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Carmakers feel chip crisis easing

bloomberg.com

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Re: Carmakers feel chip crisis easing

#221

Post by bluGill »

itsoktocry wrote: post #186
zachshefska wrote: post #179

The ripple effects from the chip shortage will be felt for years … nearly all new cars are already “spoken for” and consumers will still be paying MSRP & MSRP+ for 12-18 months. What happens to used car prices over the coming 2-3 years will be fascinating. So many people will be underwater on their car loans.

> So many people will be underwater on their car loans. Can you clarify what you mean? A car is a rapidly depreciating asset; being underwater is the norm . It's only been during the pandemic that used vehicle prices have outstripped loan values.

People who bought a used car because they needed something now and couldn't get new (ie totaled their old car), they were probably planning on trading that car in for something new ASAP. People who buy new cars tend to trade them in every 3 years, so driving a 3 year old car is not normal. While a new car will be underwater for a time, normally by the time 3 years have passed it is worth about what you owe and so trading in isn't a loss.

Re: Carmakers feel chip crisis easing

#222

Post by kube-system »

bluGill wrote: post #211
kube-system wrote: post #34

Earlier quoted context omitted.

I've found (in the US at least) that automaker financing on new vehicles is usually better than any other banks. I'm now wishing I put zero down on my last car, because it's looking like my loan is way cheaper than inflation is going to be over the life of the loan.

The automaker financing is often subsidies. In the past you could choose a rebate or their low interest financing, if you ran the math the rebate was basically the difference between the interest rate they offer and what a little more than what a fair market value interest rate would be. I seems the rebate option as disappeared though, so financing is probably your only option to get these rates. Of course in the end…

Right, the automakers' finance divisions make money by selling cars, not loans. If you can get a loan under the prime rate, it's definitely subsidized.

Re: Carmakers feel chip crisis easing

#223

Post by rhino369 »

pbourke wrote: post #212
ChrisRR wrote: post #149

Earlier quoted context omitted.

As a brit where at least 3rd party insurance is a legal requirement,I consider that everyone should be fully comp. It's not just your car you're damaging, it's likely another car and potentially legal fees and loss of earnings. Even if insurance went optional I'd still go fully comp, as the cost of a new car is not what I need if I'm already financially struggling due to injury

In the US, auto insurance policies are split into 3 buckets: collision, comprehensive and liability. Comprehensive kicks in for events which are “not collisions,” so tree falling on the car, theft, etc. You are required to have liability and collision coverage in most states, but comprehensive is optional. People often drop it from their policies to save on the premium. I have tried doing that on one of our vehicles…

No state requires collision. If you've got a rust bucket, no reason to cover your own car.

Re: Carmakers feel chip crisis easing

#224

Post by Auracle »

TheSpiceIsLife wrote: post #129
dmurray wrote: post #127

Earlier quoted context omitted.

> I can floor it and it doesn't go anywhere. This is a difficult sentence to parse. Shouldn't you want the opposite from a car?

High powered vehicles have a tendency to cause sudden acceleration. Sudden acceleration is a contributing factor in many vehicle crashes.

Sudden acceleration has saved me from an accident or two. There are times when it’s better to accelerate out of an something rather than brake.

Re: Carmakers feel chip crisis easing

#225

Post by hellojesus »

MisterTea wrote: post #154
flyinglizard wrote: post #133

Earlier quoted context omitted.

And also active safety driver aids which prevent accidents in the first place. If you can afford a new car, by all means you should.

Most of the safety driver aids seem to paper over incompetency and the fact that people can't put their phones down while operating a deadly vehicle. Been driving for 20+ years and no accidents. I also mainly drive older vehicles without any such tech save for ABS. Stay focused on the task at hand and be responsible. If you cant do that, then surrender your drivers license and use an alternative transportation method…

I've anecdotally found that the improved safety features have led to near-crashes for me, simply by making the auto behave unexpectedly.

Most notably this happens when I'm driving down the freeway, and the car thinks something is in front of us that isn't and randomly slams on the breaks.

It has also happened when other negligent drivers have started merging into my lane (where I am), and the vehicle slams on the breaks, against my better judgement of slamming on the gas to avoid the collision because it would have been safer.

My daily driver is old and has no security features, and modern rentals are a nightmare for exactly those reasons.

Also, what's with the newer cars randomly beeping at me to communicate instead of presenting an actual sentence of information? Almost all the time I have no idea why the safety features are engaging because they only communication is a beep of some kind, leaving me confused and taking my eyes off the road to look for some supporting message in the car's interface.

Re: Carmakers feel chip crisis easing

#226

Post by bluedino »

randomdata wrote: post #70
etempleton wrote: post #13

Earlier quoted context omitted.

Ford leadership seems to really want to move to the Tesla preorder model, but changing this will be extremely difficult. This entrenched way of doing business may start seriously hurting their bottom line if Tesla and others can scale the direct to consumer model.

