Posted on 10/01/2025 7:07:29 AM PDT by Mariner
Another auto company bankruptcy has set alarm bells ringing that the US economy could be heading toward a repeat of the 2008 financial meltdown.
This time, the trouble isn't mortgages — it's car loans, which have never been bigger at $1.7 trillion. That's not as high as home loans were in 2008, but experts warn it could be enough to trigger a domino effect reaching mortgages.
More Americans are stretched thin, earning less in real terms and struggling to make ends meet, forcing lenders to hand out riskier loans just to keep car sales alive.
Millions are already behind on subprime car loans, which experts say could be the first warning sign of broader debt problems and eventual mortgage defaults.
The warning signs are stacking up. First Brands, a manufacturer of filters, brakes, wipers, and lighting systems, filed for Chapter 11 bankruptcy on Sunday night.
(Excerpt) Read more at dailymail.co.uk ...
I just don't understand people who borrow more than they can pay.
I'm baffled by it.
When cars and trucks cost more than $50,000, why is anybody surprised that the Auto sector is going bankrupt?...........
Perhaps they could pay when they bought it, and circumstances for them have changed since then.
It would be interesting to know the demographic statistics regarding who takes out “subprime” auto loans.
I suspect “immigrants” are statistically overrepresented.
I’m sure a lot of people would love to buy a simple stripped-down, non-computerized vehicle like an old Volkswagen. A car shouldn’t cost more than my first house ($42,500 back in the day). It’s ridiculous. Auto manufacturers should be re-thinking what they’re doing.
A middleman for Chinese made parts goes under. Boohoo. Those Chinese parts will still be available from dozens of other retailers.
Cause: The Chinese are getting better at direct marketing and direct shipping into the US market.
$50K for a new US vehicle just shows how abhorrently corrupt and inefficient the US industry is.
A new 1.5L Toyota-knockoff in Malaysia costs $9,000 out the door.
I’ve been seeing an increase in backing back the old [70s] Volkswagen buses...
Agreed. Also related is the immigrant labor (both legal and illegal) suppressing wages of American workers. It’s not just that a new “basic” car can cost $50K. It’s that wage increases haven’t kept up with inflation.
Look for the Union Label.................
Well you would think but stripped down Nissan Versa S Manual sells for 20k new and they’re ending production this year. So I guess people don’t.
I haven’t been shopping for a car in a while, so I’ve never even heard of a Nissan Versa S. :-)
>> A car shouldn’t cost more than my first house ($42,500 back in the day)
A 3 bedroom 2 bath starter home shouldn’t cost several hundred thousand dollars, either. And an entry level elementary school teacher shouldn’t make $40,000.
If we just went to an all crypto gold standard economy we could fix this overnight Gold and silver and blockchains are money.
(—That last asinine flip comment was just to get ahead of the goldbugs. :-) Rest of my comment is honest. Stuff costs more, salaries are higher. —)
Look for the union label.
Bingo!
$50k if you're lucky, many are $60+ It's ridiculous. PLUS, you drop by the stealer to get something fixed, it's another 2-3,000 a stop.
I agree. A car with simple controls and no touch screens would probably sell.
Which two?
Almost anyone who cannot manage their money can get a subprime loan. I knew of a fellow that was outraged at having to accept a 25% APR on his auto loan. When I asked about his credit score, he told me that it was 550 and improving. This young fellow had no dad at home when he was growing up. Never learned to plan for the future, just for today. And what happened yesterday should not matter because, well, that was then, and this is now.
As I understand it one of the problems with US UAW labor costs is the huge “tail” of retiree benefits that must be paid for. I may not remember these numbers exactly right but there’s something like 3-5 retirees per auto worker. These retirees “wag the dog” on all contract negotiations. Their interests don’t always coincide with the interests the current auto worker. The UMW has a similar problem.
In 1927 a Model T cost $380. The average annual salary was about $1500. So a car cost about 25% of an annual salary.
In 2024 the average annual salary is about $64,000. 25% of that is $16,000. The average new car price is about $49,000.
Something ain’t right.
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