Average new-vehicle price jumps by $5,000 from year ago, to $45,495.
By Wolf Richter for WOLF STREET.
Inventories of new vehicles at dealers are still desperately short, even as sales have plunged due to vehicle shortages. That has been a given now for over a year, and it hasn’t gotten better, and depending on who is talking, it might get a little better, or it might get worse, if that’s even possible.
The number of new vehicles in inventory on dealer lots remained at 1.13 million at the end of May, down by 70%, or by 2.68 million vehicles, from the same period in 2019, according to estimates by Cox Automotive, based on its Dealertrack data. In 2019, vehicle inventory averaged 3.66 million vehicles.
But now there is a new problem.
Gasoline prices that have doubled since the beginning of 2021 have pushed buying patterns away from the previously hottest and most profitable models – pickup trucks and full-size SUVs – that automakers had prioritized in their production plans as they struggled with semiconductor shortages and supply-chain chaos, to economical cars and compact SUVs.
And now dealers find that what little inventory they do have is the wrong inventory. Economical vehicles are now essentially gone. No one in the industry was prepared for this shift in buying patterns.
Supply fell to 34 days, remaining in the desperately low range, when 60 day is considered “healthy,” meaning fairly tight but sufficient, and 70-90 days is more common. In 2019, supply averaged 90 days.
The problem of the wrong inventory due to unexpected shifts in buying patterns, made worse by long supply-chain delays, has also hit clothing retailers and other retailers, that now find themselves short on some items and overstocked on other items, as consumer preferences had shifted in the meantime.
Inventory by vehicle category.
Inventories of compact cars, hybrids, and midsize cars, are essentially gone, with supply in the range of 18 days to 23 days. Note that “inventory” includes vehicles that are still in transit or are still waiting to be prepped. When you go to a dealer with a brand that still sells compact cars and mid-size cars – Ford and GM killed their models in recent years, and the import brands are loving it – you will essentially see none on the lot.
But inventories of full-size pickup trucks, mid-size pickup trucks, and full-size SUVs are starting to accumulate in inventory. These are the vehicles that automakers prioritized during the semiconductor shortage because of their big-fat profit margins, while they cut production of other models. Depending on brands, inventories of pickups still is very tight (Ford) to plentiful (Ram).
Tesla is not included here because it doesn’t have dealers. It sells direct to consumers and doesn’t have “dealer inventory,” and doesn’t disclose its US inventory, and doesn’t even disclose its US sales, only global sales, and only on a global basis.
But Tesla is the elephant in the room in the US when it comes to EVs, and with its inventory and sales data not being disclosed, the majority of the EV business is not included in the data here.
Legacy automakers are now all coming out with their own EV models, but they’re all having problems making them due to the semiconductor shortage, and the time it takes to ramp up supply chains for entirely new models, even during normal times, and the number of EVs they’re selling remains small.
Many EV models have long waiting lists, and there is essentially zero inventory. But because sales are just an uneven trickle, the days’ supply data, which is based on that uneven trickle of sales without Tesla, can get erratic, and there is no significant buildup of EVs in inventories yet.
Very high-end vehicles, which are sold in just a trickle, are in a similar situation as EVs and show up with erratic supply numbers even though only few vehicles are in inventory, and few are sold.
Sales plunge: inventory shortages and the wrong inventory.
Given these inventory shortages, new vehicle deliveries in May plunged by 29.6% from May last year, and by 30.2% from May 2019, to just 1.1 million vehicles, back were it was in the 1970s and 1980s, according to data from the Bureau of Economic Analysis. Last spring was the last period when dealers still had inventory. Relatively strong sales in those months depleted that inventory.
Given the inventory shortages, no one knows for sure what actual demand would be, if there were enough vehicles to sell, because for a year now, potential customers have left dealer lots frustrated because there was nothing to buy, or they ended up buying a used vehicle because that’s all there was, while others have put in orders and are patiently waiting for months to get their vehicle.
This market remains strangled by supply issues – and those issues have been made worse by the shift to more economical models, when no one in the industry was prepared for this shift.
The average listing price in May rose 12% from a year to $45,495: for non-luxury vehicles to $42,240; and for luxury vehicles, to $64,282, according to Cox Automotive data. The year-over-year increase in listing prices has been roughly in the 12% range since last summer, and roughly in line with the CPI for New Vehicles.
This means that the average new vehicle has gotten nearly $5,000 more expensive over the past 12 months, which is another indication that there is large demand amid complicated and shifting new vehicle shortages.
By now, there are several million frustrated potential customers who haven’t bought because there was nothing to buy; and there will be more of them by the end of 2022. These buyers will turn into pent-up demand when supply re-emerges. Some of them are already on waiting lists, with their orders pending. This isn’t a sign of low demand, but a sign of supply shortages.
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Buy electric car when gas prices plunge. Buy gas guzzler when gas is most expensive. Rinse. Repeat
Irrational decisions by irrational shoppers
It’s perfectly rational for their net wealth level….sure there are always exceptions to unload on. It’s time for another Net Wealth Inequality Chart to show just who is dragging the averages up. Even Median wouldn’t mean as much now because of the massive separation of Net Wealth Groups.
Think of how you would measure a barbell with at or very close to negative weight on one end and a couple hundred pounds on the other.
Yeah…it is that bad. Living my whole life bouncing along the bottom and being related to people who were and hung with 1-0.-1%ers (or less) has given me good perspective.
unclear, sorry, 1% to 0.1 or less %ers. I gotta proof-read more before post…..and my time is anything but valuable.
In normal times this is actually sound strategy, as you get the lowest price due to situational circumstances. Today however, thanks to the FED/Covid/Covid gov checks/QE/ZIRP all normal responses are upside down
Nothing happens until someone doesn’t sell something.
I bought an escalade in fall of 2008 when gas was a record $3.50 a gallon and drove it for 2 years and 20k miles and sold it for than I paid. I’ll do the same this fall.
Good luck with that. With Biden in charge and with him having a hard on for the oil industry, You won’t see cheap gas for awhile.
Invasion of Ukraine stopped the purchase of Russian Oil and Gas for most of the world. Bring Russian Oil and Gas to the free market. See the price of everything return to pre-war prices. War is expensive in many many ways.
We should never see cheap gas again.
Gas is still horrendously underpriced for the damage it does to the environment.
But hey, Americans got to have their “right” to destroy the planet.
The ignorance in society is mind-blowing.
Great comment jw, agree 100%.
I got moderated out for expanding on a major cause of our societal ignorance, but wanted to come back and acknowledge you, anyway.
Ironically, what I pointed out is likely also the reason I was moderated out.
In either case, I’d hate to moderate this site and like I point out to some others, it ain’t their’s….or my website.
Glad it’s here.
Last calculation of Tesla’s days of inventory was 3 point something days inventory. Though the vast majority of that was in transit.
Demand for small cars just when American auto makers have abandoned that sector. Where have I seen this before? Wonder if they’ll get bailed out again?
We went through this starting in 1971 and then once again every decade since then, but obviously the manufacturers in the US never even slightly learned the lesson.
My head says that there will be a government response / stimulus to refresh cash for clunkers. Say $10k trade in for cars over 20 years old. Which will in turn drive up the price of vehicles to ATH, and the government will say they didn’t see that one coming
I’m thinking of buying a 2025 Ford Pinto…
…and this time, when it gets rear-ended, it will be the battery that explodes.
