Doug B
Footballguy
Never said a new car was. A car, in general, is very close to a necessity for a heck of a lot of Americans.
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US economy thread (6 Viewers)
- Thread starter Jayrod
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Never said a new car was. A car, in general, is very close to a necessity for a heck of a lot of Americans.
CletiusMaximus
Footballguy
This is - perhaps somewhat strangely - not at all contrary to what these guys are saying. The pod has focused on these and similar issues recently, and I think its a decent micro-snapshot of the consumer economy as a whole. There's no doubt defaults are way up with no reason to expect that to change. Loan fraud is also way up, as is general consumer fraud associated with car purchases. And yet, people are still buying cars and there's no reason to expect prices or financing to drop anytime soon.
Keerock
Footballguy
Much like the "official" unemployment numbers, I feel like the "data" behind this is suspect. I'd wager that reality is somewhere in between. This country really needs non-biased reporting/numbers/information somehow...
FreeBaGeL
Footballguy
It's not just a necessity thing.
I work in hospitality and the travel spending market was way overextended and at unsustainable record highs 2 years ago. And it's only gone UP since then.
The boat and 5th wheel markets are just as hot as the car market. Taylor Swift tickets for thousands of dollars each that sell out faster than you can blink. Luxury spending remains crazy high. That's not a few billionaires spending. That's almost everyone spending.
It's become cool to complain about the economy lately, even amongst people that aren't actually struggling. The neighbor complaining about gas prices, "how can anyone afford to live when gas prices are like this!" while they show off their new $85k truck they just bought to replace the perfectly fine 5 year old truck they had before. The boomer on Facebook complaining about living costs and when you scroll down their feed you see their photos from Hawaii 2 months ago and Italy 6 months before that and Banff 6 months before that. They're doing just fine.
Again, bifurcation remains the word of the thread.
The difference in perception is it's not just the 1% vs. the rest of everyone else like some people are alluding too. The MEDIAN net worth has gone up more than the AVERAGE net worth over the last 3 years. That alone shows it's not merely the people at the tippy top driving up all the averages (though of course that is a huge problem as well).
It's more like the top 70% are doing great (even while some complain they can only take 3 vacations a year now when they got used to 5 coming out of covid even though they only took 1 or 0 back 5+ years ago), and the bottom 30% are getting CRUSHED. That 70/30 number is completely made up, just a note that it's a lot of people spending a lot right now.
Again, asset prices play a huge role. Lettuce being $0.69 cents more is an easier pill to swallow when your home value or your stock portfolio is up 6 figures over that same time span. It's the people that couldn't afford assets that get hit hardest by inflation, and those are the same people that don't get the side benefits of inflation.
It's not all just free cash flow either. A family making $70k/yr the last 10-15 years isn't exactly a class most would call uber rich or anything. But that's enough for them to have a house, and retirement accounts, etc. And they're more likely to keep spending because even if their cash isn't going as far, they feel like they have that safety net of tons of home equity, etc.
And then there's some people that have been making decent money over that period, not invested any of it, and are now feeling the squeeze of that decision. Those folks I have less sympathy for. We've had 15 years of incredible stimulus. They chose to take that and party, and now they're upset about the hangover while the people that mixed in a few glasses of water along the way are still feeling fine (but of course they complain about a hangover anyway because it's the cool thing to do). Not talking about anyone here, just a broader point.
The people that are really getting crushed here are the ones that haven't been making enough to buy a house or anything even when home prices and mortgage rates were cheap (janitors, maids, cooks, etc). And, of course, those poor poor souls just now coming of working age. Unaided by the stimulus that boosted asset prices for the last 15 years, and crushed by the inflation it caused.
The problem is that is difficult to fix. Because as much as everyone complains about needing to fix wealth inequality, most are quick to push back when that impacts them negatively, and slow to realize that they're probably on the end that would be giving up wealth to do that, not gaining it. When hotel cleaners get paid more and room prices go up the same people that think the wealth gap needs to be closed line up to complain about more expensive hotels. The same for factory workers getting paid more while the price of new cars goes up, etc.
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Doug B
Footballguy
I'm buying what you're selling -- I would just put the percentages in different places. I'd put it more like the bottom 30% has already been flattened for many years, and in 2023 the 20-25% above them are getting crushed.
