11 ms·

Ask HN: When will car prices normalize?

27 points by arikr 5y ago

What’s causing demand to be so high, and when might that go down, and what’s causing supply to be low, and when might that go up?

thghtihadanacct 5y ago
Demand will go down as gas keeps climbing. The days of $3 gas are fairly gone. Time to start seriously considering alternatives.
- MisterTea 5y ago
  > The days of $3 gas are fairly gone. I feel like we keep hearing this every time something big happens in the world and within a year or so, it's back to normal. Not that I believe either statement.
  - giantg2 5y ago
    With inflation the way it is, I wouldn't doubt that prices close to $4 would be more where it stabilizes for a few years.
  - thghtihadanacct 5y ago
    Back to normal, as in, new oil just magically appeared? Regardless of international situations, and I feel strange needing to say this, we will run out of cheap oil. We will also run out long before the creation of a good petrol alternative for ICE vehicles. Alternatives are how the less than wealthy are going to make it thru. For example, I have arranged my life to not need a car. Wasnt easy and I need to spend my car money on a house but it is what it is.
    - l30n4da5 5y ago
      > I have arranged my life to not need a car Location very much takes a role in being able to do this, I think.
    - travisporter 5y ago
      ugh magically appeared is true kinda with opec pulling levers as they feel like it. I dream of a no car life. Hate driving but it’s really tough in the US. Was in heaven for a week when I visited Switzerland
    - nradov 5y ago
      New oil "magically" appears all the time as drilling companies find new fields and improve extraction technology. Most recently the invention of fracking made a huge difference in supply. We will never run out, but over an extended period we can expect prices to gradually increase (with some temporary fluctuations). There's still a lot of room to increase the fuel efficiency of ICE vehicles with hybrid power trains and lighter parts.
      - thghtihadanacct 5y ago
        Wait, are you saying we will never run out of cheap oil? Sure, there will still be drillable oil in my lifetime but it isnt going to be used to push cars around. I am also willing to bet, insofar as getting rid of all my ICE vehicles and getting solar going etc, that petroleum products are going to be prohibitively expensive in the next 10-15 years. There is more intrigue to oil than just the cost of turning it into gas.
        nradov 5y ago
        I am saying that in 15 years, gasoline will still be affordable for routine use by middle class people in developed countries. It will be a little more expensive but not prohibitively so. Look at long term trends for consumption versus proven reserves. More oil is found every year, and technical advancements keep making it economical to squeeze more out of existing fields. Solar power doesn't do much to reduce petroleum demand.
  - pengaru 5y ago
    It's not like gas prices haven't gone up substantially over the past 20 years... The new 9/11 NYC footage that was recently making the rounds captured a gas station with its prices in view, they were all $1.XX/gal.
    - HeyLaughingBoy 5y ago
      They've also fluctuated quite a bit. I remember paying $1.95/gallon for gas in early 2020.
    - MisterTea 5y ago
      Well a little inflation is always bound to happen. We had >$4 gasoline in the 00's when I got rid of my Tahoe as fuel was inching towards $5. > "...captured a gas station with its prices in view ..." Where was this footage taken from, NY or NJ? Back then NJ always had stupidly cheap gasoline compared to NY. I always waited until NJ to fill up on road trips.
      - pengaru 5y ago
        Looks like NYC to me, it's rather close and right on the waterfront: https://www.youtube.com/watch?v=1gBJvGMZIYA&t=332s https://www.youtube.com/watch?v=1gBJvGMZIYA&t=332s Which if what you say is true about the relative local prices, suggests these are above average prices for the era and still sub $2.
    - vikingerik 5y ago
      That actually means gas prices haven't gone up, or not by much. In the 20 years from 2001 to today, inflation roughly doubled everything. If gas went from $1.9x then to $4 today, that's actually not far out of line. The Russia supply shock this month is unusual, but the mid-$3 pricing plateau over the preceding year was quite normal by historical standards.
      - pengaru 5y ago
        > That actually means gas prices haven't gone up, or not by much. In the 20 years from 2001 to today, inflation roughly doubled everything "Inflation" is a nebulous word, if you're referring to CPI, isn't oil price (via transportation, fertilizer costs) a major contributor to that increasing? I'd expect a historic fuel price chart corrected for CPI to be roughly a horizontal line, because fuel prices majorly contribute to it.
