Average listing price rose 2.2% to $47,417. The strikes, if they drag on, could squeeze inventories, which would pressure prices again.
By Wolf Richter for WOLF STREET.
Automakers have now reported US deliveries: New vehicle sales in Q3 jumped 20.6% year-over-year to 4.08 million vehicles, according to the Bureau of Economic Analysis today. These cars, SUVs, pickups, and vans were delivered by dealers or by automakers directly (Tesla et al.) to their end-users.
Compared to Q2, sales were roughly even, which is fairly common for Q2 and Q3, given the seasonality in auto sales that is so obvious in the quarterly not-seasonally-adjusted chart below.
Also clear from the chart is that new vehicle sales have been a no-growth business since the 1980s, and only price increases and more expensive fancier models kept revenues growing. This lousy environment, so dependent on constant price increases to obtain revenue increases, is now being made miserable for legacy automakers by Tesla, which has come along with massive price cuts.
The inventory shortages of yore are largely gone, though some vehicles remain in short supply, while others are overstocked.
Automakers are again piling on incentives – incentive spending reached $1,806 on average per vehicle in September, or 3.7% of MSRP, up from 2.1% of MSRP a year ago, according to J.D. Power estimates.
Here are the major legacy automakers in the US, sales in Q3 for those automakers that report quarterly sales, or for September for those automakers that do not report quarterly sales, compared to the same period a year ago:
- General Motors, Q3: +21%
- Ford Motor Company, Q3: +8%
- Toyota Motor North America, September: +14%
- FCA (subsidiary of Stellantis), Q3: -1%
- American Honda, Q3: +53%
- Hyundai, Q3: +9%
- Kia, September: +20%.
Tesla doesn’t report US sales, only global sales, and its global sales surged by 27% year-over-year in Q3.
Not a recession scenario: Pent-up demand comes home to roost.
This 20.6% sales increase year-over-year is a big boost for the economy, and it’s practically impossible to have a recession with this kind of increase in a high-volume big-ticket product and associated services that weigh so heavily all around the US economy.
New vehicle sales have been defying gravity, so to speak, fueled by pent-up demand that accumulated during the two years of shortages when neither consumers nor fleet customers, such as rental fleets, could buy the new vehicles they wanted to buy.
Now the industry is recovering from the inventory shortages in 2021 and 2022 that caused sales to plunge by 20% to 25% from their respective quarters before the pandemic.
Pent-up demand by fleets: In 2021 and 2022, automakers were prioritizing higher-grossing retail sales over fleet sales, and fleets responded by keeping their units in service longer, and not sell them to the used vehicle market, which squeezed used-vehicle inventories, which was in part responsible for the ridiculous spike in used vehicle prices. Fleet customers are now getting their orders built and are gradually able to turn over their ageing fleets. Sales to fleets surged by over 50% in September from the starved levels a year ago, according to estimates by J.D. Power.
Pent-up demand by retail customers: Retail sales surged by about 12% year-over-year in September, according to estimates by J.D. Power. Retail sales a year ago weren’t all that bad because automakers had prioritized them.
New vehicle inventories begin to normalize.
Some models and brands are overstocked and others are in short supply, which is sort of the typical situation in auto inventories.
Inventories of new vehicles on dealer lots or in transit rose to 2.06 million vehicles at the end of August, up by 67% year-over-year, the highest since February 2021, and more than double the out-of-stock levels in mid and late 2021.
It remains well below the 2019 levels which averaged 3.66 million vehicles, but back then, dealers were overstocked (data via Cox Automotive).
The average new vehicle listing price ticked up 2.2% year-over-year to $47,417 in August, the latest data available from Cox Automotive. The crazy price surges during the pandemic, along with their odious addendum stickers, are gone, but prices have not fallen despite expectations that they would.
The strikes at the three US legacy automakers, if they drag on, could increase pressures on inventories, and then prices could be climbing again, which is something to watch out for in terms of our inflation measures.
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This would be a prime time for California to move ahead the timeline of zero tailpipe emissions from 2035 to a couple of years from now. The cost is only a few thousand more, like the hydrogen fuel cell vehicle. Since vehicles are available now, the California Air Resources Board should be all over this.
Nah, you cannot force such a huge change in such a short time. That would be total economic chaos. People will decide at their own pace whether or not they want to go that route, and the economy will adjust to that over time.
I just bought back my ole work truck
2001 DIESEL
gonna keep another 10 years or likely more
since it doesn’t use DEF – the EPA mileage killer
Hydrogen is not green at all. More inputs than outputs in most processes. It might be one day, but that is not now nor tomorrow.
Hydrogen facts:
Most is sourced from natural gas
Even though it’s a gas it is priced as a kilogram
Energy content of 1 kilo of hydrogen equals 1 gallon of gasoline
The July price of Green Hydrogen was $16.00/kilo
Blue Hydrogen was $10.00/kilo
At best, the energy content of produced hydrogen is half of the energy needed for its production.
I thought they got hydrogen from electrolysis. No?
Electrolysis requires more electricity to produce the hydrogen than you will get out of the thusly produced hydrogen. This is a very expensive thing to do.
Hydrogen for commuter cars is pretty stupid anyway. It’s a great long-term solution for a lot of power needs, but it needs more development.
Let the market work. If vehicles are available now, they will sell if there is demand for them.
CARB doesn’t have a “zero emissions” target. Plug in hybrids will be a significant portion of them reaching their goal and those hybrids are the real game changer for fuel consumption as they cover majority of daily needs in EV cycle. They are reliable and use fewer battery resources.
low income residents will gravitate toward those cars as they can meet all needs (in-town and road-trip) with little to no inconvenience or added costs.
I’m an energy engineer/consultant. There’s no H2 distribution…would take a decade and $billions extra to tax payers. Likewise, CA home electric bills doubled the past couple years and will do so again, largely due to renewable generation quotas and inadequate distribution (and fire lawsuits). So “only a few thousand more” for the car is merely scratching the surface. Most goods in CA are trucked, so also add 20% percent to all your goods and food purchases to cover the millions of diesel truck conversions. And it won’t be the ultra rich covering these bills…it’ll be you. According to ProPublica, Buffett’s “true tax rate” was a mere 0.1% from 2014 to 2018. The perception that rich people get taxed a lot and should get taxed more is our government fooling and appeasing the middle class during its slow death.
A non-fossil, non-nuclear, energy system will eventually come, but at a cost far far more than anyone realizes. USA estimate is $50T over 30 years. That exceeds current national debt and total GDP. Meanwhile we need to pay for democracy and medical care for much of the world.
“CA home electric bills doubled the past couple years ”
This is totally bogus. I checked it because our electricity costs didn’t go up nearly as much.
