Factory-fresh Hyundai cars stored on vast new gravel lots near the Mexican border.
Industry experts had lowered their forecasts for May auto sales, having been overoptimistic every month this year, always figuring that there would be a year-over-year sales increase, when in fact sales fell every month. So for May, they became practically gloomy, but not gloomy enough.
J.D. Power and LMC Automotive forecast that new vehicle sales in May would inch up 0.5% year-over-year to 1.54 million cars and light trucks. Edmunds predicted that sales would edge up 0.3% to 1.53 million units. And Kelley Blue Book forecast that sales would be essentially flat year-over-year at 1.525 million:
And this is what the industry got:
- Total new vehicle sales fell 0.5% in May to 1.519 million light cars and trucks, according to Autodata (number of vehicles sold and delivered by dealers to their customers, or delivered by automakers to their large fleet customers).
- The fifth month in a row of year-over-year declines.
- Year-to-date sales are down 2%.
- New car sales plunged 9.3% to 548,000 and are down 11% year-to-date.
- New truck sales rose 6% to 935,170 and are up 4.7% year-to-date. After the April disaster for pickups, Chevy dealers offered discounts of $12,000 on Silverado pickups and Ford dealers offered discounts of $10,000 or more on 2017 model-year F-series pickups and over $14,000 on 2016 F-series pickups – which shows just how fat profit margins are on pickups.
- The Seasonally Adjusted Annual Rate of sales (SAAR) in May fell 3% year-over-year, to 16.66 million light cars and trucks, the third month in a row below the 17-million mark.
- The 71 days’ supply of unsold vehicles on dealer lots was the highest since July of collapse-year 2009.
- Even the highest incentives for any May, estimated at nearly $3,600 per unit sold, could not stem the sales declines.
GM sales fell 1.4% to 237,156 vehicles, with car sales plunging 11.5% and light truck sales rising 3.1%. Fleet sales made up 19% of its total sales. Its inventories on dealer lots rose to 963,448 vehicles (from 935,758 in April), the highest since November 2007, at the eve of the collapse of the US auto industry. Days’ supply reached a dreadful 101 days.
Ford sales rose 2.3% to 240,250, with car sales down 10% and truck sales up 7.3%, after a massive surge in fleet sales (rental car companies and other fleets) that reached 34% of total sales, which is huge. Powered by these fleet sales, Ford edged past GM. Its inventory on dealer lots fell to 59 days’ supply, which is about normal.
Winners among the other large automakers:
- Honda sales rose 0.9% to 148,414; cars down 3.6%, trucks up 5.9%.
- Nissan sales rose 3.0% to 137,471; cars down 10.1%, trucks up 18.5%.
- Subaru sales jumped 12.1% to 56.135, with car sales surging 20% (!) to 31,605.
- Volkswagen Group sales (Volkswagen, Audi, Bentley, Lamborghini) rose 3.8% to 49,525.
And the losers:
- Toyota sales fell 0.5% to 218,248; cars plunged 13.8%, trucks jumped 12.4%.
- Fiat Chrysler sales down 0.9% to 193,040; cars plunged 24.3%; trucks up 3.9%. As an aside, Fiat sales dropped 16% to just 2,670 units.
- Kia sales (which is part-owned by Hyundai) down 7%, to 58,507.
- Daimler sales (Mercedes-Benz, Maybach, Smart) down 7% to 30,290.
- BMW sales (BMW, Mini, Rolls Royce) down 11% to 29,987, but Rolls sales surged 49% to a phenomenal 109 units.
- Mazda sales fell 8.1% to 26,047, as car sales plunged 33.7% and truck sales rose 26%.
And then there’s Hyundai.
The Korean automaker has been very successful in the US, after coming out of nowhere in 1986 with cheap cars that quickly acquired a reputation as being cheap. But overtime, cars became more reliable, nicer, and more expensive. And its product line moved upscale. Now in terms of volume, it is behind the Big Three American automakers and the Big Three Japanese automakers, but way ahead of the others.
Heavily focused on cars, it has run into the buzz saw of crashing car sales in the US. Its car sales plunged 19.1% in May to 39,567. Even its truck sales fell 7.5% to 20,444. Total sales sagged 15.5%, by far the worst among the major automakers.
And its inventory of unsold cars is piling up, but not only on dealer lots!
The photos below show Hyundai cars starting to fill up especially created gravel lots just north of the Otay border crossing to Mexico (Tijuana).
The photos were taken by a person who has been driving on this road (Alta Road) for many years, but who doesn’t want to be identified because the photos were taken in a delicate area near the border, leading to Donovan Prison and San Diego County jails. The road is marked with “no stopping,” “no parking,” and “no standing” zones, the source says.
“For 10 years there have been signs selling land with no takers, but in the last six months, acres of gravel lots are appearing where there was once chaparral,” the source said. “Now they’re filling them with factory-fresh Hyundais. The lots are getting bigger and bigger and the cars dustier and dustier.”
This photo shows one of the vast new gravel lots. Note the security lights. The first Hyundais have started to show up (click to enlarge):
Below is another lot that is filling up with Hyundais. The hills in the background are in Mexico. The cars go all the way to the left close to the structures of a prison complex.