- newaccount74 5y ago
  Gasoline costs a lot more than that in Europe and still everyone has a car. I think the current price is still a lot less than the market would pay. I'm pretty sure people are going to switch to EVs rather than give up driving.
  - anthony_r 5y ago
    Yup. Converted to gallons and the US dollar in Switzerland you have to pay $9.35 for gas (CHF2.3 per liter). Yet there's no shortage of cars on the highways here.
    - giantg2 5y ago
      It's always hard to compare value internationally, but... The median income in Switzerland is about $125k USD. That's more than twice the median in the US. It sounds like the affordability of $9/gal gas is greatly different. US politicians are actually suggesting things like a stipend or stimulus payment to help people pay for gas. Ridiculous, but that's how it is.
      - anthony_r 5y ago
        FWIW: the gas price is about the same in Germany, which has a median yearly income of about $45k.
      - rolisz 5y ago
        In Romania the gas prices are about 6.38$/gallon. I'm pretty sure average income in Romania is much lower than in the US.
      - potta_coffee 5y ago
        Distances driven in the US are often much higher as well. People I know regularly commute 30 to 60 minutes one way to get to work. Some tradesmen I know are driving 2 hours to get to the jobsite.
        giantg2 5y ago
- meragrin_ 5y ago
  Demand won't go down. It will just shift to different vehicles. Hybrids and electric will go up in demand.
onion2k 5y ago
JP Morgan reckons things will be back to normal by 2025. I imagine the war in the Ukraine and its impact on neon production (necessary for the lasers that are needed make chips) will push that out a bit further though. https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage https://www.jpmorgan.com/insights/research/supply-chain-chip...
atlantas 5y ago
Ditto housing. I just can't believe that people are able to afford the prices of the past 1-2 years and many must be paying beyond their means? I know Blackrock and other parasites are scooping up housing too, but that's not the majority of buying.
- Bostonian 5y ago
  "Blackrock and other parasites" A large landlord is not a "parasite". He makes money by fulfilling a vital need for housing. Blame housing regulation, not landlords, for high rents and home prices.
  - blueprint 5y ago
    A Federal Reserve is not a "parasite". He makes toilet paper by fulfilling a vital need for QE. Blame foreign policy, not the Federal Reserve, for high inflation and home prices.
  - MisterBastahrd 5y ago
    Capturing the supply to raise rates is about as parasitic as you can get when talking about something that people absolutely need to have. The town I live in didn't get substantially larger population-wise, but home prices have risen almost 45% in the past 2 years because Zillow and other large corporations have been plucking up homes for sale left and right to squeeze the market.
  - tonyedgecombe 5y ago
    Landlords leverage their easy access to capital to extract rent from those without. It looks parasitic to me.
    - HeyLaughingBoy 5y ago
      Or you could view it as performing a service for those who don't have that easy access to capital.
      - 5y ago
Mezzie 5y ago
I know some of the supply side difficulties come down to electronics supply issues: We had a bunch of new, built cars just sitting in parking lots here (MI) that were complete except for some of their electronic components. It was bizarre to drive past dozens of unused shiny cars while people in town can't buy a car at a decent price. I'd expect this aspect of the problem to stabilize in a few years at most, because if the components continue to be a problem, the car companies will either start making cars without them again (I wish but unlikely) or secure their own components' supply.
quaffapint 5y ago
Right now we're playing the gambling game of sinking the cost of fixing our old, high mileage car rather than paying the inflated prices. The question of course is how long do we hold out (or will the car hold out) in the cost of fixing becoming more expensive then the inflated costs.
rr808 5y ago
I'm pretty sure those 15 mpg mega trucks and SUVs will be cheap soon.
- neogodless 5y ago
  Most people buying large trucks and SUVs are not thinking about the monthly cost (or minimizing such) of ownership (beyond a few minutes of "negotiating" while purchasing to get a payment they are comfortable with). If you drive 12,000 miles / year and get 15 mpg, $3/gallon is $2400, and $5/gallon is $4000. What is an additional $1600 / year for a car you're already paying $12,000 / year for (assuming $60k, 60 months)? So while demand might decrease (particularly if EV pickup truck production capacity grows rapidly), I would not expect $60k vehicles to quickly become "cheap."
  - anthony_r 5y ago
