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Discounted Cars Benefit Buyers, but May Spell Trouble for Industry
- tyingq 9y agoI believe at least part of this is better quality cars that last longer. The 1980s started an era of crap cars that were junk after 100k miles. That's improved, over time, and not equally across all makes and models. But, we finally seem to be at a point where there are fewer reasons to get rid of a 10 year old car. Edit: some corraborating figures: http://news.ihsmarkit.com/press-release/automotive/vehicles-getting-older-average-age-light-cars-and-trucks-us-rises-again-201 http://news.ihsmarkit.com/press-release/automotive/vehicles-...
- mikestew 9y agoThe 1980s started an era of crap cars that were junk after 100k miles. I would qualify that by saying "American compact cars". Japanese cars were fine, and a Chevy Caprice would still give you a few hundred thousand trouble-free miles.
- bitexploder 9y agoFull sized cars like the Monte Carlo we're junk too. Owned a 1980. 88-92 saw the first mass consumer computer controlled fuel injection. That is when cars really got reliable. Removing carburators was a game change. My parents had a Ford Tempo (1990) and drove that thing into the ground (250k miles) running a paper route. The auto transmissions sucked in that era though. You could get 200k miles on my 90 Ford mustang manual. Auto tranny would always bust 40-50k miles on that era Mustang though. Repairs were simply less expensive in that early car computer era. I actually knew how the whole computer system worked. Difference in th 6502 and modern assembly. Yet, cars don't need much more than a 6502 for most things. Oh well.
- pmcjones 9y agoI agree that replacing carburetors with electronic fuel injection made a huge improvement. Another step was replacing the distributor and points with electronic ignition. When was the last time anyone replaced a spark plug?
- Arizhel 9y agoHuh? I've replaced tons of them. Before they went to platinum/iridium plugs, you still needed to change them at 20-50k. The platinum or iridium ones will last 100k I think, but any car these days lasts longer than that, so they still need to be replaced once or twice. But on modern inline engines they're generally really easy to replace. Maybe you meant to ask when the last time someone replaced a distributor or adjusted points was? A lot of cars still had distributors up until around 2000 or so, so they're not completely gone yet. But points, thankfully, have been gone since the 70s.
- douche 9y ago> But on modern inline engines they're generally really easy to replace. The last two pickups I've owned, 2006 and 2010 F150s, it entails disassembling half the engine head to get at the spark plugs - and I have some experience, the 2006 had the garbage 5.4 V8, that has coil problems and blows plugs regularly after 100k miles... Other modern vehicles I've looked under the hood of don't look to be designed for any more ease of access or repair, either.
- Arizhel 9y agoI guess you're looking at crappy vehicles then. Go look at some 4-cylinder Japanese cars. They're all super easy to work on and last forever. Well, the Hondas, Toyotas, and Mazdas anyway. I always steer clear of American cars; those give you all kinds of wacky crap like putting the battery inside the wheelwell so you have to remove the wheel to remove it, aside from horrible reliability and interiors that fall apart quickly.
- bitexploder 9y ago
- cptskippy 9y agoCompanies like Honda who have been known for reliable cars that last well over 150k have been going the other direction with regards to quality. A lot of their parts are made in China not to the standards they were in Japan.
- sjg007 9y agoThis will hurt them in the long run. I've bought two Toyotas but then I rented a newer one the other day and was not impressed.
- pm90 9y agoI'm curios as to how it would hurt the manufacturer. As a consumer, yes I'm not getting the amazing reliability. But if their cars don't last forever, people will buy more cars right?
- freehunter 9y agoBut if they're told their Honda will last forever and it breaks down at 90k, how likely are they to buy another Honda?
- toomuchtodo 9y agoCan you tell me why you weren't impressed? I have a 2008 Toyota Tundra with ~96k miles on it, no problems except standard maintenance schedule. I have a 2008 Toyota Highlander Hybrid with ~112k miles on it; again, nothing but scheduled maintenance. I did have to just replace the brakes and rotors for the first time because they rusted out due to disuse; battery regeneration is so effective they're only used in panic stops (mostly). My next vehicle is a Tesla, but I'd buy a Toyota again (used, from Carmax) if I needed a vehicle sooner.