HaHa. Ugliest car ever created.
I don’t think a battery produces the immediate forceful flame front a tank of gas at the right level and hit hard enough does.
And as I said before, after the midget racers (probably one of the more dangerous types of racing, but a driver has to start an American racing career somewhere) used up all the Chevy Nova 4 bangers, they went to Volvo and Pinto engines…..to me that proves it was a good mill.
I don’t know how the rest of you judge engines.
Ha Ha. Two points. My parents bought a Ford Pinto. While my mom was driving on a busy road the gear shift broke off. Second. Ford Pinto was a business ethics case study in my business ethics class. Never bought a Ford for the above two reasons.
Will about half of the new car dealers be out of business within a year?
Obviously not Try to comprehend the concept of service absorption.
2023 not 2013.
Conspiracy,gut car inventories,until dealers go bankrupt.Then go electric with no dealers,Tesla model of business
Better conspiracy. Get lawyers to force public swimming pools out of existence with excessive insurance. Then charge wealthy private pool owners more for chemicals and maint equipment. Sell poor (and rich) kids video games for exercise.
Same with go-cart rental tracks that also had big in ground trampolines….in the 60’s they were everywhere….sorry, just whining about it on behalf of today’s kids who know nothing about the Corporate trashing of their youth and childhood….and physical fitness. Sell them pills, fast food, and sugar water…a balanced diet, in the bookkeeping sense.
Why is Tesla touted as the answer to every problem under the sun? The fact that car manufacturers never plan accordingly and put all their eggs in one basket has nothing to do with Tesla. It’s simple mismanagement. Greed is the only reason they prioritize trucks and SUVs over smaller cars. Every time gas goes up they get caught with their pants down.
You would think so but majority of profits depend on service and parts.
No dealers are making money like crazy. They’re marking everything up thousands over MSRP. Selling 1 new car now is like the equivalent of selling 3 cars before.
The link under the phrase “the import brands are loving it” is broken. The URL includes both the headline and sub-heading, but should only include the headline:
Also, is the average list price heavily skewed by the relatively small number of luxury vehicles? (So I wonder whether most buyers are being as responsible as they can.)
Following the average list price in the same sentence are two prices, one for non-luxury and the other for luxury.
Wolf, are you going to do an article on all the crypto exchandes/financials going bust?
I love the part where crypto idiots deposited their bitcoins for 12% interest. So you get bitcoin appreciation plus interest. Win win.
I’m so tired of all this crypto nonsense. I just want it to go away.
It’s not going away anymore than the internet is going away. It’s here to stay and it’s going to get bigger and bigger.
It’s already blowing up tho.
“It’s here to stay and it’s going to get bigger and bigger.”
Keep on dreaming. You’ll wake up one day.
Crypto is a side consequence of the mania. That’s the only explanation how so many could collectively lose their minds to believe that nothing is somehow so valuable.
The mania is in the process of ending. Less confident about stocks but a lot more about debt and interest rates.
“It’s here to stay and it’s going to get bigger and bigger.”
Assuming this refers to the size of the ponzi?
“bigger and bigger”? Implosion-wise? You might want to check BTC today. While you sell the kids and the dog.
When I was a kid we had chain letters instead of crypto. Some even threatened you if you broke the chain. Couldn’t be profitably run by the then fledgling Financial Industry Corporate complex, and so were just deemed illegal.
So much for freedom outside of corporate defined “free choices”…..which this article reflects.
Crypto is heading for zero or below zero. All the losers who invested in this crap are going to lose everything. Many of them will have to get out of mommy’s basement and get a real job. Maybe pumping gas on I95 in New Jersey if they are lucky.
Tesla does too have dealerships, there is one on highway 74 in Charlotte NC.
Large sign that says Tesla, huge fancy building for sales, roughly 200 Tesla’s in parking lot- this is a dealership!
I’m not familiar with the store, but no, it’s not a “dealership.” It’s a factory store. A “dealership” — the term is well-defined — is a retailer that is owned by someone other than the automaker. And they’re usually under franchise agreements with the automaker. Tesla doesn’t have dealerships or franchise agreements. Tesla sells direct to consumers online and through its numerous factory stores and delivery centers in many states. They’re all owned and operated by Tesla.
The real issue is the manufacturers SIMPLY PRODUCE HARDLY ANYTHING IN THE WAY OF CARS and ship nothing but trucks which dealers are ceasing to order because buyers don’t want them. Pretty simple issue, particularly as far as ‘American’ cars are concerned. That isn’t the case with intelligent import vendors such as Toyota and BMW.
I spent 10 days in Baltimore recently and took a total of about 20 or so Lyft rides. With one exception (a Ford) the drivers had one of the following:
FWIW, again with one exception the drivers were all African-American and based on conversations most were of course driving as a separate gig from their main job. (Two were public school teachers, which is discouraging to say the least.)
In contrast, I was driven daily past 2 or 3 of Baltimore’s leading private schools (they are clustered in one neighbourhood by and large). There were streams of large SUVs dropping off and picking up the kids each day. I just can’t imagine how much it costs now to fill up those tanks!
(NB of course it’s not just US manufacturers of the SUVs — I saw plenty of BMW and Mercedes branded ones. Depressing to compare those compact sporty “Beemers” of the 1970s with the current hulking ones.)
Thankfully I am now back in my mid-sized EU city where I walk everywhere each day and shop locally and never need to use a car. What heaven!
What crime did you commit to be sentenced to 10 days in Baltimore?
Some airports are giving preference to Uber cars that are electrified. An Uber driver right now could not make money without ultra high mileage cars.
However, they probably aren’t taking their families camping in those Uber mobiles.
Who needs a family or life when your 24/7 in a taxi..
Pavel. I appreciated your observations. Sorry for the comments it drew.
Your experience typical for the car brands used, but very atypical for the ethnicity of the drivers, in every city I have drivers shared in the US in the last decade and immigrant from Africa or the Middle East has been my driver.
And many of us would love the walkable nature of your mid sized EU city, but most of the US was built after the introduction of the automobile, and development has almost entirely been car centric thereafter.
The geniuses that run the US had a plan.
1. Use foreign labor to destroy our unions by taking domestic increased productivity to enhance profits but not rewarding the increased productivity by placing labor into competition with folks making 1/20th our labor rates.
2. Use the US military to protect the foreign investments used to destroy the domestic labor rates
3. Keep the border open to keep unskilled labor rates even lower
It all worked until it didn’t.
They didn’t count on a pandemic or their primary suppliers turning on them.
A long time ago I would have been sad over the situation…..today there is a reasonable amount of satisfaction in seeing them get what they deserve……unfortunately……the typical US citizen is also being hurt due their greed and stupidity.
Just for the record….they might have bit off more than they can chew this time.
Actually, all 3 of those worked out really really well. We have better cars than ever before, and labor unions are learning their place ie the fossil bed. Automation and 3D printing should keep them there.
Maybe you should specialize more…..Neurotoxic?
Fred you are so right. And it never mattered who was in office
Number 2 is incorrect. It’s the Chinese police and central bank doing the protecting, making sure China’s workers don’t get paid what they’re worth in international buying power.
