Who got chips and who didn’t: Hyundai-Kia sales near all-time high in 2022, Honda’s sales collapsed.
By Wolf Richter for WOLF STREET.
The thing about new vehicle sales in the US is that even in good years, they’re bad, and in bad years, they’re terrible.
In 2022, total new vehicles delivered to retail customers and fleets (dominated by rental fleets), fell by 8% from the already terrible 2021, to 13.7 million vehicles, below where deliveries had been in 1977, down 16.4% from the peak in 2016, and down 20.8% from the prior peak in the year 2000. This makes for 45 years of stagnation with steep plunges in between.
The way automakers have gotten their dollar-revenues to rise over the decades in this environment of stagnating or plunging unit sales is to sell more expensive vehicles, going upscale with ever fancier, more advanced, better-performing, more efficient, better equipped, and safer vehicles – I mean, even the base F-150 pickup truck now has a 10-speed automatic transmission, that kind of thing.
But already years ago, going upscale and ever-higher prices started to contribute to the stagnation as there appears to be a shortage of upscale Americans.
But 2022 was extra-special: chip shortages & shift in demand to fuel-efficient cars.
The semiconductor shortages began to bite in late 2020, got a lot worse in 2021, and dragged into 2022, and they’re still going on, though to a lesser extent.
In this environment, when automakers could get the semiconductors they needed, they could build vehicles and sell them, and their sales were strong – Toyota through September 2021, Hyundai and Kia in 2021 and 2022, nice to have great relations with Korean semiconductor makers. And when they ran out of just one of the thousands of semiconductors in a model, they couldn’t build this model, and there was nothing to sell, dealer inventories were depleted, and their sales plunged – Honda and Toyota in 2022. The big US automakers had trouble throughout.
In addition, powered by the surge in gasoline prices in early 2022, vehicle demand suddenly shifted to fuel-efficient vehicles, especially small and mid-size cars and compact SUVs, and to EVs by legacy automakers that they couldn’t build enough of. Supply chains and production weren’t ready at all to accommodate this shift.
So the inventory shortages have shifted in 2022 from pickup trucks and SUVs, which had vanished from dealer lots in 2021 and of which there is now ample supply, to fuel-efficient vehicles, and dealers ran out of those vehicles in 2022.
Overall inventory through November has come up to 1.64 million vehicles, but was still down by 54% from November 2019, according to data from Cox Automotive:
Shortages entailed price spikes.
In the classic manner, the MSRP is set before the new model-year vehicles arrive at the dealer and won’t change after that for the entire model year. In normal years, automakers and dealers pile on discounts, dealer incentives, and customer rebates to stimulate sales (Tesla, which sells direct is the exception; it changes prices on its website whenever).
But in 2021 and 2022, these discounts, dealer incentives, and customer rebates vanished, and dealers were able to sell vehicles at thousands of dollars above MSRP, because those Americans that could afford them were suddenly eager to pay whatever, which they rarely do in normal times.
In addition, automakers that could only build a limited number of vehicles due to the chip shortages prioritized their most expensive models, and they drove up prices on them. And so I ended up writing this crazy article: $1,768 a Month, with $10,407 Down, 5% APR, on a Ford Pickup? Update on Q3 New-Vehicle Finance.
And as a result, average transaction prices after all incentives and addendum stickers spiked by 33% in three years, from $34,900 in December 2019 to $46,400 in December 2022, according to J.D. Power. That price spike has now leveled off.
The chart shows the average transaction prices in June and December every year; the green line connects the Decembers. Note also how the normal seasonality – a dip in average transaction prices in mid-year – totally vanished recently:
The Wild Ride of the seven biggest automakers in the US.
Note: the first four charts – the big four – are on the same scale to show their relative sales to each other. The remaining three big automakers don’t sell enough to show on these charts, and they got each their own scale.
General Motors: sales rose 2.5% year-over-year to 2.274 million vehicles. But this was down by 26% from its recent peak in 2015, after the plunge in 2020 and 2021, and after the sales declines in each of the four prior years:
Toyota: Through the first half of 2021, Toyota had plenty of supply of semiconductors thanks to its special contracts with its suppliers. But then it ran out too, and by September 2021, it started running out of vehicles. Nevertheless, the strength through the first three quarters in 2021 was enough to make it #1 in the US for the first time ever.
In 2022, after a series of production cuts, inventory vanished, and sales plunged 9.6%, to 2.11 million vehicles, down by 16% from the recent peak in 2015:
Ford: Sales dropped another 2.2% year-over-year, the 7th year-over-year drop in a row. From the recent peak in 2015, sales have plunged 28%:
Stellantis (FCA US): Sales dropped 13% year-over-year and have plunged 32% from the recent peak in 2015:
The charts below of the remaining three big automakers in the US are each on their own scale.
Hyundai-Kia: He who can get the chips can build vehicles and has something to sell. It helps that other Korean companies are global powerhouses in semiconductor production. So Hyundai-Kia sales combined hit an all-time record in 2021 and dipped 1.5% from that record in 2022, to 1.42 million vehicles:
Honda: Similar to Toyota, it was able to get through 2021 in reasonably good shape, but got hit hard by semiconductor shortages in late 2021 and in 2022, and it ran out, and sales collapsed by 33% year-over-year, to less than 1 million vehicles, down by 40% from the peak in 2017:
Nissan: Sales plunged 25% year-over-year to 729,000 and by 54% from the peak in 2017. The company already had massive problems before the pandemic, with sales having dropped 16% in the two years from the peak in 2017 through 2019. The pandemic and chip shortages hammered it further:
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I called a dealer in the beginning of 2022 asking if they had any new Honda Fit Models in stock.
Was laughed at and told they canceled production on the fit, but I could buy an SUV for almost 10,000 more msrp.
Stopping Fit production was a dumb move. Same with the Yaris on Toyotas end.
Just catering to the market, bro. Lot more fats than fits.
Hahaha good one.
Have you seen the Ford F450 Big Boy? The front seat is designed by Temperpedic, and it has a dashboard warmer that will hold up to 12 burritos. It’s also got a kick door dampening system with hardened stell door edges, so when you can kick the door open you don’t have to worry about the door snapping back at you if it bounces off another car. BMWs, Teslas, and some Lexus models found in grocery store parking lots have a high door kickback factor.
Twelve yards long and two lanes wide, 65 tons of American pride! Canyonero!
The Glove Compartment has a deep fryer so you can get your Chimichanga fix out of those 12 burritos on your dash board…. :) Love the Canyonero comment….
Tony,
Back when I was a traveling bicycle racer, I had a 1985 Chevy Celebrity station wagon custom modified with a high output alternator, a marine deep-cycle battery in the rear storage compartment with big capacitors to supply the audio system and a three-amp twelve-channel stereo that was actively crossed over with home made acoustic suspension twin subs in the back deck.
So, what’s the point?
The “ADS Power Plate System” amps could trow off enough heat to be used as hot plates. Frozen foods wrapped in parchment and aluminum foil were ready in the time of one long CD played fairly loud.
No shit, we would drive home from a race cooking pizza rolls and burritos in the back of my station wagon on the amplifiers. Always been a motor head and an audiophile. ‘Same as it ever was.’
For a year, I’ve been trying to find a new kia minivan. Most dealers don’t even have one you can look at. The few that do might have one and they want 5k over sticker.
Kia sales looking okay-ish must be because of the the soul model. It’s a poorly made car, but it’s cheap. Dealers have lots of them and are pricing to get rid of them.
Pile ’em high and sell ’em cheap.
Oh the irony…
In Minneapolis, Kias and Hyundais are getting stolen left and right because the manufacturers skipped on installing an engine immobilizer in their factory “security system”. Of course we have a Hyundai (the wife’s contribution) and my insurance broker warned me that insurance companies — upon renewal — are changing the language of their policies to exclude auto theft because of the lack of an immobilizer. It saddens me greatly that Kia and Hyundai are doing so well.
Mitry,
A possible fix would be to run a heavy gauge wire between the lead to the starter motor back through the fire wall to where the driver’s seat is with a marine grade on/off switch??? It sucks to have to resort to that type of a preventative measure, but if no juice goes to the starter, unless manually switched on every time you get in, your ride won’t drive away.
Years ago, I had a 1975 Datsun 280Z with 40mm side draft carbs and an MSD ignition. The ignition had a hidden toggle switch I’d wired out of sight through the fire wall, and sure enough, that did prevent a theft from my driveway in the middle of the night.
As a fellow Minneapolis resident, the stories of kids stealing cars is frustrating as hell. Car-jacking has been reduced recently, but yeah, theft numbers of Kia & Hyundai is crazy.
For a while now, I no longer feel the need to carry a piece when going grocery shopping, so, that’s a bonus.
Prairie Rider, thanks for the tip. I’m sure when it’s dark and the bad guys are in a hurry, they won’t bother to look for a well-placed switch. My buddy had a Datsun, they’re very fun to drive. And yeah that Uptown Cub Foods is very sketchy. The Aldi off 26th and Lyndale finally got rid of their security guards. Stay safe.
Interesting statistics, but what does it portend down the road for consumers?
Higher vehicle prices to continue, collapse, perhaps more mergers?
Either way, used cars moving forward will be more expensive and scarce for consumers, as less new one’s are produced and sold, to eventually became used cars.
Let me take a stab at it. Producing new cars is real work and takes real material. Its not a financial product and a lot of price tag comes from production, sales and marketing etc.
Compare that to a house. The money and work it takes to build a house is only a fraction of the total cost of the house. Most of the other costs (market value, location, neighborhood, land value, features, fees, taxes, permits) are directly proportional to financial speculation, because realtors sell the idea that “Housing is an investment irrespective of value”.
Now QT aims to control speculation. So, as there are many houses held for speculation, housing is now crashing, just like stocks bonds and cryptos.
However QT does nothing to increase production and productivity remains lows. So new car prices may not cool down soon. Used cars may go down only a small amount, but may remain much higher than the inflation corrected value from pre-pandemic.
Well laid out (especially the bit about money supply manipulation not altering supply constraints…would that the obverse had been observed during 20 yrs of ZIRP…) but there is more to the story potentially.
Leaving the chips out of it (for a brief moment) – the fact that the manufacturers generally allowed sales to fall from peaks (despite massive fixed investment) from 1977 suggests that they determined that price inelasticity worked in favor of sub-maximum output.
(In other words, despite resulting volume sales declines, the manufacturers saw it was in their revenue maximizing interest to hold prices steady (instead of dropping them to increase sales). That seems to be the current situation in spades too).
