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Bloomberg can't understand why auto sales are falling

Posted by  $  blarman 3 months, 3 weeks ago to Economics
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It's actually pretty simple: median income isn't even $50K!

One of the huge problems with the auto industry is that the industry itself is trying to turn a basic necessity for transportation into a luxury. As a result its no wonder that sales are dropping.

Me? I don't need the fancy trimmings. Give me an old-fashioned carburetor, manual transmission, manual door locks and windows and I'm fine. I don't need an in-dash GPS, back-up sensors, or 80 computers monitoring the temperature of my seat.
SOURCE URL: https://www.bloomberg.com/news/articles/2017-05-01/a-50-000-chrysler-van-explains-why-u-s-auto-sales-are-slowing?cmpid=BBD050117_BIZ


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  • Posted by Herb7734 3 months, 3 weeks ago
    One of the clever ways in which auto makers get you to buy higher priced vehicles is their packaging. If you need a certain feature which adds to your particular comfort and safety, you may only be able to get it in a certain accessory package that includes additional other features that you don't particularly want or need. The package runs the price up by over $1,000 more. You really don't need the whole package but you are compelled to buy it to get the feature you actually want. Besides, they are really cool extras. Further, the pricing of the feature you want by itself is almost the same cost as the package, so what the heck, you add it in. By the time you're ready to buy your $25,000 car, you wind up paying $31,000 instead. Many folks will say, the hell with it, I'll save up and get one next year, or possibly not at all.
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    • Posted by zonoz 3 months, 3 weeks ago
      Packaging more desirable options with less desirable ones has been going on for decades. Nothing new there for the auto industry, housing, basically anywhere someone may want to purchase a product in somethong other than its basic form. And while packaging options that way increases income/profits for a manufacturer/seller it also offers savings to buyers both st the time of sale and at trade in time because those options most always increase the value of a vehicle.
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      • Posted by Herb7734 3 months, 3 weeks ago
        We don't buy cars often Our last purchase was 12 years ago..We bought a '16 Ford Taurus In November. It was the last Taurus they had and it had the packages we wanted.It was obvious the dealer wanted to get rid of it, but the price was a little on the high side. (about $5K too high.) After a bit of haggling the price got lower every time we started to walk. Long story short, we wound up about within $1,500 of our price. Well, throw in that we liked the salesman, the head of the service dep't., and the dealership was 5 minutes from our house it was a sale.The car already contained two "packages."
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  • Posted by gbvette 3 months, 3 weeks ago
    Don't blame the car companies for the high cost of cars. The main reason new cars cost so much, and have so many electronics and computers, is the Federal Government.

    The tire pressure monitors are Federally mandated. Computers, fuel injection, overdrive transmissions, expensive light weight materials. start/stop engine programming, etc, are all a result of Federal gas mileage standards. Air bags and the sensors and computers needed to operate them, are in cars because of Federal passive restraint regulations. Back up cameras and stability control systems, are also required by Federal law. The Federal Government even has standards for the level of "reflectivity" of interior surfaces!

    Many of the extras in cars are there, because the computers needed to handle all of the Federally mandated crap, have plenty of excess capacity, so the auto companies might as well use that capacity. If you have to put a screen in the dash for the back up camera, you might as well add nav and a high end sound system to it. The cost of nav systems have halved in the last few years, because cars already have the screen in the dash.