> Ford leadership seems to really want to move to the Tesla preorder model It may not be so much that they want to, but it is apparent that Ford is struggling to figure out how the dealership fits in an EV world, where your customers aren't constantly funnelling in for oil changes. The ICE model allows the dealership to make a sizeable portion of their income from the attached repair shop, but much of that shop work…

They can still sell warranties, paint protection packages, dealer installed accessories, tire and wheel protection, etc

Re: Carmakers feel chip crisis easing

#227

Post by bluedino »

zachshefska wrote: post #179

The ripple effects from the chip shortage will be felt for years … nearly all new cars are already “spoken for” and consumers will still be paying MSRP & MSRP+ for 12-18 months. What happens to used car prices over the coming 2-3 years will be fascinating. So many people will be underwater on their car loans.

People who bought used are really going to feel the pain

Re: Carmakers feel chip crisis easing

#228

Post by bluedino »

chrismmccomas wrote: post #23
technothrasher wrote: post #9

Earlier quoted context omitted.

I ordered a new Porsche SUV in the middle of December. It just got offloaded from the ship at port today, so I should finally have it in a couple weeks. But it will be missing some of the electronics, such as the electric steering wheel adjustment due to chip shortages. My poor sister-in-law also thought she ordered a Toyota in December. But as it turns out, the dealership just took advantage of her and told her they…

I had been shopping since January for a 2022 Tundra. I talked to salespeople at probably 75 dealerships on the east coast/mid-atlantic. Two of them said they could order me what I wanted, with a large deposit and I’d have to wait up to 90 days. The remaining all said basically they’re at the mercy of what Toyota makes and decides to allocate to their dealership.

One of the only cars my local Toyota dealer has is a V6 CrewMax for.....$56k

Re: Carmakers feel chip crisis easing

#229

Post by derefr »

guyzero wrote: post #80
derefr wrote: post #74

Earlier quoted context omitted.

> Dealerships hate carrying extra inventory because it costs money to finance the vehicles until they sell them. Why aren't dealerships just consignment stores for cars? That seems like it'd work out better for everyone involved. (And they could still follow "manufacturers can't sell direct" regulations, by having the dealership buy the car from the manufacturer just-in-time to resell it, once they've already got a s…

> Why aren't dealerships just consignment stores for cars? Presumably because people prefer getting less money now to getting more money later. Also most dealerships essentially "flip" cars (like those people on HGTV flip houses) - they clean them up, do basic service, add a warranty of some sort and that gives them extra margin versus just taking a small fee for handling sale paperwork. Honestly I'd hate to sell a c…

> Also most dealerships essentially "flip" cars (like those people on HGTV flip houses) - they clean them up, do basic service, add a warranty of some sort and that gives them extra margin versus just taking a small fee for handling sale paperwork.

To be clear, I meant new car dealerships — the ones that are branded to a particular manufacturer brand (e.g. "Ford dealership", etc.) Why aren't those dealerships just consignment stores? It would stabilize a very cashflow-constrained franchise business, into something that's essentially just "making money to be a showroom" — which is exactly what those really are.

> Honestly I'd hate to sell a car via consignment because there's zero incentive for the dealer to do anything with it. They might sit on it for months.

Seems fine to me. Any consignment store is really just doing lead-gen: helping to arrange a contract between the buyer and the manufacturer (where they just happen to take temporary possession of the car in-between.) Sort of like a car real-estate agent.

The important thing to realize about consignment models, is that your customers aren't the people coming in to buy things. Your customers are the manufacturers, who essentially rent space in your lot to show off their products. If you don't work to sell their products, the manufacturers stop renting that space from you, and you don't make money.

Certainly, consignment stores aren't as motivated to move particular products. Especially particular high-margin halo products. But they are motivated to do volume — i.e. to hit their manufacturer/renters' revenue targets.

(Also, keep in mind that a consignment store can't really "sit on" consignment goods; those aren't their goods to sit on. If the manufacturer wants to rotate them out for other stock, they just go to the store, take those goods out, and put something (or nothing) else in its place.)

Re: Carmakers feel chip crisis easing

#230

Post by kube-system »

bluGill wrote: post #176
kube-system wrote: post #33

Earlier quoted context omitted.

> Context: for ages, OEMs (the factory) have had a belief that Americans will not wait to buy a car. There's also a bit of a prisoner's dilemma: if any automaker wanted to trim inventories, the customer could go to a competing automaker's lot and buy today. Since customers will not wait to buy a car, a dealership must have some quantity of vehicles that are acceptable to buy today. I think this is mostly true, for a…

Every day there are several major crashes where a car is totaled: cannot be fixed and so the person needs a new one now. There are also a lot of people who wait until their old car breaks completely before deciding to get a new one (the car may or may not be repairable, many people give up on a perfectly good car). Both of these cases are high profit margin I need a car now I'll take what I can get. Someone who is wi…

"Several" is an understatement. I couldn't find any stats on salvage titles, but Copart alone says they move more than 100k vehicles per month.
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