Wages in China are and have been moving up,but from a very low level in the 90s. The least expensive labor is in Bangladesh and Vietnam, and clothing manufacturers have already moved on from China. There may be a large obsolete rust belt in China as wages for heavy industry rise and as China passes its demographic peak in the next 10 years.
A big downer on US sales for those who don’t pay cash for new vehicles will be the finance costs due to interest rates doubling over the past year which is not a trivial amount at all on $50, 000 vehicles financed for 7 years.
Probably be able to buy them for half price for cash
Is this a bad thing? Rock bottom financing costs has been significant contributor for the insane demand thus dealer markups.
Average American is a debtslave that only cares about the monthly note with the mindset that a car payment will forever be a line item on their monthly outflows. Total long term cost and massive depreciation doesn’t cross their minds.
SCBD, you’re right. The increased finance cost is yet another hit. Personally I can’t imagine buying a new car at this time. Thanking my lucky stars I don’t have to.
Some used car repairs may take a month due to an auto parts shortage. It was on the local televised news. I bought a new Ford Escape compact SUV for $32k in January. It has some self driving features, radar sensors and a GPS navigation screen. Had terrible luck with old cars breaking down in the past.
Babying a 14 year old sedan praying nothing goes wrong and at the same time wondering if we shouldn’t be getting in line ordering something we want. No desire to be part of this ‘you take what we got for how much we want’ transparent extortion scam.
Guess we can’t count on new-vehicle sales prices to help bring down inflation…
I expect truck prices to stop being red hot. There are starting to be trucks on the lots. That should trim some of the addendum sticker prices, even though they’re very sticky, so to speak. And if inventories get big enough, they may get rid of addendum stickers entirely. A reduction or disappearance of these freaking addendum stickers is the first thing I expect to happen.
Amen on those addendum stickers. If there’s one thing that’s glaringly obvious about the main or maybe side effect from this pandemic, massive QE and supply chain issues is to really remind us how much greed is oozing out of people’s eye balls. From cars, collectibles, computer parts, housing..
Back on April 9th I posted a comment that I was seeing used car lots stuffed with pickup trucks. I don’t suppose I should be surprised that situation has migrated to new car dealers as well.
I don’t think “stuffed” would be the right word at the moment to describe the inventory of new trucks. But there are more of them than there were before.
You put out good content with lots of facts, figured and graphs. You should offer subscription for those that don’t do ads. I’ll donate till then.
Thanks to the many donations, I’ve been able to reduce the ads to make the site easier to read. No more video ads, no more ads that overlay text, etc. Donations are making it possible. So if you look at the site now without ad blocker, you’ll see that there really aren’t that many ads on it, and they’re not disruptive. Donations are a form of voluntary subscription, if you will, that keeps the site open to everyone, rather than hiding it behind a paywall.
My friend just walked out of dealership over 5 k addendum ,told them to forget it .why would I go to store get milk and pay an extra dollar .this shit is stupid or people are ,your choice
If enough people do that, the addendum stickers will disappear.
Wolf, looking at the table of Days Supply, you show Electric Vehicles as having a 60 days supply at dealers? How is this true? I thought dealers have no measurable supply?
Quoted from the article, just above the chart:
“Tesla is not included here because it doesn’t have dealers. It sells direct to consumers and doesn’t have “dealer inventory,” and doesn’t disclose its US inventory, and doesn’t even disclose its US sales, only global sales, and only on a global basis.
“But Tesla is the elephant in the room in the US when it comes to EVs, and with its inventory and sales data not being disclosed, the majority of the EV business is not included in the data here.
“Legacy automakers are now all coming out with their own EV models, but they’re all having problems making them due to the semiconductor shortage, and the time it takes to ramp up supply chains for entirely new models, even during normal times, and the number of EVs they’re selling remains small.
“Many EV models have long waiting lists, and there is essentially zero inventory. But because sales are just an uneven trickle, the days’ supply data, which is based on that uneven trickle of sales without Tesla, can get erratic, and there is no significant buildup of EVs in inventories yet.
“Very high-end vehicles, which are sold in just a trickle, are in a similar situation as EVs and show up with erratic supply numbers even though only few vehicles are in inventory, and few are sold.“
I planned to buy a new Honda Fit this year. My current 2007 fit has 250,000 miles on it, and has some rust, leaky door seals, dead AC, etc.
So, Honda immediately discontinued the Fit in the US.
So I decided that I would go with a Hyundai Ioniq hybrid.
Immediately, Hyundai killed the model in the US.
I feel like the car manufacturers are planning for a different planet than the one I live on. All electric is still not practical where I am. I would like a decent small car with great mileage. Hybrid is fine- as long as I am not stuck relying on plugging it in.
The way it’s going, I’m afraid to discuss other models I’m considering… I expect they will be killed too.
Get a Fiat 45 mpg, all the options, AC and such. Have ours 5 years never been in for any repairs.
Which Fiat model is that fuel efficient?
Fiat 500 I think. It is tiny. Kinda like WV Beatle, perhaps a bit smaller.
Yes. Cinquecento. 500cc motor in the rear. Quite popular when I was a kid in Germany. A Beetle was practically a hotrod compared to the Cinquecento. While people were driving Mustangs in the US…
Our hybrid, which is a huge massive car, now also gets about 48-50 mpg, after I tweaked the economy-driving settings. Easy does it. Yes, we’re contributing to demand destruction in gasoline.
Fuel efficiency depend a lot on driving behavior too. No need to dump so much on a new car if a lot of folks can simply drive at speed limit. I can get 10 more miles (45 mpg on 65 Mile/Hrs) vs (35mpg on 80 miles /hr).
LOL, In LA if you see an open road, everyone wants to go 95 m/hr, then they have to fill the tank every 3 days.
The VW bug/Käfer/Type 1 was a marginally more powerful and expensive car than the old Cinquecento, the Renault R4(through the Alps to Garda, two girls, two guys, and a windsurfing board on 26.5hp, patience is a virtue), or Citroen 2CV, all popular with young German drivers in the seventies who’s driver’s license cost several thousand marks in compulsory driver’s ed up front, and who needed cheap cars. Little cheap cars have always had a niche everywhere on earth except in the US, where they seem to fatten up or die off.
Tacomas in particular look like they’ve been eating their Wheaties lately. My ’98 prerunner looks small next to the new ones.
Ford Maverick hybrid is in the 40 MPG range and is selling like the world is ending. Prius is another excellent option.
I’ve been buying Chevy’s manual transmission models the last 25 years – currently have the Chevy Cruze and I can get >50 mpg on the highway.
And if you treat those Chevys right they can last 15+ years.
No more manuals for you and I. CVT go-kart belt drives are the rage now. Never will we even consider that non-starter. Corolla and some low end Subarus are all that remain. A demeaning situation brought on by W2 wage slave dumb money preferring going long on loans for bling over function.
Auto transmissions allow people the freedom to text and drive. It’s all the rage around these parts.
Automatic transmissions/CVT’W make it easier for the automaker to tweak emissions and MPG to meet government mandates.
Quite frankly, most people do not know how to drive a manual transmission nor desire to learn. To them it’d be like having the option of hand-crank windows rather than power.
My 22 CX5 Mazda has a six speed automatic transmission…no rubber band belt.
I saw new corolla hatch yesterday and thought it looked nice.