    Making things like power windows standard, actually brings the cost of them down. It eliminates the need to engineer, manufacture and stock parts for both power and manual windows.
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    • Posted by jdg 3 months, 3 weeks ago
      I blame both. Yes, the Federal government should not be dictating how cars are to be equipped. But car makers should not be installing computer interfaces that are coded so that mechanics (or even the car's owner) have to have bought the car maker's expensive diagnostic computer in order to work on the car. That's a clear misuse of IP law -- and a direct result of the DMCA. EFF is trying to end the practice, and I support them.
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      • Posted by ohiocrossroads 3 months, 3 weeks ago
        Not where traffic safety is concerned. NHTSA probably has rules about the security of cars' onboard computers, thereby making necessary the specific protocols of diagnostic equipment. Imagine the problem that self-driving cars could cause if someone could hack into their systems. It's already happened. Special tools have always been part of working on cars. Fifty years ago, it was the distributor wrench, 30 years ago, it was the tamper-proof Torx bit, now it's the diagnostic computer.
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        • Posted by  $  3 months, 3 weeks ago
          Just FYI, but any computer-controlled or monitored automobile can and has been hacked. The national engineering laboratory has some nerds there that have gone through nearly every model in the past 20 years and literally p0wned them - taking over controls, flashing lights, activating brakes, etc. If it has a computer, it's only safe from the mechanic. And if it has OnStar, it can be completely remotely controlled. This was demonstrated. GM claims they fixed it, but the only real fix is to remove the OnStar equipment, because one of its uses is to allow law enforcement remote control of the vehicle. If they can get at it, so can someone else.
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        • Posted by jdg 3 months, 3 weeks ago
          If I have physical access to a car's diagnostic port, then presumably I am either the owner or authorized by the owner, and thus the car maker has no business wanting to lock me out. It's my car to jailbreak if I want.
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          • Posted by ohiocrossroads 3 months, 3 weeks ago
            You're missing my point. Government regulations have forced the automakers into locking you out. We now live in a fascist country, made so by the boatloads of regulations coming out of Washington DC.
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      • Posted by  $  3 months, 3 weeks ago
        I'm not sure about the second claim. I used to work for a transportation company and all commercial vehicles (read tractor-trailers) had a mandated interface. A very similar interface was to be the common specification for all passenger cars, but was still several years from the mandate taking effect, thus every manufacturer had their own implementation and consequently their own machinery. I totally agree that standardization would be preferred - especially for consumers.
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  • Posted by  $  Olduglycarl 3 months, 3 weeks ago
    Some of us are beginning to realize this and the car industry has become a new age, copy cat collection of global ugly transportation.

    My simple basic 07 Ford Ranger with 200K on the OD... suits me just fine...
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  • Posted by mspalding 3 months, 3 weeks ago
    Currently the average age of the US car fleet is 11.5 years. People keep their cars longer because they are built to last longer.
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    • Posted by zonoz 3 months, 3 weeks ago
      I think if a survey were to be done it would show that people keep their cars longer because they can't afford to buy a new one. But yes, to a certain degree cars in general DO last longer which allows one the ability to keep one used car longer instead of going through a "new" used car every 2 or 3 years.
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  • Posted by GaryL 3 months, 3 weeks ago
    It is a sad commentary on Technological progress.
    The more expensive a car is directly relates to all the gadgets and computers contained within. Basically just more stuff to fail and break or go bad rendering the vehicle to the scrap heap. So much of the technology in the cars of today are out of the reach of most owners and even many of the corners auto repair shops.
    As an example, I have 2 full sets of wheels and tires for summer and winter on both of our vehicles. I bought the second set of the exact same wheels for each SUV and had snow tires and the TPMS (Tire Pressure Monitoring System) sensors installed. Every spring and every fall when I change the wheels I have to take the vehicle to the dealer to re program the TPMS sensors or the idiot light remains on. You can't do it yourself because it takes a very expensive computer to read the TPMS sensor frequency and then plug into the OBD in the car to change the settings. Wish I could just monitor my own tire pressures just like I have for the past 50 years.
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    • Posted by  $  CBJ 3 months, 3 weeks ago
      I have a different idiot light that stays on. I just ignore it. Easier and cheaper than taking the car to a dealer. If it gets too annoying I'll consider duct tape.

