Interesting take on auto industry woes/falling new sales

[JExpedition07]

The video summary: Middle class families are being priced out of new vehicles and are switching to used transactions. CBS could not find any new vehicle on Fords lot that is affordable on an average family income after taxes! Truck transaction prices have increased upwards of 50-70% from 2009 to 2019 according to CBS, the biggest increase for autos in modern history.

 

[TobyU]

I've never bought a new car in my life and never will.

If I won the 1.3 BILLION lottery and was firmly set for life, I would still buy a used Hellcat or Demon etc. It might be 3-6 months old and in perfect shape (probably better than new condition) from someone who has to have a new Vette or something.
I would let them eat the loss.

 

[Cyclone]

Yet, I see new cars everywhere. Someone is buying them.

I can't watch this video now (I'm at work) but if it was like one that I saw earlier, they had a NJ family making under $50k trying to buy a new car. My thought, was... If money is tight, you don't need to give 10s of thousands to a dealer in depreciation losses. You can't afford it.

Car quality has never been better and used cars give you some much more for the buck.

 

[Mean_Dean]

The wife and I can afford the payments on a new Expedition, however when I upgraded from my Explorer last year to an Expy we decided to get a 2 year old (2017 EL Limited) one that was in good condition for less than half the price of a new one. 70K is just not a wise investment for a depreciating asset like a vehicle. My wallet is much happier spending 30K on the used one in great condition and has all the features I wanted/needed.

 

[JExpedition07]

The video sheds some light on financing. The automakers have set up their own financing firms that offer 7 and 8 year loan terms so that people can afford to buy them....kind of crazy.

 

[Michael Shepherd]

The automakers have set up their own financing firms that offer 7 and 8 year loan terms so that people can afford to buy them

As has often been said in these and other forums, the highest pressure sales tactics happen once you sitting in front of the dealers 'finance' person.

Ford's lending arm generates more profit than ever

Thank goodness for the finance guys.

Ford Motor Credit, the lending arm that's become accustomed to propping up the company in good times and bad, now generates about half of the automaker's profit, up from 15 to 20 percent as recently as 2016.

 

[carymccarr]

The video summary: Middle class families are being priced out of new vehicles and are switching to used transactions. CBS could not find any new vehicle on Fords lot that is affordable on an average family income after taxes! Truck transaction prices have increased upwards of 50-70% from 2009 to 2019 according to CBS, the biggest increase for autos in modern history.

Yeah I don’t know. There are lots of vehicles that can be had for $20k or less. A baseline f150 is around $25k and has way more features than an f150 from a decade ago.


https://www.autobytel.com/car-buying-guides/features/10-best-family-cars-under-20k-132101/

That said, reliability is so much better today that a family can buy a used vehicle with low miles (<50k) and have years of warrantied driving ahead of them.

 

[Boostedbus]

My take on it is there’s to much extra crap on an automobile nowadays and the consumer has to absorb the extra costs. It’s not all crap that people necessarily want either. There’s the start stop technology (not a fan),backup cameras,blind spot assist, auto park assist, air bags out the ***** ( not saying I’m against airbags),heated/cooled seats and steering wheels, navigation systems, built in DVD players, etc....etc..... just naming a few.... it’s definitely not like the old days when if you had AC , power windows and door locks then you had a loaded optioned out ride.....oh and if you had a power radio antenna and a hood ornament you were the bomb!

 

[carymccarr]

And then there’s this...inflation. So a $28k car in 2009 is a $34k car today simply from inflation. That accounts for 20%+ of the 38%.

Then you need to consider that the report is on what people PAID for a car in 2009 which was the height of the recession. Of course people bought much less expensive vehicles during a market/economic crash. Makes sense that people would be willing to pay 18% more during a period of relative economic stability than they would during the worst economic collapse since the depression.



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[TobyU]

And then there’s this...inflation. So a $28k car in 2009 is a $34k car today simply from inflation. That accounts for 20%+ of the 38%.

Then you need to consider that the report is on what people PAID for a car in 2009 which was the height of the recession. Of course people bought much less expensive vehicles during a market/economic crash. Makes sense that people would be willing to pay 18% more during a period of relative economic stability than they would during the worst economic collapse since the depression.



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The inflation raising the cost is a valid argument however not everything has gone up with inflation. There are some things, actually quite a few, that due to other reasons or factors, we get for the same price or cheaper then we did even in previous years dollars.

So, since the buying power of the same dollars is less than it used to be due to inflation, that means that these other factors like decrease manufacturing costs, competition, Etc have greatly lowered the prices or cost of production of those products.

