Academically, it’s enjoyable for a journalist or an analyst to watch how one variable can interact with another to produce fascinating results. It’s a little less enjoyable if you’re a real human who bought a car at above-market prices during the pandemic and now find yourself underwater on your loan for market reasons beyond your control. Apologies in advance, but The Morning Dump probably isn’t going to make you feel better if you purchased a new car between 2021 and 2023.
If you’re one of those buyers who falls into the category mentioned above and you’re also the type of person who feels better about your personal suffering by making it seem proportionally smaller in comparison to someone else’s tragedy, then today’s news of Fisker searching out bankruptcy lawyers is worth a read.
Tesla, too, isn’t looking great after another analyst essentially downgraded the company with some fairly harsh words. Unsurprisingly, Volkswagen is looking at the above and starting to think that, hey, maybe it wouldn’t be bad if the company brought a PHEV to the United States.
It’s 5:00 AM in New York so maybe I’ll have a real shot at getting this up in the actual morning again today.
More Than 20% Of New Vehicle Sales With A Trade-In Had Negative Equity Last Quarter
I’ve talked about this before, but there’s a specific vintage of loans made from 2021 to early 2023 that are extremely problematic to hold. These are held by buyers who, for whatever reason, really wanted or needed a car during the height of the pandemic. Due to shortages (and trimflation) the lack of supply meant that prices reached record levels, with consumers paying above MSRP and ADM (additional dealer markup) on regular vehicles. Even worse, the low-interest rates at the time made it easier to get a lower car payment without a big downpayment.
This means that there are buyers out there who put only a little money down on a car that was priced at historically high levels. If car prices stayed high forever then, in theory, the value of a 1- or 2-year-old car would remain fairly high and, therefore, those buyers could trade them in on something newer and do alright.
Unfortunately for them, these buyers chose the absolute worst timing. They bought a vehicle when supply was low, prices were high, incentives were mostly non-existent, and interest rates on new cars were Flo Rida (which is to say low). Now, due to both automotive supply rising and a reaction to inflation caused by all of the above, prices of new cars are dropping, and interest rates are going back up again.
This means that someone who owns one of these cars is quite likely to be underwater because a two-year-old Jeep Grand Cherokee, for instance, commands a far lower price when a new one can be had with mega incentives.
Edmunds has all of this broken down in its 2023 Q4 Used Vehicle Report, which shows a lot of potential good news for someone in the market for a used car, and a lot of bad news for someone who bought a new car a couple of years ago.
“A storm is brewing in the used market as incentives and inventory continue to trickle back into the new vehicle market,” said Ivan Drury, Edmunds’ director of insights. “With demand for near-new vehicles on the decline, used car values are depreciating similarly to the way they did before the pandemic, and negative equity is rearing its ugly head.”
The numbers are pretty bleak. About 20.4% of trade-ins on new cars have negative equity, up from just 14.9% in Q4 of 2021. The amount is also up a lot, hitting a record $6,064, compared to $4,143 at the end of 2021.
As you can see in the charts above, the share of trade-ins with negative equity was higher in the quarters leading up to the pandemic, but the amount of negative equity was lower.
If you’re one of these vehicle owners there’s a good solution: Don’t trade in your car. There’s not a lot you can do about the near-term high availability of cars, but trying to trade in to buy something else to lower your payment means you could be facing both a negative amount of money owed on a car and higher interest rates if you’re financing.
Of course, if you’re super wealthy maybe you don’t care. For everyone else, the best action is probably no action.
Fisker Has $500 Million In Unsold Cars
It’s not looking great for electric automaker Fisker. I wrote previously about how a bad review from Marquees Brownlee was being parroted and recast on the web in a way that was detrimental to the company, with many people stating that he destroyed the company.
Well, it’s only getting worse, at least according to a new report from The Wall Street Journal that says Fisker’s looking for a firm to help it through a potential bankruptcy.
Electric-vehicle startup Fisker has hired restructuring advisers to assist with a possible bankruptcy filing, according to people familiar with the matter.
Fisker, which recently warned that it risked running out of cash this year, hired financial adviser FTI Consulting and the law firm Davis Polk to work on a potential filing, the people said. The car company reported last month that it had $273 million in sales last year and more than $1 billion in debt.
Those are not great signs and, while the review didn’t help, it does seem like major structural problems were already in place. Also, from the report, it seems like there are a bunch of unsold Fisker Oceans out there:
Employees have been working to unload the nearly 5,000 vehicles it has in stock, which are worth roughly $500 million, according to the company. Fisker has said it wanted to sell all the vehicles by the end of March, in part by signing up new franchise dealerships.
The obvious conundrum here is that Fisker could potentially raise cash and avoid bankruptcy by selling these cars, but the threat of bankruptcy only makes it harder to do so as people are wary of buying a car from a brand that they don’t think will exist to support the vehicle.
Wall Street Analyst: Tesla Is A ‘Growth Company With No Growth’
Wells Fargo analyst Colin Langan sent a note to clients on Wednesday telling them that Tesla stock doesn’t look great this year in light of slower sales and lower prices. This sent Tesla stock down a further 4.5% yesterday, adding to the stock’s poor performance this year (down 32% year-to-date).
