Between high prices, high interest rates, and some dealers thinking it’s still 2022 out here, it’s been a crappy time to buy a new car. In this lingering, smoking sales weirdness of recovering from multi-million car volume shortages, everyone seems to be wondering if we’ll ever get back to anything resembling normal.
The good news is that a light may be at the end of the tunnel. As analysts have shown, the automotive industry has been making serious ground on closing the gap between pre-pandemic sales volume and current sales volume, and it certainly isn’t done yet.
At the same time, Mercedes-Benz might reportedly bring luxury midsize vans to America, Stellantis invests big in South America, and Shawn Fain is headed to the White House. All this on today’s edition of The Morning Dump.
One Million Sales Down, One More To Go
For the past few years, everyone’s been asking when the car market might return to normal. Might we have to settle for a new abnormal, and like Julian Casablancas asked, is this it? Well, don’t let your horses out of the stable just yet. The latest industry sales figures are out and, as Automotive News reports, they’re way up, as if they’re trying to make up lost ground:
So how does this fit into a bigger picture? Well, clever analysts use something called seasonally adjusted annual rate, or SAAR for short, to normalize sales to report on how the car industry is doing. As it happens, Automotive News reported on that number as well, and signs are good.
The seasonally adjusted annualized rate of sales tallied 16.01 million last month, Motor Intelligence said, easily exceeding forecasts of 15.4 million to 15.5 million. It was well above February 2023’s 15 million sales pace and January’s 15.06 million rate.
Well, that’s a huge leap. For the record, the National Automobile Dealers Association reported that 2020’s SAAR was just 14.56, 2021’s SAAR totaled out to just 14.93 million units, and CNBC reported that in 2019 SAAR managed out to more than 17 million vehicles. We’re in the midst of a massive improvement, and with more than a million lost annual units made up for, it’s worth acknowledging that we’re largely in the homestretch when it comes to returning to normal volume. Mind you, as long as interest rates remain relatively high and new car prices keep climbing, people will be priced out of the market for new transportation, and that’s a double-edged sword. On the one hand, it takes pressure off the new car market. On the other, new car financing is typically easier to procure than used car financing, and people may be forced to accept significantly more used vehicles than they used to.
However, increased new vehicle sales do offer hope that used car values may continue to decline from meteoric highs. As it stood mid-February, the Manheim index of used vehicle values stood at 202.1, its lowest since March of 2021 but still 51.6 points higher than 2019’s average, the last truly normal year of pre-pandemic car sales. Even over five years, a 51.6-point change is abnormal, and anything that can shrink that gap closer to the 17.3-point change we saw between 2014 and 2019 is a good thing.
Stellantis Doubles Down On South America
The new Dodge Charger may be igniting the internet right now, but this isn’t the time for Stellantis to sit back and take in the applause. The automaker just announced a €5.6 billion investment into South America over five years, with more than 40 new products on the way through 2030. While some hoopla’s been made regarding supply chain decarbonization, a more tangible result in the eyes of consumers will likely be bio-hybrids, vehicles that run on a combination of electricity and biofuels. Think sugar cane ethanol. As per Stellantis:
The production of the first vehicles equipped with Bio-Hybrid technology is flexible and can be integrated into various models manufactured by Stellantis. It is compatible with all production lines of the Company in the region. The new hybrid and electric technologies are expected to strengthen Brazilian engineering and the domestic industry. The Bio-Hybrid technology is supported by three hybrid powertrains that will be gradually produced and introduced to the market. These new technologies include Bio-Hybrid, Bio-Hybrid electrified dual-clutch transmissions (eDCT), Bio-Hybrid Plug-In, and BEV (100% electric). The new hybrid technologies will start to be available by the end of 2024.
Stellantis is currently the biggest automaker in South America and Brazil, but it’s facing competitive threats from Chinese automakers. BYD and GWM have announced plans to build assembly plants in Brazil, and that means a fight is brewing. It’s another fight in the war of automotive supremacy, and survival may well be at stake.
