An unprecedented thing is happening – and it isn’t the attempt to inject every healthy American with “medicine” (sic) their health doesn’t require.
It is that used cars are . . . appreciating.
Normally, they depreciate – a fancier way of saying they lose value. Traditionally, almost immediately – and ongoing. As you drive, the less it’s worth.
All of a sudden, used vehicles are increasing in value – or rather, cost. To a degree never seen before. The Manheim used car index – which works kind of like the consumer price index applied specifically to used vehicles – notes an almost 50 percent jump in the indexed value of the average used vehicle over the past year.
With the spike – literally, it’s almost a vertical ballistic trajectory – beginning right around the beginning of this year, interestingly enough.
Even more interestingly, the spike is general.
It is one thing for a specific make/model used car to go up in value. For example, a version of a car – or truck – that people like better than the new version of the same thing. Which is now a different and perhaps not as desirable thing.
Or a more expensive thing.
And that is precisely what’s happening now – to all used cars. They are going up in value because people increasingly don’t like – or simply can no longer afford – new cars.
Part of the reason for the not-liking, arguably is because of the over-the-top electronic nannying that comes standard with practically all new cars. It has reached a degree of insufferability that is almost intolerable. Like having a horse fly constantly buzzing – just the right word – around your head.
Lane Keep Assist. Brake Assist. Park Assist. Blind Spot Assist. Pedestrian Detection Assist. Speed Limit Assist.
Soon – probably – Diaper Assist.
Older cars lack “advanced driver assistance” technologies. They don’t attempt to countermand your steering or apply the brakes on your behalf or automatically shut off the engine every time the car stops moving. They don’t put the transmission into park because you tried to back up with the door open – in order to use your eyes rather than a camera and beeping electronics to see where you want to go.
Some of the latest new cars won’t drive at all unless you “buckle up” for “safety” first.
The car press bow-wows these “advanced” technologies but how many car buyers actually want to buy them? It’d be interesting to find out but it’s very hard to fathom because in most cases, these features are part of the deal; you can’t not buy them without not buying the car.
Many apparently are doing precisely that.
By purchasing an older – used car – instead.
There are also related reasons for the rush to used, touched on in previous columns. Among these are leeriness of the increasing disposability of new cars due chiefly to their elaborate, vehicle-specific electronics. People are hearing about replacement costs and wanting no part of a vehicle that may be more expensive to fix than it is worth to keep once the warranty runs out.
There are also the exorbitant peripheral costs of buying and owning any new car, including the outrageous taxes applied at time of purchase and then every year thereafter – in states where an annual property tax is extracted. These are based upon the “book value” of the car. A new car can cost you more in taxes over five years than it costs to buy a decent used car, itself.
Many people are simply no longer in a position to hemorrhage say $500-plus (or more) each year just in taxes (plus the payments) for the next five years – until the value of their new car goes down and with it, the tax – due to the artificially imposed economic devastation of the past year-plus. It is not surprising they’re looking for ways to save some money, as by not buying a new car.
They also have less money.
Or rather, their money buys less – and less. On a weekly basis, it seems – and is.
Rising inflation is not unrelated to the rising values – the cost – of used cars. The same used car that sold for $8,000 six months ago now sells for $9,000 not so much because it’s worth another $1,000 but because it now takes $9,000 to buy what used to cost $8,000.
Just as a sheet of 4×8 plywood that cost $20 last year now costs three times as much. It’s not so much the item’s value that’s gone up but the purchasing power of the “money” we’re forced to use as “legal tender” having waned. Which has happened because it has no real, substantive value beyond the “full faith and credit” of the United States government – and we all know how much that’s worth.
Especially since about January of this year, when the new resident was (s)elected.
New cars are also costing more, too.
In real terms, not adjusted for inflation. The rate is not as ballistic, but it is incrementally steady. Because of the steadily, inexorably increasing cost of government, necessarily folded into the price you pay. These are the cost of compliance with all of the many federal “safety,” “emissions” and “mileage” befehls – a German word for decree, which is what they are – and which manifest in cost-adding hardware such as smaller engines with turbochargers – to make up for their being smaller, in order to comply with federal MPG mandates.
And aluminum bodywork, which costs more to manufacture and which is more easily damaged and more expensive to repair (and so, insure), costing you more, several times over.
Buyers aren’t asking for tiny turbocharged fours in place of V6s without all the peripherals – or for automatic transmissions with seven, eight, nine and in some cases ten speeds. Nor for aluminum truck bodies or direct injection rather than port fuel injection and the additional/secondary port fuel injection circuit needed to correct for the carbon-fouling problems created by direct-injecting the engine.
Meanwhile, the car companies are using their new cars to make money by selling you – after you buy the car. By selling data about you, mined from the car – without your knowledge or your consent.
It appears more and more potential new car buyers do not approve – and are expressing their disapproval by not buying in.
This has created a unique and unprecedented feedback loop that’s waxing seemingly with every passing day. And which may wax beyond all prior conception given the built-in supply problem with not-new cars:
They aren’t making any more of them.
. . .
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