Here are some highlights, via Bloomberg:
Elon Musk’s company is a “growth company with no growth,” Langan wrote. He highlighted that sales volumes rose only 3% in the second half of 2023 from the first half, while prices fell 5%.
And:
Even after the decline, the stock still trades at 55 times its forward earnings, compared to the average of about 31 for the Bloomberg Magnificent 7 Price Return Index.
“While an EV and battery technology leader, Tesla screens poorly relative to Mag 7 peers,” Wells Fargo’s Langan said, noting the valuation discrepancy. The analyst lowered his 2024 profit estimate for the company to $2 a share from $2.40. That compares to analysts’ average expectation of $3.03 a share for the year, according to data compiled by Bloomberg.
I’ve always thought Tesla was a super valuable company, but in light of everything else, it’s hard to square why it should be worth so much more relative to, say, Google, given that nothing Tesla did wasn’t going to inevitably be repeated by other automakers. [Ed Note: With varying degrees of success. -DT].
VW: Ok, Maybe We’ll Do A Hybrid
Volkswagen is one of those automakers in the United States that had some early hybrids and then decided to ditch them for a quick switch to electric cars. It was an interesting gambit, but it hasn’t entirely panned out for those automakers. VW, in particular, is now reconsidering bringing a hybrid to the United States.
Volkswagen Group of America CEO Pablo Di Si said EV sales were pretty strong throughout 2023 until November and December, when demand started to slow.
“We’re not questioning the future,” Di Si said on the sidelines of VW Group’s annual media conference here on Wednesday. “The future is e-mobility. It’s just a transition time.”
But…
He pointed to the Tiguan plug-in hybrid that recently launched in Europe. The crossover has migrated to an updated version VW Group’s MQB platform and has an electric range of up to 62 miles.
“We have the basis, we’re just trying to figure out how, when, how to homologate and how to localize,” Di Si said.
While that isn’t an explicit endorsement of bringing the Tiguan PHEV here, it does sound like an idea that makes sense to them. If it were me, and it’s not, I’d do a PHEV Atlas.
What I’m Listening To While Writing TMD
I’m listening to Liverpool’s greatest band, Echo & The Bunnymen.
The Big Question
What would you do with 5,000 Fisker Oceans?
If you have negative equity on your car, you keep it instead of trading it in. You do NOT need a new vehicle.
I was forced to buy a car in mid-2021 after my glorious old E550 was totaled when someone hit me from behind (I’m fine). I bought a used A6, knowing I was getting screwed, and consciously making the decision to buy something I’d be happy to drive for a decade.
I love all the hybrid talk so I’ll throw this here to see if anyone knows. I’m someone who was really interested in the Ford Lightning before it came out but wary about range rowing because my wife & I pull a 9k trailer most weekends in the summer. As I suspected, once the reviews came in the range got destroyed pulling something like that so I passed.
So the RamCharger is the latest thing really catching my eye since it has the perfect amount of battery for my daily driving (~100 miles 1-2 days a week when I have to go into the office) and the engine will make towing no problem (in theory). The thing is, I’m not really a Ram guy, I’ve always been a F150 or Silverado owner. What are the odds that Ford or Chevy matches the Ram Charger with their own 100-mile range plug-in hybrid truck?
> What would you do with 5,000 Fisker Oceans?
One daily, one backup, and 4,998 parts cars to corner the market and price gouge other Ocean owners when Fisker goes poof and they desperately need parts.
All this talk of covid is making me miss it so much. As a trucker, lockdown was paradise. No traffic, many less wrecks, no logbook if you were hauling vital commodities(pretty much anything) no tourists clogging up truckstops. Cops scared to talk to you, so no money making traffic stop schemes, no rv drivers running people off the roads, no cars causing accidents… I wanna cry.
Currently 6k upside down on a car we bought around the height of the market price. I did get an amazing price for my trade in though.
We just decided to get a well loaded van from the get go to avoid wanting to get something nicer later. I could see us keeping it for another 5 years until we just don’t need as large or a vehicle. By then we’ll paid off for sure.
Exactly. I knew I was getting screwed when I was forced to buy a new (to me) car in 2021. I bought something I’d be happy with for a decade.
I was thankful that Carvana was willing to give me ~6k more than any dealer would for my 2013 Optima which did help make buying a car in early 2022 easier to swallow.
I sold my ’18 GTI to Carvana for more than I paid for it in 2021 as well, but I’ve regretted selling it ever since.
5000 Oceans? Obviously dump them in the ocean where the underwater car loans are
E-mobility? I’m going to throw up now
If Fisker plays their cards right, maybe the ocean will come for Oceans, like it did in 2012 with the Karma.
Fluffy approves of the Bunnymen.
Flush: SPEC OCEAN RACING, BABYYYYYY
Spec racing series is the correct answer.
I’ll take my cue from Tori Amos and drive 5,000 Oceans if that’s what it takes to sail you home.