Mercedes-Benz Might Try Midsize Vans In America Again
It’s been a trying time for smaller vans in America, with all of them dying in rapid succession. Although the Mercedes-Benz Metris had some minor success, but didn’t quite pan out, with Mercedes-Benz bowing out of the market at the end of last year. However, the impending arrival of the Volkswagen ID.Buzz has given Mercedes-Benz a chance to put its thinking caps on, and Automotive News reports the brand will launch midsize electric luxury vans in America.
Given Westfalia’s recent work with Mercedes-Benz, an electric Westfalia campervan could be exactly what Mercedes needs to fire a bottle rocket through the ID.Buzz’s mailbox. However, there is another niche Mercedes-Benz should consider. The rich and famous love their luxury Sprinter and Metris conversion vans, and launching the weirdest Maybach model ever could print money hand-over-fist. It doesn’t even need to have a two-lane bowling alley or a fish tank in the middle of the dash, it just has to make occupants feel like they just hopped off the private jet and into another private jet. Just trust me on this one.
Shawn Fain Is Headed To State of the Union
The biggest name in automobiles right now might just be United Auto Workers union president Shawn Fain, who rose to prominence during the 2023 UAW strike by telling the big three that union workers weren’t going to lay down and take it anymore. Regardless of how you feel about recent UAW efforts, this is an important political play for the Biden administration. As per the Detroit News:
Fain will be a guest of first lady Jill Biden, joining her in the House gallery viewing box for speech. Biden, a self-described friend of labor, visited a Wayne County picket line to support the UAW’s strike last fall. He earned the influential labor union’s endorsement in January.
“Each of these individuals were invited by the White House because they personify issues or themes to be addressed by the President in his speech, or they embody the Biden-Harris Administration’s policies at work for the American people,” the White House said in Thursday’s announcement.
Michigan is gaining attention as a battleground state, and Fain’s UAW leadership has done a lot for auto workers. Strong leadership and bold tactics during last year’s UAW strike saw unionized workers gain impressive compensation, and equally importantly, signaled a break from the tradition of UAW leaders and automaker brass being chummy. Add in a recent drive to unionize more auto companies’ workforces, with a majority of Mercedes-Benz plant workers in Alabama signing union cards last month, and you can’t help but sense that some big things are ahead.
What I’m Listening To While Writing TMD
Thursday is Friday’s little brother, and as sun’s beaming through my window, one might think it’s the right sort of morning to ease into things with a mug full of matcha, some smooth indie pop, and perhaps even biscotti. Not today, though. It’s “Blinding Faith,” the latest track from Knocked Loose. Now open up this pit, motherfuckers.
The Big Question
In this talk of increased sales volume, it’s worth noting that buyers are often limited by interest rates and borrowing power. One great example is that although EVs may be cheaper to dump energy into than combustion-powered cars, not everyone has the borrowing power to buy a new EV, even if their current car payment and monthly fuel total evens out to the monthly payment on say, a Tesla Model 3. Likewise, just because someone can afford a Camry at 3.9 percent doesn’t mean they can afford the same Camry at 6.9 percent. So, how have interest rates and borrowing power affected your car buying endeavors?
(Photo credits: yonkershonda licensed under CC BY-SA 2.0, Stellantis, Mercedes-Benz, UAW)
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Baring a sudden, and significant lifestyle change; I’m still two years out from buying anything, used or new. Interest on used car loans are just too much of a bitter pill to swallow, and new cars are just too damn expensive for me to consider right now. Should my Civic randomly self immolate or something I’d be back at the bottom of the used car market, even 10K seems like too much right now.
Interest rates, borrowing power, and the crazy MSRPs, and dealer games are a huge factor in my purchase decisions. Which is at a full stop for the time being. YMMV
Huh. I never knew that’s what State of the Union meant. I hope they don’t labour the point.
Hot take: I’ve never understood the ridiculous amount of hype behind Knocked Loose. I think they’re fine, but they’re not exactly reinventing the wheel. There’s plenty of hardcore sounding hardcore out there. Don’t get me wrong-I’d never like sprint to turn them off or anything, but I can’t necessarily say that I’d choose listening to them over classic shit like Hatebreed, Life Of Agony, etc.
