Auto market softening?

[zeitgeist57]

http://www.thetruthaboutcars.com/2017/04/gm-works-10-weeks-downtime-2017-factory-retooling/

 

A lot more conversations in the market about the softening of U.S. new-car sales. I'm not being a downer, just observing a market that's had YoY growth for the last 8 years and a LEI (leading economic indicator) for the health of the U.S. economy.

 

97 days of inventory - where on average a new car that makes its way to a GM dealer lot takes 97 days to sell - is scary stuff.

 

Something to keep an eye/ear on.

Edited April 14, 2017 by zeitgeist57

[Geeto67]

925,000 unit surplus? wow.

 

The motorcycle market has been soft since the tail end of 2015. Being a smaller market and motorcycles being a "luxury" good in the states it acts as a sort of bellweather for upcoming trends in the much larger and slower to move auto industry.

 

A think a lot of this is politically motivated, Trump's policies have been positive for some areas of the economy and bad for others. His us "Protectionist" approach to industry (like rejecting NAFTA) is actually mostly bad for the auto industry as well as farmers and other areas of heavy mfg. (http://knowledge.wharton.upenn.edu/article/trumps-policies-economy-wharton-experts-weigh/)

 

In general people are scared and when they are scared they try to be as liquid as possible. That means they don't buy expensive assets that lose half their value over the course of 5 years.

 

I'm still skeptical about how this will affect the used market. On the one hand, fear will keep demand low as people avoid vehicle purchases unless necessary so prices should go down, but on the other new car buyers may shift to the used market which may offset the decrease in demand. At this point I am guessing it will go down as well but I easily could be wrong about it.

 

Either way it's a good time to buy collector vehicles as they seem hardest hit by the trend at the moment. The economic uncertainty seems to have even stalled the air cooled Porsche bubble for the moment and a lot of cars that were $30K+ a year ago are $20K now.

[El Karacho1647545492]

I think it's a function of a number of factors that have been a long time coming. Cash for Clunkers had a very long term affect in the car market by taking away a ton of supply in the market. Used cars became more expensive, so all of a sudden short term leases, bolstered by historic interest rates and aggressive lending to slightly less qualified individuals, became much more popular in the interim.

 

We're now into the 3rd cycle of lease turn-ins. 2009-2012ish, 2012ish-2015ish. 2015ish-early 2017 now. As a result, there are a LOT of cars entering the previously scarce used market, and those cars are of good quality, lower miles, and with better fuel tech. These used cars are lasting longer and there's less incentive to buy new now that used prices are dropping again.

 

IMO it's not an indicator of a weakening economy, it's simply a result of manufacturers riding the high of the previous years' success and only now responding to market conditions.

 

Honestly, 90-days supply for domestic manufacturers is not bad at all. 45-60 day is ideal, but under 100 is well within reason. They just need to shrink it down a bit and I think this will.

[Miller]

A think a lot of this is politically motivated

 

http://i.imgur.com/s90Weo7.gif

[Geeesammy]

There are only so many people who can afford new cars. Once those who can have bought them or decided to keep their paid off car then this happens. Its hard to justify buying new....especially trucks when you lose $10,000 when you sign on the line and another $5,000 at the first oil change.

 

Not quite that severe but still. My truck was 65% of what it was new, and I got just as good of warranty for no additional money.

[aussiek2000]

The industry is doing it to themselves. Hell, its hard to buy a new truck or SUV without spending 40, 50, 70k+

[RedRocket1647545505]

The industry is doing it to themselves. Hell, its hard to buy a new truck or SUV without spending 40, 50, 70k+

 

I just came here to post this. I've been waiting 5 years to buy a new truck because I simply refuse to pay $50k on one. That's fucking ridiculous. I don't feel any sympathy for them.

[oh8sti]

The industry is doing it to themselves. Hell, its hard to buy a new truck or SUV without spending 40, 50, 70k+

 

bingo -

 

I won't buy new just for this reason. Every year they raise the price of a new Tahoe/yukon/escalade by $2,000 for no reason. In 2003 a new Escalade premium cost $54,000 and change. In 2013 a New Escalade premium cost $74,000 and change. Thats not economical inflation. Thats a fat hog about to get slaughtered.

 

This pricing model is true for most new cars that aren't a fucking Kia. They are pricing themselves out.

[Robochan]

Honda slowed production the beginning of the year. Truck and suv sales are still strong but our car market is still declining.

[Turbs3000]

I work with Chrysler turn backs and the cars set to turn back in 2017 will literally double the 2016 and 2015 numbers. The used market will be flooded this year with turn backs from all manufacturers so expect new units to slow back down to where they should be.

[carl1647545492]

The Middle class is the new surviving class,70 million people have "service workers" type incomes with the pressure of still paying student loan debt over their heads and the prospect of putting their kids though college,yeah I would say a new car is down the list a bit.

[RedRocket1647545505]

On the subject of the economy and outrageous pricing, can someone tell me who keeps renting all these high-end apartments that keep popping up all over Cbus? $2,000/mo for a small 2br apartment is insane, yet, somebody must keep renting them because they keep building them. Are there that many young, well-to-do people in Cbus or are people just that dumb with their money? That's one hell of a mortgage payment that you're just pissing away.

