Auto sales

[randy]

I am in need of a new truck but with the pandemic pricing I have been holding off

 

Generally there about 17 million vehicle sales a year in the USA

 

there we’re 14m and 12m respectively in 2020 and 2021

 

I believe the manufacturers are going to want to make that approximate 7 million deficit up over the next couple of years

 

So the question is if the manufacturing process for the chips gets sorted out do you think they’ll be a glut of new vehicles hitting the show room floors over the next 16 to 18 months and will we see significantly lower used vehicle prices

 

I for one certainly hope so

 

 

[mickeym3]

In the same boat as you and as a last resort I’ve relied on renting trucks from Enterprise Truck Rental to haul my race trailer over the past two seasons (~5 times a year due to Covid impact on racing venues).  Generally $600 for 4 days rental of a 2500 which is not bad considering the cost of ownership buying at current crazy truck prices. Many dealers are adding 5-10K “market adjustment” using the rationale that typically trucks 2-3 years old are fetching more than they did when new. You really have to hunt for dealers doing MSRP and you have to wait for the build, which can last many weeks. Have found deals on lower trim level 1500’s and something like the the Nissan Titan but 2500’s are another story. Believe the chip issue is being addressed but that’s always subject to change. To get real world experience on the truck market I’ve been using this to make buying decision…https://www.ford-trucks.com/forums/forum5/

 

Good luck!

[wbw6cos]

I know the price is the key issue, but are you wanting to buy new or used?

[realshelby]

There will be changes to the auto industry going forward regardless of chip shortage issues being corrected. I don't see GM flooding the market and then offering huge rebate programs to move units just to keep sales numbers up ( they were the leaders in doing that!). I think there will be inventory on lots again, but not anywhere near the numbers from years past. More emphasis on customers ordering vehicles ( which is the way I usually buy new stuff ) and less on having 3-5 months of inventory on the lot. If interest rates go back up, that will make it even more important to lower inventory on the lots. 

While you can complain about the price of new vehicles right now, I don't hear anyone complaining about how much their trade-in vehicle was worth. For years the higher end manufacturers did very little discounting and kept production in line with or even below what the market would bare. Yes, there were times you could lose less on a BMW than a Ford when you looked at cost to own over a few years. 

If you NEED a new vehicle, order one now. If you don't need one, then waiting won't really save you a lot of money imo. You get your moneys worth when you keep a vehicle for many years!

[Mike]

Not quite a “truck,” but I recently ordered a Jeep Wrangler and got a pretty good deal (about $5,000 under MSRP). But, inventory for most vehicles remains low, with “market adjustment” stickers proliferating. While the circumstances leading to the current inventory shortfalls haven’t been seen before, there are precedents (like WW II) and prices do ultimately return to a sane level.  

[MikeB60]

I bought a new truck this past summer. I had a year old Ram that I just wasn't happy with and decided on an F150.  Got a good deal when I purchased the Ram and the dealer bought the truck outright for 48000. I paid 41000 for the truck and put 12000 miles on it.

 

They had 4 F150s on the lot, none of them had the options that I wanted.  The sales manager suggested I order a truck, everything was selling at sticker price anyway and I could get the options I wanted. So I ordered at F150 and am super satisfied with the process and the truck. Took eight weeks to get the truck, once Ford assigned a Vin I was able to track the process.  I knew before the dealer that the vehicle was loaded on the truck and on the way for delivery.  Got the exact truck that I wanted and wouldn't hesitate to go that route again. 

[Skywagon]

I don’t know how long this MSRP predatory pricing will continue. Terry might be right, but it will slow the growth of the new car industry and CEO’s and exec comp is largely based on profitable growth. If sales slow in 22-23 by 10-15% you will see price negotiations

Remember when GM and others all needed bail out help…slow sales and could not cut expense fast enough

Im not ready for new cars yet as one has 44k miles and one has 51k miles. I will be holding for at least 2 more years. 
 

With the reduction in auto workers and more mechanized mfg its easier to slow mfg as Terry said but that also changes ROIC which is a key stock performance and incentive pay indicator. 
 

On a similar note the boating industry is whacked out right now. Just looked at having a new version of my 2016 made. None in inventory and 9months to build. Price up 35% since 2016. Decided mine is better than I thought

[realshelby]

David, you and I may or may not agree on whether the CEO or upper level execs.....should have pay based just on growth or just on profit. I think that has hurt the American auto industry in the past. 2 Billion profit this year....then 1.5 Billion loss next year ( maybe exaggerated some, but it reads better...) has been a cycle for too long. I prefer to look out 10 years and more...