Hell I don’t even think they’re the best recent hardcore band to be honest. I’d probably rather listen to Harm’s Way or Gulch. Fucking A was Gulch good. Anyway, I think they’re fine but I’ve never really understood why they’re such a favorite for so many people.
Be that as it may, Thomas brings it–I had to double-check the byline, as this is pretty far outside the norm for Hardigree! I’ll look for your picks; I was just yesterday lamenting my lack of ambition in the new-music-discovery department.
Unfortunately Gulch called it a career in 2022 but they brought some of the fiercest sounding hardcore to the table that I’d heard in quite some time. Remarkably bleak lyrical content too, in a good way.
IMO the most interesting band in hard/heavy music right now is Code Orange, and I don’t just say that because I’m from the same city as them (Pittsburgh, PA, though the state part should be unnecessary as it’s the only ‘-burg’ in the country with an ‘h’). We have a decent hard/heavy music scene, but you’d never know that to live here; seems like it’s all bar bands playing old covers and coffeehouse singer-songwriters.
Turnstile is a good runner up, even if they wear their influences a bit too much on their sleeve.
Mercedes made a mistake by not selling the V-Class here. When people are paying 50-60k for a Kia, there should be no problem with 70k for a Mercedes minivan.
I wish we got the V-Class, Staria, GL8, Kangoo, Berlingo, and all the other cool minivans and vans not sold here.
I’ve always wanted to see the other MPVs here too. S-Max, 3rd gen Mazda MPV, international Odyssey, etc. I always assumed the Staria was too narrow but I realized it looks that way because of just how tall it is, and I think that is what would make it a hard sell here – it’s as tall or taller than even a lot of full size trucks and SUVs and might be tough to squeeze into garages here.
The V-Class likely would not have done well here though. I trust that if there were a market for a luxury-badged minivan, Toyota and Honda would have already tried their hand at it after ample research.
The. Only. Core. Is. Grindcore. Every other core is for children, save for some old school hXc.
signed,
An Aging Metalhead
That Merc van was exciting until I got to the EV part. If it comes, it won’t do well, and then they will say “well I don’t get it, we did our best” Yawn.
My lease is up on my truck in 4 months. I have never leased before, but in the covid car days I wasn’t sure what I wanted to do long term so thought it was the safe bet. Looking at how prices have skyrocketed in the last 3 years, I regret not just biting the bullet at the time on my ideal truck. Now it isn’t reasonable without them going back to 10-15k incentives. So if the market wants to go ahead and correct that would be great. Realistically, I am buying the truck I have now as those discounts won’t happen in time for me unless I want a gladiator, which I don’t . 25k miles on a Tundra that is basically bullet proof for 30k? How can I say no. It might end up my forever truck if things keep going as they are now.
I would have already bought a new car by now if it weren’t for those cursed interest rates. I have the “borrowing power” but I don’t want to use it at the current rates. Alas, I’m gonna have to pretty soon, we really need to replace one of our cars this summer…
New car buying right now is bonkers.
If possible, look at CPO low mile vehicles. Some pretty solid deals to be had and it’s essentially new.
Someone else takes the financial beating for you on initial depreciation, too.
I’m not looking at buying a new car, even though I just got rear-ended last week. Car is still drivable and the damage was light. I am also not looking for a new car or another payment right now due to the feelings we have at work. People are leaving in droves because the new owners are fucking us over left and right. They are not replacing anyone that leaves, and are sending some of the things we manufacture to Singapore.
My long term comfort and planning has me just saving right now. If I lose my job, I will be moving to Ukraine to be with my wife, instead of bringing her here.
If things improve at work in the next 6 month’s I will then be looking to buy a used Prius, or Hybrid Camry (SP? lol) and a motorcycle.