You said “past couple of years.” OK, let’s say 2 years, from July 2021 through July 2023, the average retail price rose from $0.209/kWh to $0.268/kWh, which is an crease over the two-year period of 28%, not 100%.
Over the past 4 years combined, since July 2019, retail electricity costs went up 45%.
To get to 100% increase, I have to go back 20 years, to July 2002.
Data per EIA
So I don’t know if your other claims are just as bogus. I’m not going to check them. Not worth the time.
I just looked up my bills from PG&E (Solano county – Northern CA). In Sep of 2021 tier1 electrical cost was $0.26071 per kWh and tier 2 cost was $0.32751 per kWh (tier 2 pricing would kick in after a monthly allowance of power was used). In Sep 2023 electrical cost is $0.45589 per kWh during off-peak hours and $0.53933 per kWh during peak hours. Not exactly apples to apples comparison due to different billing methodologies but surely a much heftier increase in rates than the garbage provided by EIA.
Your apples to oranges in Solano county is not California. You gotta get used to that. These garbage extrapolations are just funny.
Would be interesting to see other people look up their own bills from two years ago and compare the rates to today. Care to share yours Wolf? Was your rate increase anywhere near the ballpark you provided (28%) for the state?
Will be happy to. I’m out of town right now, and looking up prior years’ rates will have to wait till I get back.
What background for Energy Engineer? Is it ME, EE, ChemE, etc.?
Too rushed.
Considering that we’re discussing this on a “Tailpipe Solution Options” Basis here :
Better to build out a NatGas+Hydrogen Infrastructure first for CNG+Hydrogen Vehicles, then gradually offer the incentives to graduate from Gasoline+Diesel – if consumers are interested.
Hydrogen can be Steam-Fracked from NatGas.
We’ve had Commercial Diesel Trucks converted to run on CNG for nearly Two Decades; and with City Buses and many Sanitation Trucks running on CNG, the basic infrastructure are already in place.
We’ve CNG Passenger Vehicles and Personal Pick-Up Trucks.
We’ve Hydrogen ICEs available on addition to Hydrogen FCVs.
Toyota’s (Full Disclosure – I’ve a Cousin who was an Toyota Sub Exec) NewGen Hydrogen FCVs do have the (EPA Rated)400+Mile Range (Corporate demonstrated 500Miles).
One Caveat is the Price of Hydrogen Fuel. It’s still expensive; and IIRC, the Hydrogen Providers haven’t been receiving the Production Subsidies comparable to their Gasoline/Diesel Pipeline and BEV Automaker CounterParties, so it can take awhile before the Hydrogen Fuel Price comes down.
Toyota used to have their Hydrogen FCV Fuel “Provided for” for 3 Years – so as One Leased a Mirai for a 2~3Year Lease, they pretty much just paid for Vehicle+Insurance (presuming Lease covers basic maintenance+upkeep).
Not a Bad Deal if you live in California, as the State was working on building more H2 Stations.
IIRC, One can theoretically make a North-South Road Trip through the State of California on Hydrogen for years. Of course, People tend to fly to destinations outside of town to begin with; but last time I checked, it was possible to make a Road Trip from San Diego through to the Northern State Line(cross your fingers finding a Hydrogen Station there).
Not enough Nuke Plants or Solar Plants for Electrolysis. Don’t think California will be building either Plants for some time.
Hydrogen will take awhile to catch on in Murica. JPN, CHN, and RUS auro mkts will probably spearhead the ubiquity of CNG and Hydrogen Powered Vehicles.
So for now, better off advocating for CNG Infrastructure/Vehicular Subsidies – BEVs get them – if you’re advocating for Fuel Options.
You’ll fill your tank within a few minutes of being on station.
“The strikes, if they drag on, could squeeze inventories, which would pressure prices again.”
Of course the will, and it will. And the automakers want that. It gives them pricing power. Auto price inflation is not going away, it’s getting worse.
Not quite. Only GM, Ford, and Stellantis have to deal with the strike. None of the other automakers have them. If the strikes drag on, it will be a huge loss for those three as sales wander off to other automakers.
Should have been euthanized 15 years ago and the execs barred from the industry forever.
Cool, another perfect reason to keep it higher for longer and perhaps even higher and even longer cause inflation ain’t gonna go down on its own anytime soon despite what MSM is trying to sell…
Except Granny Yellen just came out and said “higher for longer is by no means a given.” These clowns are dying to cut rates as soon as possible.
Some confusion? Yellen is no longer Fed Chair. She said lots of nonsense, including in early to mid-2021 about inflation going back to 2% by later 2021, LOL.
Yellen is a pathologically, political level mega liar, who somehow still lives in 1960 and doesn’t understand the Internet allows citizens to research her verbal world salads instantly.
Per first two Google search results alone would disqualify Yellen as a “Financial Nostradamus”:
June 27, 2017 – Fed’s Yellen expects no new financial crisis in ‘our lifetimes
February 7, 2008 – Fed’s Yellen sees weak growth, but no recession
She’s a disgusting, despicable piece of human excrement. I don’t say that lightly.
Since her boss is now running for reelection, take anything she says with a lot of salt.
She’s in the Treasury Department and her job now is to talk up the economy, spin, and bloviate, not make objective, reasonable statements.
And yet, she was Fed chair, and now Treasury Secretary. I’m sure her ramblings mean something to someone. She certainly has the stage to talk BS.
I wonder how many of you “objective and reasonable thinkers” even know the full range of duties of the Treasury Secretary, much less who in gov’t she works with to accomplish them.
But it is fun for most people to see who can out-badmouth someone else, that I know FOR CERTAIN.
Feel better? Who won? Everyone think they did?
As for me, I learned absolutely nothing from all that and am still trying to reconcile Wolf’s “Rosy Economy” opinion.
Not having much luck, either, too many unknowns.
Yellen the politician, gotta assume everything she says is sugarcoated beyond belief.
Good thing she has no power over monetary policy…. Allegedly… Should be an interesting election year especially if oil rips higher per expectations
Congress is the big worry. Can we look for anything good to come from there? Most likely a shutdown is coming. The place is chaotic and frozen in place.
Just like judges are actually politicians wearing black robes, Yellen is a political hack pretending to be an economist. Read her preposterous economic claim to fame sometime. She is mentally almost gone like one of her close famous friends.
Oil prices are PLUNGING and are now down around 10% over the past 10 days to little more than $80 per barrel.
I’m pretty tired of her yellen about rates going down.
Wolf, how is the price in the last figure calculated? Is it the average price across all models for all manufacturers? Or is it the weighted average? Or?
For example, if we have models A1 & A2 with production like:
A1: price=$1, produced=20
A2: price=$2, produced=40
Is the average price $1.5, or $1.66?