“This is a closely watched area half a mile north of the triple fence at Otay,” the source said. “So photography is ‘discouraged’ by the ever present border patrol, police, sheriff, prison officers, and helicopter overflights,” the source said (click to enlarge):
Note the white foil still on the hoods and roofs of these cars. The foils are put on the cars at the factory to protect horizontal surfaces during transport. After an automaker delivers a vehicle to the dealer, it goes through dealer prep, a procedure required by the automaker, during which all protective foils are removed. That the foils are still in place means that these cars have not even been delivered to dealers but are stuck in the automaker’s distribution channel.
In other words, they’re not counted as “inventory on dealer lots.” They’re shadow inventory. They’re a sign of massive overproduction hitting an unexpected slowdown in sales.
No one stores brand-new cars on specially created gravel lots unless they absolutely have to because the dust and dirt will get into everything. This is reminiscent of what Asian automakers did during the financial Crisis with cars being offloaded at US ports and no place to go; they were piling up everywhere. This is not a good sign for Hyundai.
The #Carmageddon data is just relentless. Read… Used Vehicle Trade-in Values Sink, Hit New Vehicle Sales
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Piling up in Oxnard, Ca too.
What is impact of U.S. used truck inventory (Class 8 and medium-duty) on new truck demand, orders and production?
I’d like to know as well, I might be looking for a class 8 HDT RV hauler to convert.
Trucking spot rates have been improving recently, though they’re still not great. So the industry hopes for tightness in capacity, and that the slump in orders and production is over – though these hopes have recently been moderating.
For the first 5 months of the year, Class 8 truck orders were up year-over-year. But in May, truck orders plunged again, to 16,300 (from 23,600 in April) and the difference to May 2016 (14,100) was small. May 2016 had been a terrible month for truck orders. So if this turns into a trend it’s going to be bad news because last year was very tough.
The Trucking Conditions Index remains substantially below the levels of last year and has once again turned south:
https://ftrintel.com/news/latest-tci/index.php
In the used medium duty market, prices “paused” in April – that is they fell – according to the NADA (May 30), after surging earlier this year. Here’s NADA’s latest medium-duty report:
http://www.nada.com/b2b/NADAOutlook/CommercialTruckBlog/tabid/147/entryid/1094/medium-duty-market-paused-in-april.aspx
In the used Class-8 market, auction prices “may be hitting bottom,” according to the NADA. Prices are still inching down, but barely on rising volume. This is the latest report, dated May 9:
http://www.nada.com/b2b/NADAOutlook/CommercialTruckBlog/tabid/147/entryid/1085/class-8-auction-pricing-may-be-hitting-bottom.aspx
The fact that a country with such a small car market is allowed unlimited access to ours shows how screwed up our trade policies are. When the auto market goes south, imports should be the first to suffer. Korea, Japan and Germany should not be allowed to profit from currency manipulation. If they want to build plants here, fine, but to give them a competitive advantage by allowing them to dump their surplus production is just stupid.
Fact Check
1) Over half the GM products on the lots are of Korean origin either in part or in whole . What isn’t Korean is for the most part either Chinese CDN AUS or all of the above .e.g Very little is manufactured and assembled in the US .
2) Ford and FCA are in a similar situation . A fair amount of US assembly with very little US manufacturing
2) The Germans .e.g Daimler Benz , BMW and VW-Audi do not ‘ Dump ‘ their cars here . Not to mention most of the cars BMW and Mercedes build in the US are built for export
3) The fact that in many cases the Imports especially the European imports do not ‘ suffer ‘ first says more about the quality and desirability of what the US companies have to offer rather than any unfair trade advantage or currency manipulation
4) Take a good long look at the manufacturing ( vs assembly ) source for much of what is sold as ‘ American ‘ You’ll be shocked to know for instance than more than half of a Silverado’s content from drivetrain to electronics is sourced primarily from China
Which is to say you’re over generalizing and over simplifying to an extreme buying into a myth created to insight anger and ungrounded resentment rather than comprehending/ understanding what is a very complex reality .
As for Hyundai ? Suffice it to say they’ll suffer the consequences of their actions via the market place
I have no problem with domestic companies paying the price for outsourcing production. I do have a problem with a weak euro/yen/won giving an advantage to foreign companies. It’s easy for BMW to sell cars here when a weak euro is equal to a 30% subsidy. Imagine the squeals if the shoe were on the other foot.
And the Weak Euro /Yen/ Yuan doesn’t have an effect on the
parts outsourced by American Companies in Foreign Lands??
Maybe Assembly of some models on US Soil is not affected,
but foreign manufacturing costs of parts us by American
Companies are directly effected by FX rates.
Don’t tell your Lawyer or Accountant or TaxMan that you want
to put a tariff on their Next German Wunderwaffe, They will
pre-charge you for the upcoming Tariff on your next Bill.
Well you don’t have to worry about AUStralian car exports to the USA in the future as all car manufacturing is ending here in a few months time.
Besides, there never were more than a few thousands a year sold to the USA from AUStralia.
The highest inflation is a food inflation.
For this reason, the poor people are most affected by inflation.
This means that in conditions of a decline in living standards, the greatest reduction in sales of cars should be expected in the sector of low-cost price cars.
Such as Hyundai.
In the old Pearl Buck stories, starving peasants are known to eat dirt to ease the stomach aches. Here, today a lot of the “food” has no nutritional value. Here, today nutritious food is very expensive.
You do realize its SOUTH Korea, not North.
Yes, the country we pay billions to defend. Hopefully that will end soon.
