Sales reports are just starting to trickle in and it looks like Tesla got the lumber in China, with a big drop in sales year-over-year. Is that just because the market is sliding and people aren’t buying electric cars there? Nope, Tesla’s main rival BYD had another big month.
Over here in the land of the Whopper and home of the KFC Double Down, early reports seem to indicate that the CDK Global ransomware attack did, in fact, impact the market. That’s not great, especially if potential litigants can prove that CDK Global was negligent in some way in preventing the attack.
Also dragging down the market are interest rates, which aren’t likely to change until at least September. And finally, did Danica Patrick really lose her gig at Sky Sports F1 for talking about lizard people? It’s unclear.
Get ready for a weird The Morning Dump.
Tesla Down 24.2%, BYD Up 21% In China In June
China is likely to remain the biggest EV market in the world for some time, so the ability to sell cars there is key to Tesla’s hopes of remaining the planet’s largest electric carmaker.
For those keeping score at home, Tesla was the biggest automaker almost immediately upon the introduction of the Tesla Model S and maintained that lead on a quarterly basis until Q4 of last year when Chinese automaker BYD managed to briefly outsell Elon Musk’s company.
Both BYD and Tesla had a rough first quarter, with Tesla retaking the lead thanks to a mix of incentives and aggressive action. And now? Tesla’s Q2 was bad, with sales down 24.2% compared to last year according to China’s automotive industry association. BYD, on the other hand, saw a 21% increase in EV sales (BYD also sells a ton of PHEVs and other vehicles, but we’re going to focus on EVs today).
But even with BYD likely beating Tesla in China in June, Reuters estimates that Tesla managed to stay ahead of BYD globally by about 12,000 vehicles for the quarter. Given that BYD is going up and Tesla is going down, it’s possible we see this flip and maybe even see BYD topple Tesla for the full year.
Of course, both of them have new competition as Nio, Xiaomi, and Zeekr all start to muscle in on their market share.
Hyundai CEO Alludes To CDK Global Crisis As Reason For Sales Slowness
Hyundai sales were climbing this year as both its EVs and its exciting new vehicles like the Santa Fe hitting the market. That all stopped last month, with Hyundai reporting a 2.5% drop in sales. What happened?
Here’s Hyundai Motor America CEO Randy Parker:
“Once again in the face of yet another industry crisis the Hyundai dealers showed their resiliency by closing Q2 with a 2.2% increase in total sales, resulting in a 1.2% increase for the first half of the year,” said Randy Parker, CEO, Hyundai Motor America. “Hyundai’s strong performance this quarter was driven by demand for IONIQ 5 along with Tucson and Santa Fe HEVs. Our focus remains on delivering a robust product mix and growing market share.”
He is, of course, talking about the CDK Global ransomware attack. Kia sales were also down, although I didn’t see any assigning of blame. It’ll be fun to watch what various automakers say about this since I don’t think there are any major players who weren’t impacted.
Interest Rates Are Stretching Consumers
It doesn’t matter as much how cheap cars get if interest rates remain stubbornly high as most people, myself included, finance at least part of their car purchase.
According to Edmunds, the average new vehicle APR in the second quarter of 2024 hit 7.3%, which is up from 7.1% in Q1. Loan terms are also getting longer, reaching an average of 69 months in Q2. Combine that with lower down payments ($6,579) and you’ve got a recipe for consumers paying a lot of money for a long time.
High interest rates continued to be a heavy drag on new-vehicle sales growth in the second quarter,” said Jessica Caldwell, Edmunds’ head of insights. “In theory, improved inventory and growing incentives should paint a more consumer-friendly picture of the market, but the reality is most Americans can’t buy their cars with cash, and increased borrowing costs continue to be a major roadblock when buying a new vehicle.”
The two things that seem to be keeping inflation high are housing and car insurance, which is a double whammy if you’re buying a new car and paying more for the car and more for car insurance. Hopefully, good news on the inflation front will convince the Fed to tweak rates a bit to bring down borrowing costs for average people.
No, Danica Patrick Isn’t Officially Fired For Talking About Lizard People
I don’t know former race car driver Danica Patrick and have no real beef with her, but a few people noticed her absolutely insane podcast. From what I’ve watched, it seems Patrick is one of those celebrity interviewers determined to prove Socrates wrong.