Thanks
This metric here is “average listing price”: It’s a straight average of all posted and for-sale vehicles. Super-high-end vehicles are minuscule in number, so they don’t influence this metric much. It’s the bulge bracket where most of the 2 million vehicles in inventory are. And you can see that when you go shopping for a vehicle. It’s hard/impossible to find crew cabs for that price, but there are lots of cars, and some lower-end SUVs that you can buy for around that or less. But anything nicer in the SUV segment (the best-selling category) or pickup segment (#2 bestselling category) will send you much higher in a hurry, into the $60k+ range.
There is another metric that I cite occasionally (June and December): “average transaction price” or ATP. That’s the average price of all vehicles that sold and were delivered. I use the J.D.Power data for that. It’s pretty close to the average listing price.
Ok anecdotal, but at this printing factory I’m working for the past few months…our American clients are sending orders like water from a faucet. The company is hiring more and more staff due to the workload.
I’m not seeing any signs of a recession in corporate America…or is it because the Canadian dollar is lower?
However, if your business model is based on the Canadian economy, yes, times are very hard and people aren’t even finding minimum wage jobs at local companies.
So unemployed Canadian readers, I just gave you a job tip that an overpaid public sector “job counseller” working C$70,000 a year cannot help you with.
The Chinese in Canada haven’t cutback on their spending one iota yet.
GEN Z wrote: “Ok anecdotal, but at this printing factory I’m working for the past few months…our American clients are sending orders like water from a faucet. The company is hiring more and more staff due to the workload…”
I was talking to a Hallmark Greeting Card merchandizer two days ago. Their cards are “made in USA”. But they can’t get any to stock.
My pharmacy has not been able to get the 3% sterile sodium chloride solution I use. Also made in USA. Sterile salt water should be easy to make. But out of stock for weeks.
Bottlenecks in USA manufacturing?
At least medical grade normal saline has been intermittently in short supply in the US. Baxter makes it in Puerto Rico and it’s nothing new for US to have shortages of the stuff (pre-COVID times, too).
Anybody who uses the word “recession” with this kind of government spending does Not understand Basic math and balance sheets.
🤣 Glad you said it. I wouldn’t have gotten away with it. The recession-mongers would have called me names.
My personal recession indicator is the number of animals strangers dump on the property of our 100 year old ghetto house. We have 5 dogs, so people know we love animals. Last year it was 1 puppy. This year there has been a puppy over the fence, 1 dumped outside the fence, and 2 on the sidewalk in a cage. People can’t afford to feed their pets or take them to the vet. Just anecdotal from the poor part of town… Restaurants, movies, and malls are still full 15 minutes away.
1. If you think average price of the car, 47K is too high. Then imagine half of them are even higher- GC
2. In the swamp area, hyundai and kia are the most stolen vehicles. #kiaboyz and ticktok challenges promote aspiring thieves to steal theses cars.
3. People are waiting for recession for a decade or even longer. They will get depression sooner than an economic recession.
4. In a single night, 20+ cars in the same apartment were broken and air bags were stolen. How come there is a second market for them? When the cops arrived on the next morning, thieves were gone.
5. Believe it or not, there is a rental shop for rims.
1. You’ve confused “average” with “median”.
2. Because they can be stolen with an iPhone cable. Ain’t rocket surgery. H/K cheaped on their anti-theft equipment and are paying a price for it.
4. Stolen airbags have a market in the auto re-builder business. They’re expensive and it’s how they cut costs in the repair.
5. Which appeals to a certain demographic.
In Chicago a manual transmission is a great anti-theft device.
It’s also a way to guarantee, in my household, that my wife can’t drive 3 of the 5 vehicles in our person fleet (4 of which are my vehicles – a wagon, a minivan, a pickup truck and another wagon). She sometimes complains that, when her daily driver needs service, she’s assigned to the “too big” 3/4 pickup truck, to which my response is always, learn how to drive a manual and your options will increase.
I’m not giving up my fetish for manuals. I work on all my own vehicles and as I get older and vehicles get more electronically complicated, I like my MT fleet even more. I can keep these vehicles on the road for another couple of decades.
DD – have been like you, but with entropy affecting strength and health, at-home clutch replacements are a larger concern – though as a ‘retired’ rural-dweller I’m fortunate in not having to deal with high-density urban driving as much as in the past. When I do, though, I appreciate the autotrans a bit more (…and chuckle in agreement with Shiloh’s verity of ‘anti-theft device’!).
may we all find a better day.
91B20,
I have a long time to go before I won’t be driving anymore and I do live about as rurally and you can and still be east of the Mississippi. Of course having access to a 2-post lift makes a big difference. My days of swapping transmissions on pallets in the mud are long over.
I’m glad I was raised with the ability to service my own stuff. Given the choice between working in a cutthroat industry or in a big city (did both of those in my 20s) or living rurally and doing as much as I can of taking care of my own things (house, cars, appliances, etc.) I get the benefit of not having to stress about living a modern life or needing the income to keep up with the Joneses.
I’ve talked about the rental properties we own, where all rents are all modestly priced. We often have new workers just a few years into their careers with higher incomes than our combined family income, yet they rent from us. I put it down to the poor financial education and lack of DIY ethos.
In many ways I’m disgusted with how consumptive the US has become as a society and how lazy we are in terms of expecting people to provide every service we need (and our employers to pay for it). This mentality is going to be very hard to break.
DD – good post (…a little envious of your lift! As the old saw goes: “…if I knew I was going to live this long, I would have taken better care of (and invested more in) myself…).
may we all find a better day.
Are they just adding up more debt or are they paying with their legit income?
I have a hard time believing people are buying all this stuff with their savings and incomes. I believe they are using buy now, pay later services and creditcards.
So they aren’t really buying stuff, they are borrowing to buy more stuff which is only making things worse.
Maybe I’m completely wrong.
Robin,
“Maybe I’m completely wrong.”
Yes, you’re completely wrong.
People who think that Americans are poor, and work as hamburger-flippers, and live paycheck-to-paycheck, and don’t even have $400 for an emergency, or whatever BS gets spread around in the clickbait media (CNBC, Bloomberg, WSJ, etc.), will never understand the economy. And they’re always surprised when they see consumers saving money and spending money in huge amounts, and they think that this must be coming from some magic money somewhere.
But no, it’s not. It’s coming from record high incomes. We have noted here that consumers have received the biggest pay raises in decades, and a record number of consumers are working in jobs that pay the most ever, and that consumers are still making more money than they’re spending, and so none of these auto sales are a surprise to us. I expected them, I have been saying for over a year that the pent-up demand, caused by the shortages, will support sales for years to come.