Check out a DSG. I like the interactive nature of a manual, drove one for years in my firebird, but a DSG is great too. Dual clutch but shifted electronically. Faster shifts than manual because it already has the next gear lined up but same efficiency because you avoid torque convertor losses. Only slightly more complicated than your single clutch manual. VW group has been putting them in everything for quite some time.
You must have the diesel model they sold for a few years a few years back.
“And if you treat those Chevys right they can last 15+ years.”
That made me and my 27 year old Tacoma laugh, thanks.
The VW Jetta with the 1.4T 6M can get about 48MPG HWY ~34 city if you drive gently. The powertrain is available in the base model with MSRP ~$20k.
I had no idea it existed until the death of a vehicle forced me to buy. I am really happy with mine.
I have a 2016 Jetta with the 1.4T and an automatic. I get about 40 mpg highway. It’s a great little engine.
The Germans make great engines. Their overall reliability may not be the best (although mine’s been fine), but they make great engines.
They can be the best if they got rid of all the high technology and sensors. They got it right as much as the Japanese did.
Considering the Fit was one of the best made vehicles, you are in for disappointment if you steer too far away from Japanese.
I am a big fan of how far Koreans have come, but they are not 250K cars with so little problems…(yet)
Toyota Corolla hybrid
I’m surprised no one suggested a Prius. It’s the last hybrid that will go out of production. 58mpg in the city, starts at under $25k, has a proven track record.
Just buy a Toyota prius! They are the longest running and most dependable hybrid in the world!, I don’t see any evidence of them being stopped for production, they are extremely dependable no matter what yr of production you buy!
GM and Ford – hahahahahaha
Nothing better than watching terrible management decisions backfire. Even better was reading comments on var enthusiast sites saying what a great decision it was to stop making cars since shareholder value is so import and SUVs are higher profit per sale
Brilliant idea to hollow out American industry for short term profits.
Best DC can do is a few token reshoring gestures.
Unable to propose systemic solutions.
There are claims some companies will be reshoring, but unanswered is how much.
Not likely that much after the chains get sorted and are working.
I recently read a paper about the loss of American jobs(decent trade jobs in manufacturing and other industries) due to globalization. The paper was well researched and quite detailed.
In summary, around 20% of the job losses we have suffered over the last few decades are due to offshoring, the other 80% are due to machines/technology replacing humans.
Dave, Can you post a link ? I would be interested in reading about it too.
Pandering. Reasonable vehicle fuel standards (CAFE) were just about scrapped over the whining of the Big 3 so they cold sell more pickup trucks to clueless Americans who thought they made the best passenger vehicles for enormous profits. The standards were stretched and rendered farcical to the point where even regular cab work trucks counted against fleet average and were dropped from manufacturing lines, lest they hurt profitable crew cab sales (read about the vehicle “footprint” by class points system that CAFE uses). Meanwhile, no one has the cajones to get rid of the chicken tax so that reasonably sized practical trucks could be affordably imported. Just utter nonsense. Consumption and “consumer choice” should not drive the vehicle market. To hell with the Big 3.
I just took delivery of a new Ford Ranger for MSRP @ 31K. A dealer in Phoenix ordered it in January and it showed up June 6th, I flew in on the 8th picked it up and spent a few days taking care of business in Tucson then drove back to WA State getting 26 mpg. I also picked up a great stainless steel canopy (made in South Africa) in Boise that the Ford dealer had mis-ordered and was selling on Craigslist for $700 off list. Probably going to sell my Dodge pickup that I’ve owned for 25 years. It runs great but it’s a 1952, no AC, column shift, manual steering, 50 mph top speed…..
Wow, $31k for a Ranger. I still remember the type of base utilitarian Ranger a person on a budget could buy, and 26 MPG highway for a new compact truck is pretty bad. My son’s 2wd Colorado diesel gets over 30 and my 12 year old Canyon (Isuzu) ($20k sticker) does about 28. Many euro diesel vehicles do better than all of the above, and they make base utilitarian options available.
Diesel is a $1.00/gallon premium and the current technology is dreadful. It’s basically over for anything but heavy duty trucks. Once you get over about 25 mpg the cost difference is negligible. The Ranger @ 31k is not a base model, it has all the bells and whistles, the base model is about 26K. Chevy claims the 2022 Colorado diesel gets 20/23 mpg.
OK, so I looked at the Penske BMW dealership in the Twin Cities — via their very good website — which I used two years ago to learn about, and buy, my lease-back M4.
Total inventory of cars in stock = one 750i xDrive @ $110.4K
Total inventory of cars “in transit” = one 540i xDrive @ $71.5k
Total inventory of cars “in production” =
one M5 @ $118k
four 330i xDrive @ $48k to $51.4k
For a large Penske dealership in a fairly big metro area, they ain’t got but one new ride that’s not an SUV on the floor!
If they had any of the 2 series, they would move out the door quickly, but even Roger is losing this race, to sell cars, it seems.
BMW 7-Series are in ultra short supply and have been all year. Pretty much the same with the 5 Series. Verified that this week at our local SoCal dealer when we took our 2014 535d in for a warranty service and took a look at what was available. I think the 2 Series has been discontinued.
Four days ago, you wrote:
“Today is a nice day to go shopping for BMWs. We’re going to the local store around 9:30 am and they have one of the best selections ever of both new and used cars…”
Well, we found out differently when we went in to the store!!!
Yes. That’s why I remembered your prior comment. It startled me that you saw or expected all this inventory while everyone else is having these shortages. I mean who am I to know what your local dealer has, but it struck me.
You’re telling me socalbeachdude makes up stories to fit whatever narrative is the flavor of the day for him?
Say it ain’t so Wolf.
SoCalBeachDude making up stories?? Isn’t this the reason he was kicked off Michael Snyders Economic website? Snyder is loco anyhow, but SoCalBeachDude makes Snyder seem rational
Inventory varies rather significantly by BMW dealership here in Southern California. Both Beverly Hills BMW and Santa Monica BMW as well as McKenna South Bay BMW are very low on 5 and 7 Series inventory, whereas dealerships such as Nick Alexander in downtown Los Angeles have fairly strong inventory of 5 and 7 series as does McKenna in Norwalk. That situation makes it quite a task to shop when looking for specific models.
I have a beautiful female friend that drives a beautiful white garage kept 3 Series, five years old with only 25K. She paid cash for it when it was 3 years old and 18K miles. Sits in her garage all day because of work from home.
She took it to the dealer to get it aligned because of tire wear issue. There was a lady in the dealer complaining because the courtesy car wash after service of her series 8 wasn’t perfect. Once she unloaded on him and left, manager told my friend the lady had financed the car for 8 years and he expected the car to get repossessed within the next year or two. A lot of fake prosperity out there.
“…manager told my friend the lady had financed the car for 8 years and he expected the car to get repossessed within the next year or two.”
Holy moly!! If that manager had told me that, I would have taken my car out of the shop on the spot and I would have taken it somewhere else, and I would have never ever returned, and then I would have contacted the dealer to tell him that this manager of his is slandering his customers behind their back, and that I was worried that he might be slandering me behind my back. That idiot manager needs to be fired.
My comment of “Total inventory” could have been more clear by, “Total new inventory.”
The dealership does have a couple dozen 3 series that are ‘Pre-owned’ listed for sale on the website.
