is individual stocks, 0% of retirement. The rest is index funds.
TSLA is clearly a bubble. AAPL I believe to be one of the tech stocks that is closest to an accurate valuation. Their intellectual property in software and silicon design is a massive advantage. Unless the world suddenly shifts to use less technology, or there’s serious government anti-monopoly intervention, it’s hard to see a world where Apple doesn’t continue to grow over the long term.
Again, I’ve seen the dollar rise versus other currencies, No?
Are imports cheaper now? Are we exporting more? I don’t think so. The supply bottlenecks are tossing the normal economics into the trash. Do you think this is permanent? I don’t think so. Will the ‘return to the mean’ overshoot and be violent? I have no clue. But stocks don’t rise to the skies. That I know.
I don’t think the inflation is permanent, or even prices/valuations in certain segments (see: car prices used and new). However, though I expect many things will return to lower price levels, I am not sure it will be a return to the mean. I expect housing, food, cars, etc. to be permanently higher in pricing than they were in 2019.
Maybe I will be wrong, but I don’t see the return to 2001 valuations in stocks and housing that people are expecting on here. We are a service and information economy now, not manufacturing, not oil. Wealthy will continue to get wealthier, the upper middle class will get wealthier, and the bottom ~65% will continue to see things get harder.
I don’t like it, but that’s what I see happening.
i think that’s largely right. people are living for the moment because they realize the future is bleak. only idiot corporate ceos are “excited” about the future.
What is the old saying -? “The house always wins…”
I have it figured out from an economic systems basis. The entire american auto market is a kind of steady state and system. The only input is new cars. The only way cars leave the system is to be scrapped. Even if someone decides they want a new car and they trade in their old one it does not leave the system if it still has economic value. It only leaves the system when the cost to repair it and keep it in service exceeds its economic value either by crashes or mechanical failure. If fewer new cars enter the system and the same number leave the system the only possibility is that some people that used to have cars go without and walk or take the bus. Or fewer cars have to leave the system. The only real way for this to happen is that the system increases the value of used cars so the threshold cost where it is economic to repair a car is higher. This in turn ripples up through the system increasing the cost of new cars. So if I am right the only way new and used car prices can come down is if the supply of new cars increases, or more people abandon automobiles and get around in other was. Remember you heard it here first
Thanks SC, very good analysis!
That said, I am not fully convinced by the reasoning that the increase in the value of used cars leads to higher prices of new cars. Too simplistic. Influenced by, for sure. But in turn, more expensive new cars lead to people waiting for the craze to abate or deciding to “go without”. In other words, without quantifying each dependency, it is difficult to decide.
The effect of used car prices on new car prices is easy to work out. To keep it simple let’s use a single model of cars, an example say a Honda Accord. Before the current madness a new one is $35000, a 2 year old low mile one off lease is $28,000. A five year old one with no warranty is $15,000, a 10 year old medium mileage one is $8000 and a 15 year old one is $5000 and a 20 year old beater is $2500. Now the beater goes up to $5000, the next level up to $8000 and so forth until we get to the 2 year old off-lease car that goes up to $34000. Why would anyone buy it if they can get a new one for $35,000? So the price of the new one goes up to $40,000 to create the separation the market needs to work.
That is the supply /demand portion of explanation.
Add home equity bumping demand up.
Add covid money (PPP, unemployment, forbearance , eviction moratoriums)
Add dollar depreciation.
Add consumer disorientation.
Add people living in cars.
(Cars the new substitute for housing housing)
It seems that people think seeing ADM’s on cars is a new phenomena. It’s not.
ADM stickers have been around since Moby Dick was a minnow. When I entered the car business in 1979 (gas crisis), Datsuns (aka Nissan) and Honda’s had $1,000 – $1,500 ADM stickers on them…. on a $3,500 – $7,000 MSRP unit. Customers would follow the car haulers into the dealerships offering over that amount in order to try to buy a car out from under someone else on “the list” who were waiting patiently for the car they ordered to come in. Those, with the lowest profit, waited the longest, got the dog color, or got their order canceled.
Happened again in the mid 80’s…. and again in the 90’s.
This is nothing new….. The dollar amounts are just more mind boggling.
It is pretty clearly wealth effect in action.
Higher stock, crypto, house prices – why not splurge on a car?
The smart car dealers will point out how resale value is so high that a new car practically pays for itself…
I know four guys that bought trucks during this mess.