    LPG powered SUVs are the future.
  - tonyedgecombe 5y ago
    It's the second hand market that will be most affected by increased fuel prices. Assuming 18% depreciation a year that car will be $22K for the next owner. Then that extra $1,600 per month becomes more significant.
ksec 5y ago
>What’s causing demand to be so high When some people wants one, and there aren't enough, suddenly everyone wants one. Herd mentality. >and when might that go down. When there is enough for everybody, price will fall, and all of a sudden people will just decide to wait a little longer. ( So Called Demand disappeared ) >what’s causing supply to be low Chips, COVID, Shipping, Containers Shortage, Gas Price, GeoPolitics and War. It is quite literally the perfect storm on Supply Chain. >when might that go up? When we over estimate the so called demand and over invest into the supply capacity.
- amelius 5y ago
  > When some people wants one, and there aren't enough, suddenly everyone wants one. Herd mentality. Rational behavior: better get one before the prices go up more.
  - throw0101a 5y ago
    Works the the other way too: lowering prices causes people to wait to buy, which causes production slowdowns, causes layoffs, causes fewer people making purchases, causes price cuts. * https://en.wikipedia.org/wiki/Deflation#Deflationary_spiral https://en.wikipedia.org/wiki/Deflation#Deflationary_spiral
- xnx 5y ago
  I expect high gas prices to cause some hesitation in buyers.
  - drewzero1 5y ago
    True, but that's only within the past month. Used car prices have been high through at least 2021.
giantg2 5y ago
Some of it is probably caused by supply chain disruption. Some of it could be related to people moving due to the pandemic related changes - leaving some areas (crime/health/political concerns), moving for work or because it's remote now, more room for home/remote schooling or work, etc. Some of it could be minimized using inflation adjustment. I think many people are living at or beyond their means. There are a lot of people (still a small minority though) that have a lot of money and are willing to use it. Who bothers saving suffiently for retirement? Many people don't make enough to adequately save for retirement. Most of the people who do have the income would rather have a bigger or fancier house and a brand new Tesla/BMW/etc, possibly because they think they will always be making that level of money or are out of touch with reality. For example, I had a manager who had a big house in a nice area, Tesla, another EV, 3 kids with college funds, etc. He said something like everyone (at the company) should be contributing the max ($20k) to their 401k every year. WTF? Most of us make under $100k and can't afford to save that much, especially with a family to support and a mortgage. We aren't all managers with a physician for a wife. Completely out of touch.
- cactus2093 5y ago
  So you are simultaneously arguing that most people are irresponsibly spending their money instead of saving for retirement, and also that it's impossible for them to save more for retirement? Then your example is a manager who epitomizes wasteful spending while still maxing out his 401k? I really have no idea what you're saying in this comment.
  - giantg2 5y ago
    No. There are multiple groups and subgroups. "Many people don't make enough to adequately save for retirement. Most of the people who do have the income would rather have a bigger or fancier house and a brand new Tesla/BMW/etc, possibly because they think they will always be making that level of money or are out of touch with reality." Many people don't make enough to adequately save for retirement. You could probably say that this could in fact be most people when you look at things like Fidelity or Vanguard stats on the state of retirement accounts and savings in the US. Then there are still many people, but not a majority, who do make enough money to adequately save. Of these, a majority of them seem to live beyond their means with respect to purchasing houses significantly above the rule of thumb (2.6x yearly income) or historical average (5x yearly income), or buying fancy cars/vacations/etc. The other part of the group that does make enough money are making so much that they can actually save the max (like the example I gave), but are out of touch with the reality that most people don't have enough income to save that much. The example I gave fits in this group. I suppose the most pertinent part of the example was left out - the looks we employees gave each other about how he's crazy to expect us to be able to save $20k per year. So it's not just an example of that rich individual, but also of the group's affirmation that the savings level is unattainable.
tough 5y ago