To defend from what? You are the danger, warmongers. Stop playing the global police.
The USA has done its best to prevent both Koreas from achieving peace and reunificate.
Currency manipulation? The US is able to print all the money it needs and not have it correspondingly devalued.
The fact the US has the reserve currency is the problem.
Google the “Triffin Dilemma”. Money and the reserve currency should be independent of a country.
You never have to go to work if you have you Uncle Sam’s credit card with an unlimited balance you never have to pay off.
Flying Monkey
You’re bang on with Robert Triffin and his piece from the 1960’s, AKA Triffin’s Dilemma .
Trump was alluding the trade deficit with Germany just last week. The funny bit about Europe and the US is that if New York state has trade surplus the federal government shares those tax gains with Alabama. OTOH As Germany is running a trade surplus it will not share the said surpluses with Portugal / Ireland/ Italy / Greece / Spain. Yet because of the “Boat Anchor of the PIIGS” the Euro trades at a lower (more advantageous) exchange rate than where the Deutsche Mark in non-integrated Europe currently does..
We are getting shafted. Obama got shafted at the Paris Accord. He was the President of the World as some whig would have it, Trump is for looking after America.
Yet Trump has some sense in that he knows if he doesn’t try and stop debt the whole world will economically blow up. Then where will we all be??
Monkey Soon coming to a disasterous end
but the US consumer wants qualite cars ,,,not US junk cars,,,
They will give you a car in California. Period. Retail vacancy rate in SF is a whisper 70%. The Cal economy entered a new leg down 3 months ago. Wells Fargo is slashing jobs by asking workers to relocate, and when they won’t, using it as an excuse to fire them. Exactly the same sort of “depression masking” activity is going on in this state as went on in 2009. State gov has been preparing quietly for 6 months for a Yuge downturn.
I hope you had no illusions about the Cal economy. It is collapsing fast.
California is doing great. Look at the real estate prices.. it’s climbing everyday fueled by bidding war..
People are spending money in droves..
If things have been this bad as this site shows.. spending would have been stopped…
Hahahahaha Good one I needed a good laugh Look at the fiscal condition of that liberal paradise and you may change your tune
Staggering Number Of Homeless In LA Shows How Tough It Is To Get By
The number of homeless people in Los Angeles is skyrocketing. In just one year, the figures revealed that the homeless population in the city grew 20% while the numbers for the wider Los Angeles County were even higher at 23%.
Remember all those mortgage backed securities BS the banks were selling …everything is just great until you look under the hood and there you find the truth.
Jon – No matter how many corrupt gov’t officials and Mob from other countries hide their wealth in California real estate, it won’t change things for the average citizen here, who’s really hurting.
Thank you Alex for a comment based in reality
If you think that people in power think and care about average joe.. you are misled..
The point I am making is ..
All the numbers are looking great.. the real estate keeps going up and up
The stock market is ebullient
People are spending money…
The spending has not stopped ..
It’s pretty clear you don’t live in the Bay Area. Your comments look pretty silly to us living here. Times are flush for employment (packed buses & trains & rush hour traffic I’ve never experienced in the 33 years I’ve lived here). Job recruiters posting tons of job listings, etc. Bars and restaurants are packed as are any sporting event, symphony or opera performance I attend, etc.That said, I wouldn’t mind it if what you wrote comes true. Curious to know where you get this information. Or is it just wishful thinking?
MarkinSF – If you’re in that few per cent that are “techies” and are actually making $100k+ a year, it’s got to look great.
I liken this area to Nashville; there are few country & western artists doing great there, but the area is noted for people with a dream and a guitar who are out busking for $2 an hour.
America went from zero cars per household to 1 in the 1950’s, to 2, then to 3 or 4. Now we are going back to 1 or maybe even zero if you consider living in the city you don’t need one, the car price to household income ratio means fewer can afford car payments, many have joined the gig economy so they don’t commute daily and thanks to technology more and more can do their jobs from home by telecommuting. This will also mean a hit to projected gas tax revenues so expect those rates to increase if collections fall short.
It is not a cultural change, I bet people would rather have their own cars instead of being picked up by an stranger.
No. The problem is that debt overhead, healthcare costs, education and other forms of rent extraction leave americans with no disposable income to spend and therefore markets shrink.
By the way, this is exactly the same factor that contributed the most to us deindustrialization. Free trade deals? Currency manipulation? Yeah sure that also counts, but the main factor is the financialization of the economy which has priced out of the markets both your companies and your workers.
Look at Germany, the euro is prettt stable right now and has the same privileged acces to us marked than us exports to the ue. The secret? No real state bubble, free education, free health care, no financialization and a bunch of small banks that lend for productive purposes rather just zero-sum speculative activities.
I think that the only way i can be absolutely convinced that the economy is in trouble is if THREE of the following FOUR things happen within a SIX week period :
(1) Amazon misses (or guides down) quarterly earnings
(2) Home Depot’s store comps OR Costco’s store comps turn negative Y/Y
(3) US truck sales turn negative Y/Y.
(4) DR Horton OR Lennar miss earnings or guide lower.
As for GDP forecasts, employment #’s, census reports, sentiment surveys, etc..
No thank you !
Amazon doesn’t have any earnings. If their revenue went down, that would be significant.
Sorry. I Should have stated it differently. If Amazon misses it’s number (or guides lower)..
