42 ms·

A glut has used-car depreciation accelerating

174 points by yawz 9y ago

beejiu 9y ago
In the UK, many cars sold in the past few years are under a so-called Personal Contract Plan (PCP). These are basically sub-prime loans for cars where you lease the car for the difference between its purchase price and its projected depreciated value at the end of the term. https://www.theguardian.com/business/2017/jun/10/car-loans-personal-contract-plans-vehicle-financial-crisis-pcp https://www.theguardian.com/business/2017/jun/10/car-loans-p... One of the UK regulators recently warned about the exposure to these loans. "An initial fall in prices could lead to a surplus of used cars coming to the market, which could further weaken prices and cause material losses to lenders through their GFV risk." (http://www.bankofengland.co.uk/pra/Documents/publications/reports/prastatement0717.pdf http://www.bankofengland.co.uk/pra/Documents/publications/re...)
- guan 9y ago
  British PCPs are very similar to the car leases that have been very common in the United States for many years (in both prime and subprime markets). There has been a lot of recent discussion about the risks associated with PCPs is mainly because they are relatively new in the UK, and because they have grown so quickly lately from almost zero. That means assumptions about the “residual value” (to use the American term) of the cars at the end of the contract, which are based largely on data from before PCPs became so popular, may not be so accurate. That’s probably less of a concern in the US, where the lenders have more experience with these things, although car sales (and leases) have also grown rapidly in recent years, so there is still something to worry about. In both countries, as I understand it, it is the lender who loses out if the resale value is less than rejected. So at least individual car owners are somewhat protected, and the biggest risk might be having to return the car and not being able to get a new lease/PCP with attractive terms.
  - djaychela 9y ago
    "That means assumptions about the “residual value” (to use the American term) of the cars at the end of the contract, which are based largely on data from before PCPs became so popular, may not be so accurate." When you put it like that, it reminds me of the endowment mortgage situation in the UK which led to people having serious issues at the end of their mortgage term [1]. Obviously not at the same scale, but it'll still alter the market considerably. [1]: http://www.bbc.co.uk/news/business-20858236 http://www.bbc.co.uk/news/business-20858236
  - neilwilson 9y ago
    "it is the lender who loses out if the resale value is less than rejected." And those lenders are linked to the car manufacturers for a large part of the market (since car finance is largely a form of vendor financing). Who then book the losses to the cost of a new car, or start shipping off lease cars to Africa. Unlike houses, cars are mobile. So you can correct the market if you have enough power over the market.
- throwaway049 9y ago
  They are only sub prime if the borrower has a greater risk of default than a prime borrower. There is a real issue of mis-selling of these loans in the UK, but the loans are not always sub prime
- petepete 9y ago
  About 85% of new cars 'sold' in the UK are either PCP or Hired Purchase[0]. Anecdotally, it's really apparent amongst my peers; many are driving new (less than two years old) BMW, Audi and Mercedes that would probably cost a whole years wage or more outright. Luckily, for people like me who buy almost new for cash, this is a good thing. [0] http://uk.businessinsider.com/statistics-uk-bank-exposure-pcp-car-finance-debt-2017-7 http://uk.businessinsider.com/statistics-uk-bank-exposure-pc...
  - ZeroGravitas 9y ago
    I've noticed this same thing, but don't quite follow the logic fully. Like, why don't they just PCP or Hire Purchase a cheaper car. They'd get whatever benefit the PCP provides, and spend less money. What about the PCP convinces them (rightly or wrongly) that they can afford those cars? There's so many people doing it I feel I must be the one that is wrong, and there's some tax dodge or something they are taking advantage of.
    - bengale 9y ago
      Maybe they just want a nicer car?
      - ZeroGravitas 9y ago
        Everyone wants a nicer car, but usually there's good reasons why they haven't bought one. It seems like something has shifted recently and many people have cars nicer than they would have previously. Possibly nice cars are just cheaper, or everyone is richer or people can get credit for cars where before they couldn't. It might just be me, I thought people spent too much on cars anyway, and now they seem to have nicer, newer cars, so I assume they're spending even more, but as a non-car guy maybe that only seems weird to me.
        njarboe 9y ago
        As interest rates keep getting lower and auto loan terms now as long as 7 or 8 years. In 3 years, when the people that got those long loans want a new car, they will find their car loan still underwater. They will likely have to stick it out with their "old" car for awhile.
sbierwagen 9y ago
The average used car costs $15,300? That seems pretty wild. Are the classic Porsches that sell for $10 million dragging the average up?
- adventured 9y ago
  No, that's about right. Take some time and go through autotrader.com. $15k isn't unusual for a used mid-value sedan with ~25,000 to ~65,000 miles. For example, look up Hyundai Sonatas, 2013, with that mile load, you'll see prices around $14,000 to $18,000. Or check out Toyota Camrys, 2012 model year. You'll typically pay around $14,000 to $16,000 to get into one with 40,000 to 60,000 miles. So that's a 5+ year old car, a mid-value sedan, with a fair bit of mileage. The average new car price is around $32,000.
  - sbierwagen 9y ago
    I don't disagree that you can pay $15K for a used car, I doubt that the average price of a used car is $15K. The average price of the first 30 used cars for sale by owner on the Seattle craigslist is $5,896: https://seattle.craigslist.org/search/cto https://seattle.craigslist.org/search/cto Average price of the first 30 by dealer however, is $21,567: https://seattle.craigslist.org/search/ctd https://seattle.craigslist.org/search/ctd But who would be dumb enough to buy a used car from a lot?
    - aianus 9y ago
      Why is it so dumb to buy a used car off the lot? I bought an Audi off lease last year. It's still under warranty, free maintenance (until 80k km), low mileage (37k km), fully loaded with options, and I saved $20k vs a new one.
      - adventured 9y ago
        > Why is it so dumb to buy a used car off the lot? It's not. The parent doesn't appear to understand the used car market in the US. Most people are not buying their used cars for $6,000 off of craigslist, that's a good way to end up with a pile of junk. It's a bad idea to buy a mid-value or higher used car outside the CPO or remaining original warranty programs if you can help it, ideally from a dealer.
ng12 9y ago
Actually it's not because I don't think about the value of my car. It's not an investment, it's an expense.
- copperx 9y ago
  Pretty much everything is an expense, even mortgages, most of the time. The liberal use of the word "investment" in America is irksome. Marketing has hijacked our minds.