Financial literacy is sadly something a lot of us (especially me) learn through making mistakes. I grew up in a poor family (single parent, usually under the fed poverty line, etc.). In my family, if you could afford the payment and qualify for the credit, you could afford it (car, furniture, whatever). I know now this is not true, but this is what I learned growing up. I wasn’t taught the cost of credit or how to make good financial decisions, so when I got out on my own, the first thing I did was buy a brand new geo metro for $200 per month for 5 years, at 21% interest. The math wizards out there will understand that I paid $12,000 for a terrible car with an MSRP of about $6,000. Worse yet, I didn’t know anything about maintaining a car, so it died a horrible death just a few years later. I mean, who knew oil had to be changed? 🙂 I also made mistakes with credit cards and when I was 28 years old, most of my income was put to rent and debt service. I could barely afford food, even with a decent job. This is why people get into the trap of rolling one mistake into another. There’s no money to save because it’s all going to interest. Something happens and you incur additional debt. Your car breaks and you roll one mistake into the next.
I read comments blaming the individuals who make the mistakes, and, yeah, they are ultimately responsible and should have known better, but maybe, as some have suggested, basic financial literacy should be taught in school. It might not eliminate the bad decisions, but it might prevent some of them.
One of the arguments I’ve seen against including financial literacy in school curriculum is that the information is easily available on the internet. This is true, but if you don’t know you’re making bad decisions, why would you look?
I learned from my mistakes and it took me years to recover. I can honestly say I didn’t know better at the time. Maybe I was a victim of predatory practices; maybe an adult should have said, “Slow down there. This is a bad idea!” Ultimately, I was a victim of ignorance, my own and my parent’s.
Lets be real, despite all the education in the world, lenders are trying to make money, and can be pretty dodgy in their practices to do so. The bar on lenders should be raised substantially to reduce or limit debt spirals.
Takes a big person to be honest about things like that. Thanks for taking the time to share. I never had the credit when I was young to do anything stupid involving financing, but I certainly wasted thousands on broken cars I had no chance of putting on the road…
I agree, more secondary curriculums in North America need to teach financial literacy, and how to handle basic ‘adult’ situations in general. Insurance, income tax, budgeting etc. Anyone who argues otherwise is doing so in bad faith, or has a vested interest in the status quo.
Here in Ontario we actually have a handy course called ‘Math for Work and Everyday Life’ that covers a bunch of that basic financial stuff- But it isn’t compulsory, and in some schools, often serves only as a final math credit for students who fail out of the university-level math stream. Ironically, some of the ‘burnouts’ who took that class seemed much more fit for adult life than people like myself who barely passed the academic courses…
I suppose in theory if you can hack it through algebra, you should be capable of some basic arithmetic applied to the cost of items in your daily life. Sadly not everyone is the best at applying theoretical learning. Sometimes, people just need someone to sit them down and show them how to make a budget or work out total costs of ownership.
No matter how financially literate you are, adulting sucks
There was a personal finance class way back when I was in school, which I took, but nothing like that was available for my kids. There have been some rumblings from my state that they are going to make a financial literacy class a requirement for HS graduation.
Glad to hear that you were able to learn from your mistakes and recover.
I have over $100k in student loan debt that I will only realistically pay off if I start making more than halfway to seven figures. I didn’t come from a poor family, but still, no one explained to me that having more than a yearly salary worth of loans would be impractical to pay down at 7% interest. Also, nearly 2/3 of the debt is from a masters degree I failed out of due to an undiagnosed disability. Thankfully, I eventually finished the undergrad without accruing more debt, and it helps qualify me for jobs that make low six figures. This is enough that I can participate pretty fully in a middle class lifestyle while making the minimum payments on the loans for another ten years until forgiveness.
I came from a family that was most of the time poor or working class, but irresponsible with money during the brief periods where my dad made a middle-class income. While scholarships covered most of my college, I still had a $600+/mo minimum student loan payment upon graduating, and looking back on things, I’d have had to have been valedictorian of my high school to have done better.
I paid mine off by living in the ghetto, brownbagging my lunches to work, commuting by bicycle, cooking meals at home(lots of beans and rice), and splitting the rent with room-mates. The most expensive car I ever had cost $4,000, paid for with cash, and was mostly only used for long trips. It also helps that I made more money than most too. But because of repeated layoffs(started my career during the Great so-called “recession”), I was repeatedly set back and a 5-year payoff plan became 10 years thanks to loan capitalization during deferment and deferment fees.
I paid enough in interest to have bought a starter home, without the starter home to show for it. I often think I should have dropped out of high school and sold crack, because at least then I’d have had money to get my project car built in my 20s. I designed my first EV conversion at age 16, but it didn’t take its maiden drive until I was 27. I went into engineering to get into the EV industry, but due to lack of money, I never got my prototype built early enough for anyone to take notice. Student loans are a big reason I never had money to make progress.
At least I was debt-free in my 30s. But the EV boom passed me by while I was stuck working a boring ass job in power distribution, entirely defeating the reason I went into electrical engineering to begin with. Had I waited around to chase my dream job, I would likely still be in debt and maybe even have seen it go into default and become mathematically impossible to pay off.