 

A guy I work with just told me the other night that he found an 'awesome' 1br apartment in the Short North for $1,400/mo. I already knew he was an idiot, but I made sure he knew that I knew that.

[mrs.cos]

On the subject of the economy and outrageous pricing, can someone tell me who keeps renting all these high-end apartments that keep popping up all over Cbus? $2,000/mo for a small 2br apartment is insane, yet, somebody must keep renting them because they keep building them. Are there that many young, well-to-do people in Cbus or are people just that dumb with their money? That's one hell of a mortgage payment that you're just pissing away.

 

A guy I work with just told me the other night that he found an 'awesome' 1br apartment in the Short North for $1,400/mo. I already knew he was an idiot, but I made sure he knew that I knew that.

 

There is not enough housing in columbus right now to support the population and so many are renting. That's why there is an apartment boom AND a housing boom right now.

 

houses in my neighborhood are selling the same day they are put on the market, some are sold BEFORE they are even listed.

 

Columbus is doing well right now..

[RyM3rC]

Are there that many young, well-to-do people in Cbus or are people just that dumb with their money? That's one hell of a mortgage payment that you're just pissing away.

 

There have been piles and piles of new tract-built homes on the NW side now for 3 years and counting. I have no idea where all the $250k+ buyers are coming from, but people keep moving in.

 

No new roads though. Guess traffic will just get even worse.

[aussiek2000]

bingo -

 

I won't buy new just for this reason. Every year they raise the price of a new Tahoe/yukon/escalade by $2,000 for no reason. In 2003 a new Escalade premium cost $54,000 and change. In 2013 a New Escalade premium cost $74,000 and change. Thats not economical inflation. Thats a fat hog about to get slaughtered.

 

This pricing model is true for most new cars that aren't a fucking Kia. They are pricing themselves out.

 

and now we are getting escalades in for over 100k.

[POS VETT]

http://www.thetruthaboutcars.com/2017/04/gm-works-10-weeks-downtime-2017-factory-retooling/

 

A lot more conversations in the market about the softening of U.S. new-car sales. I'm not being a downer, just observing a market that's had YoY growth for the last 8 years and a LEI (leading economic indicator) for the health of the U.S. economy.

 

97 days of inventory - where on average a new car that makes its way to a GM dealer lot takes 97 days to sell - is scary stuff.

 

Something to keep an eye/ear on.

 

Take a look at lease deals nowadays. Quite a number of vehicles available for under $100/mo with or without down payment.

[10phone2]

I have noticed that the beater car prices on craiglist is starting to fall since tax time has come and gone. It's unreal what 3k can buy these days.

[Diamonds]

Well, I can certainly tell you that the machine gun market has softened...

[BDHG940]

There is a lot of used vehicle inventory out there.

[Diamonds]

Carmakers are like the corporate employee that gets so wrapped up in attempting to look/be innovative that they never stop to examine if what they are doing is logical. So they pump all this money into the development of features that no one would choose to use and then the price hikes up. My new truck turns by itself because it senses the lines in the roads... the fuck is that?

[Mallard]

bingo -

 

I won't buy new just for this reason. Every year they raise the price of a new Tahoe/yukon/escalade by $2,000 for no reason. In 2003 a new Escalade premium cost $54,000 and change. In 2013 a New Escalade premium cost $74,000 and change. Thats not economical inflation. Thats a fat hog about to get slaughtered.

 

This pricing model is true for most new cars that aren't a fucking Kia. They are pricing themselves out.

GM has been pushing Cadillac upmarket on purpose, although a Yukon Denali is $80k now too.

[Mallard]

I work with Chrysler turn backs and the cars set to turn back in 2017 will literally double the 2016 and 2015 numbers. The used market will be flooded this year with turn backs from all manufacturers so expect new units to slow back down to where they should be.

And used car prices have already been falling, which will hurt lease prices, and the cycle repeats. Sales have been really high for a few years now, yet the average age of vehicles on the road continues to increase. Sure, cars are more reliable than they used to be, but I still have a hard time believing that the fleet isn't turning over sufficiently.

[Mallard]

Carmakers are like the corporate employee that gets so wrapped up in attempting to look/be innovative that they never stop to examine if what they are doing is logical. So they pump all this money into the development of features that no one would choose to use and then the price hikes up. My new truck turns by itself because it senses the lines in the roads... the fuck is that?

These systems have to be on the vehicle in order to get a 5-star rating. People buy based off safety ratings, insurance costs are influenced by safety ratings, so OEM's put it on. You can configure the system off.

 

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[Geeesammy]

Carmakers are like the corporate employee that gets so wrapped up in attempting to look/be innovative that they never stop to examine if what they are doing is logical. So they pump all this money into the development of features that no one would choose to use and then the price hikes up. My new truck turns by itself because it senses the lines in the roads... the fuck is that?

 

This

 

Too many features that are cool, but not really practical or worth it. Backup cameras are nice, parking sensors too. Anything beyond that is kind of a waste and just encourages distracted driving.

[Mallard]

This

 

Too many features that are cool, but not really practical or worth it. Backup cameras are nice, parking sensors too. Anything beyond that is kind of a waste and just encourages distracted driving.

Blind Spot Warning/indicator is very useful. Lane Keep Assist only comes on when you're drifting over the line; it's a countermeasure for distracted driving. It does that steer enough to drive you down the road while you don't pay attention.

 

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