      Are you still able to check your tire pressures manually?
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    • Posted by zonoz 3 months, 3 weeks ago
      You can. All it takes is a tire pressure gauge just like before. All that TPMS does is tell you that a tire is low without you getting out of your car. Just ignore the low pressure light and vheck your tire pressures yourself and save the money. But I don't know why you have to have them reprogrammed anyway as long as you put them back on the same vehicle they should read. Otherwise just getting a flat repaired eould require a trip to the dealer. Doesn't make sense.
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      • Posted by GaryL 3 months, 3 weeks ago
        The TPMS sensor in each wheel has a slightly different frequency. They start on the front driver side and read each sensor and then plug into the OBD connection under the dash and program the computer from the reader. I can rotate the set of programmed wheels on the vehicle and no problem there but when I switch the set of wheels between summer and winter I have to go to the dealer for re programming or the idiot light just blinks constantly on the dash. Some of the older TPMS systems allowed you to do it yourself with a magnetic donut you placed on each valve stem during programming but the new systems are designed to require a visit to the dealer or to a tire place that has the expensive programmer computer. So far the dealer has never charged me to program the wheels but it is a way for them to get you in for service and find other pay as you go issues. Can we all spell SCAM! There are a few companies making the programmer computers for the DIY types like me but even they are close to $200. It can't be done without the computer gadget on our newer 4 Runner and the Lexus.
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  • Posted by jimjamesjames 3 months, 3 weeks ago
    I'll never give up electric windows. You need them for socializing on the back roads of Wyoming.
    (If you can't figure that one out, you are a city slicker, for sure....lol)
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  • Posted by wiggys 3 months, 3 weeks ago
    when people who buy cars do not have an income because they do not have a job many things including cars do not get bought. not difficult to understand.
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  • Posted by tomblackstone1 3 months, 2 weeks ago
    In order to understand why new car sales are declining, you have to understand where the money comes from to pay for them.

    New cars are generally bought on credit, using a loan from a bank. But the interest-rates on long-term bank loans are derived from the yield on long-term U.S. Treasuries.

    So if the yield on Treasuries goes up, the interest-rate on car loans goes up. As a result, the demand for car loans declines. But since most buyers of cars only buy with loans, a decline in loan demand results in a decline in car demand.

    In this case, yields on long-term bonds have gone up recently because of a belief that President Trump's policies will lead to inflation. No one wants to loan money to the government (or to anyone else) if they believe they're going to be paid back in depreciated currency.

    So the real question we should be asking ourselves is not "why are car sales declining?" but rather "why were car sales so high for so long?"

    If the market is correct in thinking that inflation is coming, it means that past car buyers got a sweet deal. They were able to borrow dollars when dollars were expensive and pay them back when dollars are cheap. So why did anyone loan them money?

    And why did so many foreigners buy U.S. bonds at high prices all of these years and push interest-rates down when it was obvious that the U.S. government was on a fiscally unsustainable path and would eventually have to devalue the dollar?

    That's the real question everyone should be asking.
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    • Posted by  $  3 months, 2 weeks ago
      Well said.

      But I have also read things indicating that the Fed never intends to bring rates back up, but instead wants to force negative interest rates as has happened in nations like Cyprus.
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      • Posted by tomblackstone1 3 months, 2 weeks ago
        That may be the answer to the question.

        Maybe residents of other countries have been buying long-term U.S. bonds because they believe the Fed will buy the bonds from them later at a higher price (pushing their yields down, possibly into negative territory).

        It's really hard to know now because the markets have become permanently distorted as a result of QE.

        But, for whatever reason, investors are currently afraid that the Fed is going to just let rates go higher and will do nothing about it.

        So they are selling their bonds...and this is causing car loans to become more expensive....which is causing auto-sales to decline.