I mean with the surge of gasoline/electricty going through the roof, I'm only considering monthly subscription based options now I can just cancel if the cost of using the car is too much. I always loved cars, but what's the point of them now?
twoxproblematic 5y ago
bradgranath 5y ago
After the Crypto/Speculation/Housing bubble bursts. But don't worry, you won't have enough for car then, either.
linguae 5y ago
I think what is happening is that in a normal economy, new cars are readily available, and the market for used cars is replenished not only with individual owners selling the cars they originally bought new, but also with off-lease and fleet sales. However, there has been supply chain problems that led to problems in the new car market. Many dealers have fewer cars available (and in many cases dealerships tack on large surcharges), and if you want a car with the exact feature you want, you may need to place a special order, which can take many months to fulfill. If you can wait for the special order, this may be a reasonable approach. However, many people on the car market need a car immediately. Thus, with the problems facing the new car market, more people are looking at used cars. But with increased demand combined with decreased supply, used car prices have skyrocketed. I also imagine that the demand for fuel-efficient cars and EVs will increase due to very high gas prices. I don’t imagine the situation returning to “normal” until the supply chain issues are resolved. Even then, it will take a while for used car inventory to get replenished. This is anecdotal, but in my experience price inflation tends to stick; unless there is a glut of cars, I don’t expect used car prices to drop to pre-pandemic levels.
mcint 5y ago
Asking about prices normalizing is a different concern than affordability or availability. Do you regularly buy AND sell, flip cars, or are you concerned about regret after purchase when prices change? Fortunately we have the market mechanism to fluidly adjust to this, weirdness can just flow through the system and cause trouble minorly and incrementally. To address the question as asked: Normalize? Welcome to weirding. > What’s causing demand to be so high, and when might that go down, and what’s causing supply to be low, and when might that go up? Geopolitical instability, from cutting back of American power projection, covid-19 slowdowns & supply-shock echoes, at least, all have a place. Hopefully global warming response movements, and walkable cities make the question less relevant. When demand grows more, or inputs (including shipping) get cheaper (including more predictable, forecastable)
youniverse 5y ago
I am currently sitting at a Honda dealership in Los Angeles, just talked to a salesman. Info: - ~25 new cars on the lot compared to 200+ before shortages. He said they have a good amount of used cars. Funny enough 15 minutes after they took my car they call me and ask if I want to sell my car to them! - Lease prices are double what they were 2 years ago when I looked. Specifically Civic sedans were ~$250/month with $3k down but now are closer to $600! - $5k over MSRP on everything which they say "can be worked on" but that seems to be the current standard. I went to Subaru few months back and it was the same. - For financing, manager said around 3.9% interest is around the lowest they do in-house (assuming max perfect credit). Not sure what auto loans are like with big banks at the moment. So until shortages normalize buying a new car is just not a wise financial decision (at least for me). $30k+ for a Honda is just pretty bad. With $700/month to finance I'd rather get a Model 3. With gas prices and the $800 maintenance I'm paying just for today it's looking like a good option. If anyone is interested in current maintenance cost breakdown on my car I will update this post when i get my bill in an hour or so ballpark $800 total.
- krnlpnc 5y ago
  Maintenance in terms of something being broken/fixed, or is this is suggested work by the dealership? Curious what scheduled $800 maintenance would be on a civic, I've had several hondas and they haven't needed much more than gas, fluid, tire and brake changes.
  - youniverse 5y ago
    No repairs just maintenance. $300 is just for two new tires + $100 for alignment check. Around $125 each for transmission check and brake fluid. $60 for oil change but you can buy a $120 package for 2 additional ones in the future so I did that. Cabin and engine filters as well not sure what those cost yet, still waiting! I definitely waited a bit too long so all this stacks up but their prices are actually pretty comparable with independent mechanics (would love to be corrected if anyone gets better in LA :). I should probably replace the air filters myself next time though.
    - 5y ago
throwlejos 5y ago
Car prices are normalized, this is the new price, and unless people stop buying them, that price is not going to change even if supply chain issues are fixed.