Yes, many consumers are leasing or financing their new vehicles, and automakers’ captive lenders are making that super easy and now they’re buying down the loan rates too. That’s how it has always been. Nothing new here.
And there is nearly no subprime lending in new vehicles – the topic here. Subprime lending takes place in used vehicles, but even there, it accounts for only about 16% of the used vehicles purchased. It’s small because the credit ratings of most Americans are well above subprime, with the average FICO score at 714 (subprime is below 600 or below 620 depending on credit bureau).
New car inventory non-existent in Canada. Electric vehicles shipped from Korea about a 2 to 4 year wait time.
I think it’s a bit oversimplistic to think that increased/solid new car sales means a recession is not possible. 4 million in sales represents what, $200-300B in the economy?
We have a strongly bifurcated economy. It’s no surprise that the ‘haves’ are still buying new cars, it’ll be one of the last great American pleasures to go in this mickey mouse economy (for those that can still afford them).
In my view, the economy continues to slow with continued demand destruction from higher prices. Yes, there are plenty of jobs and lots of people are working in those jobs (oft times several) to stay afloat.
“4 million in sales represents what, $200-300B in the economy?”
That would be about $1.1 trillion annually = 4% of nominal GDP (more of real GDP). Plus the financial and insurance services that come along with it, plus all the activity that leads to those sales, and the secondary and tertiary activities, including manufacturing in the US, transportation, labor all along the chain, the sandwich shops that feed the sales people and production workers, the diesel that is consumed by locomotives and trucks that move the vehicles, the rents and mortgage payments that are being paid with the money earned, etc. New vehicles are immensely important to the US economy. And have always been.
Not even slightly important before 1900.
LOL, yes. Adam and Eve had to leave Paradise on foot, not in their SUV.
LOL. They were also able to transport the produce without diesel.
You see where that apple got them……
SCBD – would posit the railroads and their attendant industries were very much a “new vehicle” and very important from the 1850’s-forward…
may we all find a better day.
I read that auto loan applications are being rejected at record rate, with the caveat that the data only go back 10 years. As debt to income ratios increase, house and new car purchases will decline or risk of default will rise.
When making broad statements like that about loan applications you get in trouble before you even finish the sentence, LOL.
What is getting rejected more are applications by subprime borrowers because prices are high and rates are high, and subprime lenders are more careful (two subprime specialized dealer chains shut down).
But subprime borrowers buy almost exclusively used vehicles, not new vehicles. And among used vehicles, they’re mostly buying older models not the expensive lease-returns and 1-3-year-old rental cars. They’re often buying 5-12-year-old cars, and those older cars are still expensive (and nice). It has always been very difficult for a subprime borrower to buy a new vehicle.
So the loan applications that are being rejected are not hitting new vehicles at all, but are hitting used vehicles sales, and the lower end of it. But even there, the numbers are small. Subprime is only about 16% now total used vehicle financing. People always exaggerate anything with “subprime” in it.
Recent highs in total vehicle sales are still sort of riding the seasonal lows of 2014-to-Covid, and even in line with the lows from 1998-to-GFC.
After such a long period with absurdly low sales volumes coupled with trillions in printed money, I’m really surprised that we’re not seeing record high volumes now that supply chains are less restricted. Almost every other sales chart for various other goods and services has a giant dip followed by a giant peak rebound. The sailors actually aren’t acting nearly as drunk on car sales as I would expect. These sales numbers are historically quite anemic compared to other non-recessionary periods, especially considering they’re not adjusted and they’re bought by a larger population of potential buyers.
Cars last longer than before and when supply was short some probably just got used to it and spent money elsewhere. I still have the same car after 20.5 years and don’t plan on buying a car in the US anytime soon. Demand getting near pre-COVID levels should make the used car market better in the years ahead when lease returns happen, fleet (rental) cars get sold off, and regular owners want to upgrade…
Z33, I’d say car longevity was pretty good by the mid to late 90s and hasn’t improved since then (if at all). Once electronic fuel injection, coil pack or coil-on-plug ignition, and a few other goodies became standard, engines could go quite a long time if reasonably well maintained. There were plenty of 90’s cars that could easily go 200k-250k miles on basic maintenance. Huge numbers of 80s/90s cars were taken off the road by “cash for clunkers” even though they probably had several years of operational life left. If anything, plastic valve covers, plastic cooling system QD fittings, and hoards of additional sensors coupled with more common forced-induction-low-displacement design strategies have probably made many more recent engine designs less reliable than a lot of well-known 80s/90s engines.
I think you have rose colored glasses on. Japanese cars were getting great during the 90’s but American cars were still pure crap.
Did you ever drive a Cadillac Catera? If so, probably not for long as it would break down in a stiff breeze.
What about the Dodge Omni, Dodge Dynasty ( with the ignition designed so you could pop it and use a screwdriver to start the car) or Chrylser LeBaron? Chrysler built nothing but crap in the 90’s.
The Neon was the only glimmer of light in that dismal decade for Chrysler.
There is a reason the #1 auto redeemed for in the cash for clunkers were 10 year old Ford Explorers. And they were probably towed to the dealership ’cause none of them were still drivable.
The Cadillac Catera is a four-door, five passenger, rear-wheel drive luxury sedan marketed from 1996 until 2001 by Cadillac over a single generation in the United States. As a rebadged variant of the Opel Omega B, the Catera was manufactured by Opel in Rüsselsheim, Germany, and was underpinned by GM’s V-body platform. There were approximately 95,000 units built and sold over five model years.
Not Sure,
“I’m really surprised that we’re not seeing record high volumes now that supply chains are less restricted.”
Good lordie, what a nonsensical fiction plot-twist. The consumers-are-tapped-out folks don’t give up, do they?
1. New vehicle retail sales in dollars have spiked to record levels, about $47 billion in September, +11% year-over-year, the highest September ever (J.D.Power data). In dollar terms, new vehicle sales have spiked for the past few years from record to record.
2. You may never see record new vehicle unit sales again, but for reasons other than the economy.
Here are two of those reasons:
2a. Late-model used vehicles have become a formidable competitor to new vehicles. The rental companies normally supply about 3 million vehicles a year to the used vehicle market. Lease-returns that are 2-3 years old also supply a few million vehicles a year to the used-vehicle market. All these vehicles are 1-3 years old, nearly new, in prime condition, and often with factory bumper-to-bumper warranties still in effect (we just bought one of those). Each sale of one those is a sale that didn’t go to new vehicles. This is a HUGE long-term trend.
2b. Americans buy fewer cars overall (a long-term trend, nothing to do with the current economy) because more of them live in dense urban centers – that’s where the construction boom in apartment and condo towers has taken place over the past many years – where they may not need a car, or only have one car per household, instead of two.
