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A glut has used-car depreciation accelerating

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Re: A glut has used-car depreciation accelerating

#371
post #332

Earlier quoted context omitted.

You are correct. 956-003 won LeMans in '83, and won five races overall. Regardless, most "classic Porsches" sell for under $100K. As I mentioned in another comment, the bulk of what's sold are 1978 - 1993 911s. 964s trade hands around $50-65K, and SCs more around $20-35K. Yes, there's stuff outside of that (Very good 993s commanding ~$100K now, 930 Turbos definitely not cheap, all RSs definitely not cheap due to rari…

One cool thing about Porsches that is likely to keep the price down: 70% of all Porsches that were ever built are still on the road. That's a Porsche figure, and "on the road" begs definition with some of those more expensive cars, but the fact that they're maintainable cars (and worth repairing) means the supply doesn't diminish the way it might with some other marques.

The other thing is Porsches aren't anywhere near as rare.

Until very recently, Ferrari limited worldwide production to 7000 total units (now it's 9000). Historically that was limited to demand (being unable to SELL 7000 units). Porsche sells about 20 times as many vehicles, so they're far less rare. Porsche sells more 911s in the US every year than Ferrari sells all its models combined worldwide, and has recently pushed 911 #1,000,000 out of the factory.

That's actually why we are in a Porsche bubble. It's difficult to get into very old Ferraris, Alfa Romeos, Lamborghinis, and other special cars of bygone eras because they've gotten too expensive. Collectors simply moved on to the next best thing -- Porsches, which also have very reasonable running costs in the scheme of things. The non-survivors are mostly transaxle cars and older Cayennes.

The Porsches worth good money are top-shelf performance, end of an era, rare as hell (< 500 produced/surviving), and/or have pedigree. The rest are nice cars with great dynamics and build quality (a few exceptions aside), and there's enough to satisfy demand. Modern stuff lives in a bit of a bubble as supply was less than demand, but usually that settles down after a few years when the "latest and greatest" that everyone wants comes out. Supercars and limited production top-shelf stuff aside, it'll be 30+ years before anything newer than 30 years really appreciates, and I say that having an odd one that is currently trading hands for 10-15% more than I paid for my custom order (new) 2 years ago (but I'll never part with it).

Re: A glut has used-car depreciation accelerating

#372

Earlier quoted context omitted.

Man I've been looking for a decently priced leaf for a long time. I'd like to attend an auction like this in the Bay Area. It may be this location but Craigslist is pretty slim pickings.

There are pretty massive subsidies on new Leafs now. $10k reduction by dealers as well as $7500 federal tax rebate (and potentially CA rebate if you are low income).

Doesn't the tax credit only work on new leafs?

Re: A glut has used-car depreciation accelerating

#373

Earlier quoted context omitted.

"Would love to hear differing opinions :)" Erm... A decrease in demand does not lead to an increase in price.

Economies of scale apply in reverse as well, and reduced sales reduces the number of items over which fixed costs can be amortized. Decreased demand can lead to decreased production, causing further increased prices and further decreased demand. If the market clearing price rises above the demand curve, production ceases.

'Decreased demand can lead to decreased production'

Not can, does. You're moving further down the supply curve.

'causing further increased prices'

No... less demand leads to less supply at a lower optimum price.

Re: A glut has used-car depreciation accelerating

#374

Earlier quoted context omitted.

Economies of scale apply in reverse as well, and reduced sales reduces the number of items over which fixed costs can be amortized. Decreased demand can lead to decreased production, causing further increased prices and further decreased demand. If the market clearing price rises above the demand curve, production ceases.

'Decreased demand can lead to decreased production' Not can, does. You're moving further down the supply curve. 'causing further increased prices' No... less demand leads to less supply at a lower optimum price.

> No... less demand leads to less supply at a lower optimum price.

Not always.

If I make fancy handkerchiefs, and I can sell 2 per month, I will make 2 by hand and charge a high price.

If there is demand for 100,000/per month, I'll develop a way to mass produce them and charge a lower price per handkerchief (which may further increase demand.)

But if demand fades, I won't be able to sustain the equipment/workers that produced the 100,000/ month, and if I continue to produce any, it will probably drop back to a higher price, even at a lower demand.

This can occur because of consumer surplus and differing marginal demand. At the mass-producing volume, people who are willing to pay 100x for the product get what they need for a price of 1x. The marginal consumer gets it for exactly the price he is willing to pay.

All those less motivated customers drop out at the higher price which is necessary to support a limited production, leaving the 100x customers paying at their maximum price, because no supplier can profitably produce that small an amount for a lower price.

For example, obsolete technologies may increase in price as demand goes down.

Re: A glut has used-car depreciation accelerating

#375

Earlier quoted context omitted.

Too bad your materials engineer friend has no idea that the most hyped EV car company, Tesla, doesn't even use rare earths in its motors because they're all induction motors. And you could of course replace the copper with the incredibly plentiful aluminum, which actually has superior conductivity per unit mass to copper. (Copper is nice because it's volumetrically more compact and is easier to make electrical connec…

It depends on the Tesla. the Model S and X use induction motors. The Model 3 uses a permanent magnet motor: https://www.edmunds.com/car-news/auto-industry/2017-tesla-mo...

That's very interesting, thanks.

Re: A glut has used-car depreciation accelerating

#376

Tangentially in the business. Two recent stories told to me: 1) Saw at Manheim Auto Auction (one of the largest) 300 Nissan Leafs run through the auction line in one afternoon ahead of some of our cars. Drop in "value" of leafs went down 10%+ in one day. All were recently off lease. 2) For similar reason, Santander is holding 4000+ cars on auction lots "waiting for pricing to stabilize". Reality is, when they run tho…

And now there is Harvey...
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