27 points by arikr 5y ago

What’s causing demand to be so high, and when might that go down, and what’s causing supply to be low, and when might that go up?

thghtihadanacct 5y ago

Demand will go down as gas keeps climbing. The days of $3 gas are fairly gone. Time to start seriously considering alternatives.

MisterTea 5y ago
> The days of $3 gas are fairly gone. I feel like we keep hearing this every time something big happens in the world and within a year or so, it's back to normal. Not that I believe either statement.
- giantg2 5y ago
  With inflation the way it is, I wouldn't doubt that prices close to $4 would be more where it stabilizes for a few years.
- thghtihadanacct 5y ago
  Back to normal, as in, new oil just magically appeared? Regardless of international situations, and I feel strange needing to say this, we will run out of cheap oil. We will also run out long before the creation of a good petrol alternative for ICE vehicles. Alternatives are how the less than wealthy are going to make it thru. For example, I have arranged my life to not need a car. Wasnt easy and I need to spend my car money on a house but it is what it is.
  - l30n4da5 5y ago
    > I have arranged my life to not need a car Location very much takes a role in being able to do this, I think.
  - travisporter 5y ago
    ugh magically appeared is true kinda with opec pulling levers as they feel like it. I dream of a no car life. Hate driving but it’s really tough in the US. Was in heaven for a week when I visited Switzerland
  - nradov 5y ago
    New oil "magically" appears all the time as drilling companies find new fields and improve extraction technology. Most recently the invention of fracking made a huge difference in supply. We will never run out, but over an extended period we can expect prices to gradually increase (with some temporary fluctuations). There's still a lot of room to increase the fuel efficiency of ICE vehicles with hybrid power trains and lighter parts.
    - thghtihadanacct 5y ago
      Wait, are you saying we will never run out of cheap oil? Sure, there will still be drillable oil in my lifetime but it isnt going to be used to push cars around. I am also willing to bet, insofar as getting rid of all my ICE vehicles and getting solar going etc, that petroleum products are going to be prohibitively expensive in the next 10-15 years. There is more intrigue to oil than just the cost of turning it into gas.
      - nradov 5y ago
        I am saying that in 15 years, gasoline will still be affordable for routine use by middle class people in developed countries. It will be a little more expensive but not prohibitively so. Look at long term trends for consumption versus proven reserves. More oil is found every year, and technical advancements keep making it economical to squeeze more out of existing fields. Solar power doesn't do much to reduce petroleum demand.
- pengaru 5y ago
  It's not like gas prices haven't gone up substantially over the past 20 years... The new 9/11 NYC footage that was recently making the rounds captured a gas station with its prices in view, they were all $1.XX/gal.
  - HeyLaughingBoy 5y ago
    They've also fluctuated quite a bit. I remember paying $1.95/gallon for gas in early 2020.
  - MisterTea 5y ago
    Well a little inflation is always bound to happen. We had >$4 gasoline in the 00's when I got rid of my Tahoe as fuel was inching towards $5. > "...captured a gas station with its prices in view ..." Where was this footage taken from, NY or NJ? Back then NJ always had stupidly cheap gasoline compared to NY. I always waited until NJ to fill up on road trips.
    - pengaru 5y ago
      Looks like NYC to me, it's rather close and right on the waterfront: https://www.youtube.com/watch?v=1gBJvGMZIYA&t=332s https://www.youtube.com/watch?v=1gBJvGMZIYA&t=332s Which if what you say is true about the relative local prices, suggests these are above average prices for the era and still sub $2.
  - vikingerik 5y ago
    That actually means gas prices haven't gone up, or not by much. In the 20 years from 2001 to today, inflation roughly doubled everything. If gas went from $1.9x then to $4 today, that's actually not far out of line. The Russia supply shock this month is unusual, but the mid-$3 pricing plateau over the preceding year was quite normal by historical standards.
    - pengaru 5y ago
      > That actually means gas prices haven't gone up, or not by much. In the 20 years from 2001 to today, inflation roughly doubled everything "Inflation" is a nebulous word, if you're referring to CPI, isn't oil price (via transportation, fertilizer costs) a major contributor to that increasing? I'd expect a historic fuel price chart corrected for CPI to be roughly a horizontal line, because fuel prices majorly contribute to it.
newaccount74 5y ago
Gasoline costs a lot more than that in Europe and still everyone has a car. I think the current price is still a lot less than the market would pay. I'm pretty sure people are going to switch to EVs rather than give up driving.
- anthony_r 5y ago
  Yup. Converted to gallons and the US dollar in Switzerland you have to pay $9.35 for gas (CHF2.3 per liter). Yet there's no shortage of cars on the highways here.
  - giantg2 5y ago
    It's always hard to compare value internationally, but... The median income in Switzerland is about $125k USD. That's more than twice the median in the US. It sounds like the affordability of $9/gal gas is greatly different. US politicians are actually suggesting things like a stipend or stimulus payment to help people pay for gas. Ridiculous, but that's how it is.
    - anthony_r 5y ago
      FWIW: the gas price is about the same in Germany, which has a median yearly income of about $45k.
    - rolisz 5y ago
      In Romania the gas prices are about 6.38$/gallon. I'm pretty sure average income in Romania is much lower than in the US.
    - potta_coffee 5y ago
      Distances driven in the US are often much higher as well. People I know regularly commute 30 to 60 minutes one way to get to work. Some tradesmen I know are driving 2 hours to get to the jobsite.
      - giantg2 5y ago
meragrin_ 5y ago
Demand won't go down. It will just shift to different vehicles. Hybrids and electric will go up in demand.