But a new sedan or coupe would have to be ordered, and waited for. To me, that’s a surprise. There’s no inventory of new cars to choose from if you want a BMW; without waiting.
And, how did I miss an M8 Competition Gran Coupe (4 doors & a sedan, since it has — 4 doors) “In transit” for $145k?
My local BMW dealer (Fremont CA) website shows 80 new vehicles “in transit”, 27 on the lot. I think that’s more than they had when I bought my X3M last November.
Pretty much all of the 2022 BMW supply in the US is already taken and sells instantly once it hits local dealerships, particularly in the best areas here in Southern California.
The wiring harnesses for German cars are made in…Ukraine.
Gotta LMFAO on this. Didn’t we dealt we this last time right before 08, people and dealers were loading up on big SUVs like Hummers and Suburban and Excursions then when gas price spiked last time and then recession hit hard…inventory piled up. We are repeating that pattern all over talk about definition of insanity. Looks like this reality hasn’t hit everyone since dealers are still ripping customers a new one asking well above sticker on Broncos .
Gotta love our Prius now, I will gladly give up driving pleasure and pay less than half of those gas guzzling trucks and SUVs.
Thank you for admitting you’re giving up driving pleasure with a Prius. If it’s any consolation, nobody having to drive around your Prius is getting much pleasure either.
Had my jeep with 150k miles listed on Craigslist for $11,500. Dealership called today and offered $15k cash sight unseen. Can’t feel but a small victory thinking about current market conditions, and SUVs and trucks average days on lot growing monthly. Consumer psych is heavily demanding sedan and fuel efficient vehicles. Can’t help but think that’s a bad strategy long term. Guess we’ll see.
No one should have any sympathy for US car manufactures.
The Chevy Volt was a perfect example of a car that they should have committed to making through at least 2025ish.
Auto & homes sales need to plummet. Can’t wait to hear about more production slow downs in the coming months.
For the last 6 months of so, the chip shortage excuse in the US has been a red herring. They know this slowdown was coming. They’re using the chip shortage as a scape coat to a certain extent.
thumbs up to that. Evidence is also accumulating that supply-chain on power transformers will delay 3 GM Ultium battery-plants by potentially years. Same sort of extended time-line for acquisition of hurricane repair inventory. Ford is majorly-struggling on at least one of its battery-plants afaik; as in, nobody competent enough to deal with the snafu’s is presently willing to do so. How’d you like to lose your best project manager in the face of all these birds coming home to roost? These wily cats are retiring nowadays; still in their later prime-years. Who needs the stress?
How about taking concrete steps to begin supporting other forms of transportation instead of perpetually saddling everyone with the exorbitant annual costs of personal car ownership (which are a depreciating asset).
It’s no wonder my fellow Americans have no retirement savings.
That’s too reasonable an idea for the “invisible hand” crowd.
Just because Americans make car ownership an “exorbitant annual cost” does not mean that it has to be.
Total cost per mile of my 7 year old Prius is about 30 cents. This includes depreciating the original price of the car to zero, as well as lifetime gas, maintenance, and insurance costs.
People who buy mega SUVs and pickup trucks to haul their groceries around deserve every bit of the pain they’re feeling right now, and IMO have no right to complain.
My first car, was a 1976 Chevy Chevette.
It was one of GM’s first attempts into the sub-compact car market.
The car had so many problems but it still did get around 30 MPG.
It would back fire so loud, it sounded like gun fire.
Ironically, the Chevy Cavalier I now drive was also built to serve the low end sub compact market. It is the best car I have ever owned. 2.2 liter dual overhead cam engine, cost of ownership is nearly nothing.
My Cavalier was built for one purpose only which was to get great gas mileage and allow GM to continue selling its profitable high end SUV’s and trucks to meet federal gas mileage requirements.
I remember the Chevettes coming into Nashville on trains to be loaded on car haulers. They didn’t even have enough power to drive them up on the *lower* ramps. So, they would start way back, get a running start, and most often crash them. They had a pile of smashed ones at the railyard.
Maybe there should be a “thumbs up” button so if we like a comment we don’t have to write a separate comment?
I wish we had a thumbs down so I could easily tell you I dislike this comment:) Just kidding, not trying to be a dick. I think a lot of folks like the OG BBS style of this site. I know I do. I dont want some reddit algo telling me what’s interesting to others while hiding stuff. The raw format is one of the best features of this site.
I agree with Al Loco, who may in fact be loco en la cabeza, but I still agree. I think that if something sensible is commented, it’s good enough in and of itself. The author shouldn’t really need a “thumbs up”.
Hey, I just realized that my comment above is sort of a “thumbs up” for Al Loco. I’d better think more carefully…
Learning to save and buy used vehicles with low mileage and paying cash for them changed my life and increased my net worth. Motor vehicles are a depreciating asset for the most part and it makes no sense to finance such a purchase. I did luck out with my last vehicle purchase in the winter of 2021, closing the deal before the auto market went haywire a few months later. While haggling with the dealer, I was amazed to learn my cash had NO value in reducing the price… the dealer would have actually given me a better price had I financed. And so it goes. Americans love freedom (or at least the illusion of such) and having one’s own vehicle is an essential part of American freedom.
I waited to long to add another work truck. Will see how long we can sit on the sidelines. Hopefully late 22 or early 23 . Then again…a lot of us have put off purchasing due to price.
Same here. My 2011 3/4 ton work truck in the rust-prone north is on borrowed time for what I use it for. And the van I need is unobtainable. Between Amazon and van-life dipsh*ts they’re impossible to find. I’m in a recession proof line of work. So I’m sorry, but not sorry, to say that I hope a recession comes and wipes a decade of stupid money out of every market. The working class needs this.
Ford Transits went up 6K for 2023, but you can still order one and get it in a few months.
If you need one now, good chance of finding EV Transit on a lot.
Good vehicle, I might get a second one.
They were charging like hell for those Transits ($40K?) when I bought my 2012 Frontier and was starting my off grid container project after my mom died and I was done helping my sister take care of her at sister’s. It would carry as much as the Frontier does, but lacked the ground clearance and shielded cat conv. At the time they were made in Turkey.
Anyway, most every manufacturer is now making some version of it, or bigger, and like you say, probably charging like hell because not everyone wants them for a work truck…..but for homes….which hopefully is also ending. Our Wal-Mart seems to allow a lot of homeless in the daytime, (think it was going to have a full grocery or maybe even be a super-store) for now, not sure about night.
Amazon is scaling back slightly post pandemic, and their drone thing could get traction, if so you may have that van opportunity.
I bought a 2005 Subaru Outback in 2018 with 150k miles for $4,400 cash in 2018 off a buy here / pay here lot. I’ve put 100k more miles on it since. Car is indestructible.
$4,400 for a 100k miles… it blows my mind what people pay in financing alone per mile. Besides, where I live your just one afternoon away from getting hit by a modded out P.O.S. 98 Tercel with dark tinted windows and foreign flag mirror thing. So if Suby gets banged up, no big deal.
If you are an Aussie, do you still get the ABSOLUTE BEST no frills working midsize Toyota PU ever made? You know, the one militarys/terrorists mount 50 cals or AA guns on?
That would sure sell here…..carry an honest 3300 lb over any terrain, or so I was told by an Aussie here a few years ago, and you can get them with an option to haul even more.