        I just wanted to point this out....because it seems like it has been absent from the discussion.
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        • Posted by  $  3 months, 2 weeks ago
          Your points are excellent. What many people don't recognize is how much wealth transfer from the Middle Class to the elites has actually happened due to QE and Federal Reserve intervention, especially through the manipulation of inflation. It's a vicious dual-prong attack on wealth. It's worthless to put your money in a bank or in bonds because it doesn't even retain its value due to interest rates, yet the Fed's target of 2% inflation every year devalues even the money people do keep (and is the only way they can finance the outrageous government debt). What we really need are interest rates between 5%-8% and 0 inflation. That's what spurs investment and real growth. Our economy has been living on borrowed time - literally - with these artificially low interest rates. There will be a major correction at some point and just like shifting tectonic plates, it will either be in a series of smaller shifts that shake things up, or a massive shift that destroys everything. The Fed has been trying to prevent any kind of shift in an effort to enrich themselves for as long as possible while they hope they can sell everything just before the meltdown.
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  • Posted by  $  jimslag 3 months, 3 weeks ago
    I bought a topped out Ford F150 4X4 back in 2011, with luxury everything for around $50K. If I tried to buy a similar truck with the same options, it comes out to around $70K. A base truck with 4WD and no options goes for at least $45-50K.
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  • Posted by  $  jbrenner 3 months, 3 weeks ago
    Perhaps Bloomberg should examine the consequences of a) Cash for Clunkers, b) Obama buying out the car parts market as part of Cash for Clunkers, and c) GM and Chrysler becoming Government Motors. Let GM moan when their Venezuelan plant gets "nationalized". Awwww, too bad.
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  • Posted by minorwork 3 months, 3 weeks ago
    Can't get self driving cars soon enough. They will lower accident frequency. Luddites beware, you will be seen as preferring high accident rates rather than give up cars that must be submitted to human errors. Think you can do better driving than an automoton? I thought so too until I topped a hill at 70 mph on adaptive cruise control and though I was quick to get off the throttle and on the brake, the distance detecting and closing rate function beat me to the brake by a tenth of a second. Rubber neckers backed up from a wreck in other lanes of the interstate and cleanup was in progress. Lazy Kentucky troopers at the bottom COULD have gone to the peak and warned, but no. Thankfully the Honda Touring package of my Civic Coupe stopped me afore hitting anybody. Looked in the rearview mirror to see several others I 'spect were not so well equipped hitting the ditch. In heavy traffic downtown with a speed of 35mph set on the cruise, I balked at letting it do its thing, but the dang car would slow stop and go on its own according to the distance to the car in front of me. Amazing.
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  • Posted by Owlsrayne 3 months, 3 weeks ago
    If Mr. Elio of Elio Motors was smart he would get the huge plant in Louisiana up and running to produce the three wheel car around $7800. If you add in all the creature features the vehicle would cost a little over 10grand. Of course, it's a bit under-powered and I have been constant beating them about their forum in regards to having a turbo-charger option. I keep reminding them that if they ever attempted to drive the vehicle from their corporate office in Phoenix to Flagstaff that it won't keep with traffic @ 75mph. They will just have to sell them to the flatlanders.
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  • Posted by term2 3 months, 3 weeks ago
    Its easy. Between the government's regulation cost, and the desire of the mfrs to pay exhorbitant fees to their intermediaries (dealers), the cost of the cars is just too high. They are also lasting longer than they did before, and the changes year to year are not sufficient to entice people to buy a new car. Its not rocket science. I have a 2000 excursion with no plans to get a "new" replacement. Even my Kia Soul is already 3 years old and I have no plans to even think about a new one. Used to be, when the dinosaurs roamed the earth, that people bought every year or at most every two years.
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  • Posted by  $  tohar1 3 months, 3 weeks ago
    The ridiculous price of new vehicles is why I'm looking forward to the release in 2018 of vehicles from ELIO. A very safe, fuel efficient, built in the USA automobile all for under $10K (base price only $7.5K)... You can pre-order your car now with a small down payment, or if you put down $1000 they'll give you an extra $250 toward purchase. No, I don't work for them, but I am very excited to see the results!
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  • Posted by  $  jlc 3 months, 3 weeks ago
    I do not think the conclusion this article comes to is at all accurate. I think that the reason that auto sales are stalling is that everyone knows that the self-driving cars are on the verge of being released. For decades, automakers have been trying to sell their new models on the basis of 'has a dashboard that looks like an airplane' or 'has a rear style that looks like an elephant sat on it'. People flocked to buy electric and hybrid vehicles when they were released, because it was an actual substantial change. Now, with the possibility of having a autodrive option...why would you buy a car before that came out?

    I have never bought a new car, but I have good credit and would consider buying a nice Jeep Grand Cherokee new if it came with autodrive that was at least good on highways.