 

Too often upper management can manipulate stock price to their (sole) advantage..... 

 

I think the larger auto manufacturers were looking for an opportunity to raise profit per unit. But could not because the competition would jump in and take too many sales. With the Pandemic, they are seeing profits are not always based on volume....

[Skywagon]

Terry...we don't disagree at all.  What I can share with you....I was never a CEO but was a COO of a $100billion tech company.  Our comp was decided by the board.  We had a good base, not great, but incentives were great.  We recommended to the board what our company performance for the coming year should be. Sometimes to board with agree but most time they would adjust the numbers upwardly.  They decided what my bonus structure could be.  HR or no other exec could adjust it...only evaluate it. The measures most important were growth, profitable growth, margin expansion, return on invested capital, cash flow, and to a lesser degree some social things, employee retention and employee satisfaction.  Because the numbers are largely the numbers there wasn't any manipulation of real performance as a public company.  You see what happens to those who do...prosecution and likely cross bar hotel time.  I served under 6 CEO's in my 42 years.  All of them were different, but their measures and how they got paid were always the same as was mine.  One way you can see stock price driven up is taking cash flow and buying back your company stock.  For some reason the analyst see that as companies believe in their future so must know something.  We bought back company stock when we had excess cash.  The reason to dump the cash and buy the stock back was multidimension.  Yes it would likely raise the stock price some...not always but some.  We were producing dividends greater than net performance so owning the stock improved performance.  Most importantly having massive cash flow and excess cash makes you ripe for a takeover.  I saw it many many times.  Companies buy companies with piles of cash even above market, keep the cash, break up and sell the company they bought.

 

So yes...there are ways to adjust the value, but most of exec pay is based on the above performance.  For me without being too specific, there was a cash opportunity, reward opportunity, and retaining opportunity.  If we made our numbers I could receive cash up to 3x annual pay. Generally speaking it would include a stock award and if they wanted to incent to keep me around it would include stock options.  When the company was growing, the stock options were way more valuable than cash.  There were a few other perks like a new car every 2years, family use of company planes when the plane had capacity and was going where we wanted to go.  I could not schedule it and it was space available.  The reason that was offered is most of us spend a ton of time on the road.  This allowed us to have our family come with us so we could be with them.  Many many years I was in hotels in the 180-200 days a year.  Without the wife coming along from time to time it would have been an extraordinary lonely life.  I finally wore out traveling and is the most important reason I retired.  Couldn't do it anymore.

[taylor1]

3 hours ago, Skywagon said:

Remember when GM and others all needed bail out help…slow sales and could not cut expense fast enough

I used to be a GM faithful. When the bailout occurred , I lost close to $100,000 in Gm stock. Yet bonuses were still received by top tier management. GM will never get another red cent of mine again. RANT OVER

[TEWKS]

1 hour ago, taylor1 said:

I used to be a GM faithful. When the bailout occurred , I lost close to $100,00 in Gm stock. Yet bonuses were still received by top tier management. GM will never get another red cent of mine again. RANT OVER

Assuming a 0 is missing. Wow, that’s a big hit! 💰 Hate to even mention this after hearing that kind of loss but my GM departure was over a failed alternator.

Now, this was my first brand new vehicle and only two years old at the time of the failure. I lost trust in it.

 

Besides that, I wanted a new Mustang. 

[taylor1]

25 minutes ago, TEWKS said:

Assuming a 0 is missing

Yep, fixed it.  That was a brutal year for the market period. Though it was the only stock I owned that was here today , and totally gone tomorrow

[randy]

the article I was reading my not have been "authoritative" but basically it said the manufactures ( in order keep people working) have been building units at the 16M - 17M level, and they basically have 7M of units sitting at the plants just waiting for chips.  Was hoping the article was correct/accurate  and we would see (unlike your scenario) that there would be a glut.  However I see your point, and I do agree manufactures have wanted to move to a build on demand model ( think Dell computers) and maybe this pandemic and the younger buyers (who prefer build on demand) will drive the industry to that business model.  If so I agree the manufactures will win more than the buying public.  But who knows supply/demand may find a way to level it out.