  - seiferteric 9y ago
    Honestly a car can been seen as an investment in the classic sense. If you buy a car for its utility, i.e. to help you get to work or otherwise be more productive, you will get a return you may not have been able to otherwise. Of course most people spend way too much or buy cars they don't need, so the return can be terrible.
- jrs95 9y ago
  This is true, but the value of your car plays an important role in that expense. And expected depreciation is an important factor to consider when buying a car.
  - xutopia 9y ago
    Not if you plan to run it to the ground. Then it's simply about upkeep until it dies.
    - deleted 9y ago
      [deleted]
  - volkl48 9y ago
    That's only if you intend to sell it for more than scrap value some day. Any car I buy is getting sold to the junkyard for $500 in 10+ years and 200k+ mi. How steeply it's paper value declines between now and then doesn't matter much to me.
ebyerly 9y ago
Suckers! My car is already worthless.
- jgh 9y ago
  you got some downvotes but I chuckled, so have an upvote.
Glyptodon 9y ago
Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.
- copperx 9y ago
  That doesn't even make sense, unless there are not enough cars being produced. The only situation I remember like that was with the Prius, when gas prices were $4/gal.
  - shyn3 9y ago
    Right after the recession, maybe a year, or two later, there wasn't an inventory for used cars and the prices were high. It seemed people were not selling their used cars because they couldn't buy new ones. All the used cars, few years old, were almost the same as MSRP (This was in Canada).
- hkmurakami 9y ago
  Could you tell us more? Was this in some niche segments of discontinued but popular models (like certain Subarus) or were run of the mill cars also like this?
  - discreditable 9y ago
    In short, the cash for clunkers initiative made used car stock plummet. This lead to used car prices going up. At least, I think that's what GP is hinting at.
    - brohoolio 9y ago
      Cash for clunkers pulled lots of used cars off the market but my understanding is plummeting manufacturing of new cars after the financial crisis was responsible for a much higher percentage of the gain. Cash for clunkers pulled like 700k out of the market. The auto industry was making millions less cars and trucks per year from 2008-2012.
eveningcoffee 9y ago
Does it have something to do with QE? Car leases commonly rely on some expected value at the end of the lease. Even when it is some relatively down played value then this information means that it would become even lower. This should also then mean that the lease should become more expensive. Eventually lack of information should cancel itself out.
hydrogen18 9y ago
We need another cash for clunkers deal immediately!
- jessaustin 9y ago
  When Trump announces this in January 2020, his reelection will be assured... /s
rawrmaan 9y ago
Interesting that this has nothing to do with ride sharing (or at least the article doesn't cite that as a reason). I think autonomy and ride sharing will drive used cars nearer to the value of scrap metal within the next 5 years.
- ghaff 9y ago
  Uber/etc. make a difference at the margins but don't drastically reduce car ownership. I'd believe the effect is greater with those who don't buy new cars but still limited effect. I expect full autonomous driving to be much further out. Where it could have an effect though is this. To the degree that new vehicles become much more attractive because of new sensor and software features, that would likely drive used car prices down. These could certainly increase the perceived value of a current model year car vs. one from five years ago.
- stephengillie 9y ago
  How many miles will an Uber driver drive in a year - how many miles are they putting on the car? It pushes their value down, similar to taxis or police cars. Consider 2 similar 2015 Priuses, one with 32,000 mi, the other with 92,000 mi. The one with lower mileage will usually net a higher sale price.
- TheAdamAndChe 9y ago
  Your comment displays the incredible social and economic compartmentalization between the Silicon Valley/tech hubs of the country and everywhere else. Uber is not a viable alternative to vehicle ownership for the majority of places in the country, particularly in poorer and more rural areas, and likely never will be. When you've got to drive 20 miles to reach town, ordering an Uber doubles the time required to get there. As far as automation goes, in the consumer market, I highly doubt it will be anything more than a rich person's luxury for a good long while, since most people can barely afford a $10k vehicle, let alone a $100k one.
  - rawrmaan 9y ago
    I appreciate your comment. I definitely didn't see it that way until now but I think you're right.
ProfessorLayton 9y ago
Its looking even worse (Or better for a buyer) for electric cars. A cursory craigslist search shows a 2014 Fiat 500e for ~7.5k @33k miles and Nissan Leafs for as little as ~5k @42k miles. All with clean titles. A used Model S 60 (2013) can be found for ~40k @60k miles, which I think is good but not great, especially considering the quality issues early on. I'm waiting to pounce on 1st generation electric cars that will be hitting the used market when the Model 3 is mass produced. The reason I haven't bought yet is that my current hybrid is fine and I expect used electric car prices to drop even further.
- olivermarks 9y ago
  Production of the Chevrolet Bolt has stopped due to lack of demand and bulging inventory, part of the overall problem discussed on this thread http://fortune.com/2017/07/17/gm-shutdown-chevy-bolt-supply/ http://fortune.com/2017/07/17/gm-shutdown-chevy-bolt-supply/
  - dangrossman 9y ago
    All other articles and GM comments say that the extended summer shutdown is to increase Bolt supply, not because there is too much supply already. The Bolt outsold both of Tesla's vehicles last month. The Sonic has weak sales, so during the shutdown they're reconfiguring the plant to make 1 Bolt for every 1 Sonic, where it was 1:2 before.
    - olivermarks 9y ago
      Do you have a link to support this? My comment/link wasn't a dis of EV's, it was pointing out the glut of inventory GM are sitting on, including EV's. If you are interested in a Bolt now would be an excellent time to bargain for one at the dealership...
      - olivermarks 9y ago
        https://www.thestreet.com/story/14234261/1/chevy-bolt-is-a-damn-good-electric-car-so-why-are-sales-suffering.html https://www.thestreet.com/story/14234261/1/chevy-bolt-is-a-d...
afinlayson 9y ago
This may be temporary, as services like Uber/Lyft increase, and the possibility of Autonomous Vehicles driving down the cost of those services. This would cause the volume of new cars needed to dramatically fall, leading to increased cost of those new vehicles. This would increase the value of used vehicles that are currently priced in. Would love to hear differing opinions :)
- james-skemp 9y ago
  > This would cause the volume of new cars needed to dramatically fall [...] I don't disagree with you, but when reading the article you'll notice that the auto industry is pushed to sell more cars, year after year. Like a number of industries, now that they've had years/decades of growth, I'm not sure how they would handle significant loses. Heck, even stabilization. I'm over 35, but consider myself young; was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat?