    Jan
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    • Posted by freedomforall 3 months, 3 weeks ago
      I do not want autodrive at all. But I do know what you mean, Jan. I still use Win7 and won't change until there is a real advantage to me instead of a bull$%^7 advantage to the manufacturer. It will be at least 50 years of sales before I trust auto makers to deliver an autopilot that I can trust to obey me, not them or the looters. Electric cars are currently a way to avoid highway fuel taxes. Other than that I can't see any advantage (given my needs, of course;^) Elon Musk is a slimy looter who would be bankrupt without federal assistance at our expense.
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      • Posted by  $  jlc 3 months, 3 weeks ago
        Ha! I use Win 7 and am looking for a 'new' laptop that is still Win 7. But I will take the second or third version of the autodrive that comes off the assembly line and I want that a lot sooner than 50 years.

        People actually want the electric/hybrid cars and those are selling well (at least, last time I checked.) If you sell a product that people want to buy, they will do so. If you try to convince people that the next round of cosmetic changes is worth forking over a ton of bucks, then you get headlines like, Car Sales Drop.

        I bet the first autodrive option cars will go like hotcakes.

        Jan
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        • Posted by freedomforall 3 months, 3 weeks ago
          Can't recommend any new laptop, but there are a lot of dell e6430 and e6330 laptops coming off lease that are very cheap... $100-$200 on Ebay. (Dell probably has some refurbs for around $300 with a short warranty.) You can buy several (with W7 pro) for the price of a new one with an intrusive OS. The cheaper ones on Ebay may need a drive and OS install, but those models are easy to change drives and memory. If you need a powerful cpu some come with i7 4-core/8-thread that will work as well as any new one. They have a tri-metal case for durability, too. (I have 4 of them at present.)
          Here's one e6430 example, but I have seen better ones on Ebay recently:
          http://www.ebay.com/itm/Dell-Latitude...
          Heres an e6330
          http://www.ebay.com/itm/Dell-Latitude...
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          • Posted by  $  jlc 3 months, 3 weeks ago
            Thanks for the links. I need to get off my butt and browse eBay more. It has been busy lately and I have been doing workish stuff at work!

            Jan
            (But getting a new laptop is ultimately 'work'.)
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          • Posted by  $  nickursis 3 months, 3 weeks ago
            Indeed, Intel is now scraping the bottom of the performance/cost barrel, as each process improvement is more expensive, longer to get working and more prone to low yields for longer time. Hence their new tick, tock, tock tock process.
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            • Posted by freedomforall 3 months, 3 weeks ago
              And record profits if you believe the news. Intel still has the edge on the competition, but my guess is that the next breakthrough will come from an individual in a small company.
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              • Posted by  $  3 months, 3 weeks ago
                The real competition now is in GPU's - not CPU's. My cousin used to work for Intel and now works for nVidia and he said that they really can't go smaller, so they've either got to go to 3D chips (a scientist recently figured out how to stack transistor gates) or move to optronics (light-based circuitry). Optronics will eventually win out because there is no heat/loss, but they're still trying to get viable chips built.
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                • Posted by freedomforall 3 months, 3 weeks ago
                  I understand there is a competition in gpus for gaming primarily, blarman. Are you referring to AMD vs Nvidia?
                  In my experience AMD has a driver problem that they have not fixed in 7 years according to internet discussions. The symptom is that windows lose their size and position when the lcd monitor power is cut off and back on, switches to low power idle mode, or signal source is changed on the monitor. Nvidia has no such problem. If a company can't fix a problem like this with one monitor connected to a windows OS computer (W7, W8, W10 all have the same issue) then they don't deserve my business.
                  AMD's gpu products are the same price/performance level as Nvidia but use significantly more power to get results compared to Nvidia. imo, it appears that AMD trails the leader in gpus as well as cpus.
                  Is there another competitor in the gpu competition?
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                  • Posted by  $  3 months, 2 weeks ago
                    AMD was effectively purchased by Intel, so it's really nVidia vs Intel. And GPU's are not just for gaming. Most hard-core processing power now focuses on the computation of floating-point numbers - very large numbers with long decimals. GPU's are specifically built to efficiently process floating point number calculations. What most people don't know is that in a multi-core processor - only one core is a CPU and all the rest are GPU's. The CPU does the overhead/control work while the GPU's do the heavy lifting.