As for amazon not having earnings. it’s TTM FCF is $10B, second only to Walmart.
IMHO, FCF is more valuable than earnings. It’s easier to touch. Moreover, FCF comes in handy if one wants to go shopping.
Sorry Wolf but you are way off base on this call. All those cars were sold and counted under fleet sales. They were sold to the Mexican drug cartel and are awaiting for convicts to escape from the local jail. They are simply get away cars.
The reason that the foil hasn’t been removed is so that the authorities won’t suspect why they have been purchased. It seems to have worked since even you were fooled.
Bad auto sales, bad jobs numbers, doesn’t matter. Market ignores all news and just goes up. It ain’t stopping for a while either.
LOL
Too funny … and damn I needed that today . Thanks !
As for ;
” Bad auto sales, bad jobs numbers, doesn’t matter. Market ignores all news and just goes up. It ain’t stopping for a while either ”
Yup !
Just wait to see the escapees’ faces once they find out the tanks have been drained by the gangs of fuel thieves usually targeting Pemex…
It’s the plot for the next Fast & Furious flick, “Escape from Otay”.
I, for one, would pay money to see Vin Diesel driving off across the border in a Hyundai.
El Chappo says get long Yamaha
“I think that the only way i can be absolutely convinced that the economy is in trouble is if THREE of the following FOUR things happen within a SIX week period :”
Depends on which economy you’re looking at. Retail anything seems to be a horrible mess, restaurants are suffering, car sales are moribund, job creation is anemic, and Hillary is still on the loose. Doesn’t look good to me.
“piling up everywhere”.
Look beneath these ‘piles’ to find the culprit. DEBT.
Cast your memory back to the beginning of the 08 crises and the dark days of impending doom if TARP was not forthcoming from congress. It was astronomical at many hundreds of billions of dollars. People were horrified at the vast amount of tax dollars that were about to be ‘spent’ to bail out the financial system and were against it. Congress did it anyway. So much for paying any attention to the people.
Today, the billion amount is bandied about like the million amount of the seventies, when a million dollars was a sum to be reckoned with. This million amount is now so common, as if talking about a hundred dollar bill. The buzzword amount these days is a “trillion.”
The public has now been acclimated by the financial sphere to this upward movement of ever higher denomination amounts. Debt and the process of acclimation, that which a short time ago (8 years?) was considered aberrant, is now seen to be normal. (quadrillion anyone?)
http://www.visualcapitalist.com/20-trillion-of-u-s-debt-visualized-using-stacks-of-100-bills/
Oh, for the good old days: “a billion here, a billion there …pretty soon you’re talking real money.” – Everette Dirkson, late senator from Illinois (Irony, Illinois Debt lust got downgraded to near-junk status).
As I’ve said in a couple other threads the past few days—watch Illinois. Huge increase in property tax, even rural areas. Not gonna be pretty!
Let’s see how Illinois come out of this…
Increase the taxes on super richs..
Jon No more likely they will crush the disappearing middle class even more with clowns like Emmanuel in control of things there And that will just accelerate the decline in the long run
Sure…if there is anyone left to pay property taxes.
I thought Illinois was home to some famous Politians, can’t they do something…like actually live there instead of gold plated Northwest D.C. homes?
On a somewhat positive note in todays automotive news . Elon Musk ( TESLA ) finally wised up with automotive corporate cronyism suffering its first blow . May there be many more to follow .
Damn it pains me to admit Musk did something
…. right
If tax payers stop paying for so called green initiatives then companies Tesla and SolarCity would be folded overnight…
Tesla gets a lot of revenues by selling carbon credits to other companies….
Having just got back from my dentist, I want to share something I just learned from him.
My dentist has a 2015 Ford F-150 with the new aluminum body, and it is not suitable to being subjected to Minnesota’s winter time road salt. Also, the door handles are showing sings of causing hair line cracks that are emerging out from the corners into the panels.
A quick look into this on Google show that he’s not alone, and this may bite Ford in the backside as warranty repairs could be quite expensive. As Wolf reports, there is a fat profit margin on pickups, but will Ford have a hit to the bottom-line if they need to repair this problem?
Any other WS readers have insight into this?
The only car that Ford can’t afford to break is the car they’ll use to drive to Washington to request for a bailout next time.
Bottom line is for the 99%, the 1% just have to pretend.
If you recall, the last time they did this in ’09 they didn’t drive to DC — they flew in their private jets.
Ford didn’t ask for or get federal money, and aluminum doesn’t rust.
Drango: Aluminum does get oxidized. Evidently the paint is not perfectly sealing out everything, and after a while the salty brine gets next to the aluminum.
Many times when one drives in my region in the winter, a salt-laden slush gets sprayed all around, and the shi# is nasty when it pools up next to any metal parts on your vehicle.
These are the things I don’t understand.
The first Land Rover had a light alloy body to get around steel rationing. This light alloy was Birmabright, which had been patented in 1930 precisely to have a light alloy with high salt resistance, good weldability and being easily cold pressed. Birmabright was available in large quantities from the scrapping of enormous numbers of surplus aircraft and the dismantling of several wartime shadow factories, so it was cheap to boot and not subject to rationing.
The original Land Rover was designed to be a farm vehicle, so much it had two PTO’s, and its light allow construction proved to be perfectly suited to the rigors of anything that could be thrown at it.