I moved to the US in 1994, at 17, and was nearly caught up in the debt trap when I was 19. I went to look at a Plymouth Laser (bottom spec with 92hp, SOHC 1.8, automatic). I was waiting tables, making decent money, and the salesman pushed hard, as they do. Since I am from Sweden, where you expect people to have at least a partially fiduciary responsibility, I told him I was about to start college and that I would only be working part time – I wanted to know if I would still be able to make the payments. His response was “don’t tell financial about that, and I will get you into this car today.” I walked immediately.
Had it been a five-speed, my common sense might not have prevailed (whew). We didn’t receive any specific financial education in Sweden, but we were taught about interest and what an amortization curve looks like, and my parents had explained the differences between lending and leasing and what a mortgage was. It doesn’t take a whole lot.
I hope you’re done being in bad debt.
I leased my tundra in 21, I wasn’t sure what was happening, and didn’t love anything out there. I had never leased before this. I will owe about 32k on it to buy it out, with 26k miles and I know it was well taken care of.
My other option is to buy a truck with double the miles, otherwise exactly the same, for 35-40k. Anything new is insane right now truck wise, and I do need a truck in my daily life. Paying my mortgage payment every month for a vehicle is insane, so I’ll be in this Tundra for a long time I think.
In defense of all the people who are no underwater on their loans, all of the car company execs thought the pandemic gravy train was going to continue forever too. How many of them announced plans in the past few years to continue limiting supply and increase profit margins?
This is the case in an awful lot of financial situations. There’s a reason most financial advisors recommend setting up automatic contributions to your retirement accounts and then never looking at them again until you’re nearing retirement. I recently heard that the most successful accounts at Fidelity are the ones the owners forgot they had. They just sat there quietly earning compound interest for decades, no input from the owner needed or wanted.
I feel like the obvious answer is Fisker Ocean racing series.
With that many, we could have a Fisker Ocean demolition derby series.
I’m listening to Liverpool’s greatest band, Echo & The Bunnymen.
It’s a rare cold and about to be rainy day here in San Diego, but that take sure warmed me right up – and I’m a chronic First Wave listener and big Echo and the Bunnymen fan.
Maybe one of Liverpool’s greatest bands, but don’t go forgetting The Teardrop Explodes.
Missed a big piece of news: Marcello Gandini died yesterday. For me, he was the most inspiring designer and it was his work that reawakened a dead love of cars when I was young. In interviews, he seemed like such a humble man—uncharacteristic for a designer, though I believe he considered himself more of an engineer—including being polite when presented with the horrid Borkert Countach.
And so soon after Adrian’s positive analysis of the (original in original form) Countach.
Sheeple. Anyone remember the Oklahoma nurse and her finances? So many pure distilled idiots exist and they are profoundly bad with money. Furthermore, consider just how many casinos and sports books there are. We are a stupid species able to split and fuse atoms. Excuse me while I go suntan in mid March.
>the Oklahoma nurse and her finances
Nope. Would love to hear about this though.
God Save Us.
Are you referring to the lady who ordered a pizza and then discovered she had no money when the delivery guy showed up with it?
I think I saw that movie.
Me too! But who orders a pizza then gets ready to take a shower right before it arrives?
That’s… Not very kind. Not everyone is taught how to manage money, and car sales and finance managers will stop at nothing to make a sale, even it means the buyer will need to eat their children and rent their body to strangers to make rent.
Re: underwater car loans, some are people who needed a car then and there and deserve sympathy. Others are typical “gotta have the latest thing ” fools who overpay for something while rolling in the unpaid balance on the last latest thing and wonder why their car note is the size of a mortgage payment. I am fortunate that I owe less than half of my car’s book value and it’s a Mazda so I’ve needed tires and a battery in 5 years.
Other items, Fisker can go hang, there need to be consequences, for that matter Tesla stock needs a haircut, too much value is hype rather than substance.
Hybrids are good.
Calling Echo and the Bunnymen Liverpool’s best band is pretty bold. I rate China Crisis higher, and as a partisan of Ian’s former band mate Julian Cope, The Teardrop Explodes is wildly underrated. Plus the only known use of a Humber Super Snipe in a music video (Colours Fly Away)
I might just be an idiot, but I’m trying to figure out why someone would trade in a car with negative equity.
I’m sure some could quote some edge case reasons but the fact this is happening often enough to be a trend is baffling to me.
People are bad with money and illogical. Maybe they got shafted with timing in having to buy a new car at peak, but they’ve either got the remainder of a low rate loan or they’re paid off, so, unless they’ve got enough money not to care, this is when they should be driving whatever it is into the ground. Then again, with the declining reliability and reparability of too many new cars, perhaps they’re already there.
Story Time:
New co-worker owns a three year old Ford F-150 4×2 XLT, perfectly nice truck.
Decides he has a new job so he should treat himself and trades it in on a new F-150 Lariat 4×4. Then his wife is upset she has a ratty old Corolla, so they trade that in on a new Mustang GT convertible.
He bought everything he owned on credit. If he could swing the monthly payment, it was fine.
