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At least in the USA, due to COVID there has been lower than normal new car inventory at dealerships for the second half of 2020. This drove new car prices up w

by bradfa 6y ago

At least in the USA, due to COVID there has been lower than normal new car inventory at dealerships for the second half of 2020. This drove new car prices up which in turn drove used car prices up. At the end of 2020 it seemed like the inventory problems for new cars might be coming to a close in early 2021, but if this shortage of semiconductors is real then maybe early 2021 still won't see new and used car prices come back down for a bit longer.

eulers_secret 6y ago
Drove up new car prices, too: https://economics.td.com/us-vehicle-sales https://economics.td.com/us-vehicle-sales "From an automotive standpoint, dealership inventory remains lean – currently sitting at a nine-year low and down 22% for year-ago levels – which has already led to some reversal in the very generous summer incentives", which indicates higher prices. I couldn't find pricing data. This new shortage + current shortages + low interest rates = high prices on used/new. I was thinking of buying something last year, but now I think I'll wait until '22 or '23. (or if I can WFH, never!)
- bradfa 6y ago
  Yeah, I was also hoping to buy a vehicle in 2020 but ended up holding off due to not driving nearly as much now and due to the prices going up. I was hoping prices would come back down in 2021 but we shall see...
  - aNoob7000 6y ago
    I'm complete confused about the economy in the United States. You look at the news and all you hear about is the enormous amount of financial pain families are going through at this time. But then you hear about cars and trucks flying off of dealership lots. I guess I'll be holding onto my 2011 Honda Odyssey until it catches fire on the road.
    - pkaye 6y ago
      I've heard its a K-shaped recovery. Some parts recovered quickly but others didn't. For example service and tourism didn't. But tech and construction is less impacted.
    - aidenn0 6y ago
      The average income (including stimulus checks) in the US went up, while at the same time lots of people losing their jobs. People who didn't lose their jobs (or have their hours curtailed), are doing significantly better because they aren't spending as much money and got stimulus checks. Meanwhile those who did lose their jobs are screwed. These people were probably also poorer before COVID hit, so fewer of them would have bought a new car absent COVID anyways. This is also why the stock market can't seem to crash; bond yields are super low, and there is more money being saved (and thus looking for investments) than ever. That's been the problem in the US for the past 45 years or so. We have a lot of wealth, it's just not particularly evenly distributed. Every single financial shock in my lifetime has made the problem worse.
      - mark-r 6y ago
        I bought my new car exactly a week before being laid off.
    - WrtCdEvrydy 6y ago
      > my 2011 Honda Odyssey until it catches fire on the road. Good luck, I bought a 2005 toyota corolla with the idea of driving it until it died. I am now concerned the car will bury me instead.
      - wing-_-nuts 6y ago
        >I am now concerned the car will bury me instead. No that's the toyota krushchev
    - d1zzy 6y ago
      It's a bit easier to understand when you factor the fact that: 1. average US houshold income is very high 2. cars are a must (both for cultural and practical reasons), not a luxury Yes, in times of job loss and other economic strain consumers will stop buying certain things, but likely not cars (at first).
- vecinu 6y ago
  > I couldn't find pricing data. https://www.cargurus.com/Cars/price-trends/ https://www.cargurus.com/Cars/price-trends/ is a good reference for following used car pricing trends. All signs point to them going up and barely flattening now.
mywittyname 6y ago
Used car price drops lag new car sales, since used cars cascade through the market for years.
- Baeocystin 6y ago
  Used car pricing went sideways after the cash for clunkers program, and the market still hasn't re-normalized, at least here in California. I'm surprised at how long the effects are lasting.
  - mywittyname 6y ago
    Sorry, but this is bullshit pedaled by people who've never given an ounce of thought to the economics of car buying. C4C effected 700k cars from the 90s, all of which were worth less than $3,000. There were, at the time, roughly 250 million registered vehicles on the road. There's absolutely no chance that this had any effect what-so-ever on the market for used cars. 700k is literally a rounding error when compared to 250 million. What hurt the used car market was the fact that new car sales fell from roughly 15 million a year in 2008, to 9 million a year a year in 2009. It took until 2015 before cars sales reached that of 2008. All told 40 million fewer cars were produced between 2009 and 2015 compared with how many would have been produced if not for the GFC. Those 40 million cars that were never produced are what caused used car prices to spike. Not the 700k Ford Windstars and Explorers lost to C4C. Anyone who tells you different is a fool.
    - Baeocystin 6y ago
      You make good points.
namdnay 6y ago
The whole “dealer inventory” thing seems so strange as an outsider. Is it specific to the US? Or North America? In Europe (or at least the European countries I’ve been in) and Japan, you go to the dealer, they will have a few showroom and test cars, and then you sit down, spec your car, haggle the price (this is changing in Europe with third parties who will negotiate for you), and then wait for your car to come out of the factory From time to time there will be a showroom car on sale that matches, especially if you’re near the end of that generation
- throwaway201103 6y ago
  In the US (and I assume also Canada) it's almost the exact opposite. Custom order cars are possible, but rare. The vast majority of new cars sold are built with a factory-chosen set of options and sold from dealer inventory. Transferring a car from another nearby dealer if needed is also fairly common, if they had the particular color or option group the buyer wanted but the local dealer didn't.
  - d1zzy 6y ago
    Which made car shopping quite a hassle for me because I wanted something that isn't very common (non-sport trim with highest spec options and manual gear) but which wouldn't have been any problem at all for the manufacturer (since they list those options on their site for those models). But why do you think the system is setup this way? Car dealerships in the US having more money (or financing access) to keep stocks than other parts of the world? US customers wanting instant gratification for their purchase? (although, likely, anyone likes that over delayed car delivery, it's just that once you get used to instant car delivery is hard walk away from it)
    - ky3 6y ago
      Spitballing here: more land in the US means lower cost to stock cars in dealerships. Also makes it easier to do an impulse purchase with all the easy financing available, compared to the European scenario of waiting for delivery (and possibly changing one's mind).