I doubt seriously I will get an EV due to the price, where I live, how long I keep it and what I need it to do. Hybrid or two are on my top 5 list of vehicles I want to test drive. I can handle replacing a small battery for a couple grand in 10 years, but $10K to $15K in 10 years just to keep the car out of the scrap yard, not something I’m keen to. Gas savings calculations aren’t showing an EV massively winning over a good HEV.
I’m finally nearing the time where I will get a new vehicle. I’ve gotten past the point where I think “WTF!!! Why are the trim levels I bought 7 years ago are now $6K to $15K more expensive” and I’m not talking about really expensive vehicles to start with. I’ve ruled out vehicles over $45K (or really $40K even), any vehicles with a “Market Adjustment” or “Value Added Accessories” that the dealer has carefully chosen to include for my benefit.
I won’t be financing. Don’t need to. Strategic planning for the last 20 years where I keep cars longer and pay myself a car payment. I cannot go ape on what I get, but I can afford a decent, reliable car that will have solid resale years down the road of life.
Have noticed that the prices shot back up to MSRP on many vehicles on March 1st, but I’m able to wait till the middle or end of the month for them to go back down before I start the negotiating. No since in negotiating what they will knock off in a couple weeks anyway, especially on vehicles that they will have had for over 80 to 90 days by that point.
Definitely have been watching inventory and interest rates. I want a “reasonably priced” EV but it has to make sense. Thought about pulling the trigger on one I wanted but determined it wasn’t sensible, what with having just put a bunch of new parts onto my 40 mpg daily. The EV would halve my vehicle energy costs but that would be eaten up by the interest on the loan.
Y’know, I was just thinking of the Morning Dump for…reasons, and I really appreciate the name. For years, I used “posting to Instagram” as my euphemism at events for going to poop. I mean, it wasn’t a complete lie. If you saw a social post I made from an event, guess where it was posted? “Morning Dump” is even more honest, though. I don’t have to say I’m taking my morning dump. I can just say I’m reading the Morning Dump. Anyone who puts two and number two together, well, that’s on them.
As for the flush, what borrowing power? I was just unemployed for nearly a year and a half. Worse yet, I’m a journalist. I’ve been chronically underpaid and/or underemployed in an industry that’s rapidly imploding for most of my adult life. I’m lucky I don’t have a sizeable debt to The Man who periodically threatens to crack my kneecaps if I don’t cough up the dough. You’re all lucky I can afford cheese at this point because I’m sure I’d complain even louder if I couldn’t.
I’m hopefully employed somewhere stable for a while now, but sheesh. I just got there! At least let me save up for a down payment on a Cayenne that I’ll probably get distracted with and blow on a New Beetle to rallycross. Interest rates don’t really affect that transaction as much as availability of cheap Y2K slugbugs in that cool metallic lime green. Bonus points if it’s a manual.
Solid reference, Thomas
How have interests rates and borrowing power affected my buying endeavors? What buying endeavors? ‘Nuff said.
ditto
Same! Every time I even think about another vehicle, the interest rates bring me back down to earth. I just built a Landcruiser on the Toyota site, “excellent” credit had an estimated 9% interest rate! (also, it was 720/month for 72 months with 25K down. WTF???)
our local credit union is 6.7 for anything 2021+ . Check out yours!
I mentally break at the prices though. Anything over 500ish a month seems absurd to me, but I can’t seem to configure anything but a Corolla-like car in that pay range! I need a truck for my work and life and new just isn’t worth it.
That’s about what I’m seeing at mine as well, but I got 2.9% on a car loan in 2020 LOL.
Yeah, no I’m good. Definitely not taking out any car loans any time soon. I spent more money than I wanted on a 4Runner back in 2019 because I knew it’d last forever, at 170K now it’s just broken in.
That friggin Landcruiser costs about what I make in a year, no way I’ll b getting one of those this decade.
That’s the rate I’ve seen there too, but it looks like that’s just a Toyota credit placeholder. I’ve seen lower non-promotional rates for the same credit score on the sites of other carmakers, and the rates would almost certainly be lower if you bring your own bank or credit union financing.