“The consumers-are-tapped-out folks don’t give up”
Wolf, I’m saying that I’m surprised car sales volume isn’t higher precisely because the consumer is so strong. They’re not tapped out at all. Lots of other products and services that dropped hard in 2020 rebounded way above normal. I’m surprised that car sales volume only returned to the low side of normal. I would expect today’s strong consumer to go crazy shopping for cars after being forced to hold on to their current car for maybe a couple years longer than they might have originally planned.
Arnold, today’s new vehicles have plenty of problems. Ford’s super-hyped Bronco came off the line with engine issues right off the bat. Nissan’s CVTs have a very common habit of not making it past 70k-80k miles. Newer Sentras are less reliable cars than the Sentras of decade’s passed (poor ratings from consumer reports). GM still can’t seem to make a 3.6L V6 without timing chain issues. There are some great cars being made now, and some new cars are junk, just like in the 90s. The big 3 remain low in the reliability rankings now just like they did in the 90s. The number of miles the average car could go jumped by leaps and bounds in the 80s, but it’s been incremental at best since then. A BMW m54 and zf gearbox from the 90s could routinely go 200k+ miles. Aside from the 3E and 4A-FE, pretty much all Toyota drivelines could survive 250k. There are plenty of old Chevy trucks out there still running vortec small blocks and LS engines well passed the 200k mark. As usual, a government program (clunkers) grotesquely skewed the numbers, but “vehicles last longer now” just isn’t a super compelling explanation for today’s sales volumes. New cars are going to have all the same engine, transmission, and cooling system issues 10 years from now that 10 year old cars have had for the last few decades.
I’ve got the same two cars I’ve had for 15 to 20 years. I’m getting them designated as historical vehicles with the DMV.
Just went to the Subaru dealership and know the sales guy. the 2021 Forester Premium w 16k miles was 29k plus taxes and fees came to over 33k. I couldn’t do it. I just might have to bite the bullet but man, if this is the new normal, were screwed. I was going to pay cash and avoid financing. I’ve been holding off for one year since we lost our 2000 crv in an accident.
What I am guessing happened is that used cars had a huge spike into record levels and came back down. That most likely factors into new sales volume today.
Carmax’s stock price has dropped very, very close to 50% this year based on a dramatic drop in expected sales and earnings. Articles trying to explain this are saying that used car sales are down.
Used supply for recent vintage units will remain tight for another 18-36 months given production constraints in 2020-2022. This is the primary reason that used sales (# not $) are down.
These near new/CPO units would typically be where buyers turn when new vehicle prices get out of hand, but short used supply -> higher used prices across the spectrum. Not necessarily year over year (2022 was absurd for used car prices), but in a historical context.
This pushes buyers down the chain to older, more affordable units. Average age of a vehicle on the road today is 12 1/2 years, up a full year since 2015.
A chart of new motorcycle and or RV sales would be interesting as they are pure discretionary spending. If you look at the used dirt bike market ( A Pure Form Of Discretionary Spending ) it is void of bikes in the 2009-2011 years. Also the same for most RVs. Those years during the financial crisis saw many RV makers close up. Weekend Worrier comes to mind.
RV sales are down 50% year over year. None of the manufacturers in Elkhart are running 5 days a week any more.
RV lots around here (Houston, tx) are overflowing with inventory and have big signs on their fences advertising huge discounts. Plus, they are advertising on TV now to try to light a fire under the almost dead demand. Diesel is just $4 a gallon here too!
This could be the canary in the coal mine as far as a forward indicator. It would be interesting to see a chart of when RV/ Powersports started to freeze up during the financial crisis?
We share some suppliers with the RV folks. Those suppliers are hurting for work right now. Normal 16 week lead times for some aluminum parts are now two. Got an email from a fabrication shop in Indiana who does stamping and weldments for the RV industry this week. It has been a few years since we saw any of those.
One aluminum supplier said it typically works like this heading into recessions: First goes the RVs and campers. Next is the trailer market (freight), and then last-mile equipment purchases will see a slowdown. We live mostly in last mile. We tend to follow the broader economy, timing is just a little different.
We are starting to see a mild slowdown after having more work than we can handle for over two years. Still too early to tell. Our production is outrunning orders by about 20% since July. We can keep the pedal to the floor on production for another 5 months at this pace. Then we will need to see an uptick in work or do some layoffs. I’ll save that worry for future me…maybe around December.
MotoJ – sidebar on dirt bikes (and not talking the street-legal ‘adventure’ segment). Always felt the big4 had a long-term market-interest problem when shifting to 4T power. Relatively skint kids who wanted to ride in the past could economically obtain an old 2T, give it a new top end, again economically, and go. If they decided to stick with the sport, they would move up. Cost of entry to refurb and ride, say, a 4T YZ400f, not to mention it’s technically more demanding ongoing maintenance, usually makes that (pardon pun), a nonstarter (…demographic shifts towards digitally-based recreation a sidebar for another day…).
may we all find a better day.
4T is referring to 4 stroke power plants? While we are on motorcycles, there is a shift in the classics/collectable market. The sold prices on Bring A Trailer and other online sales sites are showing a very steep decline for dirt and street bikes. One model the Honda early 70s CT70 moved in a strait line up to a cap of $10,000 during the height of the pandemic craziness. Now they are doing good to get $5000. I restore classics and have a YouTube channel. I was restoring one right in the thick of the run up. Still have the bike and it is beautiful. This decline is not isolated to the bike market, classic /muscle cars and corvettes are also returning to reality.
MotoJ – yah, 4T meaning ‘tiempo’, cycle, stroke, have always found it a convenient shorthand, especially when referring someone to Euro bike lubes, where 2 or 4 ‘T’ is prominent on the label.
Not the first time ‘vette prices have spiked and crashed. Was parts mgr. at a combined Lotus-Ducati dealership (hard to believe, I know) in Walnut Creek in the late ’80’s and saw it then, with Ferraris, as well. See it with bikes now as the function of a greatly-shrunken market demographic…
(Hoping to soon finish refurbing a ’70 CT90 for a friend, not as a collectible (though it will look sharp), but as his country home village runabout. -best).
may we all find a better day.
@Motorcycle John,
I’ve probably watched your YouTube channel.
Average listing price for a new car is $47.4k. What do you get for that money? An average new car.
A new V4 Aprilia RSV4 cost $19k for the base model without active suspension. The top of the line “Factory” version with all the bells and whistles is $26k. What do you get for that money?
202 kilograms.
217 horse power.
125 Nm of torque.
305 KPH top speed.
Zero to 200 KPH in 7.4 seconds. (A Formula One car does it in just under five seconds)
Fantastic braking ability.
Lots of electronically controllable driver aids that improve performance and safety.
Pretty amazing to think about, eh?