I’m all for questioning things and, specifically, questioning conventional wisdom. It’s important to have mavericks and iconoclasts to bring us fresh thought. On the other hand, giving voice to nonsense like ‘higher vibrations are forcing our reptilian celebrity overlords like Justin Bieber back to the source‘ is maybe not super helpful.
On the other other hand, maybe Danica is just asking the tough questions! Maybe Adele is a reptile person, which would explain why she has so many bars.
In addition to talking about lizards and the dangers of 5G, Danica also has a side hustle on NBC Sports as an IndyCar analyst and on Sky’s F1 broadcast. IndyCar is leaving NBC Sports soon so I don’t see that changing and, frankly, a place that could stand Paul Tracy for more than five minutes probably is a fine place for Patrick. F1 might be a little different, and there’s a rumor going around that says she got sacked over her weird podcast:
DANICA PATRICK GOT FIRED FROM SKY SPORTS LFG
— sabrina (@leclercworldz) July 2, 2024
This is all over F1 Twitter and people are gloating, though, if you spend more than five minutes on F1 Twitter you might start hoping that the reptilians are real and they will soon take us, and Elon Musk, to join the Galactic Federation just to end this current reality.
I’ve been poking around and, while it’s possible this rumor is true, it’s just a rumor. There’s no confirmation I’ve seen from anyone and Patrick herself mentioned on Instagram that she’s going to do more races for the broadcaster.
What I’m Listening To While Writing TMD
Yesterday’s post about ‘Baby Driver’ got me in a Jon Spencer Blues Explosion mood, so here’s the band doing ‘2 Kindsa Love’ live. Also, this allows me to tell the story about how I went to see them at Pitchfork Music Festival and some asshole kid walked by me and loudly murmured “Jon Spencer Blues Explosion? More like… Jon Spencer Shitty Nostalgia Experience.” It was such a good burn I had to laugh.
The Big Question
Can BYD topple Tesla in EV sales in 2024?
Regarding Danica Patrick and the crazy talk… in watching that video, it looks to me like Elizabeth April is the nut job doing most of the crazy talk and Danica just might be playing along to keep things pleasant.
However, at the very least, Danica deserves criticism for going along with this crazy bullshit and giving air time to that nutjob.
And if Danica truly believes this bullshit, then yeah, she should get fired. And if her employer doesn’t fire her, then people should stop watching/following Sky sports or whoever it is she works for.
“Can BYD topple Tesla in EV sales in 2024?”
This question focuses on the wrong thing. The real question is ‘What companies will get killed off as a byproduct of this sales/price war between Tesla and BYD?’
Think back to the Ford vs Chevy price wars in the 1950s… both Chevy and Ford still did fine. It’s the smaller makers that got killed or severely weakened.
And that’s what I predict will happen here… both Tesla and BYD will be fine. But a lot of the smaller/marginal automakers in China will suffer huge losses and die.
China has a glut of automakers… and a good number of them are marginal. At least some will die and get liquidated. Others will merge or get acquired for survival.
And this will also result in damage/market share loss being inflicted on at least some of the other legacy automakers from Japan, the EU and the USA.
Did you catch the video where somebody redid the Sky F1 opening, replacing all the driver’s heads with lizards? Just for Danica.
Danica telling a group of kids that there’d never be a woman in an F1 car was reason enough to get her off camera imo.
YUP.
Like, thanks for opening the door to loads of women in motorsports and then PROMPTLY TRYING TO SHUT IT BEHIND YOU.
Like, good grief. Please hire a better commentator.
Feeling a bit disappointed that there is an actual story about lizard people but no comment yet from the Lizardman in a Human Suit.
All this talk about lizard people when everyone KNOWS lizard people are just the muscle.
The REAL power players are the Grays.
She has a fat lot of nerve talking about Lizard People. I’ve seen her race, she’s a Turtle Person. How about a little professional courtesy?
Tesla is toast in China and Matt already spilled ink here why big foreign brands just cut their losses and exit. Quick recap:
– Locals learned all there was to learn from the intruders. Initial innovation advantage is eroded now
– Locals work harder, for less
– They are much quicker to innovate. This is so true in Tesla’s case, 10yr – old product, anyone? Months vs years in dev cycles
– They know and play better on home turf, hence marketing and sales advantages
Once someone holds both ends of the stick it’s time to leave or get another stick. In this case, spaceX? (They are kinda shaped like sticks in fact)
She must have suffered a head injury we don’t know about.