For me, it’s that there’s nothing I want in the new car market. A Ferrari would be nice, but I can’t quite make the financial reach /s
At least around here, car dealers became hopelessly addicted to their ridiculous add-ons ($10,000 for powdercoated wheels, anyone?) and they can’t break the addiction. The local RAM dealer advertises $7000 off MSRP, but by the time they load on the high-profit, low value crap, you’re right back to MSRP. They all need to go to ADM rehab.
My GF had to wait ~four months for delivery of a Toyota Corolla Cross. She was willing to take virtually any color combination, so long as it was a base model. After I blue-penciled some of the dealer add-ons (darn near $400 to have the tires filled with nitrogen? Nope) and cut the extended factory warranty package down by 75%, we got the car for sticker.
She paid cash, which was another savings. All the dealer had was a couple of full-boat Tacomas and a pile of Busy Forks. She wasn’t tempted by either.
Why blue pencil instead of red? Red is usually what I associate changes with being around engineers all the time.
Maybe ExAutoJourno worked in paper magazine or newspaper production where people used blue pencils to mark-up page layouts.
Some days, I feel as if I used a chisel to edit stone tablets….
Ha! Chisel, you say. We would have loved a chisel. We had to train monkeys to scratch out copy from the tablets with sticks!
I could say something about “monkeys” and “scratching out copy,” but there’s always the slight, slight chance that one of the writers whose work I trampled on might figure out who I am….
As a former editor, I’m more accustomed to blue.
Today I learned! I’m just so accustomed to red from teachers marking up papers and then engineers always making markups in red (probably because historically blue would not work on blueprints?)
I use green ink for correcting student papers. I understand some instructors do this because they think green is somehow friendlier than red but I do it for the simple reason that I only very rarely receive an assignment in green ink.
I’d hate to meet the anarchist that does an assignment in red.
It’s rare but still far more common than green.
Regular ‘ol free air is 78% nitrogen. What a scam.
In legal jargon, to blue pencil means to strike out certain provisions but keep the remainder intact. By comparison, to redline a document means to suggest changes for your adversary’s consideration.
My wife and I had to wait about four months for a Corolla Cross last spring into fall to get one that was acceptable. Color was a big factor (Cypress) but the add ons of “scheduled” production were absurd. One of the scheduled production features was all weather floor matts that were in a cardboard box in the trunk when I first got to see it. I asked if they could take the box out. Nope.
Bought it anyway and my wife is happy with it, so okay.
In late 2023 I bought a manual transmission GTI that I didn’t need at an interest rate higher than I would like to pay. Cue the scolds. It’s well within my means and I am having an absolute fucking blast driving it. NO REGERTS.
If interest rates come down again, refi. Until then (and after that) enjoy the GTI!
Ugh, Knocked Loose is terrible, man. They were and opener for Gojira when I saw them in Cleveland a couple years ago. Alien Weaponry was the first opener and they KILLED it, amazing performance, super talented group of children. Then Knocked Loose came on and wow were they garbage, in the first two songs they mentioned that they were Knocked Loose from Kentucky about 10 times and just kept trying to do crowd work, their sound quality was that of a garage band who just got new used audio equipment, and did I mention the crowd work?
Fortunately this allowed me and my buddy to go outside for him to smoke a few cigs, and for us to visit the Alien Weaponry merch booth so I could buy a sticker.
Then Gojira came on, and they were amazing as always.
Now if you want to open up this pit might I recommend this little ditty from a band called Lamb of God?
https://youtu.be/TkzK2jubKeA?si=E14qHvSRiEo91Jo2
It’s hard to judge a band on a single gig, as every group of artists has a sub-par day from time-to-time. As it stands, Knocked Loose has some of the best songwriting in the game right now, although it’s worth noting that Bryan Garris’ vocals aren’t to everyone’s taste. The artistic progression from the Spit EP to A Tear In The Fabric Of Life is insane, and if you haven’t checked that latter project out, it might just change your mind.
My first exposure to Knocked Loose was hearing “Deep in the Willow” on Liquid Metal’s Devil’s Dozen when I first got my SiriusXM subscription (I know, welcome to 2004, whatever). I thought, “Damn, that chick has some real power in her voice!”