 

for me it is not reasonable to buy right now, or maybe even in the future.  I bought my last 2500 diesel 5 years old with 130,000 miles for 18,000.00  Any similar 2017 with that many miles is 45 - 50K  

 

that is way out of my budget

 

to answer William I am looking for a Diesel 3500 SW crew cab 2016 -2019 Dodge or Ford. 

[Hosstage]

A topic for another time, GM lost my wife as a customer back in 1980, due to their own arrogance, a long time to hold a well earned grudge.

[wbw6cos]

This article states that the average used car price is $29,000.  Yikes!   That is getting close to new vehicle pricing.   

 

The next new vehicle we buy will be for Laura.   We were looking around at a dealer a few months ago and inventory was sparce.  We are in no hurry.   Then after her new vehicle, the next vehicle will be a new pickup truck, but that is for retirement, which is less than 4 years out.  Hopefully, new vehicle prices will subside by then.   Part of that retirement purchase might include a 5th wheel toy hauler.   The RV market is absolutley ridiculous right now; I have not been actively looking, but I routinely scan online sales and have been seeing prices that approach six figures.  Dang.

[Hosstage]

I have to think the used RV market will be flooded in a few years, prices plummeting. Many people that jumped in first time are going to find out they are over it and are tired of storage and maintenance, and maybe getting bored with that vacation mode too. Same with boats, not sure about the motorcycle market, but potential there too for a lot of good used bikes hitting the market in a few years. Trucks and cars is going to be a strange market coming up, trucks and SUVs, CUVs, still seem to be the darlings, cars getting less and less love. Maybe that will change as fuel prices rise.

I need a truck in a couple years, I don't even want to think about having to spend $40,000, or more, for a good truck, new or lightly used if I can find one. $50,000? Stupid money. 

[John Ranalletta]

Anything's possible with easy money, 84-month car loans and 12-year RV loans.  If I had to borrow to buy either today, I'd consider a home equity loan. 

 

IMO lots of folks are experiencing "wealth effect", i.e. they perceive the value of their houses and stock portfolios is permanent.  Comes the next crash (all trends revert to the mean), there'll be another washout.  Remains to be seen if the FED will take away the punch bowl in 2022.

 

I think there's another segment of the pop who're just figuring "screw it" and letting the future take care of itself.  Probably a good strategy.

 

Meanwhile, enjoy.

[Hosstage]

We got 36 months "free" money when buying the wife's car, we'll see what happens when it comes time for the truck. 84 months of payments does not appeal. 60 isn't a great number either.

[randy]

Like William I am looking for a 34'-36' fifth wheel toy hauler to go with the truck. My retirement is leaving Atlanta March 30th 

attending every Dual sport rally/ART,UnRally/Torrey etc.   from TN, NC,WV, TX, MT, CO, UT then back to Atlanta around Sept 30

work a winter job Nov - Feb then rinse and repeat until I cannot ride/work anymore.

:-)

[randy]

On 1/2/2022 at 4:50 AM, mickeym3 said:

In the same boat as you and as a last resort I’ve relied on renting trucks from Enterprise Truck Rental to haul my race trailer over the past two seasons (~5 times a year due to Covid impact on racing venues).  Generally $600 for 4 days rental of a 2500 which is not bad considering the cost of ownership buying at current crazy truck prices. Many dealers are adding 5-10K “market adjustment” using the rationale that typically trucks 2-3 years old are fetching more than they did when new. You really have to hunt for dealers doing MSRP and you have to wait for the build, which can last many weeks. Have found deals on lower trim level 1500’s and something like the the Nissan Titan but 2500’s are another story. Believe the chip issue is being addressed but that’s always subject to change. To get real world experience on the truck market I’ve been using this to make buying decision…https://www.ford-trucks.com/forums/forum5/

 

Good luck!

 

so yes I thought about renting, I usually do one track day a month April - Sept  so 6 -8 track days a year at 600.00 could be as much as 5k in truck rental.   2019 and prior that would be crazy, but yes now with used prices at 40-50K it might make sense.

 

[wbw6cos]

4 hours ago, randy said:

Like William I am looking for a 34'-36' fifth wheel toy hauler to go with the truck. My retirement is leaving Atlanta March 30th 

attending every Dual sport rally/ART,UnRally/Torrey etc.   from TN, NC,WV, TX, MT, CO, UT then back to Atlanta around Sept 30

work a winter job Nov - Feb then rinse and repeat until I cannot ride/work anymore.