(HULK)
(Smash)
I've literally never once bought a new car. Waste of money.
well ok fair enough, the prior posts seemed to be implying a discussion around new cars
General Malaise
Footballguy
I find this stat staggering (at least to me):
Car payment statistics
The average monthly car payment for new cars is $729. The average monthly car payment for used cars is $528.
40.72 percent of vehicles financed in the second quarter of 2023 were new vehicles.
59.28 of percent of vehicles financed in the second quarter of 2023 were used vehicles.
Stoneworker
Footballguy
I've bought two new Toyota trucks in 25 years. Best value purchases of my life.
beer 30
Footballguy
And that's pretty much the exact scenario at my company. I work with some guys that just crush it and I work with folks I would fire tomorrow for cause, we all get 2%-3%. It's tough finding the incentive to go the actual mile for the business sometimes.
Stoneworker
Footballguy
Don't they give bonuses in good times? If not I'd be looking elsewhere
General Malaise
Footballguy
Happy with our Toyota Sienna, but we bought it slightly used. Think it had 28K miles on it, got a huge discount on it because it was an enterprise rental first. Zero problems. I've had nothing but great luck buying slightly used cars, especially Japanese made vehicles.
beer 30
Footballguy
We get profit share but again, everybody does. There's very little that sets top performers apart in the office. We're a very field oriented business so the folks who work out in the stores can crush it if you want to work, not so much here.
bigbottom
Footballguy
Stick with Toyota. (Full disclosure: I have a vested interest, but they are some of the most reliable vehicles out there.)
General Malaise
Footballguy
Agreed, though I had an Infiniti and two Acura's that I also loved. I think if I ever hit it big (haha - okay, once all my kids are out of college) I'll look for a luxury hybrid from Lexus or Infiniti. Just so reliable.
BeTheMatch
Footballguy
I see Hyundai is now offering 0% financing again. First company I've seen doing that in a long time. Might be a sign that things are slowing down.
urbanhack
Fight The Power!
Todem
Footballguy
Car salesmen around the country are said to be on suicide watch.
fruity pebbles
Footballguy
Joining realtors
General Malaise
Footballguy
Mortgage brokers busy selling their boats....
Todem
Footballguy
Yeah....2024 we will be the "Real Estate" values correction year for most of the country. Going into 2025 and beyond things will start looking better as the level of interest rates is reduced probably in my estimation to 50% less where they are now.....but it will take most of 2025 to get back down to an “accommodative” lending rate environment.
massraider
Footballguy
That might just be Hyundai thing.
Within last 24 hours, I went to check insurance quotes for Kia, Hyundai and Honda.
Can't even get coverage from some companies for certain models for Kia and Hyundai. I assume because of the Kia Boys thing.
I didn't even bother looking around. Just eliminated from my search. I'm sure that's happening a ton
snellman
Footballguy
I got out of sales a long time ago. Have been in service for the last 13 years. It is weird because I am seeing both sides. We are still moving 70-120 units a month new and used (we are a smaller dealer in a town of 10,000 people), but we are also seeing a lot more people fixing what I would call old junk cars. Part of the repair thing is there are fewer and fewer people independently working on vehicles, but also a lot of people are hanging onto vehicles longer and repairing rather than buying.
BlackCrowes
Footballguy
Can’t remember the last time I wasn’t on a completely full flight. Glad I visited the parents the weekend before Thanksgving
Scoresman
Footballguy
You can say that again.
tommyGunZ
Footballguy
Yep, consumers are saying one thing with their wallets, and another thing with their mouths. Economy is doing great overall.
fruity pebbles
Footballguy
I can see that. For me it became too expensive to fix my old car. Granted it was a Lexus but it was getting harder and harder to source parts and seemed like every time I had a repair done it became more complicated.
snellman
Footballguy
We did the same a year ago. We had a 2011 Enclave for the wife's vehicle that had 185,000 miles on it. Even working at a dealership, I still have to pay for repairs. I got tired of dropping $$ here and there on it. Bought a brand new 2023 Acadia because it wasn't a lot more that used ones. Looking back, I probably should have done something before the pandemic started, but hindsight is 20/20. I also have a lifetime powertrain extended warranty on the new one with a 120,000 wrap contract (pretty much covers everything else) so I figure she will drive it until then, then start the process over.