 

[TobyU]

My take on it is there’s to much extra crap on an automobile nowadays and the consumer has to absorb the extra costs. It’s not all crap that people necessarily want either. There’s the start stop technology (not a fan),backup cameras,blind spot assist, auto park assist, air bags out the ***** ( not saying I’m against airbags),heated/cooled seats and steering wheels, navigation systems, built in DVD players, etc....etc..... just naming a few.... it’s definitely not like the old days when if you had AC , power windows and door locks then you had a loaded optioned out ride.....oh and if you had a power radio antenna and a hood ornament you were the bomb!

100% agreed! I don't want any of these new features and safety crap. I don't want what they call a new car today. I want a brand new perfect condition 2000 to 2005 model. I want a car with a normal key you put in the ignition and start. I want a key fob that unlocks my doors. I want standard delay wipers and not a $1,500 rain sensing windshield. I want basic cruise control that cannot apply the brakes downhill. Just simply power windows AC cruise control and delay wipers which is the basic package that cars have been coming with since the mid 80s.
I don't even need power seats. I'm completely okay with manually adjusting seats.
I just want a new condition car, not this crap they put in new cars today.

 

[JExpedition07]

You can buy that, it’s called a base model Honda Accord. Silverado 1500 work truck trim is very basic.

 

[TobyU]

Yeah I don’t know. There are lots of vehicles that can be had for $20k or less. A baseline f150 is around $25k and has way more features than an f150 from a decade ago.


https://www.autobytel.com/car-buying-guides/features/10-best-family-cars-under-20k-132101/

That said, reliability is so much better today that a family can buy a used vehicle with low miles (<50k) and have years of warrantied driving ahead of them.

I actually think the quality and longevity of these cars maxed out around 2003 to 2010. It does depend on the make and model but somewhere in this ballpark. Cars are going the other way now unfortunately. They're not going to hundred 250,000 miles without ever having a valve cover or timing chain cover off. They are having problems like cam phasers and valve related issues or timing chains as early as 90-110k and people are accepting this as a normal acceptable repair at cost between 1200 and $1,800.

To prove this point, you could take 20 2002-2004 brand new condition super low mile or even knew if we could go back in time expeditions dr. And now take 20 brand new Expeditions, or take 20 mm 9 expeditions. Now drive them all for 12 years and put 175-200k miles on them and look at the number of repairs and the types of repairs needed for all of the vehicles.
He was find a lot more engine issues and the newer ones.

When people start talking about a vehicle being on the road for 15 years or the engine durability lasting 250,000.. That means nothing if that engine has had the timing chains replaced, valve train components, or even if the valve covers have been off. Call me spoiled, but I have had fleets of vehicles that went over 200,000 miles that never needed any engine repair whatsoever.

They only tell you how many miles The Engine had when they junked the vehicle or when they sold it. They never disclose the fact that the engine might have had repairs versus another engine might have never had anything other than oil changes and a coolant flush.

 

[carymccarr]

So, since the buying power of the same dollars is less than it used to be due to inflation, that means that these other factors like decrease manufacturing costs, competition, Etc have greatly lowered the prices or cost of production of those products.

 

[carymccarr]

They are having problems like cam phasers and valve related issues or timing chains as early as 90-110k

Not having an engine issue until 110k miles is light years better than the ‘old days’

 

[TobyU]

My God man why do you want to argue about everything??

What did I overgeneralize now that you've read something else into or inferred something else that I probably didn't mean in the first place??

I think you were saying that since newer cars are so much better and last longer then old cars that people can buy good low mileage cars and get many many years out of them.
Am I correct so far??

I agree with you if we're talking about comparing newer cars to 1950s 60s 70s and 80s.

I don't agree that newer cars, however we haven't specified what year range your original statement meant by new, are longer-lasting than cars from right around 1998 up until 2010.

Maybe you were considering those and referring to those in your comment about newer cars. I don't know because you didn't give a year range.

Maybe we are in agreement here.

I am saying that if there was ever a sweet spot in the longevity and the abilities to keep a car 4 a large number of miles with very few to no internal or engine repairs that that sweet spot would be between around 96 and up to somewhere around 2008 to 2010. Some Vehicles like the Ford trucks you would have to cut it off at 2004 because a lot of the problems came in with the 2005 3 valve.

So while the newest cars of the past five to seven years are still far better and longer-lasting with longer last two engines and fewer major repairs needed then cars were up until the late 80s... They're not quite as good as the generation of cars they just replaced.