:-)

 

 

Sounds like a great plan!

[randy]

9 minutes ago, wbw6cos said:

 

 

Sounds like a great plan!

 

Yes it was in 2019 :-)  but with today's truck and toy hauler prices, and 4.00 diesel cost, it becomes less an option.  Again I am hoping (as noted above) that in 2023 a lot of RV owners will dump their RV's on the market and I can get a good low mileage used toy hauler.  As some have noted Truck prices may still be an issue in 2023.  We will see.  I had hoped to buy both in 2022 and do some weekend runs to learn/prepare for a 8 month RV life style.  that will probably not happen

[Scott9999]

Count me much in the same boat as others.   

 

A $40K to $70K pickup just doesn't price out, unless I'm using it for business, can write it off, and make a profit using it.  I think a good deal of the newer pickups are being sold along that route.  I mean, if I end up paying $25K to $150K in taxes anyways, and I can mitigate that with a six figure truck purchase, why not buy a loaded truck and enjoy it?  A whole lot of trade guys in Northern Idaho are running around in $100K diesels, wearing construction-homeless looking cloths, and IMHO, more power to them.  We all have to work the system that's targeted against the middle class, as best we can.

 

I have a nice, little, six cylinder 2014 Ford Edge that I purchased new in 2016 at 1/2 off the $40K sticker, which KBB tells me is now worth $16K to $18K.   We probably would sell it (i.e. it's 2WD) and buy a new F150, or even late model, low mileage pickup, if there were more of those things around, and IF they didn't want 3x or 4x the price of our current SUV.   My Edge will two a rented, $15 to $25 trailer just fine, for most of what I need.  In fact, the plan this year was to find a decent little utility trailer that I could quickly hookup whenever I needed, for example, a 4x8" sheet of plywood, or a dozen 2"x4"x10' studs.  However, I've seen RUSTED TRAILER FRAMES, no axle, no tires, no bed, selling for $600 in N. Idaho.   For what I'd want, I'd probably have to shell out $1500 to $3000, because the trailer industry, while not suffering from a shortage of computer chips, is experiencing similar supply and demand issues.  What IS available is WAY overpriced.

 

So, I'm content to run our little SUV, find a trailer eventually, or rent one (or borrow my neighbors, but I hate doing that kind of thingy), and wait until the market returns to sanity.   I just won't overpay.  

 

Besides, I used the price of 4x4" pickups that I had my eye on, as justification for our home accountant for buying my used $14K 2018 RT.  🤣  (When I brought up the truck again, she had the nerve to say "Wait, what?  I thought the RT was going to serve as your daily transportation around town.  Now you want the truck, too?"  Never marry a wife that's smarter than you. 🙄  SOOooo, now I have to work the "trailers are too expensive" angle hard, to get her back on buying my pickup truck.  It might take a while.  After I get her on the back of the RT later this year, take a few trips, and make her think the BMW was HER idea, we might get back to the pickup. 👍😁

 

And, maybe by next fall, there might even be enough inventory to push the prices back down.  I doubt it, though.   If a manufacturer can get $100K for a $25K or $30K pickup, why wouldn't they keep inventory in check to maintain that price point.  The only thing that will push prices down, is true market competition, and I don't see any new truck manufacturers coming to the US market, from foreign or domestic sources.   Unfortunately, it'll take a 2008 type of downturn to permanently adjust the market, and the manufacturers will just expect a government bail out to underwrite their overpriced, lower inventory operations, anyhow.  

 

I honestly seen about a 25% likelihood of me ever buying another pickup, unless it's a 20+ year old beater and/or fixer upper, and those are just as scarce as the newer models.

 

/end rant (well, not really, I'll probably be ranting around here again! 🙃😁😖)

[randy]

I am not sure I agree with the need for a new manufacture.  I think if GM or Ford or more Likely Ram, wants more sales, even at less margin that would be the catalyst.  again normal range for the last 7-10 years has been around 17M units.  It is possible that the manufactures keep themselves under control and only produce 14M units, and thereby sale fewer units but still have the same bottom line total company profit.  

 

but it only takes one manufacture to decide they are not getting the  market share they want, or they just do what they always do GREED, and start producing more vehicles and lowering the price.  If one manufactures starts down that path, the others will follow. Just depends on how much they want to work together or not.  :-)

[Hosstage]

Toyota is the #1 car manufacturer in the United States, not sure if it is relevant, just putting it out there. Chevrolet #4.