- devoply 9y agoMost American cars fail after 10 years and look quite beaten up. Japanese cars used to last 20-30 years but I think Toyota and Honda are the only brands that have kept up this reputation, and even then not all that well. All this has to do with the fact that people don't have money to upgrade to the latest lease.
- deleted 9y ago[deleted]
- Baeocystin 9y agoMy 1979 Honda CVCC is going as strong as ever. I swapped the engine/transmission out once, but the engine was still running fine, I just wanted the 5-speed. A cheap repaint in 2013, and AFAIC it's good for another 20. https://www.reddit.com/r/Honda/comments/1q9tww/just_finished_rebuilding_my_1979_honda_cvcc_pics/ https://www.reddit.com/r/Honda/comments/1q9tww/just_finished...
- function_seven 9y agoWow. I'm impressed. There's something about completely ordinary old cars that look so pristine after a few decades. I saw a Datsun B210 the other day that was similarly cared for and it impresses me more than most classic muscle cars. Everyone expects a '68 Camaro to look awesome; nobody expects the same from a '79 Honda.
- Baeocystin 9y agoThanks! And you're right. Many years ago, I used to feel a little silly about maintaining what was essentially an inexpensive economy car. But it was the first car I bought with my own money in college (for the princely sum of $500 in 1992), and I just really enjoy driving it around town. It's so small I can park anywhere, and it gets 30-40 MPG. And nowadays, it gets lots of positive comments. Turns out the muscle car/classic car guys like seeing the old stuff no matter what it is.
- 9y ago
- ghaff 9y agoIn states with a lot of snow, body rust used to be a real limiting factor as well. Growing up in the 60s-70s, I doubt if any of our cars got much past 50K miles over ~5 years.
- slackingoff2017 9y agoRust is still taking cars in the northern states. It takes longer, but if you make it to around 15 years rust will start reaching important things like brakes and suspension.
- lucaspiller 9y agoSame here in Northern Europe, but those are commodity parts and relatively easy to replace (although can be labour intensive). I just replaced the calipers and springs (half destroyed by rust and half by potholes) on my 2002 Lexus IS200 and it's as good as new after 210,000km. When I was young my parents had a Renault and after around 12 years the bodywork started going rusty under the passenger footwell. They had it patched up, but eventually the rust spread. Nowadays something like that is pretty uncommon.
- ghaff 9y agoI've also had all the brake lines and power steering lines rust out in a Ford Explorer though. That's probably my one really big failure of not getting rid of a vehicle when it had the first of those expensive repairs.
- ghaff 9y agoYeah, I have a ~20yo Honda Del Sol that I bought in the last model year. I haven't driven it in winter for a while. (I have another vehicle.) At this point it creates something of a sensation at the local Honda dealer when I bring it in because there aren't many on the roads any longer (because of rusting out) and it was a somewhat unique vehicle. Still, this is 15-20 years vs. 5 years.
- 9y ago
- rootsudo 9y agoSo, start of a recession? Is housing next?
- brohoolio 9y agoThere was a real slowdown in car sales during the Great Recession. That shortage and the ripple effects are finally coming to an end. Manufacturers are cranking out too many cars for the US market.
- sjg007 9y ago"Automakers have also turned more heavily to leasing, and longer loans of 72 or 84 months, which keep the customer’s monthly payment affordable." This is how they will make money. You have to lower credit scores but extend the payment. That justifies the higher price on average. Still... I guess it is not enough. And the people that take advantage of this at 0% keep the car longer..
- odonnellryan 9y agoSeems like a great recipe for another loan bubble. People owing more on their cars then they are worth, then defaulting.
- jeffdavis 9y agoI think there needs to be some other factor to really drive a bubble, like a subsidy or a government that absorbs all the risk without watching it. This just seems like a cycle. The traditional car industry is in a slump. Defaults will happen. All normal.
