The Six Month Slowdown

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It’s not being talked about much – probably for the same reason people avoid discussing their Final Arrangements – but the car business is having trouble generating business.

For going on six months straight.

According to the trade journal Automotive News, “For just the third time in a decade, the U.S. auto industry is expected to enter the summer selling season without a monthly sales gain.”

Which is ominous news for the car business.
Light-vehicle deliveries are predicted to decline between 1.5 and 3.3 percent this month from June 2018, according to estimates from four forecasters. That would mark the sixth straight month of declines and the third time since 2009 that the industry hasn’t experienced a monthly increase during the first half of the year. It also happened in 2009, at the peak of the last economic downturn, and in 2017, with overall volume dropping in each year.

As to why things are stalling . . .

It’s probably a combination of several factors, including escalating car ownership costs – not just the cost of a new car but also the cost of insuring it, which is rising like a Weimarian Deutschmark because of high repair costs, which are a function of the physical fragility of new cars, in terms of their susceptibility to significant body/cosmetic damage resulting from even minor impacts.

New cars are “safer” – but cost much more to fix. Insurance premiums have gone up on average by about 20 percent over the past decade as a result.

New cars are also taxed at confiscatory rates by local government where property taxes on vehicles are applied.

And financing has become more costly because interest rates have gone up – which is making it harder to mask the much higher average transaction price of new cars, which is over $35,000 as of last year.

Finally, most new cars are being fitted with obnoxious, invasive technology buyers haven’t asked for – such as Automated Stop-Start (ASS) and multiple “assists” that pester the driver with lights and buzzers and – in many cases – actually attempt to countermand the driver’s driving.

These things are in many cases not optional. But buying the car is.

Related to the downturn in new car sales in an increase in the value of used cars – which represent a much less expensive way to get around and a way to get around all the “assists” few, if any of us, asked for.

The take-home point is it’s a really good time to buy a used car – because it’s likely that the more new car sals stall, the more it’s going to cost you to get a good used car at a good price.

Better hurry!

Got a question about cars – or anything else? Click on the “ask Eric” link and send ’em in!

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9 COMMENTS

  1. I’m happy with my 15 year old SUV. I have no reason to trade it for a newer model. I’ll probably spend $3500 in repairs this year (2nd timing belt service at 180k, plus I already replaced the rear air springs) but that’s still cheaper than what the payments on a new GX 460 would be.

    Mom is looking for a new car to replace her 2009 Forester. She drove the Lexus UX (hit her head on the door frame – too small), the new generation Forester (nice – the default choice). But what got her steaming was the salesperson at the local Ford store. She wanted to test-drive an Escape Titanium AWD, but the idiot kept pushing her to buy a $55k Explorer. It’s too big, and too expensive for her. So Ford is losing a sale to someone whose father was a tool & die maker for Ford, and opened the factory in Venezuela for them in 1962 (since closed by the communist mismanagement of the country)

    But the one to take the cake is the Honda store. They had the gall to put a $500 “Facilities Maintenance” charge on their quote. Yes mom. They want you to pay for cutting their grass. Yes that’s stupid. I wouldn’t pay for it either. I don’t know why they would try that.

  2. You hit the nail on the head! In my county of residence last year, the ever benevolent board of supervisors raised the county decal fee from $20 to $30 per year. I’m betting because of the confiscatory property tax of $4.59 per $100 , that county residents as a whole reduced new car purchases and the assumed tax revenue fell short of county government expectations. So they screwed us on the decal fee! So anyone who may read this and are moving, avoid Page county Va unless you want to get hosed!

    • Well, VA is the “we will tax you to death for everything you own, whether it moves, or not” State. And what the state does not tax you for directly, it permits any county or town to tax virtually anything it wishes to, in the place of the State, and in many instances, in addition to the State. The LAST thing you should ever do is ask the State to CUT spending, because they are more than happy to, at least what they spend on YOU! If anything, we should be screaming and demanding that Richmond SPEND what they rob us of on US, instead of themselves. The local case in point here in the NRV was the notorious “Smart Road” project which I don’t even want to get into a debate about. The latest is an “intermodal terminal” VDOT is building that will cost between 40-50 Million, and then they will “hand it over at no charge” to Norfolk Southern. The latter of whom refused to build it in the first place because it was completely unprofitable, and didn’t ask the State to do so, regardless. V-Dot is like the Pentagon here, and no one can limit their wasteful spending, nor tell them no, nor force them to provide what they are actually obligated to provide to begin with. They don’t call it the “the good-ole-boy” system for nothing. Nepotism and pork-barrel spending is so ingrained and rampant here, Richmond is trying desperately, if not successfully, to alter the “appearance” of fairness in the system, even though they consistently do the opposite in practice. The best trick is to take the lion’s share of taxes from all over the State, and spend it in NOVA, where political clout and favoritism wins Richmond more Federal handouts! I wish they would all just burn in Hell, frankly.