-OZ-
Footballguy
I really hope that doesn’t happen with our two Toyotas and two Hondas. The newest of the four currently sits at 83k miles, the oldest at 170k. Knock on wood, we’ve been lucky so far.
fruity pebbles
Footballguy
It may not. Some car‘s parts are more plentiful than others. My car was a LS400. Great car but they didnt make a ton of them. Last axle i needed ended up coming from Western Canada. Bigger issue was an old car gets very difficult to take apart without breaking/stripping other things. Then it took a week or more to get the other parts as the car was unassembled.
3C's
Footballguy
We were forced to buy a car earlier this year and since it was for my wife I wanted something reliable and nice. And her desire was an SUV. Lightly used SUVs were in the same price range as new so new made absolute sense and was definitely not a waste. But normally I'd agree with you. I've always gone the lightly used and gotten good deals.
snellman
Footballguy
I normally don't either, but my last 2 vehicles have both been new. 1st one, a 2017 Colorado. I had been wanting a full size truck and watching trade ins come in. I decided I didn't necessarily need a full size truck for what I wanted a truck for and a brand new Colorado was cheaper that a used full size with 60,000 miles. I plan on keeping it until it gets to the point that it is more expensive to maintain than buy different. (Currently has 80,000 so I have a ways to go) . We bought a 2023 Acadia last fall. Wife's 2011 Enclave that we bought used had 180000 mile on it and was time to replace. I had been holding off because that was during the time when the market was crazy and I was waiting for prices to come down a bit. The Enclave was going to be needing tires though and other repairs so I decided it was time to pull the trigger. I probably won't hang on to the Acadia as long as the Colorado, but we will see how things develop with the market and prices and vehicles over the next 5-7 years (Wife puts approximately 15-18 K a year on so that will put us right in the 75-125K mileage range).
Biggest mistake people make is they buy new then trade after 2-4 years when the depreciation is the highest. I decided to buy new to hang onto longer, because I will know all of the maintenance and the repair history that the vehicle has had.
belljr
Footballguy
I buy new or slightly used pending on the timing and need. My wifes SUV was one owner 9K on it saved 15K vs a new vehicle of the same model. My current car is brand new because used was pretty much the same price.
However when I buy a vehicle its with intent of owning between 8-12 years..... so I have no problem buying new
3C's
Footballguy
Same here. We drive our cars until they die or become unreliable/too expensive to fix, or in my wife's case the car is totaled. I dropped a cylinder in my previous car and it had 260k miles so I wasn't about to fix it and then risk other issues. Bought a lightly used 2016 Civic (8k miles) and am nearing 200k miles. As long as it keeps running I'll keep driving it.
STEADYMOBBIN 22
Footballguy
This is not for everyone but if you can work on your own stuff- having an older fleet vehicle like a Ford or Chevy Tahoe or pickup alleviates this issue. There are a kabillion of them out there and you can get parts super easy and cheap.
You can also do this with old Honda Civics/Accords as there were so many of them but they rust out faster and aren’t as simple to work on.
Sleestak
Footballguy
1995 Maxima.
2007 Altima.
2017 Highlander.
All bought new and driven into the ground. Well, the Altima had a few years left, but I wanted to get the SUV to go with the big dog we acquired in 2017.
culdeus
Footballguy
The whole "your car depreciates a billion dollars driving off the lot" and "buy lightly used" seems to have been flipped. Impossible to find a decent used deal. And dealer drivers are non existent also.
Also looked and saw cheap kias and then found out you can steal them with an AOL CD or something. ****
Also looked and saw cheap kias and then found out you can steal them with an AOL CD or something. ****
snellman
Footballguy
The biggest reason Dealer demos and other demos are non existent right now is because of the inventory shortage that we had, which also drove up prices of used. You don't want any demos if you can't get any new vehicles and the few you do get are already sold. This went all the way up the corporate ladder as well. My GM rep said that vehicles for Field reps and other executive employees were harder to get because of inventory issues and they were driving their vehicles longer which in turn keeps them off the auction circuit and out of used inventory.