                    Samsung an Motorola would also like to be competitors in the GPU market, but they're pretty far behind either nVidia or Intel simply from an R&D budget standpoint.

                    The way my cousin always compares Intel vs AMD is to say that AMD has a faster raw processor for mathematics, but Intel's is a better multi-purpose chip. With nVidia vs AMD/Intel, AMD/Intel is a generation behind nVidia in power usage development, which is why their processors run hotter.
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                • Posted by  $  nickursis 3 months, 3 weeks ago
                  That is a viable alternative, which is in progress in several places. You do hit a brick wall where the tools of today will not handle the size, and yet to buy tools that do, is so expensive, it becomes not cost effective, so they are wandering around looking for the golden goose egg... All manufacturers are in that boat...
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              • Posted by  $  nickursis 3 months, 3 weeks ago
                Yes, Intels development process is full of bloat and inefficiency, and some really wild management style. They cut the headcounts in the factory to "save money" and we get to where we do not have enough people to do all the things they demand. Leads to some very interesting "confrontations". They go hung up in the ""kill sem all" management system where getting rid of 15 or 20% is sooooo efficient, yet they did not have the temerity to actually analyze the structure and say "this makes no sense". So now we have lots more "no sense" and less "real work".....
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        • Posted by freedomforall 3 months, 3 weeks ago
          "If you try to convince people that the next round of cosmetic changes is worth forking over a ton of bucks,"
          Yes, that has been going on for at least 30 years (probably ever since the end of WW2.) I love to see real improvements in products, too.
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    • Posted by  $  3 months, 3 weeks ago
      "I do not think the conclusion this article comes to is at all accurate."

      Sorry if I wasn't more clear, but I was mocking them and their conclusions in this article. The sad truth is that they have continually priced their customers out of the market. It used to be that the cost of a car was about 1/2-year's salary. Now they've become more than an annual paycheck. And automakers wonder why they aren't selling as many cars.
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      • Posted by  $  jlc 3 months, 3 weeks ago
        I did get your mockery...but I think that the boat that the article missed was that of a 'desired change' vs that of a 'cosmetic promotional alteration'.

        There is so much that is advertised that is just 'stuff' and nothing really advantageous. Making something that is actually an asset can still get sales.

        Jan

        Jan
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  • Posted by scojohnson 3 months, 3 weeks ago
    LOL... cars are cheap... those of us with RVs & hunting hobbies... price out a decent GMC Denali HD or a Silverado Z71 Crew Cab Dually with Duramax Diesel engines, easily $80,000.
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    • Posted by  $  nickursis 3 months, 3 weeks ago
      Find a 2004-7 Dodge with the Cummings that was taken care of, it will go forever, mine just tends to eat brake rotors with no warning every 60K....but you get wise to that after the first time...
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  • Posted by CircuitGuy 3 months, 3 weeks ago
    The industry economist quoted says only 5% of the population buys new cars. I suspect that's because they last longer. They used to say a car would lose half its value in three years and then start having major problems at 60k miles. If you flipped the odometer, you had a very old car. It seems like now they depreciate over a longer period and a more constant slope. They used depreciate much faster at first. You can get a lot of good reliable life out of an older car now. Or you can spend $50k on new car if you have money to spare. This is a great thing.