- sjg007 9y agoCash for clunkers was a subsidy of sorts.
- sjg007 9y agoIt's definitely a dynamical system. There is a limit to the new car's price due to used cars (both availability as a function of increased reliability, exchangeability and the economy), leases [a bet on the future], the competition, as well as transactional costs and don't forget interest rates. So if you own a car manufacturer what do you do? :)
- aianus 9y ago> People owing more on their cars then they are worth, then defaulting. I read somewhere that car loans are some of the safest secured loans for lenders. People will skimp on food, rent, and everything else before they default on their car.
- broknbottle 9y agoit's because of the experience these dealerships offer. I was in the market for a car, I just moved to DMV area from Michigan. I've had nothing but terrible experiences. I ended up just putting the money into repairing my current 8 year old car.
- shiftpgdn 9y agoManufacturers need to get a clue that dealers are poison to their industry. Every time we've bought a new car in my family the experience has been a nightmare because of all the games the dealers play. The only new car I have any interest in buying today is a Tesla because their sales model is low stress and can be done from my office. I will drink a toast to the day the last auto dealership goes out of business.
- tacomonstrous 9y agoLast time I bought a car, I had a fairly pleasant experience at the dealer. I looked up what I wanted online (CarGuru.com), called the dealer, made sure it was available, and then went over and bought it. Zero stress.
- ghaff 9y agoThe sales guys are still often idiots. But if you know the cost of the car, don't need financing, and either plan to do a private sale of your current car or it's a donate for $2K vs. trade-in situation, it isn't really all that stressful. What's stressful is when they start playing games with all the levers. If you're fortunate enough to not be in the position to maybe have to play those games, you basically hold the cards.
- geff82 9y agoBeing a former certified car sales guy who changed to IT out of passion, I am currently in the process of buying two cars for business and family. I am horrified by the current state of car sales. Cars are presented dirty, salespeople show absolutely no interest in even talking to us while staying around their dealership for a long time looking at specific cars. Best was this Monday, when I called one dealer and told: I want to buy a (specific) new car. Now. No haggling, I just sign. Had to call them 3 more times, every time I got a new excuse why no salesman is available to me. "Please wait another hour, then he is out of the meeting"... so I just called another more expensive dealer after 8 hours, told them the same thing. The salesman sent me the contract in a second. But as I mailed the signed contract back after business hours, I did not hear anything from it the next day. Called the dealership after waiting half of the next day to hear "Salesman out of office today". I said: no problem, I just resend the contract to another person. "You can do this, but the salesguy needs to get permission from the boss to sell you the car". At the end of the day, they somehow managed to send me the invoice for the car.... but everything took many phonecalls.
- hourislate 9y agoMillions of good vehicles were taken off the road after the 2008 fiasco (program to trade in). This left the used car market decimated. You could practically buy a new car for the price of a used car since there was no used inventory to speak of. Leasing was also hit very hard. What we are seeing now is the used car and leasing markets recover back to where they were pre 2008. This has created some much needed competition in the Auto market. Vehicles are lasting longer these days. In the 80's most vehicles already had rust on them from the factory (inside doors, pillars, etc). Since the very late 80's they started waxing and using galvanized metals. Engine tolerances were improved along with Fluid technology (Oil, Coolants, Grease, etc). My advice is never buy new. Buy something either coming off lease or something about 5 + years old. If it is a Toyota there is still at least 10 years left in the vehicle. Honda's quality over the last 5 years has really suffered in my opinion. German cars should only be leased, stay away from used German cars unless you have a lot of money or can repair them yourself. Korean cars are throwaways after a few years. If you're someone who keeps a car for a long time make sure you do a lot of research because these days a lot of newer models have some serious problems like DI and CVT Transmissions that will cost more to fix or replace in a few years than the vehicle is worth.