I just bought out the lease of my 2021 Toyota Camry. It only had 19k miles on it. My lease payment was $313. I financed it with EXCELLENT credit and still had to pay 8.67% interest making my new payment $316. The KBB value was $21k-$23k and the buyout was around $15.5k. Total no brainer. The dealer said he hasn't seen a lease with a 3 as the first digit in a long time. He said Camry's now lease for around $500. Insane. I plan on keeping this car and giving it to my son in 3 years.
STEADYMOBBIN 22
Footballguy
From the article
| Government spending also helped boost the Q3 estimate, rising 5.5% for the July-through-September period. However, consumer spending saw a downward revision, now rising just 3.6%, compared with 4% in the initial estimate. There was some mixed news on the inflation front. The personal consumption expenditures price index, a gauge the Federal Reserve follows closely, increased 2.8% for the period, a 0.1 percentage point downward revision. However, the chain-weighted price index increased 3.6%, a 0.1 percentage point upward move. |
STEADYMOBBIN 22
Footballguy
STEADYMOBBIN 22
Footballguy
Literally just read the last paragraph, usually after the picture to read the fine print.
So the government spent a boatload of dough and folks put more on credit
So the government spent a boatload of dough and folks put more on credit
FreeBaGeL
Footballguy
This tracks pretty well with one of the points I've been harping on in this thread. Humans are easily adaptable. People got used to an unsustainable standard of living during an overstimulated economy. As things reset to merely pretty good that feels like a loss to them, even though it's a huge win compared to where they were in the past.
People that used to take 1 vacation a year got a taste of taking 5 vacations a year in 2021 and now only being able to take 3 vacations a year feels like a sacrifice so they put themselves in debt so they can keep taking 5 vacations. But that 5 vacations a year life was never real. It was 100% bonus depreciation and near zero interest rates and unlimited QE and literal money deposited into their bank accounts for doing nothing. It was a free couple year run where everyone got to have fun and now no one wants to go back to reality, even though reality is way better than reality used to be.
It's a fallacy of the human condition. If the stock market goes up 20% in year 1 and 20% in year 2 everyone is over the moon with those 2 year gains. But if the stock market goes up 100% in year 1 and then down 20% in year 2 everyone feels disappointed and angry even though the total amount is still higher in that second scenario. People just got a taste of something even better, even though that was never going to be sustainable, and they can't let it go.
Unless you're in that bi-furcated bottom percent that got all the penalties of all that stimulus and none of the rewards.
I have no idea how much of holiday spending was some huge boom in buy now, pay later versus just the normal amount you would expect to see this time of year. Of course Klarna's CEO is motivated to say how awesome his company is and how much market share they're gaining when he knows they're a private company and no one can check him on it. If you have conviction in that narrative AFRM is public and still 80% off their highs so there could be a lot of easy money to be made there.
Grahamburn
Footballguy
I haven't had to cut back in years, but my household is feeling the crunch. Just this month we've eliminated our Green Chef membership, 4 bottles a month Wine Club, 3 streaming TV services, TruGreen lawn treatment service, and we've made an agreement to not eat out under any circumstances. I also now refuse to grocery shop at higher end stores like Publix and am opting for Winn Dixie or Aldi.
tonysmiles
Footballguy
Here is a question regarding the economy. We talk about consumers becoming immune to paying for necessary goods and services. We have seen that Crude has took a dramatic decline in the last few weeks. My question is why is gas below 3.00 (2.78 in my neck of the woods) we were accustomed to paying over $3.00 the last year and why did they not drop it to $3.05 but not lower so all the companies involved in delivering to the pump can profit even more.
I will also say it is a joke when the media tells you food prices are declining. Yes milk, eggs, and a few other items have decline but other prices have risen and prices for greens like broccoli rabe (rappini), string beans, escarole and for beef are still high and have not come down. A person was pressed on grocery prices and he mentioned the eggs and milk but when pressed on beef vegetables and other items that are still expensive he did not have a reply.
When consumer debt is at an all time high the Economy is not in a good spot.
I will also say it is a joke when the media tells you food prices are declining. Yes milk, eggs, and a few other items have decline but other prices have risen and prices for greens like broccoli rabe (rappini), string beans, escarole and for beef are still high and have not come down. A person was pressed on grocery prices and he mentioned the eggs and milk but when pressed on beef vegetables and other items that are still expensive he did not have a reply.
When consumer debt is at an all time high the Economy is not in a good spot.
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