onion2k 5y ago

JP Morgan reckons things will be back to normal by 2025. I imagine the war in the Ukraine and its impact on neon production (necessary for the lasers that are needed make chips) will push that out a bit further though. https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage https://www.jpmorgan.com/insights/research/supply-chain-chip...

atlantas 5y ago

Ditto housing. I just can't believe that people are able to afford the prices of the past 1-2 years and many must be paying beyond their means? I know Blackrock and other parasites are scooping up housing too, but that's not the majority of buying.

Bostonian 5y ago
"Blackrock and other parasites" A large landlord is not a "parasite". He makes money by fulfilling a vital need for housing. Blame housing regulation, not landlords, for high rents and home prices.
- blueprint 5y ago
  A Federal Reserve is not a "parasite". He makes toilet paper by fulfilling a vital need for QE. Blame foreign policy, not the Federal Reserve, for high inflation and home prices.
- MisterBastahrd 5y ago
  Capturing the supply to raise rates is about as parasitic as you can get when talking about something that people absolutely need to have. The town I live in didn't get substantially larger population-wise, but home prices have risen almost 45% in the past 2 years because Zillow and other large corporations have been plucking up homes for sale left and right to squeeze the market.
- tonyedgecombe 5y ago
  Landlords leverage their easy access to capital to extract rent from those without. It looks parasitic to me.
  - HeyLaughingBoy 5y ago
    Or you could view it as performing a service for those who don't have that easy access to capital.
    - 5y ago

Mezzie 5y ago

I know some of the supply side difficulties come down to electronics supply issues: We had a bunch of new, built cars just sitting in parking lots here (MI) that were complete except for some of their electronic components. It was bizarre to drive past dozens of unused shiny cars while people in town can't buy a car at a decent price. I'd expect this aspect of the problem to stabilize in a few years at most, because if the components continue to be a problem, the car companies will either start making cars without them again (I wish but unlikely) or secure their own components' supply.

quaffapint 5y ago

Right now we're playing the gambling game of sinking the cost of fixing our old, high mileage car rather than paying the inflated prices. The question of course is how long do we hold out (or will the car hold out) in the cost of fixing becoming more expensive then the inflated costs.

rr808 5y ago

I'm pretty sure those 15 mpg mega trucks and SUVs will be cheap soon.