    We don't need another program to pay people $4,000 to trash a perfectly good car by running the motor with bits of metal in the oil. I found that disgraceful.
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    • Posted by zonoz 3 months, 3 weeks ago
      Vehicles from the 90's on generally will outlast any normal depreciation schedule you would use. If you look at blue book values for anything but specialty or performance vehicles I think you'll find that after so long the value stabilizes and as long as a vehicle is in relatively decent, driveable conditionit will not drop below a certain point in any given geographic area. What I mean is that there seems to be a more or less standard bottom value for a reasonably decent driving vehicle in any given area. Where I live a decent running pickup with all its fenders and doors intact but not necessarily undamaged is worth $1000.00 give or take. A 4 door FWD sedan in the same shape is worth $500.00. These are what would generally be called beaters, mechanically sound but physically ugly transportation. In larger metro areas the value of these vehicles more than likely would be higher but would be dependent on the availability of vehicles of that type. For the most part I don't care a great deal about what my daily driver looks like on the outdide, but lift the hood and it's a diffetent story. There's nothing better than whipping some shiny new car in a little contest of speed with my dirty, dented, scratched up, sleeper. You've heard the term "all show and no go"? Well mine is "all go and no show".
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    • Posted by  $  3 months, 3 weeks ago
      New cars may last longer. The question I ask is how much more you spend on incidental repairs over that lifespan. There are so many more things that can break in new cars!

      And it is typical in driving off the lot for a car to lose 10%-15% of its resale value. Ridiculous but it is what it is. What that really shows is that automobiles are over-priced compared to true market value.

      Typically for vehicles, depreciation schedules is five years - even for commercial big rigs. No company in their right mind is going to pay for it on consumer terms of eight years...

      I completely agree that we don't need a "Cash for Clunkers" program. They touted that one as a way to clean up the environment, but what it really was was a shot at the Federal Government to control the dealers (you should have seen what they demanded in order to sign up to participate in the program) as well as to drive consumers to new cars to profit their union pals.
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      • Posted by CircuitGuy 3 months, 3 weeks ago
        "I completely agree that we don't need a "Cash for Clunkers" program"
        I think gov't paying people to break perfectly good stuff is evil. Certainly poor and/or frugal buyers would have been interested in purchasing a $3000 that the gov't paid someone $4,0000 to trash.

        Those cars have a higher cost on the environment than other cars, but by how much? Maybe three times worse? So someone consolidating three car trips into one have more effect. Let's say driving a new $20k car 25 miles generates $0.25 in local pollution and $0.75 in long-term costs of global warming, for a total of $1, and the old $3k car costs $3 per 25 miles--> the old car is $0.08 / mile more a toll on the environment. So even if people had to pay for the damage to the environment, they'd have to drive $17k / $0.08 = 212,500 miles before the new car was cheaper. For someone who doesn't drive that much, the clunker is the better choice.