  - marcosdumay 9y ago
    > was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat? Since the Industrial Revolution, I don't think so. Now that you mentioned it, I think the concept of "corporation" is intrinsically related to growth.
- RhodesianHunter 9y ago
  "Would love to hear differing opinions :)" Erm... A decrease in demand does not lead to an increase in price.
  - tmnvix 9y ago
    That's a bit simplistic. Substantial demand makes economies of scale possible which can lead to lower prices. The opposite is also true (i.e. lack of demand leading to increased production costs).
olivermarks 9y ago
As understand it, too easy autoloans and resulting past buying/leasing saturation are a big issue - a pessimistic view on zerohedge: http://www.zerohedge.com/news/2015-04-08/auto-loan-bubble-endgame-used-car-prices-have-stalled http://www.zerohedge.com/news/2015-04-08/auto-loan-bubble-en...
grecy 9y ago
With many countries tabling laws to outlaw the sale of diesel and gasoline cars around 2030, this is going to accelerate extremely quickly. In 5 years (2022), everyone will know it will be illegal to buy a gasoline car in just under 8 years. I think there will be very little demand for the regular old gas powered car. (excepting maybe exotics, or "pleasure drives", which much be a tiny fraction of overall sales) That car you have to fill with liquid cancer is going to be worth extremely little, very soon.
- slg 9y ago
  Aren't all those laws focused on new cars? I can't imagine the backlash a government would receive by zeroing out the value of most people's most expensive possession.
  - grecy 9y ago
    Yes, the laws only apply to new vehicles. It's similar to when Color TVs were invented. What happened to the re-sale value of all the B&W TVs that were already out there? They plummeted, because they had been superseded. This scenario will be even more aggressive, because laws will ban the sale of the "old tech".
    - loeg 9y ago
      No, the laws will only affect new car sales, not the old tech. That doesn't affect the secondary market for used gasoline cars in the slightest.
      - KekDemaga 9y ago
        It might have the opposite effect, making them more rare and increasing prices even.
        deleted 9y ago
        [deleted]
    - 9y ago
jgh 9y ago
checked the KBB for my car back in may and it said $10k (2010 a4), checked again last month and it was down to $8500. I'm not really depending on the car to retain any value at all, but it's interesting to see how quickly that price is dropping.
- aidenn0 9y ago
  KBB on my car dropped 60% in the past 18 months (10k to 4k).
loeg 9y ago
Awesome. My 20 year old car is in great shape but it is getting older and I will need to replace it sooner or later.
- zzalpha 9y ago
  Exactly what I was thinking. We have a gently used, 10 year old Fit and have been casually considering an upgrade in the next few years. Looks like our timing couldn't be better...
- gozur88 9y ago
  Apparently you won't get much for it, then. I'm kind of in the same boat, but I'd really like to get an electric model that's been produced for a few years, which means there won't be much on the used market.
  - hammock 9y ago
    You missed his point. He will wear out his car until it has no value then gladly buy another used car at a great price.
    - gozur88 9y ago
      I didn't miss the point. That was a joke.
  - madengr 9y ago
    There are lots of 2015 Nissan Leafs coming off 2 year leases. I picked up one 6 months ago for $8500 with 19k miles.
    - gozur88 9y ago
      The Leaf is a bit lean on range for me. That's not a bad price, though.
  - Cerium 9y ago
    About two years ago I bought an off lease 2012 Nissan Leaf for about 12k including all taxes and fees. It had 20k miles on it, very good condition, and battery at about 90%. So far I have been very happy, and have spent nearly no money on the car besides insurance and registration since my employer offers free charging. Obviously range is an issue, but is mitigated since I am married and have a gas car as well to use on longer trips. My wife and I never both drive further than the leaf can take us in a normal work day. Anyway, I tell this story because I was surprised to find that there were a huge number available in the Bay Area where I live. It seems that uncertainty over future models with increased range and the lifespan of the batteries has made many people reluctant to make a purchase leaving quite a glut. The retailer I purchased from had about 25 Nissan Leafs in his lot.
wbracken 9y ago
Tangentially in the business. Two recent stories told to me: 1) Saw at Manheim Auto Auction (one of the largest) 300 Nissan Leafs run through the auction line in one afternoon ahead of some of our cars. Drop in "value" of leafs went down 10%+ in one day. All were recently off lease. 2) For similar reason, Santander is holding 4000+ cars on auction lots "waiting for pricing to stabilize". Reality is, when they run those cars through the auction, they will have to book the full losses. Say they anticipated 20% repossession rate and that they would get 80% on the dollar when auctioned on those losses. When they run them through now and get 50% on the dollar, their securitization pools will be creamed.
- dshibarshin 9y ago
  The overseas markets can't seem to get enough of the Leafs. I've seen trucks full of Leafs delivered for export to places such as Ukraine.
  - DigitalJack 9y ago
    Saw zero leafs during my week in London. Same with a week in Glasgow. Boat loads of prius’ though.
    - sgt101 9y ago
      There are quite a few round here (rural Suffolk, UK) I've seen a few in London, Nissan don't seem to market them very hard in the UK.
    - Symbiote 9y ago
      The UK is the third biggest market for Leafs, 20,000 sold. http://newsroom.nissan-europe.com/uk/en-gb/media/pressreleases/426191418/nissan-leaf-charges-to-20000-uk-sales-as-all-electric-favourite-is-named-best-green-car-in-2017-driv http://newsroom.nissan-europe.com/uk/en-gb/media/pressreleas...
    - tolien 9y ago
      As well as private owners, both places have a car club using them too [1] - I guess it’s possible the low value makes them more attractive for that use. http://www.co-wheels.org.uk/electric_vehicles http://www.co-wheels.org.uk/electric_vehicles
SilasX 9y ago
Hah! Just yesterday I was remarking how car gluts don't translate into lower consumer prices because the government quickly props up demand: https://news.ycombinator.com/item?id=15064436 https://news.ycombinator.com/item?id=15064436
- brigade 9y ago
  The opposite really; cash for clunkers mostly just moved existing demand forward a year without increasing it in even the medium term. Rather, it did put a lasting dent in the supply of used cars, artificially increasing used prices.
jedberg 9y ago
I just bought a new van. It was rediculously easy for me to get a loan for 105% of the retail price (and I didn't even pay retail). I opted not to get the full loan for obvious reasons. But the fact that I could is frightening. There will be so many people underwater on their loans. The car bubble is coming and it's going to pop hard.
- jogjayr 9y ago
