A glut has used-car depreciation accelerating • Hacker News Board

Re: A glut has used-car depreciation accelerating

#291

Post by dredmorbius » Wed, Aug 23, 2017, 9:51 AM UTC

jpmattia wrote: post #183

wbracken wrote: post #109

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…

> When they run them through now and get 50% on the dollar, their securitization pools will be creamed. Amazing that mark-to-market is still not restored 10 years after its suspension.

That's not the full story.

It's that the trading market is sufficiently thin that even a few hundred units of freshly off-lease vehicles will crash the price.

David Gerard makes a similar point of Bitcoin in Attach of the 50 Foot Blockhain -- that "market capitalisation" of crytpocurrencies is complete nonsense, due to market thinness. Rather, you want to look at total transaction volume. A large player can move the market significantly on a very small number of trades.

Price, it turns out, is far more like pressure than volume. Punch a large hole in something, and it falls rapidly. Squeeze it to a small point, and you can keep it quite high, but on very small total quantity.

Re: A glut has used-car depreciation accelerating

#292

Post by dredmorbius » Wed, Aug 23, 2017, 9:53 AM UTC

hkmurakami wrote: post #18

Glyptodon wrote: post #7

Thank the gods we're no longer in that weird bubble from a few years back where decent used cars were basically more expensive than new ones.

Could you tell us more? Was this in some niche segments of discontinued but popular models (like certain Subarus) or were run of the mill cars also like this?

Backwards-bending supply curves, among other things.

If the only thing an auto manufacturer has available to meet liquidity requirements is selling cars (and they've got access to absurdly low interest), then the price of those cars will fall.

Owners of used vehicles have use-value, and are similarly cash-squeezed (financial crisis), so hold on to those.

Re: A glut has used-car depreciation accelerating

#293

Post by WhiteSource1 » Wed, Aug 23, 2017, 10:10 AM UTC

justinph wrote: post #182

Sure, as far as basic transportation goes, but you can't get the vastly improved safety features in a used car that you can in most new cars today. Buy a new Toyota? It comes with automatic emergency braking, collision avoidance, blind spot detection, adaptive cruise control, and built-in backup camera, standard. Buy a used 2014? It has none of that. I just bought a new car for the first time in my life. The safety o…

But collision avoidance, blind spot detection you can get in aftermarket Mobileye and back up cameras can be installed aftermarket very cheap as well.

Re: A glut has used-car depreciation accelerating

#294

Post by tempestn » Wed, Aug 23, 2017, 10:12 AM UTC

Ever since that pg post, I can't help thinking about how much of a role PR plays in stories. Did Black Book and Cargurus just happen to get mentioned here? Or did they reach out to the journalist, or vice-versa? Did they pay for the privilege? (Doubt it, but possible.) Always tough to know, since the best PR is subtle enough that you at least wonder whether it was involved at all.

Re: A glut has used-car depreciation accelerating

#295

Post by throwawaybbq1 » Wed, Aug 23, 2017, 10:16 AM UTC

hueving wrote: post #273

justinph wrote: post #182

Sure, as far as basic transportation goes, but you can't get the vastly improved safety features in a used car that you can in most new cars today. Buy a new Toyota? It comes with automatic emergency braking, collision avoidance, blind spot detection, adaptive cruise control, and built-in backup camera, standard. Buy a used 2014? It has none of that. I just bought a new car for the first time in my life. The safety o…

>It comes with automatic emergency braking, collision avoidance, blind spot detection, adaptive cruise control, and built-in backup camera, standard. Buy a used 2014? It has none of that. Don't run into stuff? Most of that tech is only useful if you are an absent-minded driver and even then it only covers some cases (e.g. emergency braking doesn't help if the car in front of you slammed into something and you were fo…

Don't run into stuff??? You realize it is called an "accident" for a reason. The backup camera and blind spot detection are worth real dollars in my experience.

Re: A glut has used-car depreciation accelerating

#296

Post by pwg » Wed, Aug 23, 2017, 10:21 AM UTC

grecy wrote: post #32

With many countries tabling laws to outlaw the sale of diesel and gasoline cars around 2030, this is going to accelerate extremely quickly. In 5 years (2022), everyone will know it will be illegal to buy a gasoline car in just under 8 years. I think there will be very little demand for the regular old gas powered car. (excepting maybe exotics, or "pleasure drives", which much be a tiny fraction of overall sales) That…

> With many countries tabling laws to outlaw the sale of diesel and gasoline cars around 2030,

And the world moves closer to the tale in Rush's song "Red Barchetta" from 1981 (https://en.wikipedia.org/wiki/Red_Barchetta).

Re: A glut has used-car depreciation accelerating

#297

Post by BitterAmethyst » Wed, Aug 23, 2017, 10:23 AM UTC

DigitalJack wrote: post #212

dshibarshin wrote: post #131

Earlier quoted context omitted.

The overseas markets can't seem to get enough of the Leafs. I've seen trucks full of Leafs delivered for export to places such as Ukraine.

Saw zero leafs during my week in London. Same with a week in Glasgow. Boat loads of prius’ though.

I've seen a few around Cambridge, very noticeable as a cycling since they sound so different.

Re: A glut has used-car depreciation accelerating

#298

Post by petepete » Wed, Aug 23, 2017, 10:37 AM UTC

beejiu wrote: post #21

In the UK, many cars sold in the past few years are under a so-called Personal Contract Plan (PCP). These are basically sub-prime loans for cars where you lease the car for the difference between its purchase price and its projected depreciated value at the end of the term. https://www.theguardian.com/business/2017/jun/10/car-loans-p... One of the UK regulators recently warned about the exposure to these loans. "An i…

About 85% of new cars 'sold' in the UK are either PCP or Hired Purchase[0].

Anecdotally, it's really apparent amongst my peers; many are driving new (less than two years old) BMW, Audi and Mercedes that would probably cost a whole years wage or more outright.

Luckily, for people like me who buy almost new for cash, this is a good thing.

[0] http://uk.businessinsider.com/statistics-uk-bank-exposure-pc...

Re: A glut has used-car depreciation accelerating

#299

Post by ctack » Wed, Aug 23, 2017, 10:37 AM UTC

tempestn wrote: post #294

Ever since that pg post, I can't help thinking about how much of a role PR plays in stories. Did Black Book and Cargurus just happen to get mentioned here? Or did they reach out to the journalist, or vice-versa? Did they pay for the privilege? (Doubt it, but possible.) Always tough to know, since the best PR is subtle enough that you at least wonder whether it was involved at all.

Please link the pg post.

Re: A glut has used-car depreciation accelerating

#300

Post by kalleboo » Wed, Aug 23, 2017, 10:41 AM UTC

rawrmaan wrote: post #17

Interesting that this has nothing to do with ride sharing (or at least the article doesn't cite that as a reason). I think autonomy and ride sharing will drive used cars nearer to the value of scrap metal within the next 5 years.

5 years? Maybe in 20 years.