Fast forward 1 (ONE) year. He was visiting the dealership with his father because his father wanted a new truck. The salesman convinced him he could get him in a new truck and lower his monthly payment. He came in to work Monday morning talking about it. I tried to talk him out of it because he had a baby on the way. Wednesday morning he rolled in with a brand new diesel Ford F-250 King Ranch 4×4. Apparently it did lower his monthly payment to only $1,000 for 7 years. When the baby arrived a few months later, they traded the less than 2 year old Mustang GT in for a Ford Fusion.
It kind of made me sick to my stomach. He got fired a few years later. On the plus side, I spoke to him a few months ago and he’s doing well and moved up into management.
Of course he has
I feel compelled to add this was $1,000 a month for 72 months in 2015 dollars. Not hyperinflated 2024 dollars.
That’s called ‘Failing upwards’
If you’re a midwit dudebro, they’ll roll the red carpet out for you to make more money after each fuckup.
If you’re the best guy they have for the job, they’ll keep you there, and you’ll only get appreciable raises that outpace inflation by repeatedly switching employers.
It can be a trap when you’re poor. You make enough to make a monthly car payment but you don’t have enough savings when that car has a $1500 repair. You can’t get a loan for a car repair, but you can on a new car, so you trade this one in for a new(er) one, tacking on the upside down part on the loan. Now you’re in greater risk of the same thing happening again.
Some bad financial acumen, some bad luck, some ‘it’s expensive to be poor’
Yes, both, but I’d say it’s more so the financial acumen than the bad luck.
Objectively, “poor people” don’t need a car that’s much more than a well-maintained Toyota Corolla. If all poor people bought Corollas rather than old Hyundais, KIAs, and Stellantis products (or anything that is more ‘aspirational’ then reliable), then there would be fewer $1500 “bad luck” repairs.
I know “poor people” that are a) making expensive payments on new Hyundais that will become money pits before their loan is paid off, and b), own old VWs that are objectively worse and more expensive in nearly every conceivable way than a Toyota. Improved financial and automotive literacy would avoid both of these kinds of traps.
If people (all people) understood the monetary value of reliability and longevity, then fewer people would be driving vehicles that are simultaneously more car than they need and also a ticking time bomb.
When I bought my first two cars, Toyota/Honda/Nissan/Mazda were completely unattainable. Many people are stuck needing wheels sooner than they can save up for a better car, and end up in a cycle of despair where they can’t be without a car, but their car is bleeding them dry and they can’t afford anything better.
Those days are behind me, thankfully, but I will never forget how stressful it was all the time, and a huge number of people had it worse than I did. At one point I had $450 to my name and the next month’s rent was $550. I could only drive at night with no traffic because the head gasket was failing and the engine overheated. That’s a lot of people’s daily reality.
My $1,200 Mercedes 300 SDL was both reliable and long-lasting. Very well-built car. It was simultaneously a ticking time bomb, but fortunately, it never went off in a big enough way to be ruinous. It helps that it was a mechanically simple car by today’s standards, with minimal electronics, and was actually possible for me to work on it with basic tools.
In my experience it was largely people with poor financial literacy wanting the new shiny thing because it is new and shiny. As long as that monthly payment passes their eye test, they were fine with it. Just give them the keys. 10 year loan, 20% interest, who cares.
Every now and then you ran into someone who had too much negative equity to roll into a new loan, and you’d have to suggest they actually come up with some money to make the deal work. Usually didn’t go well, because these people didn’t have two nickels to rub together.
No surprise this is happening more with people paying above sticker and rising interest rates.
The fact that you’re asking means you’re *not* the idiot.
Unless one buys a Wrangler, 4Runner, or Tacoma, being underwater on a car loan is par for the course in a normal market. General rule is that a car is a depreciating asset, it loses value as soon as you drive it off the lot. When you’re underwater, you KEEP THE CAR.
OR, Dave Ramsy it and sell it at a loss, pay off the difference, and buy a beater.
It’s not normal to be underwater unless someone is buying poorly in terms of specific odd vehicle with a terrible reputation that nobody wants or a ridiculous loan term. The exception would be up to the first year if they didn’t have much of a downpayment. Definitely, anyone in such a situation should be holding onto it, though. I imagine these numbers pick up a lot of people with terrible financial knowledge and lack of self control to resist the allure (“allure” as I see it as they’re only getting less desirable every year, IMO) of a new car.
With little money down and a longer finance term, which are very common, it’s very easy to be underwater. Especially for those who roll in negative equity to begin with.
Well, if that’s the normal transaction by the stats, financial illiteracy is indeed an epidemic. What’s especially perplexing about it to me is that this is mostly people who don’t really care much about cars who are living far more car-poor than they need to in order to buy daily beaters that aren’t remotely fun or interesting (because that’s nearly the whole market).
It’s just the math of new cars. They depreciate in the first month more than you pay off in the first year, it takes a couple years for the linear payment schedule to intersect the exponential depreciation, at which point you start building positive equity. It’s impossible to buy a new car without building some negative equity unless you come up with a hefty down-payment. If you roll tax and registration into the loan, that itself is negative equity before you even get in the car. Now, on top of normal depreciation, the entire market lost value, flipping people who would’ve normally had positive trade-in value upside-down. Of course, trading in anyway isn’t the best choice, if possible one should hold onto a car if equity is negative, but just having negative equity isn’t inherently bad. Also, I’d hardly call a little over 20% “the normal transaction”.
