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Americans can't afford their cars any more and Wall Street is worried

telegraph.co.uk

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Re: Americans can't afford their cars any more and Wall Street is worried

#91

Post by username223 »

kristopolous wrote: post #15

And yet automakers think that the smaller more affordable cars that do well overseas somehow have no audience in the US. For instance, the Geome Xingyuan is $10k, Hongguang Mini EV is $5k. Instead we have the average cost of a new car at $50k.

On the one hand, I don't understand: a reliable EV costing only a few months of the median US income would be world-changing. On the other hand, I do: high-margin EVs like the Cybertruck are an easier way for car companies to make money in the next quarter. Why would you ever sell a vehicle that the people building it could afford, when the margins are so low?

Re: Americans can't afford their cars any more and Wall Street is worried

#92

Post by johnnyanmac »

potato3732842 wrote: post #81
johnnyanmac wrote: post #70

Earlier quoted context omitted.

Next to a house, a car is one of the biggest status symbols you can grab. Those people aren't buying Ford F350's because they need significant pickup and towing ability. It's the last bit of personal expression they have in life. Now that said: I own a 2008 car with 180k miles, bought used over a decase ago. and I'm really hoping I can ride it out another 2 years. I wanted to go FEV a while back, but then the market…

>It's the last bit of personal expression they have in life. Little of column A, little of column "jerks on the internet have these people convinced that using a vehicle anywhere near it's rated capacities let alone beyond them is guaranteed to end in a fiery crash" so they say "oh we might pop out a 2nd kid, better go with the CRV over the HRV" as if the latter can't do both fine. HN is very much complicit in this p…

I'll admit pickup trucks are a bit of anlow hanging fruit, but the behavior isn't unique to that kind of car. Sports car to live out childhood dreams, luxury brand to keep up with the Jones', simply seeing a new car and falling for the "0% APR" and all those other "deals".its all the same mentality being exploited.

I don't really get the Overcompensation thing. Engineers are usually conservative when giving those ratings. I wouldn't necessarily push 4k lbs on a 3k rating load, but I wouldn't be surprised if true max load was in the range of 4.5k lbs.

Re: Americans can't afford their cars any more and Wall Street is worried

#93

Post by mattgreenrocks »

johnnyanmac wrote: post #70
NDizzle wrote: post #35

Why more people don't keep their cars long term has always been a mystery to me. Sure, I had plenty of them in my 20s when I was young without a bunch (3) of responsibilities roaming the earth. But currently, counting my oldest kid's (19) car, we have 4. I don't worry about any of them. 2008 Land Cruiser and RAV4, 175k on one, 185k on the other. Both bought used. 2013 Sienna, bought new (with a huge discount) - 161k.…

Next to a house, a car is one of the biggest status symbols you can grab. Those people aren't buying Ford F350's because they need significant pickup and towing ability. It's the last bit of personal expression they have in life. Now that said: I own a 2008 car with 180k miles, bought used over a decase ago. and I'm really hoping I can ride it out another 2 years. I wanted to go FEV a while back, but then the market…

> It's the last bit of personal expression they have in life.

No it isn't, they chose to make their consumer choices into an identity that needs "expressing." It's just a car. I don't begrudge their choice to want the car they want, I dislike the implication that they're somehow forced into buying it.

Re: Americans can't afford their cars any more and Wall Street is worried

#94

Post by Esophagus4 »

vjvjvjvjghv wrote: post #67
giobox wrote: post #11

Earlier quoted context omitted.

> I’ve seen some crazy stories on YouTube about people trading in cars they’re already underwater on just to finance an even more expensive one. This has happened for as long as there has been car finance (i.e. practically since the dawn of private vehicle ownership), it's nothing new. Given most folks cannot purchase a vehicle outright, the customer only really cares about the monthly payment, a sizeable amount of w…

"the customer only really cares about the monthly payment," I noticed this when I bought my Subaru. There was a young couple next to me that worked hard with the sales guy to get an acceptable monthly payment for their desired car. No thought about actual price or duration of the loan. I wanted to scream at them that they were making a big mistake.

Car salesmen also want to get you to focus on monthly payment instead of price.

It’s easy to manipulate the payment by adjusting the loan term without actually taking anything off the price. And then the finance manager can further manipulate the payment by upselling you additional products and saying it’s only an additional $7 per month instead of saying nitrogen in your tires will cost $336.

Re: Americans can't afford their cars any more and Wall Street is worried

#95

Post by johnnyanmac »

mattgreenrocks wrote: post #93
johnnyanmac wrote: post #70

Earlier quoted context omitted.

Next to a house, a car is one of the biggest status symbols you can grab. Those people aren't buying Ford F350's because they need significant pickup and towing ability. It's the last bit of personal expression they have in life. Now that said: I own a 2008 car with 180k miles, bought used over a decase ago. and I'm really hoping I can ride it out another 2 years. I wanted to go FEV a while back, but then the market…

> It's the last bit of personal expression they have in life. No it isn't, they chose to make their consumer choices into an identity that needs "expressing." It's just a car. I don't begrudge their choice to want the car they want, I dislike the implication that they're somehow forced into buying it.

I should preface that with "it feels like" the last bit of expression. A house is out of reach, community is siloing off, hobbies become more solitary.