Ford has had problems with light alloy corrosion since they struck a deal with Alcoa around 2000.
The problems are well known to Ford and covered by several (at least three) service bulletins: like they did with the Pinto they did the math and found it makes more economic sense to deal with the problem on a case by case basis. I wouldn’t be too surprised they are using the patented Honda “They all do that, sir” excuse to get out of several warranty jobs.
Lots of auto components have been made of aluminium for a long time to save weight and also for other reasons. What’s new on the F-150 is that the frame of a truck is made of aluminium. So if there are frame problems (for example, corrosion as you suggested) that would be quite something, given that this is the best-selling vehicle in the US. Any problems having to do with door handles or door panels would not be welcome either, but just from reading your comment, I think they’d fall into the category of regular problems automakers run into from time to time.
The frame of the F150s are still steel. We just got a bunch in our fleet. The cab and the bed are aluminum. The super duty is the same for 2017.
Steel vs aluminum…that is metal mold country. They will fight each other to see who eats whom first. This is elementary physics and chemistry. Whoa…add salt and now you have electrolysis. Add summer heat and…never mind.
Enjoy those 401k and other investment vehicles they have to be as sound at the product.
Good thing we are not discussing Sears tires or their warranties or I would never run out of words.
Thanks for the correction.
Start looking for deal? Or is this just the beginning? Still some 2016s on the lot here in Vegas. Still driving my Ranger now with 190000 miles I got on D plan back in 2003.
Truck sales will be the last to fall. All them remodeling cowboys are flush enough to justify a new ride. I sense the construction mania in many cities will start to fade soon. Perhaps by fall. Certainly, the Trump disillusionment is building and that will be key.
Overall, just about everything has peaked and is starting to decline as presented so well by Wolf in this blog.
Most people don’t have a clue as to what’s coming. This time around, and as long as Trump is in office, the government response will be scattered and ineffective.
No Mike they sure don’t just like last time and the time before that People NEVER learn that’s for sure More Silver?
What is our obsession with trucks in US? They are simply gas guzzlers, and yet you find even women driving trucks when a car is much more suitable. How about giving a one second thought to all the extra pollution that you are creating for no reason?
If you are a blue color worker who needs truck, fine; but buying gas guzzlers just because you want to look macho is just stupid.
Ease of entry/exit and visibility.
When I was in college, I dated a girl who was driving a truck. When I asked her why, she said, “Because I love it.”
I think that should answer your question. People buy things they like or “love.” But tastes vary, so you might not feel the same way about trucks.
There are also people who buy trucks because they need them. But that doesn’t turn the F-150 into the best-selling vehicle in the US.
I think i have yet to see an immigrant from India or China here on the West coast drive an F-150. Come to think of it, i have yet to see an immigrant from India or China drive an American car. What’s their secret ?
If they won’t even drive an American car, you think they’d ever fight the battle for America (on our shores or elsewhere) if one ensued? Or would they just go to the next land o’ freebies…? My immigrant relatives -never- would have driven anything other than American.
we are generally brainwashed (not that it is bad), that FORD is “Fix or Repair Daily”, a luxury we cannot afford… and reasonably told, that the Japanese cars have a long life…. therefore a good investment…. atleast you will not loose your downpayment, should you find yourself, in a position to fly back…
‘People buy things they like or “love.”’
Code for “egoistic overcompensation for low self-esteem”. Presumably you didn’t marry her.
I’ve noticed that Americans buy a lot of things they “like or love”, use them once, fill up their garages with them, and so end up parking their suburban assault vehicles on the street. Which if you ask me is exactly backwards.
It probably has something to do with why you Yanks drive on the wrong side of the road.
R2D2 They like the powerful feeling they get when driving a huge mass of metal around at high speeds Sort of like Tiger Woods and all the other celebrities with their black Escalades Yeah it’s pathetic but it’s human at least in our disfunctional nation of fools
Just for you Wolf, more Oz slang:
Ever seen a Toorak tractor?
From Urban dictionary:
“Toorak Tractor” is the name given to any of the glitzed up chrome-ridden “soccer mom/mum” SUVs often seen driving around Toorak; one of the more well to do suburbs of Melbourne, Australia. From BMW X5s and Land Rovers to Volkswagen Touraegs and Porsche Cayennes, some of them have the raw ability to navigate mountain passes and some of them don’t. The point is that for anyone who lives in Toorak, venturing out into the countryside in their glorified tractor is the furthest thing from their minds.”
You should see the lines of BMW’s, Mercs, Porsches, and Land Rovers dropping kids off at elite, private schools in the mornings and of course the same thing happens in the afternoons at pick up time.
The cops here love those times: school zones have the speed limit dropped to 40kph and they love to sit around with the speed camera’s and make their quotas.
School speed zones are in effect from 8:00AM to 9:30AM in the mornings and from 2:30PM to 4:00PM in the afternoons around schools. Does wonders for smooth traffic flow.
And to make it even more confusing some school zones are 40 kph 24 hours a day………..
Oh and then don’t forget that these variable limits don’t apply when schools have term breaks which are fixed even though some schools may be out and others are still open, except for the permanent zones…………
Not sure about the fines, but go 1 kph over in a school zone and IIRC you’ll get whacked around A$190…………
Toorak tractor… I love that.
“What is our obsession with trucks in US?”
Egoistic overcompensation for low self-esteem.