      • Can’t argue with you there! Starting tomorrow, our gasoline tax goes up 7.8 cents per gallon in the counties adjacent to I-81 in the name of improving the road. What will end up happening is that the proceeds will go to Richmond as normal and then be diverted to NoVa and the tidewater area ( votes) and 81 May … Just may get some patchwork, painted lines and some signs. All of this BS because of “safety” issues of I-81. All because of increased wrecks ( due to in my opinion of IPhone distracted driving and meat sacks behind the wheel). This is the result of where too many idiot voters and crooked politicians meet.

        • I get an earful of I-81 nightmare stories every time my parents go visit their timeshare in Massanutten. If the road is really as congested with truck traffic as dad says it is, why are the not already expanding the road? Well, obviously because NoVA and DC get all the attention. Uncle can’t have his court advisors’ chariots delayed. And imagine what unsightly potholes on their commute would do to their motivation?

    • Hi Allen,

      I’m in VA also – Floyd County, near Roanoke. And I’m seriously considering not renewing the “registration” for my truck – almost $60 now, annually. On top of the property tax – annually. And just putting Farm Use tags on it and hoping for the best.

      I have paid more in taxes (and mandated insurance, another type of tax) on this truck than I paid for the truck.

      • I think as long as you have the minimum 5 acres, farm tags should be okay. To be on the safe side, you might want to get a few chickens if any AGW should get nosy. At least you’d have access to fresh eggs and the chickens do keep insects to a minimum. Good luck!

      • eric, I have always run “farm use” tags. When other people were coming back from a day fishing to discover a ticket for their “farm use” tags with a boat trailer attached, I somehow, escaped that. Maybe it was because my pickup looked like a farm pickup. I’m surprised they didn’t just because of the Ranger Trails trailer it pulled. I no longer have to worry about it. I don’t have the money to fix the boat(a hole in the water you throw money into).

        But have you noticed how a great many things are much cheaper than they were in the 70’s? Ok, for you let’s say 80’s. I paid $400 for a used AR with a Colt ranging scope back in the 70’s and often paid a few to several hundred for handguns and even long guns.

        I can now buy a new AR for $400 with some shitty scope on it….but still, it’s as good or better gun than in the 70’s(although the Colts I had are now getting very expensive because of being a collector item). But consider everything else you buy that’s manufactured and it’s much cheaper than it used to be and that’s not accounting for inflation.

        And as many point out, a lot of stuff that would seem to be cheaper isn’t. You pay more….and get less.

        I don’t think it takes a genius to figure out cars are actually cheaper to make now. Most 20 year old cars have so little metal they aren’t worth much of anything when you sell them for scrap. Everything is plastic and that shit is cheap.

        Are new cars really better? How? Not the cheap shit they have for seats and certainly not the gauges(a bad joke). You won’t find any, even what is touted as off-road, you’d dare push another vehicle with.

        A buddy has a body shop and a 2 year old car can be totaled by a hog hit. One day he was working on a Mustang and I noticed the bumpers were anything but, just styrofoam filled plastic and both were torn up as well as the side of the car. He often has cars that are just barely worth fixing(insurance choice, you have none). Now pieces such as quarter panels and such are well oversize so you can cut the bent part of the roof out from something that happened to the front end.

        15 years ago when my old Chevy diesel was getting the frame straightened the manager of the repair shop said “Come look at this”. It was a King Ranch edition crewcab that had a deer strike on the side. You could have told me it was sideswiped by a garbage truck and I’d believed it. Every panel starting at the front fender was mangled. And people wonder why the price of old 90’s pickups keep going up. Everything on my 93 that was steel, is plastic on the new ones. Even the sides are plastic. Take a magnet and run along the side of new cars and it will be hard to find a place it will stick.

        As far as taxes go, with no input from the public, there was a new $8M Law Enforcement Center built that ran $200K over-budget. We have almost no crime in the county and if it weren’t for drug laws that would translate to about 2 people being jailed every year. Even though those laws exists, it’s rare for there to be more than 2 people in jail for any reason.

        We really are living prison planet. BTW, it seems to require more and more people to work at the courthouse and they work less hours for more pay too.

        • Hey 8, what are your thoughts on the FN FiveseveN?

          I mean, I wouldn’t pay no $1300 for one, new; and I’d prefer something that size that could shoot 5.56 NATO instead of 5.7x28mm, but I ain’t seeing no real pistols that chamber 5.56……

          You’re more knowledgeable on this subject than I; I think being from west TX qualifies you automatically as an eggspurt! 😀

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