Two are millionaires near retirement and the money isn’t a big deal. They have been trading in every 3-4 years for a long time.
One is a school teacher and the other is a factory worker. Both these guys are notoriously bad at handling money.
The reasons for buying from all four is about the same: “eh I wanted one so I bought one”.
The silver lining is if you want a used sedan there are still some reasonable deals out there because not many people want them. In the midst of all this frenzy my parents got a good deal on a very nice ten year old Acura sedan after their current ride self-detonated.
Not caring if you’re “out of style” or “off-trend” can save you a lot.
Although Wolf notes that females love big trucks too, here in Thailand it seems to be mostly Thai males who love American-style deelux trucks.
This exists even with Thailand’s historical Buddhist principles: An attraction (desire) to something that we think will gratify us is one of the three poisons (along with ignorance and hate) described by Buddha. Fixating on an object we think we need only makes us happy temporarily. The deeper satisfaction from possessing the object is transitory. The thirst of desire and greed returns, and is a basic source of stress and suffering.
Nonetheless, the land-yacht style truck does have usefulness for many Thais working in construction, tourist services, etc. At the same time, it serves as a powerful automatic exoskeleton, sort of like big balls and big muscles, that makes others step more lightly and carefully around you than if you had a light-weight easily smacked down vehicle. And now available with sumptuous luxury, like a body-builder in a $5,000 suit. Good for people needing a certain kind of respect.
Because I drive above average miles per year and need reliable transportation, a new vehicle is usually in the cards every four years. The last purchase was 2019 so my target year for replacement is 2023. But as Woff writes, “… instead of trading in their current vehicle, could just drive it for a couple more years…” This is my plan. And I’m sticking to it until things normalize. But will things normalize?
Has there ever been a “normal” time in the U.S.? Think about it.
I’m going out on a limb here. I don’t think you’ll be paying $5k or $2k over sticker in 2025. And you will have plenty of choices on the lot. Meanwhile, your current vehicle, if still in good condition by then, will save you lots of money for those extra two years you’ll be driving it.
But you may not have to wait till 2025. Production of semis is starting to improve, and auto production will improve in 2022, and by 2023, the market should normalize, with dealer lots filling with vehicles.
Will MSRP become the new standard selling price? That is a big question coming out of this mess. Dealers would love it if Americans accept MSRP as a deal, and maybe they’ll throw in a free fluff-and-buff, hahahaha
“Fluff & buff” sounds like code in adult entertainment.
Not that i would know anything about that sector (though i’m sure some past clients would….especially one that showed his ‘real books’ to a “potential buyer”, turned out to be an undercover IRS investigator. Ruh-roe)
I’ve heard variations of the term within the aviation community.
Especially involving anomalies in airframe/engines log books.
Note: the number of PDX family/legacy single line dealers continue to shrink, while the mega stores add more brands each year..
The single line dealers are selling out to the conglomerate mega-groups because the mega-groups are throwing phone book numbers at them. This has been going on since the mid-90’s.
Since you mention PDX, Lithia was merely a startup back then. They operated their original group of stores out of Medford, OR (I think they keep their HQ there). Now they are all over the place.
The issue is that the littles can’t compete with the bigs. It takes too much cash to comply with all the demands that manufacturers make on the franchisees. Imagine a mom and pop in Corvallis being asked to pony up millions for a “compliant” facility when there’s no contractual guarantee of supply. If supply gets constrained (as it is now), there’s no stonk market for that small dealer to go for funding…. he has to write a check. If he can’t stroke the check, he ends up selling to a Lithia… or a Penske… or an Autonation….
Heck… half of the dealerships who have some guy’s name on them are owned by the bigs. They just kept the name on the store and paid the previous owner to manage it if the trade name goodwill was sufficient to justify it.
I know what a “fluffer” is in the porn movie industry. But then I have a strong low-brow streak in me…..too much factory work?
This is a mix of:
– massive under-confidence at the national level
– endless advertising telling people they are worthless without truck/car X
– a completely empty culture that values nothing beyond goods
– nihilism as the defining national trait
– insanely nihilistic business leaders pushing bigger cars during climate change
– a complete detachment between earned money and unearned money making value meaningless
– huge excess death numbers and severe illness
– asset prices so high you can’t work your way out of it, so splurge
This is America.
And, it is what makes America the envy of the world, where everybody is trying to get in.
Millions want in. They want the nihilism, greed, big cars, junk food, welfare, unearned income, etc.