neogodless 5y ago
Most people buying large trucks and SUVs are not thinking about the monthly cost (or minimizing such) of ownership (beyond a few minutes of "negotiating" while purchasing to get a payment they are comfortable with). If you drive 12,000 miles / year and get 15 mpg, $3/gallon is $2400, and $5/gallon is $4000. What is an additional $1600 / year for a car you're already paying $12,000 / year for (assuming $60k, 60 months)? So while demand might decrease (particularly if EV pickup truck production capacity grows rapidly), I would not expect $60k vehicles to quickly become "cheap."
- anthony_r 5y ago
  LPG powered SUVs are the future.
- tonyedgecombe 5y ago
  It's the second hand market that will be most affected by increased fuel prices. Assuming 18% depreciation a year that car will be $22K for the next owner. Then that extra $1,600 per month becomes more significant.

ksec 5y ago

>What’s causing demand to be so high When some people wants one, and there aren't enough, suddenly everyone wants one. Herd mentality. >and when might that go down. When there is enough for everybody, price will fall, and all of a sudden people will just decide to wait a little longer. ( So Called Demand disappeared ) >what’s causing supply to be low Chips, COVID, Shipping, Containers Shortage, Gas Price, GeoPolitics and War. It is quite literally the perfect storm on Supply Chain. >when might that go up? When we over estimate the so called demand and over invest into the supply capacity.

amelius 5y ago
> When some people wants one, and there aren't enough, suddenly everyone wants one. Herd mentality. Rational behavior: better get one before the prices go up more.
- throw0101a 5y ago
  Works the the other way too: lowering prices causes people to wait to buy, which causes production slowdowns, causes layoffs, causes fewer people making purchases, causes price cuts. * https://en.wikipedia.org/wiki/Deflation#Deflationary_spiral https://en.wikipedia.org/wiki/Deflation#Deflationary_spiral
xnx 5y ago
I expect high gas prices to cause some hesitation in buyers.
- drewzero1 5y ago
  True, but that's only within the past month. Used car prices have been high through at least 2021.

giantg2 5y ago

Some of it is probably caused by supply chain disruption. Some of it could be related to people moving due to the pandemic related changes - leaving some areas (crime/health/political concerns), moving for work or because it's remote now, more room for home/remote schooling or work, etc. Some of it could be minimized using inflation adjustment. I think many people are living at or beyond their means. There are a lot of people (still a small minority though) that have a lot of money and are willing to use it. Who bothers saving suffiently for retirement? Many people don't make enough to adequately save for retirement. Most of the people who do have the income would rather have a bigger or fancier house and a brand new Tesla/BMW/etc, possibly because they think they will always be making that level of money or are out of touch with reality. For example, I had a manager who had a big house in a nice area, Tesla, another EV, 3 kids with college funds, etc. He said something like everyone (at the company) should be contributing the max ($20k) to their 401k every year. WTF? Most of us make under $100k and can't afford to save that much, especially with a family to support and a mortgage. We aren't all managers with a physician for a wife. Completely out of touch.

cactus2093 5y ago
So you are simultaneously arguing that most people are irresponsibly spending their money instead of saving for retirement, and also that it's impossible for them to save more for retirement? Then your example is a manager who epitomizes wasteful spending while still maxing out his 401k? I really have no idea what you're saying in this comment.
- giantg2 5y ago
  No. There are multiple groups and subgroups. "Many people don't make enough to adequately save for retirement. Most of the people who do have the income would rather have a bigger or fancier house and a brand new Tesla/BMW/etc, possibly because they think they will always be making that level of money or are out of touch with reality." Many people don't make enough to adequately save for retirement. You could probably say that this could in fact be most people when you look at things like Fidelity or Vanguard stats on the state of retirement accounts and savings in the US. Then there are still many people, but not a majority, who do make enough money to adequately save. Of these, a majority of them seem to live beyond their means with respect to purchasing houses significantly above the rule of thumb (2.6x yearly income) or historical average (5x yearly income), or buying fancy cars/vacations/etc. The other part of the group that does make enough money are making so much that they can actually save the max (like the example I gave), but are out of touch with the reality that most people don't have enough income to save that much. The example I gave fits in this group. I suppose the most pertinent part of the example was left out - the looks we employees gave each other about how he's crazy to expect us to be able to save $20k per year. So it's not just an example of that rich individual, but also of the group's affirmation that the savings level is unattainable.