Or, in my case being 6 5.
I did the car thing when I was younger. It sucks.
They called them Chelsea tractors in London decades ago
My husband and I are 6’3″ and both drive Honda Civics. They fit tall people very well.
We can purchase any vehicle we want — but love the little Civics.
Tim – Try a Porsche. They seem to be really roomy inside.
I have a 2006 Xterra. Bought new and struck a damn good deal, sticker $269** talked down to $21k as I bought in 2007 at end of month. I work as an ICU nurse so I have to come in regardless of weather and live in the northeast. Also with a bad back getting in and out is so much easier on me. When it comes time for home improvement projects that truck cargo space is pretty handy. CRAP roads in PA (thats what the highest gas taxes in USA buy you!!) are going to cause less wear and tear on a truck then a car as my suspension is beefier then a car and so are the tires. Visibilty and lines of sight in truck while driving are very good. Very low insurance rates for 4×4’s. If a zombie apocalypse breaks out I will be able to plow them down to survive.
It now has 125,000 miles on it and the only major repair/failure was a fuel pump which Nissan replaced for me free of charge and out of warranty….. our family had bought a few Nissans from this dealership. I hope to get 250,000 miles out of it.
Those are a few of the reasons why I have a truck. Gas mileage SUCKS, but since it is paid off and I do all maintenance and repair work myself it costs me very little besides its crappy mileage.
I’m a small female and I drive a truck. It’s excellent for visibility, so I can have a better look at the traffic conditions ahead. For grocery shopping, it’s easier for me to load and unload shopping bags at waist height, meaning I don’t have to bend down into the boot/trunk to put/lift things out, which is better for my back. When there’s heavy rain and some roads flood, I can drive through without having to worry about my engine stalling. Because I drive a larger vehicle, the other crazy drivers on the road are less likely to hassle me. I’m a lot more visible to them and they know that if they try to bully me, their little “crush zones” sedan is more likely to come off worse in the altercation.
But thanks for that comment about women driving trucks and how a car is “much more suitable”. I’m sure you’re right.
This ad from today’s . Gainesville Ga Times. Why buy new when a real bargain is available. ” 95 Camry needs a passenger finder and grill and bumper $1000 706-949-4688″ .
A grand? Damn… Maybe I should consider selling my 95 Camry…. 191k miles and all….
How did that song by The Bottle Rockets go…
“Thousand dollar car it ain’t worth nothin’
thousand dollar car it ain’t worth #!$%
might as well take your thousand dollars
and set fire to it…”
:<)
The LA Times Orange County edition building on Sunflower Street near Harbour in Orange County, California is FILLED with new cars and trucks, there is a hidden lot of new unsold BMW’s near Edinger and the 55 freeway near a computer store near freeway entrance with a tall fence covered with a covering tarp but just at the top you can see all the new Beamers…about 300 yards away from a Beemer dealership
I too saw their big decline this month (great reason to use those pics, huh Wolf? lol).
You mentioned even their truck sales were down–I must note they don’t sell pickup trucks, only SUVs. If they sold a small pickup, they’d be sitting pretty good in the “truck” sector.
These appear to be imported from Korea vs. made here, right?
Waiting for deals….
I got a pop-up ad for $11,000 incentives on a pimped out F-250. That brought the price to $66,000, which is $11 per pound. A Ford Fiesta runs about $5.25 per pound. They’re both made of the same materials, more or less. Clearly there’s big profit in the trucks, not so much in the cars.
I am definitely going to look for every post you make !
Fabulous take !
But you have to factor in you’ll get 2-3x more miles out of a truck.
“Subaru sales jumped 12.1% to 56.135, with car sales surging 20% (!) to 31,605.” – Wolf
Interesting. We just bought one and got substantial incentives (though not so large as most other brands are offering).
Sometimes sedans are the only thing on the Subaru dealer’s lots (most of their SUVs are sold before they’re even unloaded I’ve heard)…I wondered if this was the reasoning for their car increase of 20%.
I be very careful about buying a new Subaru. The 2.5L Boxer engines have an oil consumption issue caused by defective rings that requires a short block rebuild. The head gaskets are notorious for giving out at around 80,000 miles. The CVT transmissions are apparently needing to be rebuilt or replaced well before they should be. Go to the Subaru forums – lots of unhappy owners.
Subaru did have the problems you mentioned in some instances – particularly with the 2014 through early 2016 2.5L Boxer engines.
They have improved their rings and head gaskets since then – most 2017s are too new to evaluate, yet.
Subaru is the only small crossover that offers a six-speed manual transmission – all the rest have CVTs only. The manual transmissions have been trouble free for years.
Subaru’s standard warranty on the engine and drive train is 3 years or 100,000 miles. An all-inclusive, 7-year unlimited warranty is available for about $1,200.
I looked into your last comment—from my research, Subaru’s power-train warranty is 5 years/60k miles. Of course, things could be different than what I see, but that’s what I’ve found.
I believe you said you were born in the 20s—you’ll appreciate the really good visibility Subaru offers vs. the competition. Other vehicles are AWFUL. Plus, their interior layout is very minimalistic/less fuss.
bee, the warranty on our 2017, Subaru Forrester is, indeed 100,000 miles on the powertrain – possibly in response to consumer worries about past problems.