I have always told kids, “the best car in the world is a paid for car”
Learned that 25years ago! Never tell dealer your paying cash. Negotiate the price, as if financing, then show your hand. Reason…they make more due to financing, cash removes or lowers profit.
“Freedom is an illusion created by those with power for those who have none” -The Frenchman in The Matrix
Some anonymous script writers are as good as famous people……although less so all the time, it seems to me…..maybe they busted their union.
Shutting the economy down while simultaneously cashing up the entire populace was one of the dumbest ideas ever. The people running things are the dumbest of the dumb.
Since Joe Biden is taking the oil companies to task for “price gouging”
why doesn’t he give the same treatment to the auto manufacturers who stopped producing small economical cars in favor of road hogs and monsters that require obscene amounts of fuel? After all, that’s only
fair, what’s sauce for the goose is sauce for the gander. The auto folks
are just as culpable as the oil guys but not a word about them.
I hope to g-d he doesn’t dole out more trillions to help the
“poor” buy more gasoline. We don’t need to make inflation any worse
than it already is.
Tesla is a total fraud. It will never show a meaningful profit. That is why Musk maintains such secrecy about. Teslas have a proven track record of bursting into flames and/or crashing, causing life and limb. Even the working atmosphere at Tesla plants has been described as “toxic” by workers.
What a weird country this is when the stock of a company that sells 25,000 cars worldwide is valued many times more than ‘legacy” companies that sell hundreds of thousands or even millions of cars worldwide.
I agree with you that Tesla’s stock is vastly overvalued. But your knowledge is maybe from 8 years ago.
In Q1 2022 alone, Tesla sold 310,000 vehicles globally. It’s going to sell over 1.2 million vehicles in all of 2022.
Tesla is now quite profitable:
– It had net income of $5.5 billion in the year 2021.
– In Q1, 2022, it had a net income of $3.3 billion on $18 billion in revenues.
And it sits on about $20 billion in cash.
TSLA is profitable – if you believe their numbers – because of the “regulatory carbon credits” they sell to other car companies who have to buy them courtesy of the gubment, based on the belief that EV’s run on unicorn pooh.
Musk is simply a very smart guy who knows how to make guaranteed profits out of crazy gubment regulations. Kudos to him.
The credits are now just a small number in the overall profit — they didn’t used to be, but they’re now. Take out the credit for 2021, and Tesla was still profitable.
How much of that cash is from advance orders of their Cyber Truck I wonder?
As I understand it, none. That’s a completely different fund.
Could be wrong though, but considering the deposit is only $100 and there are an estimated 1.5 million reservations, that’s still only 150 million out of the 20 billion.
Not much at all.
The deposit for a Cybertruck = $100. Tesla doesn’t disclose the number of deposits. But if it has 500,000 deposits x $100 = $50 million, which isn’t even a rounding error in its ca. $20 billion in cash.
A commenter here said that he canceled his Cybertruck order/deposit when the Ford Lightning came out, and they’re now being delivered as opposed to the Cybertruck, which keeps getting delayed.
So there might be other people that cancelled their Cybertruck deposits to get in line for a Lightning.
The appeal for EVs will plummet once it becomes well known that they cannot make a dent in carbon emissions. It’s just a feel good token from people who recycle and don’t take showers. Guess what – we need to shut down most industry and agriculture, home and abroad, to cut down significantly on emissions. Won’t happen voluntarily in any meaningful way.
This is funny. So let me tell you, after having spent a decade running a company that existed to sell cars to Americans: Americans buy the cars they WANT to buy. If they switch from ICE pickups to 600hp EV pickups, they’ll do so because they love them, and because it might save them money, and because they’re cool, and because they’ve driven an EV and know what it’s like, and they don’t give a hoot about carbon emissions. Americans are motivated by a lot of factors, but carbon emissions just don’t rank high on the list. So you need to forget that. And then you need to go and drive an EV to find out why Americans are buying them. If you want to understand the auto industry, you need to understand this.
We own an EV because we live in a small town on an island that’s only 20 miles long. Gasoline has to be barged in, electricity comes via submarine cable and is no more expensive than on the mainland. Our average trip length is less than 2 miles and EV’s have electric heat in the winter, don’t require any maintenance.
Tesla did the hardest thing there is to do in manufacturing – being able to mass produce one of the most complicated products on the planet in an established market with insane capital requirements. Of course they were saved early on by extreme taxpayer investment, the ineptitude of the big players (anyone of which had the R&D, supply chains and manufacturing capabilities to snuff out any no nascent EV ventures…but of course meeting quarterly goals and SUV/pickup induced greed means this never happened), and the b@alls of one CEO. This CEO was probably best suited to get them over the hump to respectable production numbers but he’s now growing bitter and stale and showing his true @sshat colors. The smartest thing TESLA could do now is to dump him and get someone who is serious about the next stage, which can only be growing into a big manufacturer.
Jack Welch went many years in full @sshat mode. A serious problem Musk has is on the IT side – talented but tired people don’t want to work for jerks, and they want a life outside work. 1 AM all-hands? No thank you (and f-off too)
When the Koreans and Chinese get off the ground producing more affordable options Tesla is going to be on the ropes. Other than the upscale yard ornaments niche market.
One of the most attractive features of a Tesla is the excellent user interface software, which has clearly been created by very smart people with imagination and real feel for what American drivers need — people who themselves drive cars and could afford to drive a Tesla. Asian sweatshop programmers who have never driven in the U.S., and are likely unable even to own a car, won’t be able to match it. Nor will Detroit automakers, because the Detroit automakers are controlled by bean counters. The problem in both cases is management that looks at software developers as “code monkeys”.
If you’re so inclined, it’d be interesting to hear your perspective on the recent uptick in flight delays and cancellations and how it could affect the airline industry. Perhaps other industries as well like tourism.
that there’s already over 60k flights cancelled for this year, which is well above the average of 33k~ for the entire year. This level of cancellations also happened in 2020, although then it was probably seen as “transitory”, whereas now it seems to be another new and unfortunate fact of life for the foreseeable future.
Part of it is due to the “labor shortage.” Airlines shed a huge number of people in 2020, and now those people (pilots, flight attendants, ground crew, etc.) have found other jobs and don’t want to come back. It’s a massive issue.
The U.S. annual retirement rate went from 1.5 million a year to over 3 million a year in 2021. Many of them were early retirements. (Note: That doesn’t include the deceased from COVID.). The employer ideology of having 5 people wanting a job to replace a current employee is non existent. Most of the fast food chains in our area have not reopened there dining areas. They are relying only on their drive through business.
Simple they don’t have to pay staff to clean tables or inside dining Wake up
the word “color” in my comment is a typo, although mortality has been high in communities of color.
When americans start buying “economical cars”, the end is near.
Well, 1974 came and went.
I would say for most people buying a new car makes no economic sense.
Ford is making the Mach e at a loss because of high cost of battery materials.The ford 150 lightening will be an even bigger loss because of the large amount of batteries they are using on that vehicle and it’s inaficient arcature.This will all come crashing down soon.who will be left standing? It won’t be Mary and GM
Bought a retirement Caddy below MSRP gets 37 hwy and cost less than a Hyundai. Just got to think outside the box. EVs are not going to be able to make a big deal until my next purchase!
