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

If it weren't for the bad debt behind the auto bubble, we'd all pay a lot less for cars.
Bet the banks won't be forced to take their lumps when it pops. Government will rescue them again

 

You can't have a free market if there are market regulations.

 

The difference in cost to produce an economy car and an SUV is like 2000 dollars, but SUV's sell at double the price.

 

If companies had ethics there would not be a need for many regulations.

 

Is it really? I didn't know that.

 

Companies don't have feelings or morals. People do. People make up governments as well as companies. Expecting governments to have ethics when companies don't but they're made from the same basic components.... that's silly. At least the companies don't have a monopoly on force. At least the companies can't force you to buy a product (unlike the government).

 

In most cases repairing them is far cheaper than buying a replacement too.

I plan on keeping my current car until the engine goes bad, then I'll pull it out, fix it, and put it back in.

 

Everything is relative to income, I assume you understand that.

Also, to me, vehicles are meant to be enjoyed (they are toys as well as a necessity for me) hence why we prefer to buy something we will enjoy driving and spending time in. My wife loves the feel of a German car, and will no longer consider anything less (Japanese or American) as a daily driver. I’m a F-150 truck guy for example, and wouldn’t want anything else as my daily driver.

My bike (see avatar) is a 100% weekend toy for example, not a single practical thing about it. Everyone has their own thing is what I mean.

 

That is pretty much the business model that industry has been pursuing for 40 years.

Leasing eased the pain. But it also devalued the luxury car market.


Today, every single luxury brand is selling product in the medium price market. So you have Mercedes Benzes, Lexus, and Cadillacs competing directly with Accords, Camrys and Equinoxes.

And if they are leased, the monthly is about the same as the cheaper cars.

Since the whole auto marketing business is centered around discovering how much the customer is willing to pay per month, disregarding nearly all other factors, this model is unlikely to change.

 

That's Obama for ya !

 

Your claim is based on nothing.

In reality, nearly all major world auto makers make all their product on two or three platforms.

Thus, the Toyota Camry is essentially the same car as the Lexus ES. The only real differences are outer body panels, upholstery, and tire and wheel sizes. Thus, the production cost is similar on both cars. And the profit on the Lexus brand makes it a more profitable car because they price it higher because the customer thinks he's getting more for his money, when he's actually buying largely the same car.

The auto companies have leveraged this with leasing, allowing more people to buy the higher margin product.

But the real bonanza is in the truck and SUV market.

People routinelypay $50-$70 grand for a tricked out F-150 or Silverado, when these vehicles only cost a few thousand more to make then the base model. The base F-150 lists at $27,700. Yet customers routinely shell out twice that much for one with essentially bolted on features, which only require a few extra stations along the assembly line to add.

This makes trucks, and SUV's VERY VERY profitable.

This is true of even small SUV's. although the effect is less pronounced.

Small SUV's like the Equinox, the Ford Escape and the Honda CRV are essentially station wagon versions of compact sedans, jacked up a few inches in the air.

In the case of the Escape, the car itself is identical to the Focus it's based on except for the outer body panels and the seat mounting brackets. Yet the list cost of the Escape is $4000 more than the Focus, even though they cost nearly the same to produce.

 

Neither would sell for nearly that much if they didn't hand out car loans like candy

 

That's true. But car loans and service work are the two profit centers of any auto dealership now.

 

The people who run the companies should have ethics. The only thing that keeps our government officials from running wild is they are elected by the people.

 

Its true thats why the automakers had such a hard time with the environmental regulations, high gas prices, and an economic crash.

 

I didn't make a claim, I asked a question.

The answer seems to be that all the cars are cheap, but they charge more for certain models and the public is willing to pay the extra.

 

Really? They're coming off of record years.

 

They carry uaw pensions and other obligations that are dependent on suv sales

 

Providing a link as "support" for a statement that the link does not support, which is what you did, is dishonest.

And there you go again.

First of all, submitting an opinion as "support" for a proposition stated as "fact" is not honest either. Second, in the right-wing orthodoxy, tax exceptions is not a "cost". So I will need to see you be consistent when we talk about the cost to taxpayers of tax exemptions for the rich. Third, if there is any case in which tax exemptions are not a burden on taxpayers, this is it! The USPS receives tax exemptions because, in return, it provides a service to the people. A service mandated by the Constitution. All government agencies receive these tax exemptions. Why would the USPS be different? And finally, this whole discussion was about the price of service. Nothing you have written contributes even an iota to that subject.

You are obviously trying to justify your red herring based on just the title of an opinion piece. You didn't even bother to find out first if the content actually supported your position. Or... on the other hand... maybe you did. And this is why you failed to send the link in your original response. Either way, your dishonesty has been exposed.

 

What does that have to do with what you are responding to?

 

You claimed that private entities can't compete with government entities and obviously are incorrect in that assumption.

 

Oh good grief. Why do you just completely ignore things that are right in front of you?

Here is USPS income for the last almost 100 years.



Now explain to us where the money comes from that keeps the USPS solvent, because it certainly isn't their non-existent profits.

 

Read again. This time, make an effort to read all the words. Use a dictionary if there are any you don't understand.

 

A lot of this is on the buyer, of course. Why do people keep shooting for SUVs when they can get a sedan or a wagon? I keep my cars small and efficient, and would even if I were buying a family vehicle. A wife and 2.5 kids wouldn't need a Sherman tank-sized vehicle with video screens in the rear and single-digit gas mileage (or whatever those things actually get).

 

I understand all the words.


You're wrong, on all counts, in the deepest sense of the word.