tough 5y ago

I mean with the surge of gasoline/electricty going through the roof, I'm only considering monthly subscription based options now I can just cancel if the cost of using the car is too much. I always loved cars, but what's the point of them now?

twoxproblematic 5y ago

bradgranath 5y ago

After the Crypto/Speculation/Housing bubble bursts. But don't worry, you won't have enough for car then, either.

linguae 5y ago

I think what is happening is that in a normal economy, new cars are readily available, and the market for used cars is replenished not only with individual owners selling the cars they originally bought new, but also with off-lease and fleet sales. However, there has been supply chain problems that led to problems in the new car market. Many dealers have fewer cars available (and in many cases dealerships tack on large surcharges), and if you want a car with the exact feature you want, you may need to place a special order, which can take many months to fulfill. If you can wait for the special order, this may be a reasonable approach. However, many people on the car market need a car immediately. Thus, with the problems facing the new car market, more people are looking at used cars. But with increased demand combined with decreased supply, used car prices have skyrocketed. I also imagine that the demand for fuel-efficient cars and EVs will increase due to very high gas prices. I don’t imagine the situation returning to “normal” until the supply chain issues are resolved. Even then, it will take a while for used car inventory to get replenished. This is anecdotal, but in my experience price inflation tends to stick; unless there is a glut of cars, I don’t expect used car prices to drop to pre-pandemic levels.

mcint 5y ago

Asking about prices normalizing is a different concern than affordability or availability. Do you regularly buy AND sell, flip cars, or are you concerned about regret after purchase when prices change? Fortunately we have the market mechanism to fluidly adjust to this, weirdness can just flow through the system and cause trouble minorly and incrementally. To address the question as asked: Normalize? Welcome to weirding. > What’s causing demand to be so high, and when might that go down, and what’s causing supply to be low, and when might that go up? Geopolitical instability, from cutting back of American power projection, covid-19 slowdowns & supply-shock echoes, at least, all have a place. Hopefully global warming response movements, and walkable cities make the question less relevant. When demand grows more, or inputs (including shipping) get cheaper (including more predictable, forecastable)

youniverse 5y ago

I am currently sitting at a Honda dealership in Los Angeles, just talked to a salesman. Info: - ~25 new cars on the lot compared to 200+ before shortages. He said they have a good amount of used cars. Funny enough 15 minutes after they took my car they call me and ask if I want to sell my car to them! - Lease prices are double what they were 2 years ago when I looked. Specifically Civic sedans were ~$250/month with $3k down but now are closer to $600! - $5k over MSRP on everything which they say "can be worked on" but that seems to be the current standard. I went to Subaru few months back and it was the same. - For financing, manager said around 3.9% interest is around the lowest they do in-house (assuming max perfect credit). Not sure what auto loans are like with big banks at the moment. So until shortages normalize buying a new car is just not a wise financial decision (at least for me). $30k+ for a Honda is just pretty bad. With $700/month to finance I'd rather get a Model 3. With gas prices and the $800 maintenance I'm paying just for today it's looking like a good option. If anyone is interested in current maintenance cost breakdown on my car I will update this post when i get my bill in an hour or so ballpark $800 total.

krnlpnc 5y ago
Maintenance in terms of something being broken/fixed, or is this is suggested work by the dealership? Curious what scheduled $800 maintenance would be on a civic, I've had several hondas and they haven't needed much more than gas, fluid, tire and brake changes.
- youniverse 5y ago
  No repairs just maintenance. $300 is just for two new tires + $100 for alignment check. Around $125 each for transmission check and brake fluid. $60 for oil change but you can buy a $120 package for 2 additional ones in the future so I did that. Cabin and engine filters as well not sure what those cost yet, still waiting! I definitely waited a bit too long so all this stacks up but their prices are actually pretty comparable with independent mechanics (would love to be corrected if anyone gets better in LA :). I should probably replace the air filters myself next time though.
  - 5y ago

throwlejos 5y ago

Car prices are normalized, this is the new price, and unless people stop buying them, that price is not going to change even if supply chain issues are fixed.