Maybe there’s a case for better automotive safety measures
She was dating Aaron Rodgers for a while. I expect this nonsense to sprout from idiots
Oh yeah, I forgot about that. Stupidity like that is indeed contagious.
Yeeeeeeeesh.
The question is, can the lizard people build better cars for lower prices? I’m guessing yes, so long as they build cars that fit the human form factor.
Great question, if so I’m in!
When will the lizard people finally build the perfect sexbot?
They can build them, but only to scale.
And today Tesla stock is up 9%. I suppose that has more to do with the robotaxi “announcement”, which I assume will turn out to be another broken self-driving promise by Elon, but still. I hate that they got included in major stock indexes because it means I own some of their hideously overpriced shares. Might as well include GameStop too, given that their stock price is approximately as divorced from reality as Tesla’s.
So… compare and contrast. Lets compare Gold and Tesla stock as investments. Neither one gives dividends. One of them is the basis of our nations monetary system. The other one is arguably a Ponzi scheme with EM at the top. Did I miss anything?
Not to shit on your point but our (assuming fellow American) monetary system hasn’t been based on the gold standard in a very long time. I would have gone with “One is shiny and often used in jewelry and F1 engine covers.”
Is this a fair opening to bring up Max and Lando?
I was referring to the McLaren so not really, but this is a car website so if you wanna rag on Max or talk about how relatable Lando is, don’t wait for an invitation from me! However, if you wanna talk extol the virtues of Red Bull’s D1, you’re wrong, but we’re an inclusive bunch and will indulge your crazy ramblings.
So far…
It’s that, they beat expectations on deliveries, and distributing 9.4 GWh of electricity in the quarter.
Yes and no. From what I read, Wall Street got spooked in the past few weeks and significantly reduced delivery predictions. So they cleared a previously lowered bar, and the trends are still not exactly positive. They also manufactured fewer cars this quarter, which will either squeeze supply or is indicative of lower demand. My guess is the latter given the numbers out of China.
Well, they sold 30k+ more cars than they built. so…
Right, so one of two things is going to happen: Sales increase and they don’t have enough cars to sell or sales continue to contract and they’ve built the right number of cars. Neither is an ideal scenario.
I’m not disagreeing at all.
From what Tesla/Elon seem to be saying lately, is that these numbers for the car sales are fine with them. The (obvious) pivot to fully autonomous cars and energy storage are almost equal weight in priority now that the passenger car division is “mature”. This all aligns with what Elon said about “If you don’t believe Tesla is now a tech company…” or something to that effect.
It’s pretty obvious they aren’t gonna win China, so any more hardcore expansion efforts there (or most other markets where Chinese cars will be sold) are basically pointless. That’s what I’m getting out of all of it, anyway.
The stock increase is due in large part to Tesla’s quarterly sales numbers in the US — which beat expectations by a fair bit. (That detail accidentally got left out of this article.)
“…and increased borrowing costs continue to be a major roadblock when buying a new vehicle.”
So don’t buy a fucking NEW vehicle! If you can’t afford it…again, don’t buy new…there’s so many other options.
On the extreme side, I would even say just buy any Shitbox Showdown Showdown car for dirt cheap that you like, put some $ into it even if it means a rebuilt engine, fixing things to make dependable, etc and you’re still way ahead. Obviously, there’s a lot of caveats to this and I’ve heard them all. This is just an example that I would do and not everyone. Ideally, most people do play the few years old used car game where it’s like new and has taken the initial depreciation hit already and that’s smart. Also, I’m still gonna say the old school line that, in my opinion…if you buy any “brand new” car, you are a big dummy like Fred Sanford said. I don’t care about any reasoning otherwise; that’s why it’s called an opinion. Enjoy the huge depreciation hit right when you drive it off the lot!