Side note – what also really helps in volume downturns?…the vast availability of credit, which can thoroughly power price spiking. I think that a strong argument can be made that the “manufacturers” have paid much more attention to credit operations for 25+ years than any actual manufacturing operations.
Back to the chips.
Every quarter that no terribly effective substitutes or workarounds surface, really, really, really makes me want to know the granular specifics of this chips shortage.
We are heading into 2.5 years of this claim.
The Russians are ripping apart imported consumer goods to kludge chips into their domestically built cruise missiles for chrissakes (well within 1 yr), but GM can’t substitute chips after 2.5 yrs?
” but GM can’t substitute chips after 2.5 yrs?”
This phrase is beyond ignorant and stupid. GM sold 2.27 million vehicles in 2022 in the US alone. DIDN’T YOU READ THE ARTICLE???? Each single one of these vehicles has THOUSANDS of chips. There are chips in everything, including the wheels and the trunk lid. If one chip is in short supply, and the component is therefore not delivered to the plant, the vehicle cannot be completed. YOU have no idea how these automakers have struggled to work around the chip shortage, that has led to widespread component shortages. They even built 100s of thousands of vehicles that were incomplete, put them on storage lots, and then finished them when the components arrived. GM and Ford are disclosing those numbers from time to time.
On dog walk late last night (Saturday) noticed a neighbor around the block put to the curb Maytag washer and dryer pair, circa mid-80s.
Garbage / recycling pickup isn’t until Wednesday morning.
Dog walk this (Sunday) morning- they’re gone!
If they were taken out as a pair I kinda doubt it was for repair reasons; perhaps cosmetic reasons involving a remodel? Someone wanting a fashionable stainless steel pedestal type?
My mother still has that vintage pair going strong. Wonder how many chips they have?! Only remember replacing belts and auto dry sensor.
Anyway, my SpeedQueens are fine and I didn’t have any room in my garage last night.
Why isn’t there friend CHINA supplying chips
It is kind of poetic justice. The modern consumer is way too fixated on gadgetry. Manufactures love it because gadgets are highly profitable, and people buy what they want and not what they need. Car purchases are way too much about emotion and not enough about logic. And car salesmen know it.
I’d hardly call recent housing price declines a “crash” but otherwise agree with your post.
Longer term, noticeably tightening credit conditions will mean that few Americans (and people elsewhere) can afford a car at all, new or used. When my mother was growing up in the 50’s, households had one car (and maybe none). Those days will return as the country gets poorer.
Ultimately, no industry or company can sell at prices the customer base can afford, whether it’s a necessity or not.
There were no suburbs and exurbs back in the 1950’s.
More like outer-bands of a collapse/correction. Crash just sexier.
Of course they can,,, and will AF:
That’s what design, engineering, (and architecture for construction,) is all about ultimately, and it’s going on constantly these days for homes and other construction.
And will go on for vehicles too, WHEN NEED BEE…
Just look at the $5-6,000.00 vehicles available elsewhere in the world,,, and eventually such will become acceptable when the nanny state becomes the poverty state you frequently predict is coming— and I agree with that part.
”Laziness is the basis for invention.” is one way to see it,,, cost effectiveness is another, eh?
Ultimately, no industry or company can sell at prices the customer base can afford, whether it’s a necessity or not if production cost is higher.
Prices can go up as long as there is purchasing power, then it stops. If more expensive to make, the product is no longer mande and no longer possible to buy.
Cheaper products may replace more costly products. Skimping quality, usefulness and on.
#VintageVNvet, those $5-6,000.00 vehicles may get available in the USA. Still there may not be one car in each households. Multiple cars in each household may not be common where thay are sold today as people can just afford one car if they can afford a car.
Drive thru most low income areas and you are likely to see more older vehicles in the driveways. Poor people long ago had learned to have multiple beaters for a spare if there was a breakdown. When they came into some money they would get them back on the road. Insurance? Keep comprehensive only for those cars in use until going back into service. Sadly this will end due to high cost of repairs and complexity for the future used car fleets.
Used car prices have already begun to “adjust”. The small fuel efficient cars are doing just fine. However, some of the manufacturers who “have run out of chips” are offering discounts on their big bombers. A dealer friend of mine offered (in our corporate refugee Faceplant page) to sell his “big bombers” $1,000 back of dealer net (he’s still making money, but…. not nearly as much). Used Tesla’s also appear to be dropping in value (Twitter syndrome?).
I was stalking an X5 (CPO) just to watch prices. The local non-Penske BMW dealer had this one weird duck (odd color, high performance M mit V8 and some features that the spousal unit wanted she wants tush coolers) that he had listed for (get this) $79K – for a 2 now three year old car. He’s had the thing long enough that the tires have taken root into the blacktop (the dash picture shows the outdoor temperature hovering near 100 degrees – we haven’t seen those temps since August-ish and I’m fairly confident it’s been around since June eating floor plan hay). Now? It’s in the mid 50’s last time I looked. Still no love.
Most, if not all, of the new crop of vehicles are throw aways. They cannot be serviced in the true sense of the word. You replace modules, solenoids, DME’s, and “flash” components. The engines have “sloppy” piston rings that can allow gasoline to leak into the oil pan – which is a little hard on the bearings – and the turbos help that process. Many engine components are plastic (radiator tanks, oil pans, valve covers, etc..) that warp and essentially decompose over time from heat, oil, etc.. Complexity beyond necessary.. things like having to remove the intake and exhaust manifolds to get to the starter motor (no you can’t reach it from below). They’re a joke. There will come a day where the Cubans will thank their lucky stars that they never got any of this new iron. We started laughing @2013 wondering who was going to restore these things and what their “collector” value would be (conventional wisdom was “not much”).
I view it as garbage heap fodder. No matter what the price, they’re all going to the crusher at the same timeframe. So the real question is how much W2 wage slave money am I willing to toss in the crusher after hopefully 15 years?
The entire house of cards is built on money we don’t have spent on features we don’t need.
I enjoy curmudgeonly rants as much as the next guy, but in reality, cars today are much more reliable than they were 20 years ago and definitely more than the halcyon 50s and 60s that everyone likes to talk about. They definitely are not throwaways or else the car companies would be selling many more of them.
The reason you can’t get to many parts easily now is because they pack much more powerful engines and other components into much smaller hoods, leaving more of the vehicle between the axles which leads to much better stability. Those old Cadillacs were called floating boats for a reason.
And those “plastics” last far longer than the steel of yesteryear which used to rust out after a few years.
And we haven’t even gotten to the safety and performance that all that “complexity beyond necessity” gives us.
I do admire the artistry of old car design, but let’s not get too nostalgic about their engineering, which has made staggering advances and continues to do so. (Also, the design has gotten bland because cars are converging on the optimal aerodynamic design, which leaves little room for flourishes)
This speaks to the American appetite for newness and obsession with retail therapy. It’s a success culture ours, and nothing telegraphs success more than imported over-engineered baubles.
Whenever I see a person driving a 15 year-old grocery getter, I always suspect they’re probably loaded but keep it on the DL.
bul – good observation. i recall an article of at least a decade ago which revealed most millionaires (remember when that term was a big deal?) were driving a Taurus or similar, although time, tide, and inevitable changes in the zeitgeist seem to favoring your comment’s beginning more than it’s end…
may we all find a better day.
Lune:
My point was that you likely won’t find them on the road 30 years from now. They’re not going to be able to be cobbled together the way an older vehicle without a Canbus can. One component in the system goes out and, if you don’t have a proprietary scanning tool, you’re SOL. And that would be if, once you determine the culprit, that the part remained available. The electronics are coded to VIN’s on many cars… and without the proper tools, replacing the “the computer” won’t work unless you can find someone with the knowledge (or device) to do so. That is beyond the capacity of your average shady tree mechanic.
Yes, the current crop can last longer… but often it takes an owner who exceeds the factory minimum maintenance schedules. More frequent oil changes, actually service the transmission, replace timing belts, check tensioners, change the coolant every two-three years, flush the brake fluid bi-annually, use “top tier” gasoline…. The stories of the 1,000,000 mile Honda’s and Toyota’s aren’t vehicles that were ridden hard and put away wet.
We don’t have decades of experience with high volumes of turbocharged vehicles. Time will tell how that works out….
Lune:
Big difference was in the 50’s and 60’s anyone with even a little bit on the ball was buying a new car every 2 years. In those days you did not buy a new car out of necessity, you bought a new car because it was out of style in 2 years, and your friends would think you had money problems if you drove and “old” car.
With an average price of about $2500 new, people did not put a lot of money into maintenance of their cars, they just traded them in.
“Interesting statistics, but what does it portend down the road for consumers?”
Owning and driving a vehicle is slowly morphing into a luxury reserved for the well-heeled. The writing is on the wall.
DC, In California, the laws are changing to force you into mass transit and bicycles. Like reducing car lanes on busy streets and adding a bike lane, or allowing apartment and condo construction with out any parking at all. They did that in Portland and the people who bought these condos just park on the streets having to fight for spots, and creating problems for the surrounding neighborhood.
Maybe a structural shift in the market?
Car manufacturers have priced out a significant portion of the population, maintenance/fuel/insurance costs are skyrocketing while wages are not and a large portion can get by with uber type transportation now?
Not Uber. The majority get by with older vehicles and used vehicles. This is quite sustainable since cars are so much more reliable. Buying a car that had 100k miles was insanity maybe 20 years ago. Now, it’ll probably last for several more years without a sweat. Many owners of Japanese cars drive them until 200k without issue.
So buying a new car is now a luxury. But owning reliable transportation is probably about as expensive as before. It’s just that now you buy a used car that lasts you as many miles as a new car did 20 years ago.
Buy[Ng any car is a luxury unless it’s 20 years old with 150k or more miles on it. The key is keep the junkers on the road….
My daughter put 500$ deposit on Toyota Highlander hybrid 8 months ago ,called her told her it arrived. But now her 2016 Highlander is worth 7000$ less and interest rate would be 6% .She told them not interested,but salesman said he would keep her on list
She could get a lower rate than that from a credit union and probably make up that lower trade-in value by just selling it herself.
Depends on the sales tax rate and if the trade offsets the net sale price. If sales tax is 8% and her car is worth $20K, she’d have to net $1,400 more just to bust even and deal with the flakes in the meantime.
She certainly could tote her own credit… but there may be finance incentives (aka finance bonus cash) that would reduce the transaction price. But truth be known, you just refi @ the time the first payment comes due.
At what age do people generally buy new cars? 30-50, while coping with children? 50-70 when children are off their hands? Whichever age group it is, I’d love to see a chart of sales per capita in that age group.
