Subprime Auto Bubble Bursts As "Buyers Are Suddenly Missing From Showrooms"

Discussion in 'Political Opinions & Beliefs' started by PT78, Apr 3, 2018.

  1. PT78

    PT78 Banned

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    Last edited: Apr 3, 2018
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  2. waltky

    waltky Well-Known Member

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    Will this create a boom for formerly new cars...

    ... which are now re-possessed used cars?...

    ... The automobile version of toxic assets?
     
    Last edited: Apr 3, 2018
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  3. doombug

    doombug Well-Known Member

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    Why are cars so expensive when we have cheap steel and aluminum as well as cheap foreign labor? I thought globalization made things cheaper....guess not.
     
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  4. Quantum Nerd

    Quantum Nerd Well-Known Member

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    I have said this many times. The current car marketing trajectory is unsustainable.

    Even the most inexpensive sub-compact car has a total cost of ownership in the range of $4,500 a year. Which family on median wage can afford this, or let alone two of those? But you see them driving large SUVs with total annual cost to own of $9,000.

    The only way this works is by extending car loans further into the future (now 6 years) and rolling over loans into the next car. In essence people are drowning slowly in their car loans.

    This is not a good business model for the car industry, but, as always, they take short term gain over long term sustainability.

    Instead of looking to make cars more and more expensive by adding features people don't need but think they need, the goal should be to make cars simpler and cheaper. Of course, there is less profit in cheaper cars....
     
  5. Lesh

    Lesh Banned

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    And I'm seeing more and more leases offered...and probably accepted.

    I buy a car and keep it maintained well past the warranty date. It sucks that in order to keep payments low I have to finance for 6 years but I get 4-6 years "free".

    Were more people to do that, the car market would be screwed. It looks like they are to some degree.

    Happy leasing
     
  6. PT78

    PT78 Banned

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    Unless you can write off the payments, leases cost consumers more then financing in the long run...but the payments are lower - so many people take the lease.
     
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  7. Chuck711

    Chuck711 Well-Known Member

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    One of the few things I can't pin on Trump

    After a pent up demand for cars coming out of the Great Recession the Auto companies have forecasted a downturn which will probably last for a few years

    Typical up and down cycle for cars. Housing is down. Dollar has tanked for 15 months........... Likely headed into hopefully a mild recession
     
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  8. Quantum Nerd

    Quantum Nerd Well-Known Member

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    That's the problem, consumers have been trained to look at monthly payments instead of total cost to own - to their own financial detriment.

    The other problem is that fewer and fewer people can afford new cars. That has propped up the used car price. That's why we have been buying new, because you rarely get a deal by shopping for 1-3 year old cars. It is kind of like the flattening yield curve in bond duration, sometimes economics are counter-intuitive.
     
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  9. Stevew

    Stevew Well-Known Member

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    True.

    A better way to look at this is from an annual income versus car prices. It involves looking at how many hours it takes to buy a car 30 years ago versus how many hours it took to buy one today.

    I bought my first new car two years out of high school. I probably could do the same now on a similar 36-month payment plan but it would cause a great deal of financial stress to do so now. And this ALSO shows my real income hasn't changed much since I graduated high school yet I have a degree in economics with tons of working experience now.

    I recently paid CASH for an older car and also got it for a third less than the blue book value.

    Steve
     
    Last edited: Apr 3, 2018
  10. opion8d

    opion8d Well-Known Member Past Donor

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    Good move. I did the same.
     
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  11. tomander7020

    tomander7020 Well-Known Member

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    I think you can pin the weak dollar and upcoming recession on Trump as well as the stock market "correction". His tweets and executive orders are poisoning the US economy. Granted, the weak dollar should be helping US exports, but Trump has also torpedoed the export market.
     
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  12. ButterBalls

    ButterBalls Well-Known Member

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    I don't know about that, last car I bought new was zero down and zero interest. So other that tax and license, the sticker price is all that I spent and that was under 18k (Ford Focus).

    There is a deal going on right now at the Nissan dealer no down, no interest for 36 months and Buy a truck and get a SUV free.. They do this every spring as long as I remember, might be a regional thing.

    Point being, shop around, used car sales has historically been for the sucker or those with less than good credit and always taken advantage of!
     
    Last edited: Apr 3, 2018
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  13. Pycckia

    Pycckia Well-Known Member

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    Why is there less profit in cheaper cars?
     
  14. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Of course, if it is 0 down and 0 interest, the price of financing is already built in the sticker price.

    That's what ticks me off, if you are a cash buyer like myself, you get few incentives, because the dealers make more from the financing than the actual car sale.
     
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  15. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Do you really have to ask this question?
     
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  16. ButterBalls

    ButterBalls Well-Known Member

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    At 18k out the door? I paid more for my Indian ;) Regardless, the point is that's a pretty fair auto for the dollar, so why get hosed on a used car, other than less than good credit..
     
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  17. Golem

    Golem Well-Known Member Donor

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    Good point. Maybe we shouldn't have given GM back to the private sector.
     
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  18. Pycckia

    Pycckia Well-Known Member

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    Yes I do. A 10% markup on a cheap car yields the same 10% profit as a 10% markup on an expensive car.

    So what makes cheap cars less profitable?
     
  19. doombug

    doombug Well-Known Member

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    Yeah, everything from the government is so inexpensive.....not!
     
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  20. Golem

    Golem Well-Known Member Donor

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    Well now, let's see. Is there anything we can compare? Can't beat $0.50 to send a letter from coast to coast.....
     
  21. Stevew

    Stevew Well-Known Member

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    True, but that's not a valid comparison. The USPS was created with an infrastructure that private delivery companies can NOT compete with. Amazon is closing in fast though. My Amazon Prime costs less than 3 rolls of stamps per year and includes entertainment and other benefits.

    Steve
     
    Last edited: Apr 3, 2018
  22. vman12

    vman12 Well-Known Member Past Donor

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    LoL you think you're saving money!
     
  23. BleedingHeadKen

    BleedingHeadKen Well-Known Member Past Donor

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    Well, thank goodness we have a quasi-government controlled, centrally planned monetary system designed to create cheap credit and indebt just about everyone to the point of bankruptcy.

    But, you know, blame the automakers, and, by extension, capitalism.

    Right, it's all the expensive bits on the car. Let's ignore the tremendously expensive government mandates that would also price the poor and lower middle-class out of the market if it weren't for that government-mandated monetary system designed to load them up on debt so they can buy more car than they can afford.
     
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  24. vman12

    vman12 Well-Known Member Past Donor

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    No one forces you to go into consumer debt, and it's no one's fault if you go into consumer debt but yours.
     
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  25. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Last edited: Apr 3, 2018

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