  I thought anyone who finances a new car is underwater as soon as they drive off the lot. Don't new cars depreciate something like 20% the day you buy them? EDIT: I was wrong it's closer to 9% [1] [1] https://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html https://www.edmunds.com/car-buying/how-fast-does-my-new-car-...
  - rlanday 9y ago
    Depends how big of a down payment you make.
- JSONwebtoken 9y ago
  Why wouldn't you take the loan on your van? Interest rates are under 3%, which is definitely cheaper than any mortgage or student loan you might be carrying. Auto loan risk is significantly mitigated by modern advancements in GPS & tracking technology. No other collateral is as easily repossessable as a modern car.
  - jedberg 9y ago
    3% is barely less than the mortgage, and it wouldn't be worth the hassle. Also I would never pay down my mortgage early. Which means I need to find an investment that will have a greater than 3% return. Since I can't really guarantee that, it's not really worth it. I'd rather not put myself into a situation where I'm that badly underwater.
mrfusion 9y ago
I really found the opposite last month when I was truck shopping. The prices at carmax weren't much lower than buying new. I even found one case where it was cheaper to buy new! I'm wondering if people hate the dealership experience so much they're driving up the price of used cars? I'm still just utterly confused by the used truck prices I was seeing.
- hkmurakami 9y ago
  Afaik trucks are the strongest US auto segment (iirc Toyota can't make enough of them right now and are increasing production capacity in their Mexico plant), so maybe you hit an outlier segment.
  - francisofascii 9y ago
    That's really interesting. It is the low gas prices? Or strength in the construction sector?
    - selectodude 9y ago
      The former.
      - dsfyu404ed 9y ago
        A 4dr crew cab can haul the kids to soccer and move furniture all while requiring one parking spot. It's a good multi-tool at the expense of operating costs. The cost of insurance, registration and (possibly) parking buys a hell of a lot of gas. Think of a vehicle as having indoor storage, long term comfort (space to not be cramped) outdoor storage and passenger capacity. Crew cab trucks are used like full size sedans with outdoor storage instead of a trunk. That's a pretty good blend for most use cases since most people can use the second row as a trunk when not carrying passengers. Insurance, registration and parking costs are a disincentive to buy specialist vehicles (like the electric commuter cars HN loves).
- damnfine 9y ago
S_A_P 9y ago
This bubble has been building for years now. Wholesalers and other exporters have been hiding the problem for a while now, and but somethings got to give. The problem is multifaceted: 1) Lease rates arent necessarily in sync with the used car market 2) Buyers are keeping cars longer if they purchase 3) Subprime loans and buy here/pay here dealers are multiplying. THIS IS A BUBBLE. I wont call when its going to burst, and it wont be like the housing bubble, but the fallout will be great...
- gnicholas 9y ago
  Any predictions on how the popping bubble will ripple through the economy? With the housing bubble, there was a huge pull-back in consumer purchasing, as people lost hundreds of thousands of dollars in home equity. That caused a drop in consumer confidence and purchasing, which led employers to cut back on wages/hours, which led to further drops in consumer purchasing. Do you think we'll see the same domino effect here, but just at a lower magnitude? Or is there a different path for this bubble to ripple out through? Perhaps when people lose cars they lose jobs that they can no longer commute to?
  - S_A_P 9y ago
    I don't think that it will be as severe. The big banks are largely insulated from this. I do think that it will be a buyers market for late model used cars for cash buyers. I'm already seeing signs of this. It's just not quite there yet but I bet I can get a car at 50% traditional market price soon.
    - bluGill 9y ago
      I think the banks as in the car manufacture's finance arms will be hit the most: when it hit they are the ones who are suddenly owners of a car that they owe more on than it is worth. They will have to sell these cars at a loss. If they try to make up for that loss by raising lease rates those who turned their car in will be forced buy a used car at greatly reduced rates (few have the ability to afford much larger payments) Those who buy their car have a known payment, they might owe far more than the car is worth but that payment won't chance and other than an accident they eventually have a paid off car. They might not be able to trade their car in as soon as they would like, but they at least have a car.
kevin_thibedeau 9y ago
> What’s more, an increasing share of those sales came with a lease, so there’s now a rising tide of machines flowing back onto the market when their three-year contracts run out. Hopefully the 1%'s lobbyists won't figure out how to plug this loophole in their rentier serfdom.
justinph 9y ago
Sure, as far as basic transportation goes, but you can't get the vastly improved safety features in a used car that you can in most new cars today. Buy a new Toyota? It comes with automatic emergency braking, collision avoidance, blind spot detection, adaptive cruise control, and built-in backup camera, standard. Buy a used 2014? It has none of that. I just bought a new car for the first time in my life. The safety of those features was worth the $10k premium for a new car.
- ethbro 9y ago
  $10k premium + accelerated depreciation And in 3 years, I'll have all those features on my used Toyota. ;)
  - wmeredith 9y ago
    And if you buy a used luxury sedan, you can have all that stuff now. Go pick up a 2006 Lexus LS430 with 150,000 Mike's on it for $10,000; they were $70k new and have all those whizbang safety features and it's a Toyota Avalon underneath. You can put 400,000 miles on them if you treat them right. You can do the same thing with the big German luxury sedans, but upkeep will be more. Those aren't Toyotas underneath. It's still pretty reasonable for the amount if car you get; just budget for it.
    - TylerE 9y ago
      You couldn't be more wrong. Built on a totally different platform than the Avalon (The Avalon is even FWD) No pre-collision braking (A partial system was included on some Japanese models, but none on the US model) No blindspot monitoring So, hardly "all that stuff".
      - alexanderstears 9y ago
        Here's an easy way to be more wrong: The LS430 is basically a Toyota Cavalier. Or - the LS430 is basically a Toyota Century.
    - 9y ago
KKKKkkkk1 9y ago
If the rate of depreciation has increased, wouldn't that make price as a function of age more convex than before? Meaning that new car depreciation is accelerating, but used-car depreciation is slowing down?
tempestn 9y ago
Ever since that pg post, I can't help thinking about how much of a role PR plays in stories. Did Black Book and Cargurus just happen to get mentioned here? Or did they reach out to the journalist, or vice-versa? Did they pay for the privilege? (Doubt it, but possible.) Always tough to know, since the best PR is subtle enough that you at least wonder whether it was involved at all.
- ctack 9y ago
  Please link the pg post.
  - tempestn 9y ago
    http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html