2 Million flooding across the border this year. 10 Million total by the 2024 elections. From 105 countries. No questions asked.
They are willing to DIE to live this life. They can work for cash. Don’t have to be vaccinated like the citizens. Free health care if you just show up at any Emergency Room. Free school for your kids.
I can answer the “why” in my case:
I felt like my vehicle was no longer reliable. And I am about to make a 3500 mile trip so I needed something reliable. Rentals were $100 a day!
Fortunately, I bought used, the vehicle had sat on the lot a relatively long time, and it was during the slight slump in Sep.
So you trusted your “feelz” as to the “why”, and bought another vehicle?
As compared to the professional mechanic’s independent evaluation and assessment of your former vehicle, to see if it was safe and viable, not only for your trip, but the next few years?
Glad you are well off enough to be spending that money.
But please don’t then try to justify it with a “deal” you got during this recent madness in the escalation in auto prices.
I’m sure the dealer made out very well on your purchase.
But, sadly, I’m afraid you and your money, didn’t do as well.
The sales price of the car is one thing to consider but the life-cycle cost of a vehicle includes: taxes, insurance, depreciation, maintenance, and other costs between keeping an old car and buying a new car. Where I live just the additional taxes and collision ins on a new car give a maintenance allowance of about $3K/yr (plus the initial 4% sales tax) toward keeping the old car.
Then the wild card of accident damage and possibly totaling the car – that’s where you really find out about depreciation.
And gas vs hybrid vs electric. Who knows what cars we will see in the next few years.
So I am waiting for prices to come back down or I get over 150K miles. The longer I can wait, the more I save and probably the better car I can buy.
To me now cars are boxes that move stuff and people around. My neighbor on the other hand just bought his 2nd Corvette, He now has 2 customized ear splitting beasts. In a way he’s lucky and price is no object because Corvettes have been his hobby for a long time and he gets so much enjoyment.
I too take the hobbyist route. Always have a mistress. What is an affordable mistress, you ask? Jaguar. Just last week, new wheels, tires, brakes in the box awaiting. Updated Reverse mirror-camera gives realtime 170° view, litium battery 8.8# replaces the 58 lb Gp49 deadweight in the boot…on and on. Rinse and repeat on the ’09 BMW too.
Yeah. Douglas, that’s what I like to hear.
I just got off my favorite mistress after we had a short, but hard and fast session of pleasure. And since she’s so beautiful, she stays in the living room on full display.
Of course, I keep two more sweet things on call in the garage. They are always willing and ready to be used!
“She was a fast machine she kept her motor clean
She was the best damn woman that I ever seen”
My daughter lives in Halifax Nova Scotia and recently bought her first car a 2011 Hyundai Elantra. In Halifax a 10 year old car already has pretty significant corrosion. She looked for weeks with a budget of 6-7 k for a reliable beater. All in taxes, needed repairs and snow tires the car cost her over $9000. The cost of a reliable beater has gone up at least 50%.
Owning an older car is the way to go if you are willing to do maintenance and light repairs, especially if you don’t drive much except for 1-2 week duration adventure trips. Don’t let the over conservative EV car literature/propaganda fool you.
I rotate between two 1999 and 2001 vehicles. The older cars have simpler electronics, simpler mechanicals, less fluff gadgets, and can be repaired without the need of special dealer equipment.
Since I drive less now, I do oil changes every 2 years for about $40 each. Both have almost 200k miles and I’ve only had to change some ignition coils ($50 each), radiator fan ($100), and alternator ($100). Wear and tear items like tires and brake pads are cheaper (old cars had smaller diameter rims and parts are cheaper).
Most useful tool is an OBD2 reader ($20) and car tools have gotten cheaper over time (except for recent covid bump). Being able to work on my cars saves money and allows me to drive confidently when on longer road trips.
Car registration fees and insurance is cheaper too. Just in case, premier towing coverage from AAA is only $120 and it covers 200 mile tow (if you don’t already have AAA). Finally, swapping out cars every 2-3 years after lease ends is just a wasteful behavior.
You are a demi-god.
My only car from this century is my biggest problem.
The stinking computers.
The other four vehicles are almost perfect.
An oil-change every couple of years, top off the fluids, check the tire pressures, and we are all doing well .
Oddly enough, my 1937 Cord is the most dependable, and fun car,in my little menagerie.
Historically the most expensive models to at least around 1975:
1. Station Wagons
3. 2 door coupes
4. 4 door sedans
5. at the bottom and special order only, Light Trucks