Posted on 10/30/2019 10:03:12 AM PDT by Vigilanteman
Key Points
•Auto sales have crashed, the unsold inventory and delinquent debt may worsen well into 2020.
•This auto-led downturn may be less damaging to the global economy than the housing bust was 10 years ago, but automobile manufacturing still accounts for a sizable amount of production, debt, and jobs.
In 2009, the world economy was starting to climb out of a housing-led downturn. Ten years later, a downturn in auto production following tumbling car sales is driving a bust in manufacturing and threatening a recession for the global economy. This auto-led downturn may be significantly less damaging to the overall economy than the housing bust, but is no minor threat considering the amount of production, debt, trade, commodities, and even jobs tied to the making of automobiles. The auto inventory and debt hangover may last well into 2020.
Manufacturing-led downturn
Manufacturing output has slowed sharply around the world, slowing overall economic growth. This can best be seen in the resulting drawdown of excess inventories acting as a drag on economic growth.
(Excerpt) Read more at schwab.com ...
My dad was a builder - from just before WWII (his dad finished the house when he went off to war) to about 1984. During the Jimmy Carter years he told me “Back in the day you could buy two brand new Cadillacs from the profits on a house. Now I’m lucky to get the down-payment on a Chevy.”
Of course that was the Carter years with 20% interest on a mortgage and nobody was buying. He stuck with it and made out okay in the end.
We always buy our cars. Recently bought a new car, and the salesman assumed we would lease (because so many do) and was surprised we bought it.
We don't put much mileage on our cars, and they last for decades, made more sense to own it until it falls apart. We have a 25-year-old car and 20-year-old truck still in relatively new shape with low mileage and maintenance costs, and we own them.
For people who put thousands of miles on a car each month it makes sense to lease; after a few years they have nothing although up-front costs were low. For people who don't drive much and baby their cars, it makes sense to own, costs are low averaged out over decades; after a few years costs are minimal and it's theirs until it falls apart decades later.
I could probably do it but haven’t done any major engine work since the late 80s.
Car/Truck prices are outrageous these days.
And one of the biggest reasons is the never ending “mandates” that the Gov’t puts on new cars.
Lane change assist, crash avoidance radar, backup camera, etc... all these things cost mucho bucks and are added directly to the cost of the car/truck. Add to that every wiz-bang gadget that is added into the new cars just to distract the driver and you looking at 6-10K on a new car price.
Now the “turbo” craze is hitting (along with junk CVT trannys) to eek out another 2 mpg or so, but adding a huge cost to a new car (turbo, innercooler, piping, etc..).
Turbos are great on Diesel trucks ... NOT on gas cars with 1.# liter engines.
Cut the the mandates and put out a good base model (and bring back the 6-speed manuals) and they will sell.
$30+K for a Camery is insane!
Totally agree with you on working on the modern stuff. I don’t have the robotic hands that built it plus a fully equipped shop with the factory/dealer training.
I pick at both jeeps, blazer, and bike when I can. Most of it is a budget thing. Quality parts and being left alone to do stuff is part of the problem.
I’m dumbfounded by how much pickups cost these days. And they are simply too big for most peoples’ needs. They need to bring back those 80’s mini trucks.
So the choice is if you have $80,000 is to pay the tax and have $40,000 left or buy an $80,000 pickup.
Which would you rather have? $40,000 cash or drive and $80,000 Pickup. Taxes do drive this economy.
Jeeps, BMWs, Mercedes, Jaguars, and a number of other vehicles are maintenance nightmares.
A 10 year-old loaded Honda Accord with 100k miles is worth more than a middle of the road Mercedes. Accord is just getting broken in and a Mercedes will have needed or soon will be needing very expensive maintenance or repairs.
There are a number of independent repair shops that only work on Mercedes. The number that only work on Hondas is zero. There is a reason.
actually that is not true.
I have a ‘98 Civic that has been maintained by the same shop since 2000. Prior to that the shop maintained my CVC and Prelude. I have been served by the shop for 40+ years.
They service only Hondas.
I also have a Dodge Sprinter that is Mercedes except fot the plastic Dodge badges. I have to have it serviced by the dealer because independents don’t do Mercedes. It has over 260 k mikes. I have maintained it like I did my air plane. It has been literally all over the USA and Canada
People who will not spend money on maintenance are foolish
Both vehicles serve us very well. I plan to keep both
I’ll also add that on some vehicles even a simple battery replacement is no longer simple. Can you say Scan-Tool?
JEEP.... Just Empty Every Pocket
That is not a rebuild, that is regular maintenance.
A rebuild consists of a LOT more than a gasket, a couple of belts and a water pump. Pistons, rings, bearings, camshafts, lifters/rockers, alignment boring, gaskets, sprockets, etc etc etc. Last rebuild I did was over $1000 in parts alone.
The job you are talking about takes about 2-4 hours tops. A rebuild is in the 25+ hour range.
Tell me about it.
Being picky and somewhat perfectionist doesn’t help.
A local car dealer told me that there new car “sales” are now over 50% leases. He shared other “insider” concerns:
Cars last longer - 40 years ago few cars made it to 100,000 miles. Most cars now have a life expectancy of 200,000+ miles.
Depreciation - Imagine if your house depreciated at least 20% the day you closed on it. Cars are the only high priced item that drops in value a huge amount for no good reason.
The Internet - knowledge is power and now there is no reason for anyone to pay too much for a car - new or used.
Uncertainty - with states pushing unreasonable gas mileage standards and the rise of new technologies, people are leery of spending $30K+ on an item that will be considered obsolete before the end of it’s useful life.
There were more (including the issue of vehicles being transported having narcotics hidden in them) but it all boiled down to a really crappy time to be in the car business.
Excellent point.
I avoided that issue on one car by powering the car on an external AC-operated power supply while I changed the battery.
After I posted, I just knew I should have said “very few”.
Thass why I am hanging on to my “restified” ‘65 GTO hardtop!
Owned it for 35 years and have no interest in selling.
Don’t drive it too much, but when I do, I REALLY enjoy it!
Dang, you’re a strapping lad. Hope you never went combat arms. There are so many things wrong. Besides being a huge target, the enemy would be using you as a reference point. I’m 6’2 and thought that was bad enough.
Back on topic heh, I do hope the auto industry comes crashing down. We don’t make amy more, only the cost of living keeps accelerating unsustainably.
LOL!!
yeah the carter years were awful- he was the second worst president ever- thnakfully we survived trhose years, but the damage he did is still aroudn today-
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