174 points by yawz 9y ago

In the UK, many cars sold in the past few years are under a so-called Personal Contract Plan (PCP). These are basically sub-prime loans for cars where you lease the car for the difference between its purchase price and its projected depreciated value at the end of the term. https://www.theguardian.com/business/2017/jun/10/car-loans-personal-contract-plans-vehicle-financial-crisis-pcp https://www.theguardian.com/business/2017/jun/10/car-loans-p... One of the UK regulators recently warned about the exposure to these loans. "An initial fall in prices could lead to a surplus of used cars coming to the market, which could further weaken prices and cause material losses to lenders through their GFV risk." (http://www.bankofengland.co.uk/pra/Documents/publications/reports/prastatement0717.pdf http://www.bankofengland.co.uk/pra/Documents/publications/re...)

guan 9y ago
British PCPs are very similar to the car leases that have been very common in the United States for many years (in both prime and subprime markets). There has been a lot of recent discussion about the risks associated with PCPs is mainly because they are relatively new in the UK, and because they have grown so quickly lately from almost zero. That means assumptions about the “residual value” (to use the American term) of the cars at the end of the contract, which are based largely on data from before PCPs became so popular, may not be so accurate. That’s probably less of a concern in the US, where the lenders have more experience with these things, although car sales (and leases) have also grown rapidly in recent years, so there is still something to worry about. In both countries, as I understand it, it is the lender who loses out if the resale value is less than rejected. So at least individual car owners are somewhat protected, and the biggest risk might be having to return the car and not being able to get a new lease/PCP with attractive terms.
- djaychela 9y ago
  "That means assumptions about the “residual value” (to use the American term) of the cars at the end of the contract, which are based largely on data from before PCPs became so popular, may not be so accurate." When you put it like that, it reminds me of the endowment mortgage situation in the UK which led to people having serious issues at the end of their mortgage term [1]. Obviously not at the same scale, but it'll still alter the market considerably. [1]: http://www.bbc.co.uk/news/business-20858236 http://www.bbc.co.uk/news/business-20858236
- neilwilson 9y ago
  "it is the lender who loses out if the resale value is less than rejected." And those lenders are linked to the car manufacturers for a large part of the market (since car finance is largely a form of vendor financing). Who then book the losses to the cost of a new car, or start shipping off lease cars to Africa. Unlike houses, cars are mobile. So you can correct the market if you have enough power over the market.
throwaway049 9y ago
They are only sub prime if the borrower has a greater risk of default than a prime borrower. There is a real issue of mis-selling of these loans in the UK, but the loans are not always sub prime
petepete 9y ago
About 85% of new cars 'sold' in the UK are either PCP or Hired Purchase[0]. Anecdotally, it's really apparent amongst my peers; many are driving new (less than two years old) BMW, Audi and Mercedes that would probably cost a whole years wage or more outright. Luckily, for people like me who buy almost new for cash, this is a good thing. [0] http://uk.businessinsider.com/statistics-uk-bank-exposure-pcp-car-finance-debt-2017-7 http://uk.businessinsider.com/statistics-uk-bank-exposure-pc...
- ZeroGravitas 9y ago
  I've noticed this same thing, but don't quite follow the logic fully. Like, why don't they just PCP or Hire Purchase a cheaper car. They'd get whatever benefit the PCP provides, and spend less money. What about the PCP convinces them (rightly or wrongly) that they can afford those cars? There's so many people doing it I feel I must be the one that is wrong, and there's some tax dodge or something they are taking advantage of.
  - bengale 9y ago
    Maybe they just want a nicer car?
    - ZeroGravitas 9y ago
      Everyone wants a nicer car, but usually there's good reasons why they haven't bought one. It seems like something has shifted recently and many people have cars nicer than they would have previously. Possibly nice cars are just cheaper, or everyone is richer or people can get credit for cars where before they couldn't. It might just be me, I thought people spent too much on cars anyway, and now they seem to have nicer, newer cars, so I assume they're spending even more, but as a non-car guy maybe that only seems weird to me.
      - njarboe 9y ago
        As interest rates keep getting lower and auto loan terms now as long as 7 or 8 years. In 3 years, when the people that got those long loans want a new car, they will find their car loan still underwater. They will likely have to stick it out with their "old" car for awhile.

sbierwagen 9y ago

The average used car costs $15,300? That seems pretty wild. Are the classic Porsches that sell for $10 million dragging the average up?

adventured 9y ago
No, that's about right. Take some time and go through autotrader.com. $15k isn't unusual for a used mid-value sedan with ~25,000 to ~65,000 miles. For example, look up Hyundai Sonatas, 2013, with that mile load, you'll see prices around $14,000 to $18,000. Or check out Toyota Camrys, 2012 model year. You'll typically pay around $14,000 to $16,000 to get into one with 40,000 to 60,000 miles. So that's a 5+ year old car, a mid-value sedan, with a fair bit of mileage. The average new car price is around $32,000.
- sbierwagen 9y ago
  I don't disagree that you can pay $15K for a used car, I doubt that the average price of a used car is $15K. The average price of the first 30 used cars for sale by owner on the Seattle craigslist is $5,896: https://seattle.craigslist.org/search/cto https://seattle.craigslist.org/search/cto Average price of the first 30 by dealer however, is $21,567: https://seattle.craigslist.org/search/ctd https://seattle.craigslist.org/search/ctd But who would be dumb enough to buy a used car from a lot?
  - aianus 9y ago
    Why is it so dumb to buy a used car off the lot? I bought an Audi off lease last year. It's still under warranty, free maintenance (until 80k km), low mileage (37k km), fully loaded with options, and I saved $20k vs a new one.
    - adventured 9y ago
      > Why is it so dumb to buy a used car off the lot? It's not. The parent doesn't appear to understand the used car market in the US. Most people are not buying their used cars for $6,000 off of craigslist, that's a good way to end up with a pile of junk. It's a bad idea to buy a mid-value or higher used car outside the CPO or remaining original warranty programs if you can help it, ideally from a dealer.

ng12 9y ago

Actually it's not because I don't think about the value of my car. It's not an investment, it's an expense.

copperx 9y ago
Pretty much everything is an expense, even mortgages, most of the time. The liberal use of the word "investment" in America is irksome. Marketing has hijacked our minds.
- seiferteric 9y ago
  Honestly a car can been seen as an investment in the classic sense. If you buy a car for its utility, i.e. to help you get to work or otherwise be more productive, you will get a return you may not have been able to otherwise. Of course most people spend way too much or buy cars they don't need, so the return can be terrible.
jrs95 9y ago
This is true, but the value of your car plays an important role in that expense. And expected depreciation is an important factor to consider when buying a car.
- xutopia 9y ago
  Not if you plan to run it to the ground. Then it's simply about upkeep until it dies.
  - deleted 9y ago
    [deleted]
- volkl48 9y ago
  That's only if you intend to sell it for more than scrap value some day. Any car I buy is getting sold to the junkyard for $500 in 10+ years and 200k+ mi. How steeply it's paper value declines between now and then doesn't matter much to me.

ebyerly 9y ago

Suckers! My car is already worthless.

jgh 9y ago
you got some downvotes but I chuckled, so have an upvote.