Do people simply need fewer cars in the age of Uber, and home delivery services, and Working from Home?
How many people ever buy a brand new car? I’ve done so only once in many decades of driving.
@dearieme,
1988: I bought my first new car when I was 25. I bought a Nissan pickup.
2002: I bought my 2nd new car (for my wife) when I was 39. I bought a Toyota Camry.
2003: I bought my 3rd new car when I was 40. I bought a Nissan Frontier
pickup.
2018: I bought my 4th new car (for my wife) when I was 55. I bought a Hyundai Sonata.
I was planning on buying a new pickup truck in 2020, but Covid changed my plans. I now have 219,600 miles on my 2003 Nissan pickup truck. I’m not sure when I will replace it, but I might not buy brand new. I might just buy a low mile truck that is a few years old.
I’m a pretty boring guy, none of the cars are very flashy. The Camry and the Sonata a very nice though. My wife and I never had kids.
Like many things in life, the 80/20 rule probably applies. In this case, I’ll guess that 20% of the driving population is responsible for 80% of the new auto sales.
I know several folks that won’t keep a vehicle more than 3 years, and they usually lease. They like having newer vehicles and don’t care that much about saving money. I know many more people who drive their Camrys, Accords, minivans, and pickups into the ground.
I have a 95 Tacoma with 280k. This year it will get a third timing belt, replace the cooling system parts and fix some leaking seals. Much cheaper to repair than buying a new one, less complex so easier to work on, and predates most of the iCrap installed now.
Go buy your bling, kids, and get off my lawn.
I bought a Toyota Corolla Fx 1988.
Still driving it. 163k miles.
It had about 150k in 2000.
Thats when I really cut back my driving.
I can walk to grocery stores, banks, CUs.
10 times or so a year I take a bus.
I read the above comments. From my neighbors comments it is apparently very expensive to get newer cars maintained and repaired. And this guy really understands car mechanics.
As to reliability… which is about all I care about… reality is I suppose somewhere between Katz and Lune comments.
Gadgets and accessories… most I probably would rather do without. I do wish my back window defogger worked better, etc.
Pretty soon I won’t be able to get parts for something necessary.
I definitely do not look forward to buying a new or used vehicle again.
Not quite as car-ownership conservative as you are, but average 10 years per car. Last trade-in was a 2014 F150 Ecoboost – put 160,000 miles on that baby in 7 years, hauled a fifth wheel 35,000 of those 160,000 miles. Never a hick-up, with the exception of a busted computer that drove the fuel pump – replacement was $200. Other than that, synthetic oil changes, standard maintenance, and lots of washing and waxing. Loved that truck – most comfy ride I ever had.
My guess would be that on average people with vehicles are simply keeping them longer. I don’t have stats for disposable income but if home prices have been soaring over the years and wages have not then new buyers and renters will be spending a larger proportion on shelter, less on vehicles.
Over the last few decades I believe we’ve also had higher population growth in urban areas, that’s where a lot of the jobs are now, including those nice 6 figure tech jobs and stuff. This is also where public transit/taxi/uber make most sense and cars become more of a luxury, so maybe there actually are fewer drivers overall. I know in Vancouver BC I’ve come across quite a few people who simply rent a car when they want to drive out of town or need to move something across town, they don’t own vehicles. That’s quite a lot different than few decades ago when I was a kid, jobs in manufacturing was still a (dying) thing, people moved into suburbs or smaller cities and everyone including their kids had a vehicle in the driveway (of houses costing a fraction of today).
My layman’s analysis based on anecdotes anyway.
Depends where you live. In Texas they worship the pickup truck. Morons who have never seen a dirt road have 4×4 trucks for their commutes.
This is true, I’ve been lucky enough to work on a project in SA and ofcourse took the opportunity to travel around. Even in SA itself at the time I remember Real Estate going up but selling at a pretty significant discount compared to where I live or anywhere in California or Washington, while still at super low interest at the time, though wages in trades made me do a double take (not in a good way). In Canada it’s not as different as you may think, cities in AB also have plenty of pickups driven by soccer moms and stuff, most smaller towns will be similar, and RE in Alberta for instance also is within reach of the typical working class family.
I guess it would be helpful to see sales numbers for TX specifically, sometimes what we see around us doesn’t match with the millions of others who live in the area. I’d venture a guess places like TX and AB bouey pickup sales. Anecdotally again, I know quite a few people from AB who would love to switch out their trucks but aren’t too keen because of the high prices, few years ago that probably would not have been a hindrance for them.
Phoenix Metro is full of large pickup trucks.
Never seen a dirt road, never hauled anything, always housed in a garage.
Bought 2 new cars 25 years ago with young family. Haven’t done it since. Seems like engineering job purchasing power has gone steadily down throughout career. Who can afford these? Ugly charts make it look like a rapidly shrinking demographic. And if most buyers can only afford by borrowing a ton, what happens now when money ain’t cheap? That buyer demographic is going to be cut in half from here unless prices come down.
@grimp,
I agree. I think demographics play a big part in the charts shown. Americas largest generation ever, the Boomers (my Generation) have been moving into retirement. For more evidence of this, just look at how Harley Davidson motorcycles are doing.
Moving forward I think car companies will be fighting over an ever declining number of buyers.
Harley Davidson is basically an orange and black clown costume brand now.
Hubby and I moved to a townhouse very close to a light rail station in a walkable area.
When I retired, I sold my car. Hubby still has his and works part time, sometimes. He isn’t ready to retire yet but can whenever he wants to do so.
Weather due to age or just no longer wanting to continue working, we can use very good public transportation or call an uber when we want to go anywhere. For long trips we can rent a car.
There just won’t be any need (or probably want) to continue to own a vehicle.
McQueen’s Ghost/DC – not so strangely, the Motor Company wedded itself to the limited production/waiting list/high selling/dealer MSRP+ price model with a lot of success in the ’80’s/’90’s. But going forward, it didn’t adequately deal with the disconnect between a relatively well-heeled, but shrinking, legacy customer base and a coming smaller and younger one that wasn’t interested in riding an expensive (Sporty’s possibly excepted) two-wheeled version of ‘driving their father’s Oldsmobile’ (to reference advertising of another once-successful brand that faltered due, among other reasons, to an image that once made it so…).
may we all find a better day.
91B20,
My current motorbike is # 7 that I’ve owned. Each one was a move up the ladder from my first KZ 400 bought on the day I turned 18. (Parents wouldn’t sign and let me have one earlier.)
There is nothing out there that comes close to a liter super bike (I don’t fit on an RSV4 unfortunately) or a liter hyper-naked bike for performance to price. Nothing. The new sport-touring machines are incredible too.
For those of us that ride, this a magical time.
Polaris’ Indian brand has some good bikes, made in Iowa, for those that want the “Harley style,” but want new technology and performance.
DanRo-find riding on motorized two wheels of any persuasion always magical, but like you, have favored sportbikes and road racing after moving to NorCal in the late ’70’s, leaving enduros and the desert behind. Indian (nee Victory) certainly seems to have gotten their act together, and indeed, seems to have cracked the declining H-D market with the good manners to seriously support contemporary US flattrack. (Sadly,’Murican involvement in all forms of two-wheeled motorsports has declined greatly from just a couple of decades ago. Aging out of the older demographic plus cost and interest in other entertainments among the younger one at the root, I reckon).
Best, and keep your head on that swivel…
may we all find a better day.
See housing market…
The only thing that kept these price hiking industries alive and gouging for 20 yrs…was ZIRP.
The entire orientation of the auto industry went from Model T (lowest cost via highest sales, and vice versa) to T Bills (save our failing asses, DC Fed).
Most cars nowadays that are within reach of the average buyer could be called the model low T. Just devoid of inspiration and guts unless you’re a transformers fannboi.
“Most cars nowadays . .. .. . could be called the model low T.”
The Nissan Soy – it has a nice ring to it.
“model low T” – I love it! Not much excitement on the road these days. Gray 4 cylinder crossover followed by white 4 cylinder crossover followed by black 4 cylinder crossover followed by gray 4 cylinder crossover to infinity
Can not imagine what auto sales will look like this year with rising interest rates, economic slow down, expiration of 2020 bonus deprecation. (100% tax write off effective January 1) In addition to those looking to purchase an EV.
I‘ve only purchased one new vehicle in my life. My first. I’ve chosen to let someone else take the first year’s depreciation on my vehicles ever since.
The depreciation which used to occur when one drove a new vehicle off the lot was turned upside down by Covid which saw a two to four year old vehicle commanding more than it cost when new. That pre-Covid period was a great time to buy a vehicle, but just like housing, who cares what a car or house is worth if one has to spend a similarly ridiculous amount to replace it. The winners are people who had a second home or a second or third car which could be sold at the inflated prices with no need to replace them.
COVID didn’t do anything. Filthy central bankers and politicians did. It’s and important point to understand and remember.
Me too. Current car is 19 years old. I budget $1000 for repairs and maintenance per year. It’s a big S class Mercedes so it still rides like a dream on a road trip. I use a scooter for daily errands. Used Honda PCX was cheap and a blast to ride.
There was a lady at my work who had 500,000 miles on her Mercedes diesel. Pretty incredible.
Wow, I thought I was the only one driving around in a car that old here. I’ve had the same daily driver since March 2003 (new) and people tell me it still looks new. I wanted a new Z from the Nissan dealer last year, but they wanted $50k markup on top of the $53k MSRP. No thanks. I didn’t realize Nissan sales have been declining that much until I saw this Wolf article…sad as I love their GT and sports cars and those survive only by the other models selling. I’ll probably use my same car as my primary car and buy a used car next for fun…I think I’m done with dealers given my bad experiences in 2020 with Toyota and 2022 with Nissan.
I would love an old 300D sedan. Mercedes hadn’t completely lost their soul back then.
My 93 mercedes E300 D got the fender dented by a delivery truck in the parking lot of my shop. The freight companies insurance adjuster came out for an estimate and I was afraid they would total the car as the Kelly Blue Book price was only $950. But I was surprised to find that the W124 chassis Mercedes have turned the corner and are now considered classics with ordinary ones going for more than $8000 at auction. The insurance company wrote me a check for $3000 and it was only 35% of value. So I can look forward to my daily driver increasing in value from here on in. I figure in two years it will be worth what I paid for it back in 2003 .
Only $1000 for repairs and maintenance / year for a 20-year old Mercedes S-Class? That seems low. Or maybe you just don’t drive many miles?