- mikeyouse 9y agoThere's no evidence for anything in your first paragraph.. I know it was a popular conspiracy theory on the auto forums but it doesn't remotely pass the sniff test.. Cash for clunkers only turned in 690k cars, not 'millions' and they had to get terrible mileage to qualify in the first place so the list of trade-in was almost entirely 90s era SUVs. In any case, in the preceding 15 years there were something like 200 million vehicles sold in the US. Removing under half a percent of those couldn't possibly have had a half-decade impact on the used car market.
- knz 9y ago> You could practically buy a new car for the price of a used car since there was no used inventory to speak of. Leasing was also hit very hard That was probably the Great Recession and not Cash for Clunkers! People were buying used instead of new due to financial uncertainty and not wanting a large monthly payment.
- bkjelden 9y agoSo the tl;dr of this article is that lower prices are good for consumers, but manufacturers cannot sustain selling below cost (what a surprise). I wonder what is driving demand lower. Has supply simply finally caught up to pent-up demand from the crisis? Is some other expenditure (housing, healthcare) sucking up discretionary spending that would otherwise go towards new cars? Is this a leading indicator of a drop in consumer confidence/spending that more traditional indicators haven't picked up on yet? Are people driving fewer miles (I don't know the exact numbers off-hand, but I believe the data doesn't support this)? Are longer-lasting cars hurting new car sales?
- hueving 9y agoIt seems the last sentence rings true for me an my social circle. I have a 15 year old car that costs me almost nothing because it's paid for and worth so little that I only carry liability insurance. Sure, I could get an awesome new car, but there is absolutely no rational economic reason to do so. Other than missing lane assist and adaptive cruise, I see no useful features that have emerged in cars for nearly 20 years. Electric cars are about it, but the environmental impact of effectively throwing away a perfectly good car to get a new electric car defeats the purpose.
- Arizhel 9y ago>Other than missing lane assist and adaptive cruise, I see no useful features that have emerged in cars for nearly 20 years. You're forgetting fuel economy and crashworthiness. Fuel economy has improved greatly in the last 20 years; I drive a car that 20 years ago with this much power and weight would probably have gotten less than 30mpg on the highway, this one gets 40. Of course, gas prices are low so you might not care about this. But crash protection has also gotten far better in the last 15-20 years. You can walk away from a crash in a modern car that would have maimed or killed you in your 15yo one (even for a car of the same rough size). >Electric cars are about it, but the environmental impact of effectively throwing away a perfectly good car to get a new electric car defeats the purpose. Wrong. You're not "throwing away a perfectly good car", you're reselling that car on the used market to someone else, and in the end (assuming the market doesn't expand) this results eventually in some really old POS car somewhere being junked, which is good because it's pouring out emissions and wasting fuel. More people buying new cars increases the supply of newer cars on the used market, which helps push the oldest and crappiest cars out of usage. Of course, there's limits to this, but the point is: don't feel bad about getting rid of a "perfectly good car"; it's going to continue getting used, just not by you, and theoretically results in another car that really isn't "perfectly good" getting finally retired. The thing that really sucks here is that, in some states at least, you're highly penalized for buying a new or newer car because of personal property taxes. They should just eliminate these taxes for all but luxury vehicles maybe, to encourage people to buy newer cars to improve safety and emissions. There's already a disincentive in higher insurance rates; we don't need to add to that with pointless taxes.
- sxates 9y agoOver 400,000 Tesla Model 3 reservation holders who are putting off their next car purchase until the car is out - and industry expecting a ~300k decline in sales this year. Coincidence? I have to imagine 400k people committed to a car coming out in the next year is a bunch of people who might otherwise be in the market staying on the sidelines. I'm certainly one of them.
- elchief 9y agoKeeping my 140k mi Subaru alive til I can get my hands on a Tesla 3 v 1.1
- Kluny 9y agoI can't afford a Tesla so I'm buying their stock instead :)
- dsfyu404ed 9y agoThis entire comments section is like reading a news article and realizing the journalist is running on nothing but conjecture and stereotypes.
- bobbington 9y agoEverybody's waiting for the model 3 ;)