Glyptodon 9y ago

Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.

copperx 9y ago
That doesn't even make sense, unless there are not enough cars being produced. The only situation I remember like that was with the Prius, when gas prices were $4/gal.
- shyn3 9y ago
  Right after the recession, maybe a year, or two later, there wasn't an inventory for used cars and the prices were high. It seemed people were not selling their used cars because they couldn't buy new ones. All the used cars, few years old, were almost the same as MSRP (This was in Canada).
hkmurakami 9y ago
Could you tell us more? Was this in some niche segments of discontinued but popular models (like certain Subarus) or were run of the mill cars also like this?
- discreditable 9y ago
  In short, the cash for clunkers initiative made used car stock plummet. This lead to used car prices going up. At least, I think that's what GP is hinting at.
  - brohoolio 9y ago
    Cash for clunkers pulled lots of used cars off the market but my understanding is plummeting manufacturing of new cars after the financial crisis was responsible for a much higher percentage of the gain. Cash for clunkers pulled like 700k out of the market. The auto industry was making millions less cars and trucks per year from 2008-2012.

eveningcoffee 9y ago

Does it have something to do with QE? Car leases commonly rely on some expected value at the end of the lease. Even when it is some relatively down played value then this information means that it would become even lower. This should also then mean that the lease should become more expensive. Eventually lack of information should cancel itself out.

hydrogen18 9y ago

We need another cash for clunkers deal immediately!

jessaustin 9y ago
When Trump announces this in January 2020, his reelection will be assured... /s

rawrmaan 9y ago

Interesting that this has nothing to do with ride sharing (or at least the article doesn't cite that as a reason). I think autonomy and ride sharing will drive used cars nearer to the value of scrap metal within the next 5 years.

ghaff 9y ago
Uber/etc. make a difference at the margins but don't drastically reduce car ownership. I'd believe the effect is greater with those who don't buy new cars but still limited effect. I expect full autonomous driving to be much further out. Where it could have an effect though is this. To the degree that new vehicles become much more attractive because of new sensor and software features, that would likely drive used car prices down. These could certainly increase the perceived value of a current model year car vs. one from five years ago.
stephengillie 9y ago
How many miles will an Uber driver drive in a year - how many miles are they putting on the car? It pushes their value down, similar to taxis or police cars. Consider 2 similar 2015 Priuses, one with 32,000 mi, the other with 92,000 mi. The one with lower mileage will usually net a higher sale price.
TheAdamAndChe 9y ago
Your comment displays the incredible social and economic compartmentalization between the Silicon Valley/tech hubs of the country and everywhere else. Uber is not a viable alternative to vehicle ownership for the majority of places in the country, particularly in poorer and more rural areas, and likely never will be. When you've got to drive 20 miles to reach town, ordering an Uber doubles the time required to get there. As far as automation goes, in the consumer market, I highly doubt it will be anything more than a rich person's luxury for a good long while, since most people can barely afford a $10k vehicle, let alone a $100k one.
- rawrmaan 9y ago
  I appreciate your comment. I definitely didn't see it that way until now but I think you're right.

ProfessorLayton 9y ago

Its looking even worse (Or better for a buyer) for electric cars. A cursory craigslist search shows a 2014 Fiat 500e for ~7.5k @33k miles and Nissan Leafs for as little as ~5k @42k miles. All with clean titles. A used Model S 60 (2013) can be found for ~40k @60k miles, which I think is good but not great, especially considering the quality issues early on. I'm waiting to pounce on 1st generation electric cars that will be hitting the used market when the Model 3 is mass produced. The reason I haven't bought yet is that my current hybrid is fine and I expect used electric car prices to drop even further.

olivermarks 9y ago
Production of the Chevrolet Bolt has stopped due to lack of demand and bulging inventory, part of the overall problem discussed on this thread http://fortune.com/2017/07/17/gm-shutdown-chevy-bolt-supply/ http://fortune.com/2017/07/17/gm-shutdown-chevy-bolt-supply/
- dangrossman 9y ago
  All other articles and GM comments say that the extended summer shutdown is to increase Bolt supply, not because there is too much supply already. The Bolt outsold both of Tesla's vehicles last month. The Sonic has weak sales, so during the shutdown they're reconfiguring the plant to make 1 Bolt for every 1 Sonic, where it was 1:2 before.
  - olivermarks 9y ago
    Do you have a link to support this? My comment/link wasn't a dis of EV's, it was pointing out the glut of inventory GM are sitting on, including EV's. If you are interested in a Bolt now would be an excellent time to bargain for one at the dealership...
    - olivermarks 9y ago
      https://www.thestreet.com/story/14234261/1/chevy-bolt-is-a-damn-good-electric-car-so-why-are-sales-suffering.html https://www.thestreet.com/story/14234261/1/chevy-bolt-is-a-d...

afinlayson 9y ago

This may be temporary, as services like Uber/Lyft increase, and the possibility of Autonomous Vehicles driving down the cost of those services. This would cause the volume of new cars needed to dramatically fall, leading to increased cost of those new vehicles. This would increase the value of used vehicles that are currently priced in. Would love to hear differing opinions :)

james-skemp 9y ago
> This would cause the volume of new cars needed to dramatically fall [...] I don't disagree with you, but when reading the article you'll notice that the auto industry is pushed to sell more cars, year after year. Like a number of industries, now that they've had years/decades of growth, I'm not sure how they would handle significant loses. Heck, even stabilization. I'm over 35, but consider myself young; was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat?
- marcosdumay 9y ago
  > was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat? Since the Industrial Revolution, I don't think so. Now that you mentioned it, I think the concept of "corporation" is intrinsically related to growth.
RhodesianHunter 9y ago
"Would love to hear differing opinions :)" Erm... A decrease in demand does not lead to an increase in price.
- tmnvix 9y ago
  That's a bit simplistic. Substantial demand makes economies of scale possible which can lead to lower prices. The opposite is also true (i.e. lack of demand leading to increased production costs).