Also, I was born in 1931 (you weren’t far off) and am tall and achy (osteoarthritis) – it’s great to be not only able to see out the windows well, but to get into the Forester in the first place – nice and tall.
Woops! – you are right about the basic powertrain warranty. I was confusing it with the extra coverage we bought – 7 years or 100,000 miles.
Does osteoarthritis occur inside the cranium?
Compared to my initial 2007 Subaru Forrester I’m underwhelmed by the quality of the 2016 transmission, to say nothing of the inferior ergonomics. I’m not surprised to read that they are requiring a rebuild. I would be interested to learn if Subaru is selling its cars to first timers who are merely reading Consumer Reports & aren’t aware of the disappointments
Hyundai still doing well in Canada. They sold 15000 cars vs about 40,000 in the US. Consider the Canadian market is about 1/10 (roughly), they are doing fine. In fact Hyundai outsells Nissan and Mazda. Heck even Kia outsells Mazda.
Hyundai is selling at about 1/2 of the volume of GM Ford and Chrysler … so not too shabby.
http://www.desrosiers.ca/pdfs/sales.pdf
On the paradox of unemployment decreasing, yet no increase of big purchases by American workers–excellent article in the NYT. https://www.nytimes.com/2017/05/31/business/economy/volatile-income-economy-jobs.html?src=me
It discusses how many “jobs” are basically variable shift work. From one week to the next, workers do not know how many hours they’ll be working, and thus what their monthly income will be. No way to budget for big purchases. (Not to mention the nightmare of trying to plan for childcare.)
No job security kills long term planning.
Mary – Unemployment decreasing means simply that people are *applying* for unemployment insurance. So, you lose your job, can get UI for maybe a year, than you drop off of the “unemployed” rolls. Doesn’t mean you found a job, it just means one less person is applying for help because they’re no longer eligible.
You might be slinging crack, or have become your neighborhood’s shadetree car mechanic, or have become a professional shoplifter, or sell your soul to Labor Ready for $50 a day, or anything. You might be one of the guys living along the river bottom and who picks up the scrap metal I leave out front here from time to time. Doesn’t matter, not applying for unemployment insurance == you must have a job.
Alex Don’t be so quick to knock scrap metal I got 600 dollars for a carfull of copper in 2008 Not a bad hours work if you can get it lol There are people here in Turkey that raise their families collecting scrap metal I respect them more than people like Jon Corzine or Blankfein but that’s just me
Frederick – Not knocking “scrapping” at all. Hell we’ve got whole families living on it here because there’s no other work. People are keeping their kids out of school so they can help out. We’re slowly but very surely becoming a society where if you make the wrong choice of parents you could end up being a member of a sort of Gypsy-like caste.
I’m looking for a cheap commuter car. A 2-3 years old Ford Fiesta 1.0 with low miles and decent gas mileage. I’ve noticed that a lot of off lease vehicles seem to be dumped into South Florida . Prices look to be 1-2k less than what they go for further north. What’s the strategy ? Auction the vehicles in an area that won’t hurt used and new cars values ?
Florida has insane dealer doc fees–be prepared to spend $500+ vs. anywhere else paying $0-100.
P.S. Fiesta is kind of garbage from what I gather. I think Ford is being sued right now (again?) for its garbage transmission (I don’t know the engine/exact trans etc. though). There have been 20 TSBs pertaining to it already. Caveat emptor.
P.P.S. You’re welcome :)
The Fiesta to get is the 3 cylinder 1.0.
Very popular in Europe and fairly reliable.
I’ve seen 3 year old low mileage examples
retail for 7.5k. I’d stay away from any Fiesta without a manual.
I didn’t assume you were one of the <3% of the populace buying a manual :) But yes, I've heard the manual is much better. 7.5k for a nearly new car isn't bad!
I had one as a rental a few years ago. A decent all-round economy car, except it felt like the transmission was failing at 10k miles, frequent weird slippage and surges.
I’ve been shopping for a 3 row SUV and haven’t found much in the way of deals. It seems as though once I say “I have financing through my credit union” and “I don’t have a trade in” the willingness to discount anything is gone.
In particular 2014 leased vehicles that are hitting the used market seem like they don’t have much room to move. We found one used vehicle we liked that had been on the lot for a few months. They were only willing to drop it $500 from $34,000. We walked, contacted them a month later, still wouldn’t budge.
Likewise there was another one for $28,000, had been on the lot for 8 months, quite a few miles, and had been in a minor accident (hit an opossum and damaged bumper). Didn’t want to move on that one at all.
At least to me it feels like:
1. Dealers might be trying to recoup for leasing too cheaply a few years ago
2. Dealers may have given too good a deal on a trade for a new vehicle
3. Because of 1 and/or 2, they need a trade or financing to do a “deal”. It’s not a deal but they could drop the price and make back the money elsewhere.
4. They are trying to not kill pricing on new models.
‘They’re a sign of massive overproduction hitting an unexpected slowdown in sales.’
I’m not sure what prevents Hyundai from simply lowering the cost on these excess vehicles. I’ve purchased many a discounted article of clothing, without the clothing being sent to a special desert location in the hopes its value will somehow appreciate.
Autos 50% off, why not?
Supply and demand- even if these excess vehicles are sold at cost its better than no sale. Why should autos be any different than consumer electronics or clothing?