I don’t know anything about RVs, but I have been addicted to dirt bikes since the early 1970s. In my opinion, the biggest detriment to the dirt bike industry, is the motorcycle industry. When I was a kid, you could get a paper route, save up some money and buy a motorcycle. I don’t think that is possible now.
I could buy a new dirt bike nowadays no problem, but I don’t. I am still hanging on to my year 2000 KTM 300. The only thing the new bikes have that I would truly like is electric start.
McQueen’s Ghost – concur. As I inferred above disdaining the long-tail benefits of the legacy used market-bikes, or auto (‘cash for clunkers’)- too-often results in ‘who knew?’ heartaches…-best.
may we all find a better day.
It would be interesting to see how RV (and related camping, recr. vehicle after-marketers, etc) sales correlate with the general economy (it used to be a reliable indicator but supposedly now not so much). Camping World Holdings, retailer of rv/camper products, is at a 52-week low. Winnebago, Thor and LC Industries are not as low, relatively, but all three of them have substantial short positions against them. Keep in mind that the stock market is a leading market indicator.
OMG! It never occurred to me to watch Camping World stock. Thanks for the idea. I chart used Bikes, Boats, RVs, Autos/Trucks in my area since the pandemic started. Offerings dipped to a very low level in 2020/2021 but now have grown steadily into Q4 of 2022, no surprise. Since 2022 the #s are rising and falling with the typical seasonality. At some point I look for a glut as the drunk sailors get tight on cash and want to dust off that RV or other toy and list for sale. I wonder if they are stuck like home owners with a low interest rate loan on that diesel pusher?
Howdy Folks. Americans enjoying and spending and enjoying life? Outrageous and you are welcome.
Old Sober Sailor
Bubba, it’s really a great feeling to buy a new car or truck. Especially when you can sit in it in the garage and savor that “new car smell!” Makes it all worthwhile!
…dopamine is where one finds it…
may we all find a better day.
I was never going to buy a new vehicle as it was the way I was raised. A situation arose where it made more sense to buy new and as I was driving it home I was hit in the face as to why they are so expensive, they are NICE and all the creature comforts were amazing!
And when the new car smell runs out, you’ll have lost about 20% of the car’s value in depreciation. Besides, that smell may be toxic.
I just commented on they “new car smell” air fresheners.
Imagine a world were the US didn’t allow cars to fully monopolize transportation.
Whenever I see these eye watering new retail prices, I think of friends in Europe riding trams, taking high quality buses, biking everywhere, as well as occasionally driving.
We are in a desperate need of a transportation paradigm shift in this country. We need transportation alternative’s that can help deflate our transportation costs.
We’re entering into a territory we’re our poorest/subprime borrowers may not be able to afford access to a quality job in a timely matter.
Thanks always Wolf for the clearest reporting!
deep dive writes:
> We need transportation alternative’s that can help
> deflate our transportation costs.
Should we build another ($200 million/mile) “bullet train” from SF to Tahoe once we finish the “bullet train” from SF to LA? More busses and trains built and driven with union labor will just “increase” transportation costs…
Agree.
US states and cities seem to have banked on self driving cars and cite cost. Like it will get cheaper in the future.
Americans need to travel more. Maybe then they will see they are getting bilked. We pay very near the same total tax rate and getting little to nothing for it. Yeah maybe they pay a bit more on average but they get great quality roads, functioning public transportation and medical care. We get a bloated MIC, corporatocracy and little else.
It’s well-chronicled how the urban cores of so many US cities have been systematically jiggered or rejiggered for car-centric faring over the past century. If you’ve ever walked through a city you typically only ever drive through, it can prove an almost uncanny experience—the things you miss while conveying between 25-40 mph.
Public transit isn’t always practical – the US has densely-populated cities, separated by huge swaths of nothing.
However, I agree its very American thinking that a full-size car is the only motor vehicle one can own. In many parts of the world, folks get around just fine on scooters and motorcycles.
Personally, I try to do as many errands as possible on my little 70cc scooter, and save my car for going out of town. My last fill-up for the scoot cost me $5.
The European Union has approx 450 million people people living within a territory of 4,324,782 square km. Compare that to the United States with an approx population of 335 million people living within 9,883,517 square km of territory – the US is more than twice as big as the EU in area with only 3/4 its population.
In much of the U.S. the trams, buses, and bikes are untenable.
See, for instance, the boondoggle of California High Speed Rail.
What is less of in Europe is suburbs and exurbs. And quite a bit of the suburbs in Europe are denser populated than in the USA. That is what make public transport viable, not the overall densinity of people.
It is suburbs with rows of houses or low rise multifamily versus single family houses spaced out. The overall population or territory do not matter.
That is patently untrue. The US has a number of dense city centers that resemble Europe. They are simply farther from each other.
Intracity rail is completely doable in our major city centers.
Intercity public trans is a hard sell given distances and presence of airplanes. But some cities can make sense. NY to DC, or LA to San Fran.
That last one is a boondoggle but not because the idea is flawed. It’s because our government is inept and serves special interests…which goes back to my comment on the US taxpayer being bilked.
I have a friend that got hired by BART out of college and don’t know if there is another job in America (other than actual “no show” political favor jobs) that pays more money for less work and my friend makes even less than the $270K/year BART janitors (Google BART Janitor $270K for more info). I don’t know the current numbers but a Greek friend (with family in Greece that works for the railroad) said about 25% of the cost of the railroad is paid by passengers and the rest is paid by taxpayers. I don’t get the point of making taxpayers pay crazy amounts of money for public transit that few people use (has anyone ever seen more than two passengers on a TART bus in Tahoe?) Even after making the (super expensive TART busses driven by union drivers FREE years ago I still have never seen more than two passengers in one). I think some of the mid Peninsula SamTrans routes ran for years without a single passenger before they finally cancelled them.
I’m pretty Tahoe is not considered a major metropolis.
People use good public trans that allows one to reach where they want to go. The US sans with the exception is 1-2 cities doesn’t have that. We put in limited system comprised primarily of worst form (busses) that take a long time to get anywhere and then say “see nobody even uses it”
There is no pivot coming. Anyone suggesting to the contrary better not be speculating on bonds.
I wonder how truck sales are going? Is this mostly an uptick in car sales? Foreign cars priced at MSRP are selling well. I purchased a Subaru recently, nearly every car that was in transit to the dealer was sold in transit or shortly after delivery (no surcharges).
I hear a lot of complaints about the high cost of trucks, which are still priced much higher than cars, starting in the $60K plus. Lots are full of trucks, some new 2022 units still on the lot, man priced at or near $100K. The only ones buying appear to be business owners and those pretty much forced to buy for their work needs. With a high inventory in trucks, the strike is good timing for US automakers.