I was in the car business on the factory side for several decades. I never bought a new car during all those years… I’d buy the “brass hats” (aka company vehicles) for a discount – back of Black Book. Hard to buy them much cheaper than that.
To illustrate, the technomobile that we currently have is a 2017 with 50K. Got a bonafied offer of $24.5 for it. I paid $27K for it with 4K miles on the clock. To replace it new, like for like, today…. $54K MSRP. Even with the double rabbi discount, it’s more than I’d pay for it… let someone else take the hickey.
Zoomers are living at home “because they can’t afford rents,” but they’ve got $1,500 per month car payments. Welcome to Clown World.
Depth,
How many zoomers actually have a $1,500 a month car payment? More likely you’ll see younger people with newer cars on a long note as that is only big ticket item they can afford, and a reliable car is the most important possession some people can have. The old Dave Ramsey advice to drive a $1,000 beater car around doesn’t work for a lot of people because 1) there are no $1,000 cars anymore, and 2) a lot of low paying jobs out there where you don’t get a lot of flexibility to have your car repaired whenever it needs. Might as well bite the bullet and buy something new or 1-2 years old that you can finance for 6 or 7 years and drive it to 100,000 miles with no maintenance, as any newer car can easily do.
I really don’t understand how you of all people KNOW who is to blame for all of the problems plaguing the economy, and frequently articulate that point, yet here you are doing a drive by of the younger generation and lower income individuals for economic distortions that no Zoomer had any part in actually creating those policies.
crazytown –
First, you should understand that I feel terribly for the younger generations. They have gotten the absolute shaft. While as a Gen Xer I have lived my entire adult life under the same financial repression, it has only gotten worse with time.
That being said, if Wolf allowed links I would happily provide you a Twitter post that went viral with said Zoomers showing their monthly payment books for their new cars. They were all well over $1,000, with some approaching $2,000. The younger generations have chosen some absolutely reckless borrowing habits.
If you have to live with your parents because you supposedly cannot afford it out on your own, you have no business borrowing so much money for a depreciating asset. There are plenty of $5,000 cars out there. Sure, some ain’t pretty, but that’s life.
They should be saving that money instead of blowing it. A new car is one of the worst “investments” there are. Wolf has shown time and again it is 100% a DISCRETIONARY purchase. Nobody “needs” a brand new car.
DC- This country doesn’t have remotely sufficient sub/exurban public transportation to be young, lower income, adequately employed and horseless. The poors will have to keep financing to keep being able to work, especially as they’re driven further and further away from cities due to housing prices. Used cars are outrageously expensive even/especially where the roads are salted 1/4 of the year.
And I begrudge no one in the Z’s still living with their parents if they are allowed to, a luxury seldom afforded to Xers and Elder Millenials whose Boomer parents punted them out the day of HS graduation (yo). If you can stay at home, DO IT. Get a good reliable car with a warranty and save til you can buy a home, or have a solid nest egg at minimum. There’s no glory in roughing it when the economy is against you. Living with your parents is a miserable experience that builds more character than culture could possibly understand. Ramen noodle isn’t so cheap anymore and its inflammatory anyway.
Depth Charge,
A twitter post that consists of anecdotal evidence?
Let’s not get into the psychology of the reckless borrowing habits. I wonder where that came from? Oh, they should save their money at sub 1% interest rates? While the generations before them are sucking at the QE teat to stave off systemic collapse and salvage their retirements before they kick the bucket.
give me a break
what’s the point of saving money for the future when you have no future?
“what’s the point of saving money for the future when you have no future?”
That sentiment sums up the colossal damage done with 15 years of QE and interest rate repression.
Replying to Phoenix,
I’m sympathetic to the gist of what you wrote.
However… just because you can only earn 1% on your savings doesn’t mean its foolish to save… build up savings.
Many do it.
I do think it’s very bad that essentials… shelter and transportation… have gotten so expensive over the last few years. Well, near many urban areas.
Some say capitalism may have many flaws but its the best system out there.
I’m waiting for something akin to
Consumerism to flourish as an eco-societal model. Not antithetical to capitalism, draws on socialism.
“Do people simply need fewer cars in the age of Uber, and home delivery services, and Working from Home?”
The answer to your question doesn’t have much to do with discretionary spending.
Uber isn’t a viable business, at least at the fares it charged a few years ago the last time I used it. It’s a taxi service and while it may be economically viable to charge lower fares than traditional taxis, it is or was dependent upon economically ignorant or financially desperate drivers and “free money” from “investors”. “Free” “investor” money is unsustainable because every business eventually has to provide an adequate return.
Not any different for most home delivery. It might be economical in high density areas or for more expensive purchases but not in suburban America for food delivery or a $10 Amazon order.
Working from home is different.
People buy new cars every few years now…
I know it’s crazy, but that’s the idiotic american consumer
People seem to buy new cars more frequently now. Probably due to vanity reasons. I’m not one of them.
Anecdotally, cars last much longer now. Cars in the 1960’s and 1970’s were lucky to make 100K miles. I see cars today lasting up to 300K miles.
Back then it was the body and interior that seemed to fall apart.
My parents were a one car family in the 1960’s. In 1968, my dad bought a used second car to get to work. It was a 1960 Rambler.
After 8 years, the car was completely rusted and the interior seat springs were poking out. The rust was so bad that my parents put plywood down on the rear floor to keep the kids from falling through the gaping hole in the floor. My parent sold their primary 1966 new Impala in 1971 after 5 years due to rust and the interior falling apart (falling headliner, cracked dashboard).
The oldest car I currently own is a 2000 Ford Expedition with no rust and the interior is still good after almost 200K miles in 23 years. We just use it to haul big messy stuff now. It was our family car, then our son’s car to get to high school, and now it is cheaper than renting a UHaul.
I appreciate cars last longer now so I don’t have to sell before 15 years.
Yep, it’s vanity, keeping up with neighbors, the need for new things etc.
Cars are a means of transportation, and often hold a lot of emotional weight for their drivers.
Case in point:
I’m 34, currently own 4 cars not including my wife’s little commuter thing.
I’m a fanatic so to speak, but on a budget. Newest car is a 2008 Jeep Cherokee Diesel(Mercedes turbodiesel).
Second oldest is an 07 Jaguar XKR coupe.
Third is an 05 Jeep Liberty diesel.
Forth is a 1972 Dodge Challenger 340 Rallye.
Which one do you think I paid the most for? Which one would I would never part with?
The Challenger.
It’s the only car I’ve paid more than 20k for and it’s also the only car that will probably never lose value(it’s almost doubled in value since I bought it).
You CAN be a baller on a budget, my Jag turns tons of heads and was purchased for a mere 15k. Low miles too. It’s just that most people don’t have the discipline to save a few sheckles and pay cash for a highly depreciated car. They look at the monthly payment only and that’s how much car they can afford. I keep a fleet of older cars running just fine and they serve my purpose, but I cannot imagine paying $600, $800, or $1000/month for a pickup truck or a BeeEmTroubleYou.
dearieme, I haven’t bought a new car since the first and only time in 1988. I have no intention of repeating the experience.
My retired friends over the course of 2022 have purchased the vehicle they were leasing. Common quote ” I’m not leasing a new vehicle for $4500 down and $500 a month”, They will be lost to the automakers indefinitely.
Bought my first new car at 46. Could have paid cash but they were offering a 3 year loan at 0%.
I don’t know if it is all the people flooding into Florida, but people are still paying insane prices for 10-15 year old vehicles with 150-200K miles. Older vehicles under $6k sell in days.
Yes, including the ones who aren’t here legally. The illegal immigrants will continue to cause inflation to increase more than it would have if the border were still secure. No one wants to talk about it, but it’s a fact.
Interesting thought, and you could be right. What is the source of your “facts”, please?
Just think of all the money borrowed or invented to pay for converted motels, food stamps, language teachers, and all other life support needs and living expenses for millions of “migrants”. George Soros isn’t paying for his policies. We are almost ready for Cloward-Piven and The Great Reset causing economic collapse, Techno- Feudalism, Total Dependency on the Govt, the China Model and Total Control by the Elite.
He makes up his facts and then says “that’s a fact”.
Curiouscat,
Do you really fail to see how artificially goosed demand via illegal immigration would cause price spikes in something, like, say…housing rents (illegals have to live someplace, just like US citizens and habitually ignored legal resident aliens).
How about Ismael Huazo-Jardinez and his Chevy Avalanche for starters? Read a bit about him. It’s a really maddening tale of what’s really going on. All of these illegals buy and drive vehicles. How do you think they get around? To think they are not competition for all resources is a fool’s errand.
“He makes up his facts and then says “that’s a fact”.”
I’m trying to understand how somebody like yourself could fail to comprehend how all humans, regardless of who they are, are sharing the same resources that all of us need to survive.
If you believe inflation is being driven by illegal immigration, then imagine what the price of food would be if we completely shut down the border. Also, if you don’t like migrants coming across the border, then why not go after the large corporations putting out fliers in their native countries to encourage people to come to America for jobs and a better way of life. And while you’re st it, tell people to stop snorting cocaine and shooting heroin, as a ton of those migrants are running for their lives from evil drug gangs.
You are correct. English is rapidly becoming a second language in Tampa. The people that are coming into Tampa are not learning English, they instead are forming cities in cities. I had to deal with an entire commercial electrical and heating and AC crew and not a single person spoke English. Most of the delivery drivers cannot read or speak English. Majority of commercial and retail customers can’t speak English. Since most deal in cash the cars at the lower end of the price regardless of condition go fast. The last private sale car I bought I had to use google translate because the person didn’t speak English.
They are labor scabs, brought here by the wealthy special interests – BOTH PARTIES – to drive down wages and replace American workers.
Tampa is a dangerous place to drive. A lot of car sales “stimulated” by the people who cause severe accidents by blatantly disregarding every single traffic law. They can do this because there is absolutely 0 enforcement of these laws anyways, and the roads are overflowing because the county approves every mega apartment complex plan that comes across their desk without requiring appropriate impact fees to build the infrastructure to support them.
Illegal aliens are now the ones responsible for vehicle inflation?? Did you not even read what Wolf wrote?
LMFAO!
Minivan = cheap motel
For the most part, anything that runs and tracks decently is worth $5K-ish. My daughter was gifted a car from a friend last March. She’s dumped about $3K into it and, while it’s sun baked and dinged up from airport parking lots, it’s a solid runner and has a lot of new components that makes it drive *as new*. She has been offered $7K for it by a shade tree mechanic known by her “friend-boy”…. even with the failed clear coat and hatcheted sides.
Is it possible for auto manufacturers to re-design their cars to rely less on chips or particular types of chips that have shortages?