Fuel costs are only part of the cost of owning a car. It’s just the most immediate one viz. one’s pocketbook.
One can purchase, say, a mid-sized used vehicle with good but not great fuel mileage rather than paying more on an economy car with great fuel mileage and still have the same overall costs over the course of many years.
Anyhow, that’s how I roll. Just pencil it out before buying.
Good call on the Caddy!
For a country that has had a 50% increase in population since 1976, that is a strangely flat graph of sales.
New vehicle sales is the ultimate mature industry. I call it 20 years of stagnation interrupted by deep plunges. Part of this has to do with the fact that vehicles today are far more durable than they were in 1970, and they stay on the road far longer. Here is the average age of vehicles in operation:
Hi Wolf. What was that flat spot with 7.5 year old average holding between ‘83 and ‘90 all about?
More about better economic time and less about the cars?
That flat spot was supposed to be the norm. I started working in the business at the time, and it was expected that the average age would not increase ever because if the average age increases, it means lower sales.
Then when the average age started rising, as quality of the vehicles improved, there was a lot of hand-wringing about it. For the new vehicle industry (dealers and automakers), this is a terrible chart. And the flat spot were the good years.
There is an additional (minor) reason for the flat spot – just math. During the double-dip recession, new vehicle sales plunged, and then afterwards, there was pent-up demand and higher sales. So when, as during the double dip, you add fewer new vehicles to the fleet for a few years, the average age rises. But when you add proportionately more new vehicles to the fleet afterwards, all those new vehicles bring down the average age by a small amount.
“As the World Turns” : from inflation to deflation.
1) If we support Ukraine Ford and GM might collapse.
2) Europe might stab Ukraine in the back, because Society General, BNP Paribas and Deutsche Bank are in mortal danger.
3) Our borders are open for millions of black market workers.
4) After 13 weeks WTI failed to close > Mar 7 high. WTI might close Feb 22/28 open gap, down to : $85 -$95 on the way to Nov 29 fractal zone, completing a S-Wave : from Jan 6 2020 high down to minus $40, up to $130 and back to the $50’s – $60’s, or below…
5) WTI weekly : June to Aug 2020 is a Lazer tilting up, blowing oil prices, causing chaos, up and down.
3) Our borders are open for millions of black market workers.
Same in Europe
Sometimes the English Channel comes in useful……
If you want to know how bad it can get, google pictures of refugees in Paris, France
(use something else other than the CIA’s owned google…. lol)
Now though, big majority of refugees in Paris and rest of Europe are from eastern Europe (many indeed black market workers) for obvious reasons, in fact on our team’s last trip there, the numbers are so enormous they’re de-facto forcing out previous refugee waves. Even compared to WWII the influx from east is record setting, apparently more and more Russians and Belarussians than Ukrainians pouring in. The French and Belgian authorities did a prelim. survey and huge percent of the “Ukrainians” coming into Poland and Romania (and then off to France etc.) are actually Russians tossing off their uniforms and getting civilian garments off clotheslines, on top of Russian asylees going to Finland or Lithuania. And since they truly fear punishment or drafting, they can’t be sent back, and EU has much less room to house anyone else. The Syrians and Afghans have largely lost temporary asylum status and support, same with North Africans, Somalis and Eritreans, and even without formal deportation they’re leaving. Though not all are going back home, a bunch are coming here to the US and Canada, or UK and Australia. The West is sort of re-distributing refugees.
Plus, English Channel isn’t worth much border control anyway. At least until recently. The British newspapers and tabloids are full of stories of England “flooded” by refugees in from Calais, and UK took them in through late 2021. But then, sheer numbers of Russians, Ukrainians and Belarussians pouring into the EU scared England authorities into tougher action, since something like 11 to 15 million (!!) people are projected to pour into the European Union from eastern Europe by the time the conflict is over and in the months after. Again, most of them Russians, fleeing the draft and collapse of Russia’s economy and knowledge industries. The UK figured they did Brexit to avoid this kind of thing, so stopped the flows. Some kind of unspoken agreement now that EU takes in almost all the eastern Europeans, while the UK and North America, Australia and New Zealand take the refugees from everywhere else. And it sort of works, the eastern Europe flows are so high that EU running out of room to take in more from other places.
As the Speeding Crypto Train Crashes, Scientific and Engineering Experts Tell Congress that Both Crypto and Blockchain Were a Sham from the Beginning
1) The average list car price don’t matter, because inventory is piling from
mid size pick up trucks all the way down to the most expensive EV and uber luxury.
2) The repo guys might pick them up, but turnover is low : it’s hard to find new suckers.
3) Even after steep discounts and lower WTI there will be no new buyers.
4) The fragile shadow banks might crack first.
5) Detroit layoffs next.
– I never thought we would see the day that those trucks & pick-ups woould start filling up the lots of car dealers. But these high gasoline prices are certainly helping demand shift towards more economic vehicles.
– If I had it my way I would double the price of gas and make sure it would stay there for ever. We americans consider to have a (big, large) car as a birth right. Well, just look at the size of the average car in Europe. smaller and much more fuel efficient.
@Wolf Richter: I assume that prices for 2nd hand cars are also very strong and rising ??
Used car prices spiked about 40% last year and early this year. Then prices dipped some, and the dipping may be over already:
“Used car prices spiked about 40% last year”
Wow! Thanks for that chart. I knew the spike was off the wall but.. 40%? Amazing. And alarming. And to think an affordable used vehicle is what someone used to be able to fall back on while starting their first job, or as a set of wheels while in college. Just another indication of how the Fed policy (until recently) and Everything Bubble it caused has distorted prices and values on everything. They used to warn you that a car depreciated heavily in the first few minutes you rolled it off the dealer lot. But now? That old clunker taking up space in the garage might be a nice source of extra cash if you can truly get around without it.
Just a sickening display of the ramifications of failed leadership. These clowns engaged in a printing orgy without even so much as considering the ramifications.
1) 4cm from 2009 low to 2020 low. 4cm from 2020 low to the top.
2) This spike might be over.
3) In order to plunge, there must be a dot < 190.
4) There might be a bounce to a lower high, after 170-180.
5) Why : pickup trucks liquidations.
7) The used vehicle market might be injured for years, along with the new ones…
Energy is what makes the World Go around
Cost of Energy = Cost of living simple as that
if have Energy you have friends
No Energy Get lost.
How much is XL Box of Money ?
Workers work for Energy
I heard that F or another Major Maker decided to sell their a new BEV Model DIRECTLY via the Web – circumventing Dealer Mark-ups.
Anyone else see this trend with other Majors? I read about an Asian Startup Selling Directly with only Corporate-Owned Showroom-ServiceCtrs Stateside.
IIRC, most Dealerships depend on Servicing Revenues; but shifting New Model Sales at MSRP strictly to Buyers sounds interesting.
Dealers in States that won’t allow Makers to run Retail Outlets are going to have some transitional issues.
Feedback in the form of actual situations appreciated.
State franchise laws protect dealers from just this sort of thing. So I don’t know how Ford is going to get around those laws. Tesla fought it state by state before it had ANY dealers, and so there was nothing to protect, and Tesla was able to get exempted from state franchise laws in many, but not all, states.
The US Dollar closed the week very strong at 104.62 on the DXY and will have another very strong week this coming week and could go all the way up to 110 on the DXY.