by bradfa 6y ago

eulers_secret 6y ago

Drove up new car prices, too: https://economics.td.com/us-vehicle-sales https://economics.td.com/us-vehicle-sales "From an automotive standpoint, dealership inventory remains lean – currently sitting at a nine-year low and down 22% for year-ago levels – which has already led to some reversal in the very generous summer incentives", which indicates higher prices. I couldn't find pricing data. This new shortage + current shortages + low interest rates = high prices on used/new. I was thinking of buying something last year, but now I think I'll wait until '22 or '23. (or if I can WFH, never!)

bradfa 6y ago
Yeah, I was also hoping to buy a vehicle in 2020 but ended up holding off due to not driving nearly as much now and due to the prices going up. I was hoping prices would come back down in 2021 but we shall see...
- aNoob7000 6y ago
  I'm complete confused about the economy in the United States. You look at the news and all you hear about is the enormous amount of financial pain families are going through at this time. But then you hear about cars and trucks flying off of dealership lots. I guess I'll be holding onto my 2011 Honda Odyssey until it catches fire on the road.
  - pkaye 6y ago
    I've heard its a K-shaped recovery. Some parts recovered quickly but others didn't. For example service and tourism didn't. But tech and construction is less impacted.
  - aidenn0 6y ago
    The average income (including stimulus checks) in the US went up, while at the same time lots of people losing their jobs. People who didn't lose their jobs (or have their hours curtailed), are doing significantly better because they aren't spending as much money and got stimulus checks. Meanwhile those who did lose their jobs are screwed. These people were probably also poorer before COVID hit, so fewer of them would have bought a new car absent COVID anyways. This is also why the stock market can't seem to crash; bond yields are super low, and there is more money being saved (and thus looking for investments) than ever. That's been the problem in the US for the past 45 years or so. We have a lot of wealth, it's just not particularly evenly distributed. Every single financial shock in my lifetime has made the problem worse.
    - mark-r 6y ago
      I bought my new car exactly a week before being laid off.
  - WrtCdEvrydy 6y ago
    > my 2011 Honda Odyssey until it catches fire on the road. Good luck, I bought a 2005 toyota corolla with the idea of driving it until it died. I am now concerned the car will bury me instead.
    - wing-_-nuts 6y ago
      >I am now concerned the car will bury me instead. No that's the toyota krushchev
  - d1zzy 6y ago
    It's a bit easier to understand when you factor the fact that: 1. average US houshold income is very high 2. cars are a must (both for cultural and practical reasons), not a luxury Yes, in times of job loss and other economic strain consumers will stop buying certain things, but likely not cars (at first).
vecinu 6y ago
> I couldn't find pricing data. https://www.cargurus.com/Cars/price-trends/ https://www.cargurus.com/Cars/price-trends/ is a good reference for following used car pricing trends. All signs point to them going up and barely flattening now.

mywittyname 6y ago

Used car price drops lag new car sales, since used cars cascade through the market for years.

Baeocystin 6y ago
Used car pricing went sideways after the cash for clunkers program, and the market still hasn't re-normalized, at least here in California. I'm surprised at how long the effects are lasting.
- mywittyname 6y ago
  Sorry, but this is bullshit pedaled by people who've never given an ounce of thought to the economics of car buying. C4C effected 700k cars from the 90s, all of which were worth less than $3,000. There were, at the time, roughly 250 million registered vehicles on the road. There's absolutely no chance that this had any effect what-so-ever on the market for used cars. 700k is literally a rounding error when compared to 250 million. What hurt the used car market was the fact that new car sales fell from roughly 15 million a year in 2008, to 9 million a year a year in 2009. It took until 2015 before cars sales reached that of 2008. All told 40 million fewer cars were produced between 2009 and 2015 compared with how many would have been produced if not for the GFC. Those 40 million cars that were never produced are what caused used car prices to spike. Not the 700k Ford Windstars and Explorers lost to C4C. Anyone who tells you different is a fool.
  - Baeocystin 6y ago
    You make good points.

namdnay 6y ago

The whole “dealer inventory” thing seems so strange as an outsider. Is it specific to the US? Or North America? In Europe (or at least the European countries I’ve been in) and Japan, you go to the dealer, they will have a few showroom and test cars, and then you sit down, spec your car, haggle the price (this is changing in Europe with third parties who will negotiate for you), and then wait for your car to come out of the factory From time to time there will be a showroom car on sale that matches, especially if you’re near the end of that generation

throwaway201103 6y ago
In the US (and I assume also Canada) it's almost the exact opposite. Custom order cars are possible, but rare. The vast majority of new cars sold are built with a factory-chosen set of options and sold from dealer inventory. Transferring a car from another nearby dealer if needed is also fairly common, if they had the particular color or option group the buyer wanted but the local dealer didn't.
- d1zzy 6y ago
  Which made car shopping quite a hassle for me because I wanted something that isn't very common (non-sport trim with highest spec options and manual gear) but which wouldn't have been any problem at all for the manufacturer (since they list those options on their site for those models). But why do you think the system is setup this way? Car dealerships in the US having more money (or financing access) to keep stocks than other parts of the world? US customers wanting instant gratification for their purchase? (although, likely, anyone likes that over delayed car delivery, it's just that once you get used to instant car delivery is hard walk away from it)
  - ky3 6y ago
    Spitballing here: more land in the US means lower cost to stock cars in dealerships. Also makes it easier to do an impulse purchase with all the easy financing available, compared to the European scenario of waiting for delivery (and possibly changing one's mind).