Yes Tesla did it
Compared to these automakers, Tesla sells just a small number vehicles, and they used different chips to begin with.
Tesla didn’t just “use different chips.” They designed their own chips – probably the only car company in the world to do so.
The issue is process nodes. Big carmakers have been using chips with seriously outdated manufacturing processes, like 90 nm which came online commercially in 2003. GM et al effectively outsourced the cost of semiconductor production for so long that their business has become unprofitable for the chipmakers, who can replace some equipment and make 10x return on their billion dollar chip fab from a customer with a more modern design.
The chip design and validation cycle is about two years, meaning we will see chips from newer processes coming out later this year, which have been designed by the in-house teams that the big carmakers have brought to bear on the problem.
I personally won’t likely ever buy a 2024 model of any car. I’ll give them a year or two to iron out the kinks.
Of course it is. Do we need absolutely vehicles with hundred plus sensors, microchips, mini circuit boards for functions which most able bodied drivers can perform effortlessly? Other than for the powertrain – engine, emissions, transmission, brakes, we can dispense with practically all of them.
Current functions ……………………………………………..Legacy solution
Multizone Climate control with infinite temperature setting
Heater and AC knob
Automating headlight switch manual headlight switch
Automatic rain sensing windshield wipers ….. manual switch
Heated steering wheel….. Gloves ?
Heated seats ……………………………………….. Turn on heater, clothes
Obstruction sensing power windows … Crank handles?
Load sensing shocks …………………….. Plain old shock absorbers
Just to name few features which became “indispensable” in newer cars.
I am not opposing any of these high tech creature comfort items. If one wants them, pay for them. Sure, if you want active road sensing suspension, 20 forward and 5 reverse speed transmissions, great. Pay for it and you get it! Same time, manufacturers should offer the low cost, legacy options. As ordinary F150’s approach $60,000 MSRP, if a lower cost, stripped down version exists for $25,000 less, there will be many takers.
Chip shortage? Very easily circumvented by low tech, manual features – same features that performed adequately for nearly 100 years, before high tech infiltrated nearly every facet of auto mobile functions.
Agree. Agree.
This is where Consumerism versus
Capitalism might do some good.
Let consumers drive the economy…st least
more than today. Today we consumers
have no say in what products, services are provided. We merely provide feedback on which ones we prefer.
If 10 years from now homebuilders are only building, say, $5M homes …well too bad for the majority of consumers.
The counter: someone will jump in and provide lower cost homes. Not necessarily.
Maybe they get bought off.
Noone builds new subdivisions of homes in the 600 ft² to 1200 ft² size where I live. My guess is if they did they’d sell very well.
The industry could easily do it by standardizing, but there is no incentive at this point. They have been able to sell all the cars they make at ever higher prices.
If the day ever comes when they need to seriously cut production costs, to sell vehicles, then they will do what is necessary.
All great charts, but I continue to disagree as to the overall drop in sales that are the result of chip shortages, especially in the last 6-9 months.
Increasingly, 50-70% of the country can’t afford to buy a new vehicle. so they’re buying more used cars instead.
The US manufacturers, at least, are using this opportunity to reset the buying process for EVs. There won’t be hardly any inventory on the lot. You’ll buy and then come back some number of days later to pick up your new, way overpriced vehicle.
Resetting the buying process? You fail to consider some variables. One is customer want… a dealer will rarely let someone go off the lot without tryig to shove him into a vehicle in inventory. Why? Deposits and “deals” are what we called “hunting licenses”. You take the deal and see who beats it.
Manufacturing plants have a “sweet spot” for production. You think cars are expensive now, wait until it’s “just in time”. A factory that has to produce 30,000 cars per month to turn a profit with a pre-determined mix, cannot survive at a low price point. So…. they raise the wholesale price (remember the increases in MSRP when the government handouts for EV started?) to compensate for the lower volume.
To do it “days later” requires what’s termed a “bailment pool” where dealers pluck units out of manufacturer owned inventory to satisfy customer demand. It’s been tried before and has failed miserably. None of this is a new idea – just done with flashy websites vs. paper. Manufacturers hate to own inventory because they don’t get paid for it until it sells – lots of frozen capital. The current model is that they can build cars out the wazoo, shove them down the franchisee’s throat, and then write themselves a check out of the dealers’ open line of credit that is a mandatory part of their dealer agreement in order to continue on as a dealer (which is also known as a floor plan). No floor plan? Termination can come quick for “breach” of the dealer agreement. (I know… I terminated several in my glorious career for that very reason. Got sued and won.)
What would likely happen is that a customer would have zero input into the configuration of their car. Look to BMW’s concept of subscription services. They’d build one vehicle….. your choice of black with black guts or white with black guts (for plant emissions – metallic paints throw a lot more pollution than solids – saves money on material and “smokestack scrubbing”)… and they’re all the same basic spec. You want heated seats? $30 a month for a subscription. Same with blind spot sensors, air conditioning, on down the line. They can shut them on and off over the air via telematics. So pay up or else.
Rivian won a challenge by Illinois who wanted to kill their direct to consumer model. This is also being considered by others (Honda and Sony announced a partnership… wonder if they’ll call it Betamax?) to try and remove the middleman… and take that profit for themselves to offset the production cost issues.
El Katz,
Thank you for your insightful comments here.
I hope BMW and other car/motorbike manufacturers get it shoved up their backside for, “You want heated seats? $30 a month for subscription.”
When I write the check and purchase a machine, it had better be a finished product — not something with a service agreement that’s akin to being extorted month by month in order to use said machine.
I take it you aren’t in the great plains. Autostart is $30 on my car, 2019 model. It would be awfully nice to have my car heating up before I go out there when it is -20, but I’m not going to pay those assholes.
Errr, sorry. Remote start. It’s been a long day.
Cyrus,
One mile west of the Mississippi river between the MSP airport and downtown Minneapolis, where we just got 15 inches of heavy wet snow this mid-week that clogged things up a bit.
Castrol Edge full synth 0W-20 in the hybrid AWD SUV, and Blizzaks. She’s good to go, eh? But no, not gonna run my machines unless I am with them; theft and such makes it unwise where I live.
And Thursday morning, I gave my neighbor a lift to work so he could play — in the Minnesota Orchestra’s 11:00 am performance. Got stuck at the edge of his driveway and the street with no snow tires on his Accord. It took three neighbors’ help to push him back into the garage. Oh well …
How many days until the spring equinox?
Car manufacturers should use this opportunity to reset the distribution model. It is an utter waste of resources to produce 60 to 100 days of car inventory, dump them on the dealers and let them figure out how to deal with it.
The technology exist for car manufacturers to produce cars to order, using JIT – just in time inventory management methods.
Manufacturers should focus on manufacturing systems that enable them to manufacture and deliver to dealers cars in maximum 21 days from order date. This is very feasible.
Further, manufactures should have moved forcefully against price gouging dealers. Adding $10,000 market adjustment prices to ordinary vehicles prices does absolutely nothing to promote brand loyalty. All the profit ends up in the dealers pockets. Factory receives no benefit. In fact, the factory/brand loses money because sales volume drops.
A manufacturer cannot move “forcibly” against a gouging dealer. There’s these pesky anti-trust laws. That’s why the Monroney stickers says Manufacturers “Suggested” Retail Price. In the mouse print it says something along the line of “dealer is free to sell at any price”. If a manufacturer jumps into the fray to control pricing, someone’s going to get really rich and someone may go to jail (nah… just a fine out the wazoo). Had a few neophyte district sales managers attempt to “have the talk behind the body shop” and got their clocks cleaned by the dealer who reported them.
It is already feasible to produce and ship a car in 21 days – even less. Not a problem…. but only if the production is planned and the components ordered far in advance of that. At my old alma mater, the production plans were set at the beginning of the fiscal year and then modified based on demand as the year went on but… under no circumstances could it be modified after 90 days out. The term (I think) was “frozen stack”. The truth is, you can’t even get custom made shirts in 21 days let alone a vehicle which is arguably more complex.
If you’ve never been to an automotive plant, you’d be surprised at how efficient they are and how few humans touch the components any more. The days of the sweaty guy wearing a wife beater and physically wrestling the dash in place are long gone. One operator can install it as a pre-assembled component with the aid of robotics. The operator just guides it. No person “welds” anymore on high volume vehicles. A bunch of panels come together, sparks fly, and voila! You have a unibody shell. Engines/transmissions are installed from below… assembled body meets subframe. A few bolts, some harness clicked together, and it goes to final inspection (paint, alignment, etc.).
JIT is what caused the mess in the supply chain. JIT has been around since Moby Dick was a minnow. Toyota and Honda were the reigning champions. The manufacturers that continued to build during the plandemic were the ones who had stockpiled chips. You’d think my old employer would have learned that lesson back in about 2010 when there were the floods in Thailand… which wiped out their key chip suppliers. They spent a fortune scouring the world and air freighting them in so the factories only had to slow down, but not shut down. Costs a lot of money to fire up those aluminum smelting operations if you have to let them cool down and our operations couldn’t hold more than 5 or so days of production before we had to seek alternative storage facilities, not to mention the line workers who get furloughed get kind of grumpy. The plants have their own rail yards and trucking operations. Out the door and they get loaded. At least that’s the plan.
I’m rambling but…. your wish was granted…. about 20-ish years ago (or even longer – I have CRS)
1) S. Korea beat Japan. Women are crazy about Santa Fe for $45K and Forte for $23K. Forte used to be $13K few years ago, but the competition
disappeared. Women threatened to divorce their husbands if they don’t get their Nissan Rouge, but now it’s all about Santa.
2) China is the biggest car market in the world. China indigenous innovation policy force US, European, and Japanese co to form JV in China, transferring knowledge.
4) Ford, GM and WV are fully committed to EV.
5) If the stock market plunge below Oct low, in stepping stones, China
might get these JV for 25 cents/ dollar, becoming self sufficient in 2025,
exporting cars to the world, including Europe and US.
China is for free trade, against building a wall.
And Lotus Cars Limited makes some very nice sports cars in Norfolk, England. This guy named Colin Chapman founded the company 75 years ago. They raced in Formula One with Jim Clark, Stirling Moss and Ayrton Senna. Plus, Lotus revolutionized both Indy car and Formula One chassis design.
But times change, you know? Since 2017, Lotus is 51% owned by Geely Auto in China & 49% owned by Etika Auto in Malaysia.
However, Lotus does make some very advanced carbon-fibre fixed-gear bicycles for velodrome racing, so they got that going, which is nice.