The markup on clothing is 100%-plus. At higher-end stores, more like 300%-plus. In cars, the profit margins are thin. So 50% discount on a $30,000 car means that the automaker might lose $13,000 per sale… If they sell half a million vehicles at that loss, they’d rack up a negative gross margin of $6.5 billion. By the time they add overhead expenses, they’d drown in red ink. They’d be out of business in no time.
Profit margins on trucks are much higher, but they still aren’t high enough to allow much past 20% off.
If the dealer loses $13000 at 50% off or 15k that implies 15k+13k=break even.
Which means the profit margin on autos is only about $2000 or 7%! That is seriously low.
For small basic Fords the profit margin is a lot lower. This came out during the whole brouhaha recently about manufacturing them in Mexico.
The closest I saw to 50% off a car was when Mercedes-Benz was desperately trying to offload the last production A-Class. 33% off list price was the norm but some large dealerships went as low as 40% off in a desperate bid to eliminate their large stocks.
Since it was a rotten car with a well deserved reputation for high running costs and poor reliability it was still overpriced. ;-)
Last year Toyota went to 20-23% off to unload 2016 model years Auris hybrids. This was nominally due to “overstocking” but apparently it was due to the common issue in automotive these days: Toyota grossly overestimated demand and their dealerships ended up saddled with cars they struggled selling: the Auris is mostly a price sensitive company/penny-pinching old person car so the market for it is pretty stable.
Don’t know how pertinent this is but BMW is having large discounts on present (2017 model year) motorcycles, again due to overstocking.
It seems channel stuffing is alive and well these days.
Discounts on beemers ? WOW things must be bad
Huh? I drive an A-class “Elk”, but it’s a year 2002 with a FMV of 750 € in Germany. A ton of repair docs and lots of rust. To change the starter motor, one has to lower the whole engine, then grope blindly… Touch wood, the car has been a pleasure to drive, except the short wheelbase is felt on motorways. Nice engine, sweet manual gearbox and a good seat & visibility.
How’s Porsche doing? I bought several RHD Boxsters in the UK for about half the German price.
There are a ton of driveable cars out there in the sub $ 2,000 price bracket. Lovely S-class, BMW 7-series and Porsche Boxsters for a few grand. (The Boxster is pure fun with the rood down, try a used one before buying a MX3 or a Z4).
https://www.motor-talk.de/news/dieser-lambo-bruellt-seine-dekadenz-in-die-welt-t6050386.html has anyone seen this Lamborghini beast? Rare as hens’ teeth, I suppose.
Will Hyundai reduce production? Clogged distribution pipelines are a dreadful dilemma!
GM recently announced its decision to pull out of India. his came as a surprise as the Indian Car market has been growing the past few years and is expected to continue its growth.
Also, they pulled a fast one on the Auto Dealers by refusing to deal with the trade group for the dealers but forcing individual dealerships to sign seperate compensatory deals for each dealer, along with NDAs to ensure their silence.
Article which sums up the situation – http://auto.economictimes.indiatimes.com/news/passenger-vehicle/cars/gms-india-exit-the-episodic-events-of-shock-confusion-and-failure/58814677
Looks like this thing has gone global.
So, my question is: If I am running a car company in the current environment, what should I do to stay afloat? The things that I have been doing look like they’re not going to cut it.
Nice try, Elon.
Auto imports are piling up at the Port of Baltimore.
http://stockboardasset.com/insights-and-research/birds-eye-view-americas-largest-auto-port/
Doesn’t look like anything to me.
I see a gravel lot with a few hundred cars. Imported cars are rarely, if ever, loaded on transporters directly from the ship. They’re staged at the port or someplace else, and then organized for shipment to dealers.
But gravel? Those cars will have all sorts of damage when they arrive at the dealer.
How timely an article this has turned out to be.
Just yesterday my wife and I were on the way back from Canton (Texas) and we were on U.S. Hwy 67 just before where it crosses U.S. Hwy 287 in Midlothian, and we noticed acres and acres of cars in lots we’ve never noticed before. I guess that since we were in the motor home we were sitting higher than in our pickup or one of the Jeeps. It sure looked like it went on for ever! We were not close enough for me to be able to make out any of the car makes though.
Here are the coordinates if you’re interested: 32°29’38.3″N 96°59’13.4″W
It looks like the storage areas have grown since the last Google images were taken. The lots seem to have been expanded towards the highway now.
I don’t know, it could just be a transitional loading area since there are railroad spurs feeding this area.
This from 2009:
“The Auto Park is a 600-acre light industrial park that fronts US 67 on the north side of Midlothian. It is a secured, private facility with dual rail access. The Auto Park is 50% developed with a full service automobile distribution and processing center with intermodal facilities. MidTexas International works with each user to design a facility that meets its individual needs. Major tenants in The Auto Park include Mazda North America, Kia Motors America, Inc., and Toyota Motor Sales, USA, Inc.”
Well, the selection seems to be great – good news for prospective buyers!
At least all of those vehicles are not cluttering up a sales lot somewhere. That might lead to talk of “channel stuffing”.
I wonder how (or even if) this inventory build ties into that conjecture…..
It would be nice to know the storage numbers/lot size from 2009 when that quote was written (in the throes of the Great Recession) vs. the past few years (bigger sales numbers) and today (precipice of another fall?).
I don’t see too many knock-out deals. Prices are a bit lower than 6 months ago, but nothing major. They’re going to have to fall to get me onto their lot.