        This is complicated because it's hard to quantify the immediate local pollution from an old car, and it's really hard quantify the future costs of global warming and then amortize them back to the prevent-value cost of a something you do today. We're not even sure what percentage of which human activities cause global warming. But it's damned simple to quantify the value lost by trashing a $3,000 car: $3,000.
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        • Posted by freedomforall 3 months, 3 weeks ago
          Your '02, '05, and my '99 (assuming all kept in good operating condition) put out so little pollution it isn't worth discussing any alleged advantage of a new vehicle in comparison. (I admit I paid almost double the $3000 when I bought it 3 years ago but there are scores of good (under $3000) cars available that emit very little pollution.) Buying a new car today is an irrational act based strictly on economics. My (under $200) aftermarket audio system is better than most new car systems and my $50 smartphone has a GPS that is as good as one in a new vehicle. Prestige and lifestyle is what US auto makers sell, not transportation.
          BTW, most of the cars sold in New Zealand are used cars imported from Japan. As I understand it, the Japanese are hit with a large tax if they keep a car beyond a few years. This is supposed to help the Japanese auto industry, but it also provides a benefit to NZ drivers because there is a big supply of relatively young used cars for import from japan.
          I love that people have the choice to buy new cars here, too. I will need to buy another good used car someday;^)
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        • Posted by  $  3 months, 3 weeks ago
          For the same reason I can't ethically buy an all-electric car. What they don't tell you is that the battery packs have to be replaced every few years at a whopping $10K per. I can put a LOT of gas through an engine for $10,000!
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      • Posted by CircuitGuy 3 months, 3 weeks ago
        "The question I ask is how much more you spend on incidental repairs over that lifespan."
        Our cars are from '02 and '05. So far they keep running, and the mfg scheduled maintenance isn't bad. I'm not sure if that's true of recent cars. I just know my 15-y/o car is nothing like the 15-y/o cars I remember from long ago.
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        • Posted by freedomforall 3 months, 3 weeks ago
          You are so right about older used cars waaaay back in the 20th century ;^) In my youth I wouldn't have expected reliability in a used car beyond 60,000 miles. Today well cared for used vehicles are much more reliable at higher mileage. Although the cost of repairs is much higher today, repairs are less frequent. Today's used cars are much safer, and use a bit less fuel than 30 years ago, too.
          I wish there was more room on the road to enjoy them though ;^)
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          • Posted by zonoz 3 months, 3 weeks ago
            I bought my last new vehicle 1994. Since then for our family csr I've avoided taking the depreciation hit by buying 3 to 4 year old, sometimes even older if they're really nice, used vehicles and I've had good luck doing it. But having a background in auto repair probably gives me an edge most people don't have. But for my personal vehicles I'm stuck in the 90's. My 92 Dakota with over 250k recently shucked the transfer case whick I'll fix over the summer, but meantime I've pulled a recently purchased 95 Dakota exactly like the 92 out of storage and am driving it now as I do some minor repairs to it, swapping parts from another wrecked 95 that I bought for the transfer case to replace the one in the 92. These trucks are 5.2 liter V8 powered. 5 wheel drive, automatic transmission, club cabs, with gull power and air. Easy to work on when they break which is seldom and parts are cheap when they do because of their age. Insurance snd registration costs are also very low due to the age of the trucks. No, I don't get great mileage, only 15-20 mpg, but I can pull my trailers, boat, haul friends broken down cars in, and have gun four wheeling and not worry about trashing a $50 -$60,000 truck. If mine gets a dent or a scratch it just adds character
            If I tesr a fender off I mskr a trip to the salvage yatd for another one that might cost me $50.00. Right now I've got 5 of these trucks. 4 are V8, 3 of those are 4x4, one has a snowplow on it, and one is 2 wheel drive. Plus the wrecked one is V6 4x4 so I've got some goid spare parts for my drivers and an engine and transmission to sell. The nice thing? All I've got tied ip in these 5 trucks is $3800.00, and the last V6 and manual trans I sold for $1000.00 ad I recall.and in the 15 or so years I've been doing this they've stranded me once while I can't remembet how many broken down cars I've hauled in!
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            • Posted by  $  nickursis 3 months, 3 weeks ago
              Good policy. I have a Dodge 3500 2004 dually with 176K miles on it. I have taken care of it and it has never gone down on me. The Cummings 6 cylinder is an awesome engine for power, relative efficiency (18mpg). While waiting for my Elio, I junked my Ford Fiesta, as they really had me pissed off, and Hyundai offered 60K bumper to bumper, and 100K power train in the purchase. My Elantra is twice as big as the crappy Fiesta and gets 40 mpg. It was only 14K vs 18 for the Fiesta, so I am happy.
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  • Posted by  $  nickursis 3 months, 3 weeks ago
    This is why there is a new startup called Elio. I have made a reservation a couple years ago, the car was listed for 6800, they took 1500 for the reservation and added 1500 credit, so I have a cost of 3800.00. It is designed to get 83 mpg, has 3 wheels and the base cost is up to 7300 now, but I expected some rise, as they were working from their design only. They also say they will allow you to pay with a credit card that pays for gas and then sends the same amount to them every time you fill up. I dove in because it is what I need, I drive alone, 62 miles each way, the car seats 2 front to back, so it is half as wide as a regular car. It fills the niche of an inexpensive commuter, with no luxury but what is basic for today.
    I just saw an article by Graham Summers that claims the next market crash will be driven by the sub prime auto lending programs, that have gone overboard on poor credit risks and is now causing the market to nose over, as it has saturated the market. There are not enough qualified buyers for the sales they need to feed the wall street thirst for constant profit increases, so they did the next best thing, loan to anyone who is living and breathing, job optional. Just like the mortgage market did. He is forecasting any time now a big implosion of the debt and securities markets which will trash stocks.
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