Was at many sports car races in mid fifties to early sixties, both pro and SCCA, pit crew and spectator, and never saw a Lotus actually finish a race.
Heard similar stories from owners into the eighties.
Course my first, an early ’56 Triumph TR-3 never saw a repair facility it didn’t want to stop at either. LOL
Something about a proper Englishman always needing to spend the picnic puttering with the Wentworths, eh what?
Well farmers and their local mechanics have a good reason to be happy. This just in from my Farm News out of Grand Forks:
“The American Farm Bureau Federation and John Deere have signed a memorandum of understanding, giving farmers the right to fix their own equipment. Farm Bureau President Zippy Duvall made the announcement at the organization’s convention in Puerto Rico. “This agreement will enable you and your independent mechanics to identify and fix problems,” said Duvall. “You will have access to the diagnostic tools and information that you need and you’ll get it all at a fair and reasonable price.” It took years of negotiations to secure this agreement. Discussions with other equipment manufacturers have already begun.”
As one of our seed dealers in Crookston, Minnesota remarked to me and my dad a dozen years ago,”To be in this business, you need three degrees; agronomy, mechanical engineering and computer science.”
A top-end new Deere combine runs 3/4 of a million bucks.
DanRo – understood from one of my old employers who retired to restore several vintage Deeres (as well as a number of Britbikes (‘Whitworth’, btw VVNV, autocorrect no doubt striking again…) and autos) that JD has/had a bespoke ‘farmer-proofing’ department in the engineering division…
may we all find a better day.
Lotus is, if anything, worse than Italian cars for maintenance. The new ones almost require you have a factory team on hand every time you drive.
We had a Lotus meet in Birmingham, AL about 10 years ago, and the number of cars dead on the side of the road was legendary.
I love small, light, cars, preferably with a mid-engine, but Lotus isn’t the answer. And hasn’t been since the days of Lucas Electric.
That being said, a small, basic, light, fuel efficient, car should be the ideal; the market for such outside the USA and Europe is much more viable. Ther’s no reason a low-tech vehicle couldn’t be provided for less than $10,000 today, other than regulations set in place to discourage such practices.
KGC – don’t disagree, but would posit that much more investment in driver training/traffic enforcement would need to be made to keep the level of highway carnage at acceptable levels. (We’ve chosen instead to make the investment in various attempts adding various armors and safety devices – including what appears to many as the Holy Grail of self-driving).
may we all find a better day.
The sad part is that the Hyundai’s and Kia’s are junque. Look at the engine problems they’re having and the customer complaints because Kia has tried to schmeek the customer with hidden fine print in the “product update” notices as they are trying to avoid a recall. Do a search. Lotsa PO’d people.
Yup. Had a run of horrid luck with all these models about 5 years ago. Brand new Forte, struck oil inside of its first 500 miles. Dealer said under the plastic cover it looked like a crime scene. They ‘fixed’ it, claiming delay as a Kia corprate rep had to come check it out to approve a motor replacement because it was clearly a manufacturing/factory line error. They say a lot of things so who knows, probably crashed it in the lot and needed a few extra days to repair. But it did strike oil again a thousand miles later. Kia must have Margarita Fridays on the factory line.
Replaced that with a Rogue, funny enough, and it never ran right. Crawled under to change the oil and noticed a crime scene of a different matter with a hefty price tag. Stayed quiet and unloaded it asap on trade in for an Elentra whose tranny failed within a week. Been throwing a lot of salt over my left shoulder since getting my current ride.
You picked a few of the worse brands for reliability. Kia/Hyundai’s look nice and that’s what attracts people. They’re stylish (I think their design chief was stolen from the Germans) but it’s just tinsel on a cow pie.
I worked at Nissan long ago. The stories I could tell…. and yes, that’s decades ago. At the time we used to call them the Japanese equivalent of a Chrysler. (K-car quality)
Who remembers “Buy a car. Get a check.”?
El Katz, funny, I found the Kia butt ugly, the only thing about the Kia that appealed to me was its standard transmission. Its a crime stick is all but phased out. Wouldn’t be caught dead in a Jeep.
“China is for free trade”.
Bollocks.
Google: “China, trade, coercion”.
I work at a Honda factory. We’re still in supply chain hell. It’s not just chips, it’s things as simple as steering knuckles and side airbags that we cannot reliably procure. We stop production early at least one day per week because we’ve run out of something. Management lowered daily production goals and we still cannot consistently hit them. For a few months now, I have not had to work full-time because we’ve had voluntary days off due to parts shortages.
Due to the “decades of stagnation,” at some point don’t we start to run out of used cars? Or is the overall demand for vehicles going down over time? Population growth is slowing, but it is still rising.
The same phenomena that was caused by “cash for clunkers”. The feed stock of good, serviceable, inexpensive vehicles were destroyed and used car prices skyrocketed – which hurt the lower income folks the most.
The downfall of this country is MBA’s, lawyers, and bean counters.
You realize that bean counters just provide information to the MBA’s and other parties and don’t actually make the decisions, right?
The information they provide is skewed by their tunnel vision. New vehicle sales are not practical decisions, they’re emotional. No one *needs* a new car. They want one. Bean counters are notorious for missing that gene.
The company I worked for had passion and innovation as part of it’s early DNA. Build a product people want and the profits will follow.
Then some genius frat boy MBA douche nozzle comes along, and with his beannie friend, convinces management to chase profit vs. innovation.
The result is mediocre products that no one wants at a premium price. They try to market their way out of the problem… and end up throwing incentive money at it to mitigate the problem they created… blaming the sales side for the failure.
I cannot count the number of parts bin *innovations* that I’ve witnessed first had. I called them “the answer to a question no one asked”. Overpriced sports cars to assuage someone’s ego. Great car. Wrong price. Especially when the street creds don’t exist to ask $100K plus for a vehicle. A more visceral vehicle could have (and has) been produced. It didn’t sell because it had no soul.
Which goes back to the original thought…. cars are an emotional purchase. One buys a specific model – not because they need it, but because they want it.
Those stories sound like weak management trying to point fingers at employees for their bad decisions.
Or, maybe companies actually need to make money to survive long term and cannot rely simply on passion.
Nope. It wasn’t “weak management pointing fingers”. The engineers initially build an incredible car. Took nearly a decade to bring it to market because of the beanies wanting to pencil whip the production costs and the infighting between factions. A lot of what the original car was to be ended up being lost due to the delay, the multiple years of “It’s coming! Honest!”(and the lost interest), and the competition passed it by – and it still couldn’t be pencil whipped far enough to hit a price point where someone would invest 6 figures in a non-exotic branded “super car” was willing to spend. Needless to say, it was a flash in the pan and no longer in the lineup.
This explains part of it — the average age of vehicles in operation. It doubled since the late 1970s:
That’s a genius graph, right there.
1) In the 80’s the chart is flat. The economy was booming, people dumped their old large cars from the sixties and the 70’s and bought
more fuel efficient cars from Japan.
2) The cash for clunker program started in July 2009 and ended few months later, when the money was gone, didn’t dent the chart.
3) The trend is up. Car prices are too expensive for consumers, unprofitable for mfg. Consumers buy impaired & affordable Kia, because it all there is and it serve their needs.
4) Hyundai / Kia is the only chart moving up. Defective engines, production delays, don’t deter customers, because there is nothing else. The competition is gone.
5) A systemic change is coming to the car business.
1) yes. And Chrysler went from hulking dinosaurs to k-cars during that era.
Cash for clunkers is a current policy in California.
5) A systemic change is coming to the car business.
This is at least 40 years overdue.
What do you think the systematic changes will be?
1) In the 80’s the chart is flat. The economy was booming, people dumped their old large cars from the sixties and the 70’s and bought
more fuel efficient cars from Japan.
People dumped their gas guzzlers, and begun buying Honda’s, Datsun’s, and Toyota’s, in the mid 70’s 1973 was the embargo. The economy did not start booming until mid 80’s, but was not much worth buying from Detroit. And there Japanese cars were only 10yrs old. They started buying bigger vehicles again in the 90’s when gas was still around $1 gal.
Great chart! It makes me happy.
The lifespan of cars since the 2000’s has lengthened.
I don’t want to buy a car that has built-in obsolescence (I have to buy my kitchen appliances that die after 7 years). I want to buy a car for transportation and utility that will last as long as possible.
I hope automakers don’t build in obsolescence in the future. (Like the 1960’s cars that rusted away after 8 years.)
From my experience, a 15 year old car(2008) is reliable enough around town to get to work and school. I would not embark on a 5000 mile road trip in one. I’d trust a 5 year old car for that.
My newest car is a 2008. It is getting to the point where it requires more maintenance, shocks, brakes, tires, a side mirror, and a windshield this past year, but it looks new, and I plan to drive it for at least another 3 years.
My oldest vehicle is a 40-year-old truck that’s entirely analog. Average maintenance on that is less than $1000/ year, and I’d drive it across the USA today without a worry.
I learned a long time ago it’s cheaper in the long run to maintain your stuff than it is to replace it.
KGC – triple check your last sentence. (Of course, it helps immensely if the items in question are DESIGNED to be maintained-your truck vs. your car, for example…).
may we all find a better day.
We have to come to terms less cars is the future. But it might be good news if combined with much more pleasant and healthier walkable cities and suburbs.
I bought LT puts on GM about a year ago after Mary Barra said GM was moving 100% to EVs by 2030. I sense the US government will have to bail GM out again if they follow this policy. Toyota appears to be the only large car manufacturer that has not taken the pledge to go all-in on EVs.
On a side note, our only car was flooded by Hurricane Ian, so my wife and I shopped for a new Lexus SUV. Our local dealer in Naples quoted us $10k over the same car’s price in Tampa. So we bought the Lexus in Tampa.
Unless western countries mostly or entirely ban foreign competition, many “legacy” auto makers are going to disappear, including the US “Big 3”.
Perpetually shrinking your way to (higher) profitability isn’t a permanently sustainable business model.
They did that years ago, which is why Toyota, Nissan, Honda, BMW, VW, Mercedes, etc all have plants in the USA.
The impact of trying to eliminate import competition is going to kill not only the “Big Three” (now down to 2) but the unions that fought for the legislation. They cut their own throats instead of innovating.
Maybe car companies can make the transition without a government backstop, but I am pessimistic. At some point in time you are going to be making, marketing and servicing half EV and half IC and that is going to be expensive to manage.
They’re all hedging their bets behind the scenes. Mr. Toyoda is the only one with the balls to tell the truth. They’re not all in, regardless of what they babble in public. It’s nothing more than virtue signalling.