Here is where a certified pre owned vehicle shines. Depreciation is far lower vs new, and you still get a solid manufacturers warranty too. Some even come with paid maintenance. Might even get preferred finance rates as well.
Little money down and longer terms is, in many cases, simply a way to rationalize buying more car than one really needs. A big bet that things will remain stable from a health and financial standpoint.
Leasing makes sense in certain situations, but one does lose out on having an asset at lease end. If one decides it’s ok to forego that, thats fine. Not recommended with children or of driving a lot is part of the use plan for the vehicle.
Not quite as hot as some of Adrian’s takes but damn…
I love Pavement’s cover of “The Killing Moon.”
Yeah, 100%, I love that version.
I saw a Pavement MTV video marathon once and was sure something was wrong with the TV’s speaker.
I’d hang on to those 5000 Fiskers; they’re bound to be worth more in awhile because because everyone knows Ocean levels are rising.
Just keep them away from the NY docks.
I’m not sure about that. It looks like they’re about to flood the market.
I’m hoping they won’t sink to those depths.
Maybe you’re right and there will be a fresh wave of interest, but I’m still concerned that there’s been significant erosion of enthusiasm about Fisker.
They need a partner, fast.
Yes. Someone to throw them a rope.
We need to have some sort of massive public service announcement that educates people on the dangers of car shopping based on payment. IMHO that’s the biggest driving force behind this crap. A shocking majority of people buying cars don’t understand what an interest rate is, what the principal balance is, et cetera…and they’re literally the most important part of the entire process.
People literally see that Nissan will put them in a Rogue for $500 a month and sign on the dotted line without question…then they’re surprised that they owe $40,000 on it when they get bored of it and try to trade it in after two years because to get their payment to $500 the term had to be 84 months at 17% APR.
Most of these folks don’t understand how their credit affects all of this either, and a shocking amount of people don’t even know what their credit score is and what changes it. It’s easy to be like “these people are dumb and should know better” and I’ve certainly had similar thoughts cross my mind in anger when a Talltima or Dodge Journey doing 90 in a 45 nearly runs me off the road. But that misses the point.
This is a societal problem. It’s absolutely ridiculous that here in Murica we don’t include any of this in our core curriculums. People should be taught about taxes. They should be taught about how loans work. They should be taught how to balance a budget. They should be taught about how to save for retirement. But they aren’t, and it’s a goddamn travesty. All these manufacturers that prey on subprime customers are laughing all the way to the bank.
Fisker is a scam. Has been from day 1. Henrik is a con man. This was apparent with the Karma debacle. His goddamn wife is the CFO of the company. Fisker 2: Snake Oil Boogaloo was literally a way for him and his wife to bathe in a bunch of vulture capital money then peace out. This is merely the tip of the iceberg. The fact that anyone is willing to give their money to this guy is baffling to me.
He’s done this before. Fisker 2 will collapse and he won’t be held accountable because the 1% never are and are always allowed to have little a white collar crime as a treat, and he’ll be back in 5 years with some gorgeous car (he is damn good at designing them, that much I’ll give him) to sell you. Stop giving him money.
Ayyyy Echo and the Bunnymen are criminally slept on. I saw them live in 2018 and it was a great show, although the Violent Femmes were the warm up act and they’re hard to follow up. I’d ask for our cool goth uncle’s take on them but after he tore my beloved Cure to shreds idk if I want to hear it 🙁
I saw them on that same tour. Violent Femmes totally stole the show.
I would not be surprised at all if there is a fortune in lobbying dollars behind finances not being taught in school. The financial industry has a huge stake in this, as well as the govt. If people only bought things they could afford, the US economy would likely collapse in no time.
Beat me to it! Of course, it’s not all financial ignorance, there’s a cultural reinforcement of entitlement and wealth signaling that also feeds this problem and people will ignore the sensible thing if they think the new vehicle will make them feel better/look wealthier to other people they probably don’t even like.
The same reason that they won’t let the tax forms be pre-filled. 90% of people could have the government complete their taxes based on the information submitted by employers, investments, etc. But that would destroy H&R Block and they lobby against it.
Yup, I was aware of the tax prep firms lobbying as well. I wonder if there is ANY industry or government entity that is not completely corrupted?
Maybe the NLRB. Amz, Google, and Tesla, etc. are going after them, so clearly, they’re doing SOMETHING right.
Agreed that we really should have better financial education for young folks. I will add as a former young buyer who had a fairly good at home financial education (though my girlfriend at the time was the devil on my shoulder that didn’t) and got bamboozled by a hyundai dealer-they do everything in their power to hide the real overall costs and in my case I was so exhausted of dealing with them by the time we got to the paperwork that I didn’t look as closely as I should- we had talked with two sales people, a sales manager, and a finance manager-all to get us into a shitty 12% loan on a $14K car. Not completely excusing myself or other’s personal responsibility but even if you got some education in school going up against a whole team working on you to make a bad decision is a lot to deal with. Haven’t bought a new car since then-2007-so maybe it’s gotten better with more internet buying…
Wearing you down tactic is still a thing. I’ve walked out on the process when I’ve gotten tired of their feet dragging. I give them fair warning about what I’m going to do and after a break I’ve come back refreshed. They act like it was personal, but they get over it.