olivermarks 9y ago

As understand it, too easy autoloans and resulting past buying/leasing saturation are a big issue - a pessimistic view on zerohedge: http://www.zerohedge.com/news/2015-04-08/auto-loan-bubble-endgame-used-car-prices-have-stalled http://www.zerohedge.com/news/2015-04-08/auto-loan-bubble-en...

grecy 9y ago

With many countries tabling laws to outlaw the sale of diesel and gasoline cars around 2030, this is going to accelerate extremely quickly. In 5 years (2022), everyone will know it will be illegal to buy a gasoline car in just under 8 years. I think there will be very little demand for the regular old gas powered car. (excepting maybe exotics, or "pleasure drives", which much be a tiny fraction of overall sales) That car you have to fill with liquid cancer is going to be worth extremely little, very soon.

slg 9y ago
Aren't all those laws focused on new cars? I can't imagine the backlash a government would receive by zeroing out the value of most people's most expensive possession.
- grecy 9y ago
  Yes, the laws only apply to new vehicles. It's similar to when Color TVs were invented. What happened to the re-sale value of all the B&W TVs that were already out there? They plummeted, because they had been superseded. This scenario will be even more aggressive, because laws will ban the sale of the "old tech".
  - loeg 9y ago
    No, the laws will only affect new car sales, not the old tech. That doesn't affect the secondary market for used gasoline cars in the slightest.
    - KekDemaga 9y ago
      It might have the opposite effect, making them more rare and increasing prices even.
      - deleted 9y ago
        [deleted]
  - 9y ago

jgh 9y ago

checked the KBB for my car back in may and it said $10k (2010 a4), checked again last month and it was down to $8500. I'm not really depending on the car to retain any value at all, but it's interesting to see how quickly that price is dropping.

aidenn0 9y ago
KBB on my car dropped 60% in the past 18 months (10k to 4k).

loeg 9y ago

Awesome. My 20 year old car is in great shape but it is getting older and I will need to replace it sooner or later.

zzalpha 9y ago
Exactly what I was thinking. We have a gently used, 10 year old Fit and have been casually considering an upgrade in the next few years. Looks like our timing couldn't be better...
gozur88 9y ago
Apparently you won't get much for it, then. I'm kind of in the same boat, but I'd really like to get an electric model that's been produced for a few years, which means there won't be much on the used market.
- hammock 9y ago
  You missed his point. He will wear out his car until it has no value then gladly buy another used car at a great price.
  - gozur88 9y ago
    I didn't miss the point. That was a joke.
- madengr 9y ago
  There are lots of 2015 Nissan Leafs coming off 2 year leases. I picked up one 6 months ago for $8500 with 19k miles.
  - gozur88 9y ago
    The Leaf is a bit lean on range for me. That's not a bad price, though.
- Cerium 9y ago
  About two years ago I bought an off lease 2012 Nissan Leaf for about 12k including all taxes and fees. It had 20k miles on it, very good condition, and battery at about 90%. So far I have been very happy, and have spent nearly no money on the car besides insurance and registration since my employer offers free charging. Obviously range is an issue, but is mitigated since I am married and have a gas car as well to use on longer trips. My wife and I never both drive further than the leaf can take us in a normal work day. Anyway, I tell this story because I was surprised to find that there were a huge number available in the Bay Area where I live. It seems that uncertainty over future models with increased range and the lifespan of the batteries has made many people reluctant to make a purchase leaving quite a glut. The retailer I purchased from had about 25 Nissan Leafs in his lot.

wbracken 9y ago

Tangentially in the business. Two recent stories told to me: 1) Saw at Manheim Auto Auction (one of the largest) 300 Nissan Leafs run through the auction line in one afternoon ahead of some of our cars. Drop in "value" of leafs went down 10%+ in one day. All were recently off lease. 2) For similar reason, Santander is holding 4000+ cars on auction lots "waiting for pricing to stabilize". Reality is, when they run those cars through the auction, they will have to book the full losses. Say they anticipated 20% repossession rate and that they would get 80% on the dollar when auctioned on those losses. When they run them through now and get 50% on the dollar, their securitization pools will be creamed.

dshibarshin 9y ago
The overseas markets can't seem to get enough of the Leafs. I've seen trucks full of Leafs delivered for export to places such as Ukraine.
- DigitalJack 9y ago
  Saw zero leafs during my week in London. Same with a week in Glasgow. Boat loads of prius’ though.
  - sgt101 9y ago
    There are quite a few round here (rural Suffolk, UK) I've seen a few in London, Nissan don't seem to market them very hard in the UK.
  - Symbiote 9y ago
    The UK is the third biggest market for Leafs, 20,000 sold. http://newsroom.nissan-europe.com/uk/en-gb/media/pressreleases/426191418/nissan-leaf-charges-to-20000-uk-sales-as-all-electric-favourite-is-named-best-green-car-in-2017-driv http://newsroom.nissan-europe.com/uk/en-gb/media/pressreleas...
  - tolien 9y ago
    As well as private owners, both places have a car club using them too [1] - I guess it’s possible the low value makes them more attractive for that use. http://www.co-wheels.org.uk/electric_vehicles http://www.co-wheels.org.uk/electric_vehicles

SilasX 9y ago

Hah! Just yesterday I was remarking how car gluts don't translate into lower consumer prices because the government quickly props up demand: https://news.ycombinator.com/item?id=15064436 https://news.ycombinator.com/item?id=15064436

brigade 9y ago
The opposite really; cash for clunkers mostly just moved existing demand forward a year without increasing it in even the medium term. Rather, it did put a lasting dent in the supply of used cars, artificially increasing used prices.

jedberg 9y ago

I just bought a new van. It was rediculously easy for me to get a loan for 105% of the retail price (and I didn't even pay retail). I opted not to get the full loan for obvious reasons. But the fact that I could is frightening. There will be so many people underwater on their loans. The car bubble is coming and it's going to pop hard.