[Hosstage]

8 hours ago, Hosstage said:

Delete, double post

 

[mickeym3]

Since Alan Mulally retired from Ford I’m not sure there’s any real leaders in Detroit.  Expect all the other brands are going to keep taking market share simply because they understand and manage supply chains and labor better. Just my 2 cents, I’m starting to circle the Titan XD (2020-2021) and Tundra now which I never dreamed I would  do but I’m done with diesel and only have ~8,000 pounds to yank around. I’d like a Lariat Tremor but simply ain’t paying 70K for a truck. 

[realshelby]

A word about Diesels in pickup trucks. The last one I had was an F 350 Crew Cab that I bought to pull a  couple 39' Fifth Wheel RV's that I owned. I was constantly worried about maintenance on that engine, constantly worried it would derate and leave me stranded, worried about a mechanical failure that would cost as much as the truck was worth. Yes, it pulled the RV's nicely....but honestly the miles I actually towed were not all that many of those put on that truck. 

Moved to a motorhome with a Cummins diesel. The only real trouble I have had with it is...Diesel emissions equipment ( see worries above ). I went to Montana last year and was constantly worried with an emissions light. Freightliner in Denver said it would be two weeks minimum to make a major repair. We did reset the light and upload a new program and the light stayed off most of the rest of the trip. I did have a recall done that is supposed to fix it...but my experience with diesels and emission equipment they require leaves me not trusting them. Imagine the engine power GONE in the middle of nowhere because it has a bit too much NoX emissions!

Short of owning the very largest and heaviest RV ( including motorhome) I would not buy a diesel again. I would go with Fords new 7.3 gasoline engine. That would easily pull the Fifth Wheels, and do well in the motorhomes I would be owning. MUCH less maintenance, repair expense, and worry. 

Diesels are simply a status thing for the majority of owners. I was selling them in the late 90's and into the 2000's and that was quite obvious!

[Patallaire]

On 1/4/2022 at 9:18 AM, John Ranalletta said:

Anything's possible with easy money, 84-month car loans and 12-year RV loans.  If I had to borrow to buy either today, I'd consider a home equity loan. 

 

IMO lots of folks are experiencing "wealth effect", i.e. they perceive the value of their houses and stock portfolios is permanent.  Comes the next crash (all trends revert to the mean), there'll be another washout.  Remains to be seen if the FED will take away the punch bowl in 2022.

 

I think there's another segment of the pop who're just figuring "screw it" and letting the future take care of itself.  Probably a good strategy.

 

Meanwhile, enjoy.

The depreciation on the car or RV would be tremendous and probably offset any other advantages. This heated car market will probably not last. Most of the car loans are as cheap as a home equity line of credit.  A line of credit is not deductible unless you use it to repair your home, gone are the days that the home is a make believe bank account. 

[John Ranalletta]

45 minutes ago, Patallaire said:

The depreciation on the car or RV would be tremendous and probably offset any other advantages. This heated car market will probably not last. Most of the car loans are as cheap as a home equity line of credit.  A line of credit is not deductible unless you use it to repair your home, gone are the days that the home is a make believe bank account. 

I assumed but am not sure a home equity loan might carry a lower interest rate.

[Hosstage]

I got three years zero interest on my car loan, cheaper than any home equity loan.

[Scott9999]

1 hour ago, Hosstage said:

I got three years zero interest on my car loan, cheaper than any home equity loan.

I'm SO stupid. Here I've been paying cash for my vehicles for the past 15 years, when I could have used *** FREE MONEY ***.   🙄😏

 

Well, I did take a loan out on the RT at about 5.5%, which I will accordingly, pay off early.  So, I guess I'm learning (oh, is zero % interest less than 5.5%??🤔). 😖

(Seriously, I was kind of shocked that I couldn't get a motorcycle loan at the same interest rate my credit union's been pimping cars at, for years.  Talk about ignorance!  My credit rating is now sky high, but when I "needed" to borrow some money a couple of years ago to finish construction on my house, I ended up having to sell my pickup and use VISA instead.  Then, when my short term debt is zero, I have to pay bandit interest to borrow for my "new" RT.  Seems like I'm always taking the "stupid" route in life.)