There’s still an investment by several manufacturers in hydrogen…. the infrastructure for that is weaker than that of EV’s… but that could change.
Mr. Toyoda and his underlings totally f***ed up, totally missed the ball on EVs. Now they’re behind by years, and they’re desperately trying to catch up. They bet on hydrogen and lost. And they know it.
Now they’re spending billions of dollars on developing EVs, but they’re so far behind it’s no longer funny. GM is almost as far behind. EVs are the only segment where there is actual sales growth. Everything else is declining.
BMW is still investing in Hydrogen… I think they recently launched the iX5 in Europe. Honda is still fiddling with it. So’s Toyota. Hyundai as well. Ditto Porsche.
Some manufacturers have the philosophy of “fast followers”. Let the others take the lumps in R&D and then copy what you safely can without violating patents, get into the fray and then pretend you created the market. Toyota did that with the Prius. The first hybrids sold in the U.S. were sold by Honda… the weird little Insight reported retail sales before Prius.
One little known anecdote: Honda was contacted by the Hollywood crowd to lend an Insight to an actor and drive it to the Academy Awards or other such event and garner all the free press and exposure. Honda turned them down… Toyota jumped on it like a monkey on a football and the rest is history.
Oh, it’s easy to make cars that run on hydrogen — ICE or fuel cell. That’s not the issue. BMW was testing hydrogen powered ICE vehicles over 20 years ago. At the time I was working with fuel cells, and they were already pretty good. BMW and Mercedes were testing Ballard’s fuel cells. Fuel cells had powered the electrical systems of the Apollo space crafts and Space Shuttles super-reliably. They were ideal! United Technologies, which had made the Space Shuttle fuel cells, had an experimental bus powered by a fuel cell. It was perfect.
The problems with hydrogen are the costs of getting the fuel and the costs of handling and distributing it. That has been the issue back then, and it still is the issue.
It takes a lot of energy to split it from the element that it is attached to (such as O or C). For example, with electrolysis, you will put more energy into splitting H from O than you will get from H as it recombines with O in the fuel cell. So hydrogen is just a very expensive fuel.
Then there are the issues of the nature of H. It’s the smallest lightest element on earth. To get any kind of energy density, you need to compress it to 5,000 psi or 10,000 psi, and then it starts seeping through all kinds of materials and fittings at that pressure, and you need to use special materials.
And then there are the problems of public refueling station that can fuel a vehicle at a pressure of 5,000 psi or 10,000 psi. You certainly cannot do that at home, like you can with EVs. And you would need to build massive infrastructure to deal with this refueling issue.
All of this makes hydrogen as a fuel very expensive, and for users even less practical than ICE vehicles – you still gotta go to the filling station, but now the filling station is a major technical project. And because it’s expensive built this filling station, it’s going to ad costs to the fuel. It just doesn’t make sense.
It seems like every 20 years, someone gets excited about hydrogen as a transportation fuel, and then they play with it for a while and throw some money at it, and then they learn the ropes and abandon the project for the same reason as 20 years earlier.
Hydrogen vehicles will win in the end because they work.
Evs don’t run well in cold weather. Yes, Hydrogen is electric , but the electrochemical cells have no problem with deep cold.
There are only a few million electric vehicles in the USA, mostly on the west coast. The EV things is a pipe dream, until better batteries arrive.
Electric cars are to practical transportation as cryptocurrencies are to money.
All I know is the car lots around here are full of pickups and large SUV’s. The same lots have a very limited amount small vehicles. Also, most of the newer cars are Kia or Hyndai. This all happened in the last year.
About 8 years ago I bought a used 2005 Camry that had around 45000 miles on it, I paid $9k and still have it and sadly it just turned 75k. I’ve never had an issue, never had a time up, bought new tires and changed oil regular. I don’t need or want a car with thousands of chips connected to problems.
“I paid $9k and still have it and sadly it just turned 75k.”
That’s nothing to be sad about. 75k miles on a Camry is nothing. My wife’s old Camry had well over 350,000 miles. During that time, we had to replace the timing belt, the clutch, and electric window controls.
My 2003 Nissan Frontier 2wd has 219,500 miles. It is still on the original clutch. The interior is starting to fall apart, for example the manual window crank handles, and the sun visors. I had to have the water pump replaced once. It just passed smog (Southern California). But I must admit, I feel like I am pushing my luck on long drives. It still suites my needs perfectly, just getting a bit old. After years of little pickups getting bigger and bigger, I am happy to see the automakers are now starting to focus on small pickups again.
I bought a 2004 Nissan Frontier 4sd long bed RD new. It lasted until 210K in 2018 when I traded it in. I admit with the 4 spd I used to pound it pretty hard. But even then I think yours is on borrowed time. Probably could look around for a good deal in a full sized pick up now that prices are down.
Prices will be dropping hard by summer as supply chain sorting nears completion.
For example: Ford Transit adding third production shift in April or sooner.
They do not hire people to build nothing.
Expensive cars make a lot of new friendships. It doesn’t matter if u like
your new friend or not, u need their car.
Wolf and others,
With the data on domestics and imports, was curious how the luxury manufacturers–Porsche/Audi/BMW are doing now in terms of sales. I sold my Porsche in September, felt I got more than it was worth for it. Guess there’s still some free money sloshing around.
BMW had big problems with its supply chains, and dealers ran way low in 2022. This is getting better now, but supply “in inventories and in transit” is still very low (as of November). One of their additional issues was wiring harnesses made in Ukraine.
Porsche and Audi now seem to have plenty of supply.
https://wolfstreet.com/2022/12/14/rising-but-still-low-new-vehicle-inventory-tangled-up-by-shift-in-demand-from-trucks-now-lots-of-supply-to-fuel-efficient-cars-very-little-supply/
It seems surreal now that only a few years ago trucks were gangbusters and you had automakers like Ford phasing out their whole line of sedans (which I said at the time was idiotic). It seems to me that if you have to have a car nowadays, it might be a good idea to get a PHEV because you can then do most of your daily routine on the electric range and then buy petrol only when longer trips are required. This is my plan if and when I require a new car, which hopefully won’t be for about 10 years (bought a new one in 2019). On the other hand, it’s possible the whole auto world will be very different by that time, but this is assuming that PHEV catches on more and the technology continues to be refined, etc.
There are many new BMWs for sale, and discounts range from 5-10%+ before incentives.
End of 2022, you could get 10% off a 2022 X5 plus incentives; there were so many of them. I just saw an M6 go for 6% off and an X5M50 go for 5% off, all before incentives such as loyalty.
I’m going to get rid of a 2021 Platinum Expedition this year for a 2023 X7, and those are currently going for 5% off on the East Coast and 10-11% off in Socal due to a refresh. They should be 10% off on the East Coast by the end of Q1. As always, I’ll write a check for the difference, so rates don’t affect us.
I’ve also seen discounts off MSRP for Cayman and Macans. I saw a “stuffed” 911 Base with a $145K MSRP sell for MSRP, which had been unheard of. Base 911 had been $5-10K over to order them.
Have an 8 y/o car with 22,000 miles on it. See no reason to get another one. Since Covid I went from driving a few thousand miles a year to a couple of hundred. I now walk 10 miles a day.
Healthier, happier and a few extra dollars in pocket from gas savings.
Walking ftw
Yes! Walking as transportation is fabulous. Two birds with one stone: free transportation and free exercise. As a freebee thrown in on top: no-hassle-parking, which is a biggie in San Francisco. I walk nearly everywhere (except to Costco because I don’t want to carry 150 pounds of stuff home). I’m a horror show for the auto industry and gasoline retailers. But the wife drives 20 miles to work every day.
If I lived where you do, I’d walk, too. It’s a fantastic place to walk around.
I am cringing as I write this drivel, since I hope someone will benefit from it, but… I drive 33.7 miles to work. After researching electric vehicles, I found the Nissan Leaf has a simple measurement of battery life. A new Leaf has 12 bars, which drops to 11 bars below 85% battery capacity. Nissan will sell you a new battery at 8 bars. The biggest factor in the economics of an electric car is the cost of the battery ($6000 for an older Leaf, without labor). Used electric vehicles are priced very similar to ICE (internal combustion engine) vehicles based on year, mileage and condition (but not battery life). So searching Autotrader all over the U.S., I found a 2011 Nissan Leaf in SanDiego with a 12 Bar battery for $6000. I bought it and found the market to ship it to Florida was extremely competitive ($800). The way to preserve the battery life involve 1) always using 110 volts to charge (Level 1 charging), 2) never charge over 80%, and 3) drive slow and steady, never using the disc brakes but always regenerative braking. Thermal management of the battery is important, but I live in Florida so there is not much I can do about it.
This vehicle with a 10 bar battery will still be worth $6000. I figure I will save $6000 in gas minus electricity in two years (my employer is giving me a 110 volt outlet at work, but I figure 60% of the electricity will be at my house). There is the cost of registration and insurance, tires, wipers and the 12 volt battery, but electric cars are really simple the the electric motor is likely to work well for a long time.
Global warming is real and electric cars really are the future. I am looking forward to not going to Sam’s Club to fill up every week.
I’ll let you know how it goes.
So if you see a 2011 Electric Blue Nissan Leaf driving the speed limit between Melbourne Beach and Vero Beach with the license plate WLFSTRT, it’s me.
HH,
I think it’ll go well for you. Everything you say is consistent with our experience. We purchased a 2016 Leaf with 12 bars and only 13,000 miles when it was 1.5 yrs old. We’ve had it over 5 years and put another 22,000 miles on it without any issues. It has a quick charge port, which is a pricey option, but we’ve never used it preferring the 110 volt outlet for the same reasons you describe. It still has 11 bars at nearly 7 years old. For us, it’s great inexpensive transportation, but it wouldn’t work for lots of people with different driving patterns. If we ever go down to one car, we’ll need to get rid of the Leaf.
All that said, the most amazing thing about your comment is that the WLFSTRT license plate was still available in Florida.
WLFSTRT 🤣❤😎👍✔🥂
Cars are to stupid to equalize all this financial bs. Dude you looking for a car? Me to but ain’t going to buy one. What a old rehash of an old financial indicator? Me thinks litterbugs outside a grocery store will be a better indicator.
BMW Rolls-Royce heralds ‘momentous year’ as car sales exceed 6,000 for first time ever…
Rolls-Royce Motor Cars has exceeded annual sales of more than 6,000 cars for the first time in its 118-year history, the company announced.
It said it achieved “particularly strong year-on-year growth” during 2022 in the Middle East, Asia-Pacific, the USA and Europe.