jogjayr 9y ago
I thought anyone who finances a new car is underwater as soon as they drive off the lot. Don't new cars depreciate something like 20% the day you buy them? EDIT: I was wrong it's closer to 9% [1] [1] https://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html https://www.edmunds.com/car-buying/how-fast-does-my-new-car-...
- rlanday 9y ago
  Depends how big of a down payment you make.
JSONwebtoken 9y ago
Why wouldn't you take the loan on your van? Interest rates are under 3%, which is definitely cheaper than any mortgage or student loan you might be carrying. Auto loan risk is significantly mitigated by modern advancements in GPS & tracking technology. No other collateral is as easily repossessable as a modern car.
- jedberg 9y ago
  3% is barely less than the mortgage, and it wouldn't be worth the hassle. Also I would never pay down my mortgage early. Which means I need to find an investment that will have a greater than 3% return. Since I can't really guarantee that, it's not really worth it. I'd rather not put myself into a situation where I'm that badly underwater.

mrfusion 9y ago

I really found the opposite last month when I was truck shopping. The prices at carmax weren't much lower than buying new. I even found one case where it was cheaper to buy new! I'm wondering if people hate the dealership experience so much they're driving up the price of used cars? I'm still just utterly confused by the used truck prices I was seeing.

hkmurakami 9y ago
Afaik trucks are the strongest US auto segment (iirc Toyota can't make enough of them right now and are increasing production capacity in their Mexico plant), so maybe you hit an outlier segment.
- francisofascii 9y ago
  That's really interesting. It is the low gas prices? Or strength in the construction sector?
  - selectodude 9y ago
    The former.
    - dsfyu404ed 9y ago
      A 4dr crew cab can haul the kids to soccer and move furniture all while requiring one parking spot. It's a good multi-tool at the expense of operating costs. The cost of insurance, registration and (possibly) parking buys a hell of a lot of gas. Think of a vehicle as having indoor storage, long term comfort (space to not be cramped) outdoor storage and passenger capacity. Crew cab trucks are used like full size sedans with outdoor storage instead of a trunk. That's a pretty good blend for most use cases since most people can use the second row as a trunk when not carrying passengers. Insurance, registration and parking costs are a disincentive to buy specialist vehicles (like the electric commuter cars HN loves).
damnfine 9y ago

S_A_P 9y ago

This bubble has been building for years now. Wholesalers and other exporters have been hiding the problem for a while now, and but somethings got to give. The problem is multifaceted: 1) Lease rates arent necessarily in sync with the used car market 2) Buyers are keeping cars longer if they purchase 3) Subprime loans and buy here/pay here dealers are multiplying. THIS IS A BUBBLE. I wont call when its going to burst, and it wont be like the housing bubble, but the fallout will be great...

gnicholas 9y ago
Any predictions on how the popping bubble will ripple through the economy? With the housing bubble, there was a huge pull-back in consumer purchasing, as people lost hundreds of thousands of dollars in home equity. That caused a drop in consumer confidence and purchasing, which led employers to cut back on wages/hours, which led to further drops in consumer purchasing. Do you think we'll see the same domino effect here, but just at a lower magnitude? Or is there a different path for this bubble to ripple out through? Perhaps when people lose cars they lose jobs that they can no longer commute to?
- S_A_P 9y ago
  I don't think that it will be as severe. The big banks are largely insulated from this. I do think that it will be a buyers market for late model used cars for cash buyers. I'm already seeing signs of this. It's just not quite there yet but I bet I can get a car at 50% traditional market price soon.
  - bluGill 9y ago
    I think the banks as in the car manufacture's finance arms will be hit the most: when it hit they are the ones who are suddenly owners of a car that they owe more on than it is worth. They will have to sell these cars at a loss. If they try to make up for that loss by raising lease rates those who turned their car in will be forced buy a used car at greatly reduced rates (few have the ability to afford much larger payments) Those who buy their car have a known payment, they might owe far more than the car is worth but that payment won't chance and other than an accident they eventually have a paid off car. They might not be able to trade their car in as soon as they would like, but they at least have a car.

kevin_thibedeau 9y ago

> What’s more, an increasing share of those sales came with a lease, so there’s now a rising tide of machines flowing back onto the market when their three-year contracts run out. Hopefully the 1%'s lobbyists won't figure out how to plug this loophole in their rentier serfdom.

justinph 9y ago

Sure, as far as basic transportation goes, but you can't get the vastly improved safety features in a used car that you can in most new cars today. Buy a new Toyota? It comes with automatic emergency braking, collision avoidance, blind spot detection, adaptive cruise control, and built-in backup camera, standard. Buy a used 2014? It has none of that. I just bought a new car for the first time in my life. The safety of those features was worth the $10k premium for a new car.

ethbro 9y ago
$10k premium + accelerated depreciation And in 3 years, I'll have all those features on my used Toyota. ;)
- wmeredith 9y ago
  And if you buy a used luxury sedan, you can have all that stuff now. Go pick up a 2006 Lexus LS430 with 150,000 Mike's on it for $10,000; they were $70k new and have all those whizbang safety features and it's a Toyota Avalon underneath. You can put 400,000 miles on them if you treat them right. You can do the same thing with the big German luxury sedans, but upkeep will be more. Those aren't Toyotas underneath. It's still pretty reasonable for the amount if car you get; just budget for it.
  - TylerE 9y ago
    You couldn't be more wrong. Built on a totally different platform than the Avalon (The Avalon is even FWD) No pre-collision braking (A partial system was included on some Japanese models, but none on the US model) No blindspot monitoring So, hardly "all that stuff".
    - alexanderstears 9y ago
      Here's an easy way to be more wrong: The LS430 is basically a Toyota Cavalier. Or - the LS430 is basically a Toyota Century.
  - 9y ago

KKKKkkkk1 9y ago

If the rate of depreciation has increased, wouldn't that make price as a function of age more convex than before? Meaning that new car depreciation is accelerating, but used-car depreciation is slowing down?

tempestn 9y ago

Ever since that pg post, I can't help thinking about how much of a role PR plays in stories. Did Black Book and Cargurus just happen to get mentioned here? Or did they reach out to the journalist, or vice-versa? Did they pay for the privilege? (Doubt it, but possible.) Always tough to know, since the best PR is subtle enough that you at least wonder whether it was involved at all.

ctack 9y ago
Please link the pg post.
- tempestn 9y ago
  http://www.paulgraham.com/submarine.html http://www.paulgraham.com/submarine.html