Oh me too. As soon as they bring in some other person and then some other person after that I walk out. People always ask me why I’m pretty damn good at buying cars and the number one thing I say is that I’m willing to walk away.
At the end of the day unless you’re shopping for some rare 911 or something there will be another car you want. Every time. Knowing that is weirdly empowering. When I have to buy a car I figure out the best financing option, come in ready to go with numbers, drive it, and if I like it I’ll buy it.
If they try to pull some sort of “oh we can’t discount it as much as you want if it’s financed” crapola or try to sell me on the true coat or some nonsense I’ll just go home. If the car sells it sells…but in my experience that rarely happens. If you walk away and hit them up a day or two later saying you’re still interested they’re usually a lot more amenable to what you asked for in the first place.
Yeah for sure-and while it’s lame I will somewhat blame my girlfriend at the time as getting a newer car between us was more her idea because she drove way more and she didn’t have the DGAF to walk away from them.
I have told my wife now as we have been shopping for a newer car that ultimately if I say walk away she just has to back my play absolutely. Fortunately we’re also in much better finanical situation and may even pay cash for her car so it’s much easier to say give us a final out the door price or we’re walking.
Life is better when you have FU money.
I wish I could attest to that. I can only afford that with things like coffee or splurging on a five-pack of underwear.
I’m not sure adding a requirement to teach financial literacy will fully address issues like this. It might help, sure. I have seen the implementation of this and it is subject to the same issues that any other high school class is, textbooks with outdated info, teachers with outdated info, general apathy of high school students towards classwork. My high school had a requirement for a “money management” class and dispite taking it in the early 2010s the textbooks were early 90s maybe, the teacher gave some… let’s say questionable advice, and my Facebook feed is still littered with people I graduated with complaining that we were never taught about finances.
Yeah definitely don’t underestimate the average high schooler’s ability to totally ignore and do the bare minimum on subjects they don’t find interesting.
It doesn’t need to be a part of the curriculum. The info is easily available these days on every part of the internet. Long gone are the times when managing finances was something that was only passed down info like a Masons handshake.
If people choose not to learn about it, that’s on them.
Telling people to just find their info online is how we get flat earthers. People should be offered a foundation upon which to build. Critical thinking, evaluating sources, and basic financial literacy would ensure that the person going online would be able to find and use good information.
Who would you rather have teach you, a legitimate financial planner or the part-time girls volleyball coach?
Navigating the internet is not some mystery anymore. Kids have cell phones and other means of internet access before they have pubes. It is obviously not difficult to do properly.
Again, it’s not that people can’t navigate the internet. It’s that you need to have some basis to evaluate the information you find. We have access to all sorts of information, and a LOT of it is wrong. If you don’t teach teens to evaluate information and give them some basics to work off of, plenty of them are going to pick up bad info, bad habits, and a bad foundation to build on.
If the business math teacher is also the girls volleyball coach, I don’t see a problem with it.
Our Girls Volleyball coach was smoking hot.
I paid very close attention to everything she said.
And paid very close attention even when she was not talking.
I was in school in the Age of LeTourneau.
I did *exceptionally* well in subjects when the teachers were… Interesting. Perhaps if I did well enough I would be the next Vili.
Yes. The thought of bedding my teachers got me into MIT. Sadly, the teachers never did anything less than professional.
I’d rather that we, as responsible parents, do the teaching and live by the example we set. May not work in all cases but it’s a good place to start with kids.
Not conservatives: what if we did something small to help people?
Conservatives: mother FUCK helping people!
Politics has nothing to do with it and you know it. Personal responsibility is just that. It is NOT incumbent on others to help oneself.
The lack of self awareness is impressive: D
Having a 16 and 19 year old, I can say they have education in schools. But just like HS Algebra or Chemistry, if you have not experienced the stuff in real time with your own money the education doesn’t stick. They know it may be a bad idea but the draw of “newer/better” is real and compelling. We have a pretty consumption focused society, which drives innovation but also drives bad habits. Hard to change as a society.
For sure on the monthly payment thing.
And, I think it is only getting worse. Younger generations are all about the monthly for their music, video entertainment, phone, etc. They see the car as just another monthly…..not something they are actually buying. (don’t get me started on Spotify and the like….pay hundred of dollars through the years and own……nothing….)
I have had salesmen that will not discuss the actual price…..just keep asking what I am looking at monthly. I have walked away when I couldn’t get a straight answer.
My last 2 cars have been negotiated 100% over email & text. I have a good down payment. I let them run financing, but also have my own via my credit union.
For my truck, they lowered the price $1,500 if I took their financing (I’m sure they got a lot of cash on the backend). This was in 2020. I read closely their 6.5% loan (no pre-payment penalty)……took it and their $1,500. Refinanced with my credit union on the first payment to 2.9%.