The majority (80%) of new vehicle sales are trucks and suv’s
Right, which is bad news for pedestrians. SUVs kill 30% more pedestrians than smaller cars, and pickups 106% more. Pedestrian deaths have increased 59% since 2009 in spite of fewer cars on the road and make up 20% of traffic fatalities. EVs won’t help much since they are monstrously heavy. Mowing down pedestrians, wear and tear on roads, it’s the American way.
…am just old enough (1960’s) to remember when CA changed the law and required pedestrians to use a crosswalk (prior to that pedestrians had the right-of-way anywhere when crossing the street…).
to dd/Gaston above – makes me recall media discussions of not that long ago positing that most ‘Muricans only actual ‘alone time’ was that spent in the car, commuting to work…(comments favoring/abhoring physical social interaction often seem to frequent Wolf’s most-excellent establishment…).
may we all find a better day.
You forgot to add the fact that most pedestrians are absorbed in their phones and not watching where they are going. I’ve watched several step off the curb with nary a glance left or right. As an alert driver you will catch such things…as a driver also absorbed in your phone, it’s much easier to hit them.
Frank,
“Car” sales have been trending lower since 2014. I used to report on it under “Carmageddon.”
The problem is the definition of what a “car” is and what a “truck” is. In the current industry classification, compact SUVs, SUVs, vans, and all sizes of pickups are “trucks.”
But compact SUVs and medium-size SUVs are cars with a hatchback and a higher roofline. This is a new product that didn’t exist 20+ years ago. They’re built on a car chassis, and they should have been classified as cars from get-go, but for marketing reasons and pricing reasons were put under “trucks.” So the “truck” metric is no longer useful.
So car sales hit a low point in late 2021 when dealers ran out of cars, and there was nothing to sell. Now inventories are reappearing but remain low (as you pointed out), and car sales have recovered a little. But “truck” sales have surged over the same period and the gap between them has ballooned.
I have a customer that builds high end convertible camper canopies ( canopy by day, fold out tent by nigh) for mostly Toyota PU’s. They do make them for other vehicles but their market ( overlanding) is mostly 4×4 Tacoma’s. They have taken a big hit in sales recently, not because demand for camping products is down, but because there is such a shortage of new Tacoma’s. For the last few years they have been booming based on trucks purchased before the Covid shortages, or late model new vehicles. But now the pipeline is so thin it is affecting their sales.
Last year, I was looking to buy a slightly used Tacoma here in Houston, Tx. The very few that were for sale were beat to death and way overpriced. They are like trying to buy hen’s teeth here in Truck Country. Gave up, but a Chev Bolt EUV instead.
A quick search on Carmax and Autonation shows tons of them available, both new and used, and prices are not insane (2k available on just those two sites combined nationwide). Toyota of Orlando alone has 73. Not sure where these comments on shortages of Tacomas and high prices is coming from…I didn’t even bother searching outside those three places since I saw so many. You can readily buy one at a decent price if you want including with a manual transmission. It’s not hard like trying to find a Nissan R34 GTR for sale in the US.
These Toyota camper conversions are amazing when done right. I took one across Namibia pre-covid and lived in it almost exclusively for more than a month. Best experience of my life.
Back in 2018, my wife became wary of my 30 year old diesel Mercedes as our only second car. She wanted something more reliable to get work in case her car was in the shop. Being cheap I was not in favor of this so she went out with out me and purchased a new base model 2wd drive Tacoma for $21,000, thinking I could use if for yard work, and hauling stuff. Needless to say my wife turned out to be much smarter than me and we still have the Tacoma in perfect shape, low miles and worth much more than what we bought it for.
This 20.6% sales increase year-over-year is a big boost for the economy,
Is this an increase in units sales or dollar sales? If dollar sales, it would seem that the jump is mostly the result of inflation.
RTGDFA. Not just the headline. At least read the first effing paragraph!!!
I hate this shit. If you’re too lazy to read the first paragraph, don’t comment.
Violation of commenting guideline #1.
The latest gimmick I have come across is msrp + $2,000 market adjustment – $2,000 market adjustment for a smoking deal of msrp. This is beyond insulting. The clowns who are paying these prices are the problem.
Depth Charge wrote:
> The latest gimmick I have come across is msrp
> + $2,000 market adjustment
Last time I was at the Ford dealer I saw a $10K “market adjustment” (aka Additional Dealer Markup or ADM) on a loaded Expedition Platinum pushing the price over $100K. If you think that is bad last time I was at the Porsche dealer thay had a $150K ADM on a GT3 Touring pushing the price from just over $200K to just over $350K.
I may have not been clear with my post. They are showing msrp PLUS market adjustment of $2k MINUS market adjustment of $2k for a round trip back to msrp, as if you’re getting a deal or something. F***ing scummy.
🤣 thanks for clarifying.
It is a deal if it’s the car you want and other places are adding $5k. It’s also a deal if you’re not willing/able to buy out of state and potentially get a better deal.
Not scummy, just business. I’ve said this before, if you could make 20% more money by pressing a button, you would. You wouldn’t consider yourself greedy either. You would consider yourself the holder of this magical button and gloat about it.
Guess we’re all wrapped differently because I would feel scummy. Calling it ‘just business’ doesn’t make it right. Talk about moral twilight.
Nunya, yours was the most succinct description of the “human condition” I’ve ever read. Although you might have added that, if your a male, you’d want women to know you have that kind of button.
It is natural to think that the rebound in sales would be even higher than quarters before the pandemic and supply constraints, as pent-up demand drives sales even higher. But it is still less than those previous quarters pre-pandemic. I also noticed that after the financial crisis, sales only rebounded to approximately the same level as before that crisis.
What is probably significant is that those unit volumes are being transacted at a much higher price. I do think that there are still supply constraints on the lower priced, economical vehicles and that as those return to full stock, the average prices will fall. It would be interesting to know how much of the average price increase is due to the mix being sold versus actual price hikes on the same model.
My read on this situation is that unless we see a further bounce in sales in the next couple quarters as the economy cars come fully into stock, this is actually a sign of weakness. Any pent-up rebound demand has been filled without pushing car purchases up to new highs. This portends a future weakness, not strength.
The domestic car makers seem to be in a pickle. Labor strikes will reduce their production in the short term. Cars from Honda and Toyota and other imported or non-union brands will increase inventories and sell-through. Plus the domestic car makers dont seem to have their new BEV cars flying off the shelves in the US. I also think that BEV cars will lend themselves even more than ICE vehicles to global platforms (amortize the high tech development costs across more units). I think BYD will have an easier time extending into Europe and even North America than GM and Ford will extending into China. Look for BYD to break away as the clear leader in NEV (new energy vehicle = BEV and PHEV) in 2024.