Finding out their vocalist is a guy was pretty astonishing, even more than when I learned Rush’s vocals were done by a male.
I don’t know this band and most of the recommendations here have not been my kind of thing, but I’ve seen a few bands I really liked over the years that put on a garbage live show. One seemed like it was the fault of whoever setup the audio, but the others were the bands. Not sure if they were pissed off, not into it or something that day, or maybe they just suck live.
I don’t borrow for my cars. I wouldn’t trust any financial institution that would offer to advance money for the types of nonsense I buy.
That is about the most Autopian statement ever.
COTD?
That made my day
Something to remember is that car loans can be refinanced.
So if dealers are giving good discounts now to entice sales in a high-interest environment, it might be worth jumping on, while anticipating rate cuts and a refi in the future.
I actually had no idea about that! That’s very interesting indeed…
My credit union offers a refi guarantee that they’ll save you $100/mo on your payment or give you a couple hundred bucks. I think they used to say, save $100 or beat the rate by a percent, but that was when rates were lower, so not as great to offer now.
I was never tempted to try it as I bought my car new at 0.9%/60 mos and assumed that saving could technically come from extending the term, but nice to have the option especially on used cars where rates typically run higher.
Yes, I’ve refied multiple loans, back when I was dumb enough to take out big car loans.
My GF did hers 2 years ago, she’s paying just over 2%.
Good timing!
Absolutely! Not long after rates started going up. She loves how much of the payment is going to the balance, and that the balance is actually falling faster than the value of the car. Prior to this she’s leased or traded every few years, this one she plans on holding onto after it’s paid off.
I currently have a very small loan at an interest rate lower than my earned interest in my credit union. I would like to get rid of my car and my pickup and get one vehicle that will cover all my needs, but I’m definitely looking at prices, rates, and efficiency. The Equinox EV would do pretty much everything I’d like, but I don’t want to double or triple my interest rate on a more expensive vehicle and don’t know the what rates will be when it actually ships. I’ll be watching interest rates and lease deals very closely (and likely going for a lease if I go for it).
We’ll never get back to 2019 levels. This was proven when OEMs said they were reducing output to keep inventory at a level that makes them more profits. People paid too much for cars because they needed(?) them. Now OEMs don’t have a incentive to reduce prices or build less expensive (lower margin vehicles).
The only way we’ll get less expensive cars in the US, is for a new OEM (China?) to enter the market, same as in the past. Japan then Korea.
Could be India, too, I’d buy an Indian car for the right price (technically, we did already get the Ford EcoSport, but that was a pretty terrible value proposition)
these get crapped on a lot, but my daughter loves hers. I have driven it a few times and had one as a rental and I found it to be pretty alright. Hers was a lightly used 2020 that we bought last fall for about 13k all loaded up
I think the big issue was that, when they were new, the price gap with the Escape wasn’t significant enough once you started adding options and looking at monthly payments. It was similar to the Contour/Taurus situation in the ’90s
All it takes is one manufacturer breaking from the pack trying to increase their market share. Doesn’t even have to be Chinese, but Geely or BYD are a good bet.
A full-sized van is not everyone’s cup of Gatorade, but isn’t a significant part of the ID.Buzz’s buzz the neo-retro styling and call-back to hippy vans following the Grateful Dead around and carting surfboards to the beach? (Was that sentence long enough?)
I doubt anyone would cross-shop an ID.Buzz and a Merc EV van. People wanting the ID.Buzz will want the ID.Buzz. When it comes to marketing a van, Mercedes-Benz has none of the 1960s groovy vibe to pay homage to, except for a Janice Joplin song mocking conspicuous consumption. Bring back styling cues of the W198 or W123 and then maybe MB will have something to talk about. [/soapbox]
What I’ve been wondering is if pandemic quality issues have been ironed out yet, or if buying a new car right now is still a roll of the dice.
Not entirely ironed out and with a tight labor market factories are still have staffing issues and quality issues with suppliers. I’d argue better than a year or two ago when short builds were normal.