A “single-digit” drop in sales was recorded in Greater China – which includes mainland China and areas such as Hong Kong – due to “ongoing headwinds” but this was “successfully counterbalanced by increased sales in other markets”, according to the car maker.
Prof Michael Boskin, H.B Bush adviser : computer chips, potato chips,
what’s the difference.
The products u make today determine tomorrow’s products, the supply chain and the know how.
Due to chip shortages car mfg sell produce memo pcs : when a dealer click sold, mfg will complete the order with Frito chips and ship. The rest will wait on mfg lot for the next online sale.
Comparing potato chips, which I can easily make at home just fine (and they’re delicious too), to computer chips is patently inane.
Teslas in the People’s Republic of China are 40% less than equivalent models in the US and the PRC is now the largest single car market in the world and should start exporting cars into the US and put other US manufacturers totally out of business which really should have happened back in 2008-2009.
And again…
Import restrictions on cars, designed to limit foreign competition, is why all the major “foreign” manufacturers have plants in the USA. China isn’t going to do that.
1) Honda sales are down from 1.64 to 0.98. Supply is down, below a healthy supply.
2) Honda might have limited inventory on dealer lots and online showcases/ catalogs to order from.
3) Honda cut inventory to the min possible. Not all 1M can be sold in one day.
4) They might produce a large inventory of skeletons, common pcs, and complete the rest when the online order come.
5) Thus Honda is cutting cost, increase turnover, increasing dealers memo prices, before dealers discounts.
5) Honda might reduce full time workers, cut hours, produce in stepping stones cut everything, but the cost of financing inventory. Honda sales people might adjust customers orders to what can be done within 30 days, and what is more profitable for them.
It would be great to have a future car with 7g interconnective chip AI technology. Then the toilet could be flushed from my car 300 miles away, the casserole in the oven heated up. And when I reached 75 miles from my home, the gas heat could be turned on to warm up my house.
Then some supper hacker kid who likes to have fun, could hack into my car’s system and crash the vehicle right to the corner of my house where the furnace sits. The house blows up, but I have overinflated house insurance due to inflation and greed. What a waste.
LOL. That was some good humor for the day.
Those features are already here.
While driving home and safely using apps on my IPhone, I can:
1) Check traffic on Google Maps to see how long my drive will be.
2) Turn on the WiFi enabled crockpot. (Don’t laugh. It was on sale).
3) Turn up the heat in my house with Nest.
4) Set my DVR to record the news if I will be late.
5) Look at the refrigerator cameras to see if I need to stop for milk.
6) Turn up my WiFi controlled Hot Tub for a late-night soak.
7) Have Alexa be playing soothing music as I come in the door from my stressful day.
Technology is awesome! At least until someone hacks my crockpot.
The techno antenna transmit data about destinations, family, kids, eating habits, music, news channel, friends, bosses, work, customers, income…
I know!
I should be paid for all of this great marketing data.
I’d happily accept information on the cheapest place to buy milk and a new crockpot in lieu of cash. My information seems to be getting lost for the important stuff.
Cars last longer than they did in the 1970’s.
We are in a similar industry making commercial truck equipment, but I see parallels in autos. It is now only evident in hindsight, but 2015-2017 were goldilocks years for our industry, and these auto sales charts tell me a similar story. We were really firing on all cylinders at that time, and it has been very difficult getting back to that performance.
We posted fantastic volumes and record profits in 2015-17. Sales were high and input costs were low. The “fun” at this job has been on a downward slide ever since.
Stability is important when you live on 3% net margins, and we’ve had a lack of it in the last few years. The trade war hurt a little bit by boosting our material costs a little too quickly, but that was a walk in the park compared to dealing with 2020-2022.
Here’s to hoping for a little stability in 2023. Please no more stimulus! We’re tired!
Question about Hybrids:
In car shopping, many dealers are touting 10 year warranty on the hybrid battery. If the battery goes out in 8 years, do you get another battery that can last 10 years? Do they prorate. So they only give you 20% off on the new battery?
Also, is there any worries about now having to service two motors (gas and electric( and two driver trains?
I have 3 vehicles that are 20, 16, and 15 years old. I usually buy them when they are 4 or 5 years old. I am a little leary that a hybid will have some major expense at 10 or 11 years.
We have a hybrid.
1. Gradual battery capacity loss over time and use is considered normal wear and tear and NOT covered under the New Vehicle Warranty.
2. Our vehicle has 67,000 miles on it — a 2018 model we bought used in Feb 2020. Looks like we could sell it for more than we paid for it, LOL, crazy times.
3. There has been no engine repair work of any kind. No repair work at all.
4. The only maintenance work were an oil change (synthetic oil, which lasts a long time), new tires, and wiper blades.
5. The high-voltage powertrain components have been maintenance free.
6. The CVT is like silk since it doesn’t shift (but don’t tow a horse trailer with it).
7. By stepping down from a 300hp rear-driver sports sedan to our bigger (much slower) hybrid, we cut our fuel consumption in about half, just in the nick of time. Wife drives it to work every day and pays for the gas: she loves it.
I drive EV and like it a lot.
But hybrid vehicles are the best and it gives best of both the worlds.
I bet your EV runs circles around our hybrid, LOL.
Thanks! Much appreciated.
DM: How much? Auto insurance costs jump 8.4% this year – 52% for motorists with tickets. Tesla owners and those in Michigan, Florida, and Rhode Island are worst hit
Those driving Porsche Taycans, Tesla Model Ys and other top end electric vehicles may come to regret their stylish choices when they renew their insurance premiums.
SCBD:
A lot of that has to do with the lack of replacement parts. Tesla, for the longest time, used every part to support production and, if you broke something, they’d have to not build a car to let you fix yours. Tesla had a lot of suspension problems – lower control arms and the like would fail. The cost to the insurance company to provide rentals was high (which is why they now limit the rental to a flat $ amount rather than days to repair). Plus they often had to total a Tesla because the cost to repair it was prohibitive. Lots of them run through Copart. It doesn’t take much to kill a Tesla. I read a story about a guy who hit some road debris and it broke off the plastic coolant pipe nipple on the battery. Cost to repair was something like $18K for the part (the car was weeks old). Some guy who runs an EV repair shop in MA fixed it for somewhere in the vicinity of $700 with “non-approved parts”.
A lot of “just need to get from point A to B” types here, not meaning that in a bad way, but, a basic model 3 is very much a satisfying sports car (at least to 99% of those who own them) at around $40K. US automakers don’t even seems to be on he right track to compete. (What car in that price range and how is it better?). These automakers are not too big the fail, but will be bailed out again. Let them fail and something much better will emerge. Any subsidies should be for displaced auto workers and for training to be of value to the new age of autos.
$1,768 a Month, with $10,407 Down,
Was not that long ago, those numbers would put you in a very nice house in most places…..
The inevitable ghost of ad valorem taxes haunt all the lot dealers. The engineered “soft landing” will slow the flow of their sales and when the tax is due in 2024 the whole ship may well flip over. Don’t fight the fed. You can get a time travel ticket to 1982 as an Ethereum token. Who remembers mixed metaphors?
I just got an email alert from a very high-volume Toyota broker I use and he has a 2023 Sequoia Pro with a $78K MSRP, and he is selling it for $95K + tax + 422 doc fee!
Here’s the kicker: He notes these are going for $110K at the auction!
Imagine a Toyota being that much in demand. In certain obnoxious colors, Forerunner Pros were going for outrageous money in 2022.
FWIW, this guy has access to a couple of hundred Toyotas at any given time, whether inbound or on the lot.
This sounds like a Great Time to Wait, LOL
Regarding durability of new cars, lots of you are embedded in amber! Tho some electric vehicles may not be finished well now, soon (already some of) these vehicles will last over 30 yrs. as they have roughly 10% of the moving parts that ICE/dinosaur burners have. You are now saying “the battery wont last”, but I’m at 90% (10 yrs and 200,000miles) on my poorly manufactured Tesla S. Further, as cars become computer-like commodities instead of status symbols, we’ll be able to shuttle a new, better, battery in anytime.
Ford is in trouble. They have not been able to to fill all the preorders from 2022, yet took orders for 2023 models. And it is looking like all of the 2022 and 60% of the the 2023 orders will be canceled.
Way to make sure the customer will never buy a Ford again.
Just a few points after reading the comments,
– New auto sales are declining for a few reasons in Canada (still relevant for USA) . Price increase, credit eg., debt to income ratios are increasing (higher household debt and many incomes were reduced during pandemic which affect this), financing availability “banks were very loose on approvals in the 2010-2017 years then tightened up, its was simple to make a finance deal auto-snap with no oversight from the bank if the underwriter filled out the form right, then banks became more strict. Now banks are loosening again to keep the consumer debt cogs going but due to negative equity, rate and price increases many are priced out. Chip shortages hurt but lack of availability increased dealerships sales profit per vehicle as people didn’t/don’t haggle. Many buyers from the 2005 – 2020 are buried on their loans because as interest rates dropped they were buying new earlier, keeping payments the same while not seeing the negative equity from the deal be pushed along. Now people have 3-5 deals with negative equity which can amount to 20k-50k extra on their loan, many auto loans are backwards so owners cant get out. This is another reason sales continued buyers were trapped into the new car cycle. Thank high pressure sales tactics! Good ol sales force etc.
– Canyonaro!
– Dealerships make their profit in service, finance, warranty! Many sales have little profit unless the sales manager can fleece an owner of their trade in.
– I can’t see the traditional auto industry business model surviving! Way too predatory! Vehicles are built to break! The auto industry like many industries was built clucky to drive job growth! This is going away as technology moves forward. We will start seeing poor performance dealerships being shut down like in 2008/2009. The EV boom should keep jobs steady for a bit then jobs will decline due to automation. Sales numbers will continue to decline for the legacy auto makers as they cant change the game they made. Who would want stop getting 1,000$ for “administrative” costs or not make an extra 3k to push a higher interest rate? The old dogs will drive the industry of old into the ground for one last 10-15 year push then squeeze gas/diesel owners pocket books in service.
-Tesla will out preform everyone! If the Cybertruck rolls out in a year with no major issues and it’s what its suppose to be, its game over. Passenger van will be next.
– hydrogen is a no go! But oil and gas and governments are starting to push the idea more as it allows the same actors to control energy. Having vehicles charge themselves and home charging via solar scares big brother. But it is here and not going away.
– Millennials and Zoomers were/are being screwed in the auto sector and housing sector!
– personal flying drones will be next. Check out eHang.
Just my 0.37$ for whatever it worth…