About Fisker, is a viral TikTok/YouTube video really going to bankrupt the company? I wouldn’t expect the person buying a Fisker to be greatly swayed by social media. Unless, of course, they’re buying it for the social clout, in which case, maybe. But my opinion of these EV startup companies falls along the lines: “…people are wary of buying a car from a brand that they don’t think will exist to support the vehicle.”
Not just any video. It was by Marques Brownlee – who is probably the most trusted man on the internet when it comes to all things consumer tech.
Even if it was a review from Marques Brownlee, one review isn’t going to drive a company into bankruptcy. And if that was enough to push them over the edge, it was only a matter of time before it all came crashing down. I know David was pleasantly surprised with Beau’s Fisker, but that company has been shitshow for years.
If you don’t want a bad review saying how your product seems half-baked, don’t release a half-baked product?
If the magical 2.0 update fixed so many problems and was released so soon after launch, why not wait until that was the shipped version of software rather than an OTA update? THIS is the problem with cars as tech products, not that tech reviewers are reviewing them.
Never buy hardware on the promise of software that doesn’t yet exist. See: any feature promised in a Tesla
Exactly! To be honest, it’s frustrating when tech does this. There’ve been more than a few occasions when the newest phone or video game comes out and people end up waiting months for features that should have been at launch. But when it’s a car that costs tens or even hundreds of thousands of dollars and you rely on for daily life, it’s simply unacceptable. But we do, because cars have become tech and are now subject to the same hype-cycle.
It’s appalling how much power these stupid “influencers” have. We also have the double whammy of EVs existing at the intersection of car people and tech people. We’re not the most reasonable people on the planet but tech people are on another level of obnoxiousness. Their culture is hyper consumerist/capitalist, impatient, instant gratification demanding, attention seeking, etc.
They’re also not experts in what makes a good car! But they think being in Silicon Valley makes them an expert on every topic in the goddamn world. God I could keep going but I’ll stop. Suffice to say, I have less than 0 interest on what some fucking tech obsessed terminally online person starving for clicks has to say about a car.
And for the record I don’t even like the regular car “influencers” either. If you’re interested in a car go out and experience it for yourself. Who cares what some trust fund kid who specializes in 30 second content for the ADHD crowd has to say?
My lawn. Get off it. Now.
Dead on take.
Epic rant. Well done.
Brownlee isn’t a silicon valley guy, he’s an entertainer on YouTube.
Regarding Fisker… if Apple wants to get into electric cars, buying Fisker might be a cheap way to do it. Well… cheaper than what they have been doing anyway.
Regarding the Wall St. Analyst: One of many analysts who don’t know much about the companies they talk about. And I have suspected that for a long time, when an analyst talks a company down, it’s to either support an existing short position or they are looking to buy in cheap.
And it was already well known that Tesla’s profit situation on vehicles sold would more or less be flat this year as the company works to ramp the Semi and Cybertruck… two products that will benefit the bottom line in 2025.
Anyone who has done just a little bit of research would know that.
Tesla is still a long-term growth story. But anyone who things the growth happens in a straight line is an idiot.
Regarding the big question… I’d keep one for myself and sell the rest. I sat in a Fisker Ocean at the Toronto Auto show. It seems like a nice vehicle. With it being brand new, I’m sure it would have a few bugs. But as long as you’re not too picky, it should be fine… unless it has some sort of mechanical, electrical or software flaw that would make it unusable as a daily driver.
Anyone who believes Tesla’s stock valuation is directly tied to their future value is dillusional. Tesla’s stock value is tied only to the hype train. When the hype train changes speed and direction, so does the stock.
Or they are perhaps delusional?
What’s there to buy with Fisker? They contract out their manufacturing, so there’s no factories. As far as I know, they don’t really have any unique tech or patents that could be worth it. All that’s there is some IP and non-existent brand cache that any potential buyer would immediately scrap.
Tesla will almost certainly continue to grow over the coming years and decades. However, they’ve framed themselves in terms of short-term growth and an overinflated market-cap. They will continue to sell more and more cars, making more and more money, but their stock price won’t necessarily keep going up.
“What’s there to buy with Fisker?”
The design of an in-production vehicle. Even though the manufacturing is contracted out, Magna doesn’t own the design.
I also imagine some distribution and supply chain has been set up as well.
If Apple were to buy them, they’d have a good starting point to work from and then have some decisions to make.
To be fair to anyone who bought a car in 2021 for too much money, that was peak YOLO after Covid tore a hole in the thin veneer of society and gave us a peek at a world of chaos and pain. I wonder what the stats are for gun trade ins?
Lots of used (never fired) and over priced ARs on the market.
Ready to make their way to Haiti.
Barbeque for U.S. president, 2024!
My god, the things we bought in 2020-21 … I MOVED in 2021. Across town. Didn’t really need to. Just bought and sold houses for a change in scenery.
No COVID purchases should be judged harshly. Our brains were so starved for joy.
I was working full time (facade inspections, construction). There was a brief lull in work and then it was full speed again. We home-schooled our kid; my wife gave birth in September 2020 and also finished her RN degree while working part-time as a nurse. I also passed all six architectural exams the same year. I have never been so busy in my life as during COVID, but ours was an abnormal experience.