"Its just a car" to them in the same way "it's just a streamer" to someone developing a parasocial relationship. If only it was that easy to snap them out of it.

Re: Americans can't afford their cars any more and Wall Street is worried

#96

Post by binary132 »

lotsofpulp wrote: post #46
bombcar wrote: post #17

Earlier quoted context omitted.

Maybe in silly-con valley. Around most places the land goes up very slowly, but the house’s depreciation is reduced by steady repairs.

I can envision a future (maybe even the present in some areas) where increasing prices of skilled labor and/or materials results in a structure’s price increasing even though it is aging.

I mean, the simple fact of inflation and urban flight during the covid spending bubble did indeed cause prices to go up quite a lot for many properties.

Re: Americans can't afford their cars any more and Wall Street is worried

#97

Post by thaumasiotes »

tamimio wrote: post #87
thaumasiotes wrote: post #69

Earlier quoted context omitted.

> Because that's literally the only way banks make money. Cars, houses, whatever -banks are after the interest money. Lending for bad investments isn't a way to make money. It can work for the banks if they resell the loan, but in that case one thing they definitely aren't after is the interest money on the loan they no longer hold. > The loan is a fake number that gets transferred from your account (as debt) to thei…

> because they are never holding enough money to cover all deposits at once. Yep, that's the reason (not the other one you mentioned), which means banks are creating money without actual assets backing it up. It's fake numbers basically created out of thin air, but that's not an issue as long as it will make money, real money, from the interest. The concept of modern banks when it was created was that this money is t…

> which means banks are creating money without actual assets backing it up

It means they're creating money. That money is backed by actual assets; that is, for example, what's going on when someone forecloses on your house.

> I was talking about bank loans to the account owners that they take to purchase/invest/etc., with added interest.

How does this work with the comment "The loan is a fake number that gets transferred from your account (as debt) to theirs, as digital numbers too, all under the 'trust' that you can withdraw all of it one day"?

A loan from the bank to you is generally withdrawn in full, immediately, because you need to use it to pay for something else. A loan that isn't withdrawn in full isn't called a loan, it's called a line of credit.

Re: Americans can't afford their cars any more and Wall Street is worried

#98

Post by Ccecil »

DaveZale wrote: post #4

I use the Loud Muffler Index for judging the economy. Traffic gets louder when working people are under financial stress. It's easily measurable.

I have been noticing similar but not "loud muffler" so to speak but instead it is noticeable lacking maintenance on "mid-high" value cars.

There have been a lot of cars I consider "nice" but have squealing wheel bearings, squeaking brakes and/or engine tune issues which point to general lack of maintaining the vehicle.

Good to see I am not the only one seeing this warning sign.

Re: Americans can't afford their cars any more and Wall Street is worried

#99

Post by Retric »

Gigachad wrote: post #56
Retric wrote: post #23

Earlier quoted context omitted.

Think in terms of banks not borrowers. Houses are a much better long term bet for buyers, but car depreciation is more predictable. Lend someone 500k to buy a house and during a recession it might tank in value by 20-40% while a bunch of people walk away. Worse the’ll likely pull out their equity before defaulting in mass. Cars value on the other hand is more counter cyclical. When the economy is bad people still get…

That's why banks require huge deposits though, or charge you for insurance for this exact risk. If the house tanks 20% but you had to put in a 20% deposit in + whatever payments you made up until that point, you eat all of the losses first before the bank.

In 2024 only 52% of US buyers put 20+% down on a house and which is up from 2022. Worse as a share of outstanding money new loans with low down payments obviously count for more. IE a 30 year loan on a house at year zero likely has 10+X as much outstanding vs a 25 year old loan due to principal payments and inflation on the average value of homes.

PMI is there to reduce risks, but PMI isn’t an infinite pool of money independent of the rest of the economy. It’s on someone’s balance sheet.

Re: Americans can't afford their cars any more and Wall Street is worried

#100

Post by tharkun__ »

Esophagus4 wrote: post #94
vjvjvjvjghv wrote: post #67

Earlier quoted context omitted.

"the customer only really cares about the monthly payment," I noticed this when I bought my Subaru. There was a young couple next to me that worked hard with the sales guy to get an acceptable monthly payment for their desired car. No thought about actual price or duration of the loan. I wanted to scream at them that they were making a big mistake.

Car salesmen also want to get you to focus on monthly payment instead of price. It’s easy to manipulate the payment by adjusting the loan term without actually taking anything off the price. And then the finance manager can further manipulate the payment by upselling you additional products and saying it’s only an additional $7 per month instead of saying nitrogen in your tires will cost $336.

Agreed. I usually have to remind the salesperson to stop talking to me in monthly payment terms. I always tell them to talk to me about final price including all interest.

It's a bit of an uphill battle, where you have to tell them over and over. They're just so used to trying to sell the monthly payment. It's really no wonder that people that don't understand interest (many if not most) will fall for this. And if you actually can't really afford the car, it's also understandable why many if not most people will "gladly" fall for it. The alternative is not having the car of their dreams.

That said, financing in general isn't bad. I've financed most of my cars. I wouldn't have had the sort of "emergency fund" to just outright buy the car and financing allowed me to get the car when I needed it instead of buying some "temp beater" and taking even longer to buy the car I really wanted when I needed it and I paid it back with priority (i.e. faster than the financing terms required it).

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