The future battle for NEV domination is going to be intense and probably force consolidation and create some real losers.
And then there is Musk, who thinks that private ownership will nearly go away once he can put a network of robo-taxis out there.
Business Insider: Collapse in US Treasury bonds now ranks among worst market crashes in history…
It’s pretty bad, but people will get their money back if they hold Treasuries to maturity, unlike junk bonds that default. The bond vigilantes were born in the early 1980s after bondholders had gotten crushed year after year for 10 years, just not all at once, during which time the 30 year yield rose to 15%. That was a lot worse, but it was spread out over many years.
I like when Uncles Buffy and Charlie talk about that, they remind me of the Bartles & Jaymes commercials from the ‘80s.
And it was completely caused by interventionist experimental Fed policy, which continues to cause high inflation.
Correct me if I’m wrong, but it seems to me that a 46% decline in 15-yr and 53% decline in 30-yr bonds (over a 3 1/2 yr. period) is a significant deflationary pulse.
Not only do the bonds prices fall, but stocks fall, too. Utilities, in particular, are getting whacked – their dividends are too small and they always carry tons of debt; other equities also have financing pressures increasing and the relatively risk-free bond yields are becoming more attractive.
Even if money in circulation stays the same, relatively, the assets are devaluing which should lead to deflation, not dis-inflation. What do I have wrong here?
What is wrong is not the declines now but the gargantuan buying with newly created money (not backed by goods and services) that ran up bond prices and debased the dollar. Deflation would benefit the economy enormously which is why you see the main stream financial media acting like it’s the apocalypse, because they are the propaganda arm of the big money wealth transfer interests.
On Oct 5 2008, 15Y ago, the first raid to people bank accounts was
applied.
In Mar 2020 the Fed ignited its back burners to take off. In Jan 2022
the Dow reached 36,952 feet.
New ev cars are a very meaningful upgrade on older models, which has not been the case in the car industry for a very long time (perhaps more than a century?)
I wonder what that will do to the market long term?
Car industry must be rubbing their hands with glee.
“New ev cars are a very meaningful upgrade…”
I don’t want to come off as anti-EV, but this is your opinion, there’s not really a consensus yet. I work in automotive in a data science capacity and I assure you the verdict isn’t in.
That doesn’t negate your opinion, but many, many of our users find EVs to be intimidating, unnecessarily complex, etc. These people will evolve and/or age out of the driver pool eventually, but for now they’re fine with the current driving experience.
“I wonder what that will do to the market long term?”
Fewer unit sales at or near these price points for a long time. Maybe forever.
Gradual elimination of the dealer network. OEMs will sequester their EVs into independent business entities (Volvo/Polestar, Honda/Sony/afeela) to bypass dealers with a direct to consumer model (see Tesla, Rivian, Polestar).
“Car industry must be rubbing their hands with glee.”
Right now there are only two OEMs that have figured out how to do EVs profitably on a global scale. The rest are 10 years behind on EV production, not so much the tech, but production efficiency.
And now they have to play catch up, in a big way, while maintaining current ICE production in a high rate environment. That’s gonna be a tough landing to stick and some of them are gonna fail, at least for long enough to rearrange some C-suites.
In private I expect they’re more likely to be rubbing their brows in fear.
Thanks FBEM, for those interesting dynamics.
I meant a meaningful upgrade on the previous generation of EVs. Presumably the pace of functional improvement will drop, but still seems new EVs will inevitably disappear off the road much faster, which I would think will have major implications for the second hand and new market (once they make up a larger share of overall sales).
I appreciate your post in any case. Very interesting.
Irrespective of whether they represent an improvement over traditional, legislation alone makes their long term mass adoption inevitable, no?
random50 – thanks for the clarification, and in that respect, I fully agree with your opinion on both counts:
– 2023 EVs are a vastly superior to 201X-2020 EVs by most, if not all objective measures – full stop
– No one knows how EVs will hold up for the long term. 1st gen Teslas with meaningful production #s are only ~8 years old now and seem to be doing fine – but hard to extrapolate that to more recent 1st gen product from legacy OEMs. From a risk management perspective, I’m taking the under.
Per mass adoption – also agree that it is inevitable, but don’t find the legislative angle compelling (my opinion in this case). In fact, I find it unnecessary and distracting.
Mass adoption will occur primarily because EVs will eventually become very, very profitable to manufacturers who figure out the production efficiencies. Tesla, and to a lesser extent BYD, have proven that there’s money to be made here, but you gotta do the work and the work is very, very hard.
But at the end of the tunnel is a product that requires a fraction of the inputs and labor of legacy manufacturing. A product that is sold directly to consumers, eliminating a layer of fat from the cost structure, and enhancing purchase experience for many (most?) buyers. A product that provides a granular feed of your very specific driving behaviors, patterns, etc. that will greatly enhance your consumer data profile.
Apologies – this has gotten very long. Will follow with some numbers in a separate post.
Some numbers to keep in mind as we think about EV adoption. Below we illustrate the impact of a very aggressive EV adoption rate on total cars driven in US.
Background – US car park has been in the 280-290 million range for years, let’s assume 300M for easy math.
Similar with total new unit sales, call if 15M/y going forward.
EV penetration in 2023 is ~7%, call it 1MM units. Let’s double this every two years, getting to 12MM EVs/year by 2030 (80% of new units that year, aggressive adoption).
That gets us to ~13% BEVs in the total US car park by 2030. US car market in total will remain predominately ICE for 20+ years:
TOT NEW TOT BEV
2020 15 0.3
2021 15 0.6
2022 15 0.75
2023 15 1
2024 15 1.5
2025 15 2
2026 15 3
2027 15 4
2028 15 6
2029 15 8
2030 15 12 (80%)
10 Y BEV 39.15
TOT PARK 300
PCT BEV 13%
Price increases are likely whether the strikes are soon settled or not. If they’re not settled inventory reductions will pressure prices as you point out. If they’re settled for 20-30-40% pay increases, that will add to prices too.
The bottom line is up.
Chris Whalen has same opinion Wolf. “the consumer is swimming in money and banks & commercial are in real trouble”.
Did not know about the decline in new auto sales till i read your reply above. Makes sense now why the price of used cars are still high, especially if you are looking for a certain make and model.
I now see middle class people buying 80-100k cars with greater than 1k monthly payment (not including skyrocketing insurance and gaz) for like 72 months. Am I missing something ?
That’s insane in my book.
“Only” 10 million or so cars/trucks have been sold in the US YTD. There are over 300 million people in the US so a very small number are buying. And even of those sales only a small number are buying the $80-100k range you quote. A lot of people have money in the US, whether earned or inherited/generational.
But not the middle class. Those are my employees. And I know they cannot afford those payments.