Paradoxically, the strong DXY is driving down dollar financial assets, because foreign central banks have to sell HQLA in order to maintain their own currencies. See the Swiss NB saying they may have to unload US stocks.
DXY is caught in a positive feedback loop as a credit crunch causes deleveraging.
It’s frustrating as a GM shareholder, seeing its stock drop from $67 to $31 in the last 6 months. Because their business is still doing well. Their profits were excellent on their most recent earnings report in April. The P/E ratio is now 5.3.
So apparently, Wall Street thinks their business is going to fall off a cliff in the next year or two (presumably that’s why the stock has sold off?) And yet this article indicates there’s probably plenty of pent-up demand for new vehicles still out there.
And they have a bunch of new EVs coming out, although whether they can actually build enough of them is another question.
> Wall Street thinks their business is going to fall off a cliff in the next year or two
If you read the article again, you’ll see the part where Wolf said “dealers find that what little inventory they do have is the wrong inventory. Economical vehicles are now essentially gone. ” and later, “Ford and GM killed their [compact cars and mid-size] models in recent years”. So Wolf Street is saying that, I can’t speak to Wall Street’s collective thinking, but this is a much better thesis for a price move than “PE is 5.3”. Funny enough, Ford’s PE is around 3, and unlike GM, it pays a dividend.
> they have a bunch of new EVs coming out, although whether they can actually build enough of them is another question.
Wolf also addressed this point (this Wolf guy is pretty thorough): “Legacy automakers are now all coming out with their own EV models, but they’re all having problems making them due to the semiconductor shortage, and the time it takes to ramp up supply chains for entirely new models, even during normal times, and the number of EVs they’re selling remains small.”
So you’ve got the markets telling you something, Wolf is telling you why the markets think that, and you’re wondering why your investment’s been cut in half. If I were you, I’d reexamine my investment thesis.
I did read the article, thanks. But like I also said, GM’s last earnings report they had great profits (for the last several years, actually). So no business downturn has been actually reported yet by them. This is all speculation.
And they do still have a few small cars, like the Chevy Bolt EV.
PE of 5?? Wait until their earnings go negative. Then the 5.3 P/E will be a rear-view-mirror phenom. Cyclical stocks can look inexpensive until they get really inexpensive or just file for bankruptcy.
GM should have been shut down entirely in bankruptcy in 2009.
SoCalBeachDude should have been shut down entirely in 2022.
Better look at there debt haw haw
I always enjoy your articles.
Government subsidized electric cars.
There’s a lot of steps to get there.
The first step is to build the charging stations and build out domestic and near abroad supply chains for manufacturing the charging stations and cars, and of course, lots and lots of solar panels and wind mills, which also need a supply chain build out.
But that is only a piece of the needed 21st century infrastructure buildout.
We need to rethink what the skyscrapers should be. FARMS and solar energy complexes.
Government doesn’t susidze shit taxpayers do would be great saying on a mug Wolf
Not with my money. I would rather move to a Red state. They already subsidize enough already.
Plenty of taxpayer subsidizing in Red States and Purple States too. Have lived in Texas, Arizona and Florida at different points and it’s a sore point even in the usual anti-tax, conservative circles how much many of our industries depend on huge taxpayer subsidies, and how the state and local governments are perfectly happy to raise taxes so long as “their” industries and buddies are subsidized. Often sneaky tax increases in fees and licenses, but Texas has one of the higher property taxes in the US because of this. Agriculture, oil–plenty of taxpayer welfare there in the Red States. The talk of Red States or Purple States as “pro-market, anti-subsidy, anti-welfare” is mainly just hot air. There’s just as much or more here as in Blue States, just given to different places.
The biggest blue state problem is that they are essentially owned by state employee unions, in a way that few red states are. In the long run this requires much higher taxation. This mostly relates to pension funding. In some blue states you may get slightly better roads and public schools in bargain, but not as much as in the past.
1) Mon June 20 teenagers protesters federal day.
2) If teenagers bent the will of the gov, they can certainly bend the will
of Tesla elite buyers.
3) Online media migration from one capitalist entity to Ilan entity drive the federalist teenagers crazy.
4) Tesla raise prices by $6K while cutting payroll by 10%. Destabilezed Tesla is no longer the most desirable place to work for young engineers.
5) China closure hit TSLA sales. China consumers are not coming back.
They might be confused, or have a change of character after the last closure.
6) TSLA sales and profit went up vertically in 2021. The average transaction was $58K. TSLA might lose momentum, or decay in fiscal year 2022.
7) if Ford and GM in troubles, Intel ceo will pay the price.
8) large Ice pickup trucks and luxury might become bargains.
CNBC: Cost to finance a new car hits a record $656 per month — and auto shoppers could pay even more later this year…
The monthly costs to finance a vehicle purchase have hit record highs. Consumers face monthly payments averaging $656 for a new car, financed at 5.1% over 70.5 months, according to May data from Edmunds.com. For used cars, the average monthly payment is $546, with an average rate of 8.2% and loan length of 70.8 months.
New car prices are up 12.6% from a year ago and used car prices are up 16.1%, according to government data. For new cars, the average transaction price was an estimated $44,832 in May, according to the J.D. Power/LMC Automotive forecast. For used cars, consumers are paying an average $31,450, according to CoPilot, a car shopping app.
Quite shortsighted strategy by US manufacturers to end the production of most of their fuel efficient ordinary cars. What to do when fuel prices are causing consumers to buy less big guzzlers and turning to Toyota and others that still are offering ordinary cars with fuel efficient engines ? After all, EVs will not for a long time replace ICE, especially in the used car market and in addition the needed infrastructure is still lacking in large areas
I quit buying chev 20 years ago. No quality control. When a toyota can go 300k miles without stopping, and still look good, leaving GMC was a no brainer.
1) Turkey USD/TRY is vertical. Turkey is an industrial hub. Labor is cheap.
2) Toyota produce Corollas and other vehicles in Turkey.
3) GM is out of Europe. Ford is in the back of the line.
4) If both GM & Ford be more humble they will bring back small and midsize cars from : Mexico, S. America, China, ASEAN whatever, because DXY is high. Load them on dealer lots. They will be sold like hotcakes, because demand for small and midsize cars is high.
5) With a strong dollar, cannibalize the regional markets and sell in US for v higher margin, fulfill customers need, not bs.
6) Ford & GM have to be more flexible, never to fully commit to unproven fads, be less arrogant, because both have been busted before.
Are people finally buying hybrids? As far as I know, only a relative handful are in operation in the USA.
A chart of hybrid adoption would be useful, although that information may not exist.
Hybrids are just another power-train option: Camry 4cyl, Camry V-6, Camry Hybrid; Ford Fusion 4-cylinder, Fusion V-6, Fusion Sport twin turbo (325 hp), Fusion Hybrid. Hybrid power trains are available in nearly every model out there, including F-150s.
And mandated in Formula 1 race cars since 2014.
Where are they getting that full-sized pickup truck number? I have a friend here in Jacksonville that’s trying to find a new Toyota truck to replace one that gave up the ghost, and there’s nearly no inventory.
I’d be fascinated to see a breakdown by brand and region, if such a thing is possible without banging every new truck dealer’s inventory website.
Go send him to the RAM dealer.