I will take a fleet of 4.6 and 5.4 2 valve engines and put them a controlled comparison test with a fleet of mm 8 or 2012 5.4 3 valves
And guarantee you more of the first gen engines will go 250,000 miles and still have their original timing chains and gears, and still have the original valve covers in place I still have their original water pump for that matter.

That is exactly how it would work.

 

[TobyU]

Another note on longevity... It's kind of like a little over a decade or so ago there was a commercial for the Pontiac Grand Am that said of all used cars on the road there were more grand-am's still on the road after 15 years than anything else. I hope they meant by percentage.

I'm sure that was a factual statement but that in no way tells us that they are better cars really. Maybe people just like them more and spent more money to keep them on the road.

People can make a lot of assumptions going from that statistic but these assumptions wouldn't necessarily be true.

It'd be like going back 30 to 40 years ago and finding out that Buick had the fewest number of miles on them after the same number of years as other cars. What does this mean?? You could assume lots of things but maybe it's just because the old people that bought Buick back then didn't drive much.

 

[carymccarr]

My God man why do you want to argue about everything??

What did I overgeneralize now that you've read something else into or inferred something else that I probably didn't mean in the first place??

I think you were saying that since newer cars are so much better and last longer then old cars that people can buy good low mileage cars and get many many years out of them.
Am I correct so far??

I agree with you if we're talking about comparing newer cars to 1950s 60s 70s and 80s.

I don't agree that newer cars, however we haven't specified what year range your original statement meant by new, are longer-lasting than cars from right around 1998 up until 2010.

Maybe you were considering those and referring to those in your comment about newer cars. I don't know because you didn't give a year range.

Maybe we are in agreement here.

I am saying that if there was ever a sweet spot in the longevity and the abilities to keep a car 4 a large number of miles with very few to no internal or engine repairs that that sweet spot would be between around 96 and up to somewhere around 2008 to 2010. Some Vehicles like the Ford trucks you would have to cut it off at 2004 because a lot of the problems came in with the 2005 3 valve.

So while the newest cars of the past five to seven years are still far better and longer-lasting with longer last two engines and fewer major repairs needed then cars were up until the late 80s... They're not quite as good as the generation of cars they just replaced.

I will take a fleet of 4.6 and 5.4 2 valve engines and put them a controlled comparison test with a fleet of mm 8 or 2012 5.4 3 valves
And guarantee you more of the first gen engines will go 250,000 miles and still have their original timing chains and gears, and still have the original valve covers in place I still have their original water pump for that matter.

That is exactly how it would work.

I was referring to the part I quoted. Either I didn’t understand what you meant (possible). But inflation doesn’t lower the real costs associated with production.

 

[TobyU]

Not having an engine issue until 110k miles is light years better than the ‘old days’

Okay, I see we probably are in agreement here. You're talking about the really old days.
Heck, I can do you one better. In the really old days you had to put new rings in your car by 50,000 miles because the compression was so low.

 

[TobyU]

I was referring to the part I quoted. Either I didn’t understand what you meant (possible). But inflation doesn’t lower the real costs associated with production.

So you were talking about my inflation comment and not my certain Decades of cars being better or worse than other Decades of cars.

Okay back to inflation. I never meant to say that inflation lowers the cost of production. It should raise the cost of production at least it would if you were buying the same materials you bought previously in most situations.

What I'm saying is not everything has gone up and cost which inflation always lowers the buying power of money so in theory everything should go up in cost. There are a number of other factors that determine the overall price of an item so if these other factors have lowered production cost, distribution cost, advertising, Transportation Etc then they could easily offset the increase of inflation so the overall price could go down.
Now mostly, in a capitalistic world, the company just goes ahead and keeps charging the same old pricing and raises it up because of inflation because that's what people expect and they just reap the extra profit.

That's what I do. Just take that extra free money because you can. That might be wrong though and then we would have a discussion on why things are wrong because they're just wrong.

Actually I'm a total Cheapskate and a harp on that being wrong all the time. It's funny that I don't always practice what I preach though. I have run two separate companies and one of these companies I am super cheap but still provide super quality service that everyone just absolutely loves.
The other one, regardless of my costs which are very greatly over the two and a half decades I have had this business, I just charge whatever the market will bear.
Why not. I don't really mean the maximum the market will bear but I mean charge what everyone else is. Stay right up there in the top of of the price range.
I could do it for half the price or 1/3 the price and maybe work a lot more but maybe not make any more money. You have the whole high volume low dollar versus low volume high dollar conundrum.

The back to things we buy cheaper than what we used to. Because of super reduced costs of the manufacturers, we are buying some things now at the same price or cheaper then we were 25 years ago. So even with inflation the prices on these islands has not gone up.