Just the thought of having to go into a dealer after the COVID markup shenanigans is enough to keep me from wanting a new car…
Yup…somebody already mentioned that maybe the low interest rates/incentives will get some of the people coming back who were turned off at all the markups during that time…I say I HOPE they don’t fall for it! So many places screwed over so many people that it was just unacceptable. Other people have mentioned in the past that there are still a handful of decent dealerships so for the ones who choose to use that route I think they should support those…and NOT support the ones that screwed everybody over. Me though, a dealership is a stealership…they’ll get you for that TruCoat! Ha ha
I always opt for the TruCoat haha
At some point I’m sure I’ll have to step foot into a car dealer and when that time comes, I’ll be researching who opted to do the right thing and resist mark-ups.
The lizard people thing is a CIA coverup and to divert us from the real issue which is the world is ran by a cat that is constantly pushing things off the table. They cannot hide the truth any longer. Damn you Supreme Lord Mittens McFluffyface we know about all the glasses you have knocked off the table and all the couches you have scratched up.
My place is run by spiders, presumably from Mars. I’m fine with it. They are very benevolent overlords (they can see what I type). I’m totally fine with them, fine I say again.
I like spiders I used to have some pet tarantulas. Shit that might piss your overlords off… Umm not pets they were my ummm landlords yes they actually own my house. Praise be the 8 legged god may his legs be bountiful and plentiful.
I’m thinking of adopting an octopus. It seems like a suitably short term relationship for my lifestyle and I understand they are pretty good at escaping and foraging for their own food (also messing with the thermostat to run up the energy bills and posting dumb shit on your social media accounts). Besides, I need something more intelligent than me hanging round these days. I just can’t decide what to call it. Kang or Kodo?
But is he really, you’ll have to look in the box to find out and you know what might happen then.
Clearly Danika Patrick is yet another victim of the reptilian overloads ruthless and cold-blooded plot to maintain their secret control of our population through popular culture. For years I’ve been adamant that Martin Brundle is not a human but a reptile using his grid walk interviews as propaganda for a new reptilian world order. Alex is likely doing the same for F1TV. Reptiles are controlling your every though on high-level open wheel racing! Open your eyes! WAKE UP SHEEPLE!!
But her dad was pretty fast in cars and on snowmobiles.
The podcast industry is wildly out of control. I often say this on sports blogs I frequent but I’ll also say it here-not every athlete needs a podcast. Being an athletic savant does not inherently mean you have valid opinions or important things to say…as it’s clear that Patrick, who has always been a few fries short of a happy meal both above the neck and as a professional driver, does not.
The issue is that people take this nonsense seriously because of how deeply fucked up our society is. Lots of normies hear a rich, famous person talking and hang on to every word they say…because our society values money over all else. We can laugh it off when someone like Patrick or Tom Brady or whoever starts going off about reptilians or crypto or some shit…but a shocking amount of people hear this drivel and are like “hmmmm really makes you think”.
And that’s how we wind up with certified lunatics in political office and people legitimately believing in Jewish space lasers and pizza gate and shit. Stop giving these dickwads platforms already. If we ignore them they will go away.
You think that podcasts, of all things, are the reason for dipshittery and influences actual voting? Isn’t it possible that podcasts are just the reflection of dipshittery? I mean, there are a LOT of podcasts…
Lol no, I do not. I just think they’re a particularly heavy concentration of dipshittery.
I knew and hung out a few times with an NBA player. Cool guy, a lot of fun, and he had some great stories about the various teams he played for and the various players he played with. However, he had a very narrow knowledge base for non-basketball experiences. He had spent a couple decades, which was almost his entire adult life at that point, in a strange sport bubble where reality only existed outside of the arenas, hotels, and charter jets. It was funny to chat with him about normal situations, like grocery shopping, doing yard work, and having to pay attention to the price of things, because he had an ethereal memory of doing those things back when he was in college twenty years prior. When we talked about my engineering work, he was completely flummoxed and enraptured in how complex my job was, and it became very apparent that the guy had a lot of admirable skillsets, but if we were ever held up at gunpoint and told to provide a coherent rationale about anything related to science, technology, politics, or business, lest we be shot, he was going to be of no help in keeping us alive. He was a really cool guy, and friendly and kind to absolutely everyone, so out of respect I’m not going to name drop him.
Damn, JSBX is a nostalgia act now? I still think of them as a “new band”.
And yeah, I think BYD will conquer Tesla in China. Home turf, own rules.
Will BYD exceed Tesla? Probably, if the Chinese domestic market stays healthy.
Tesla does have the ability to go heavy on incentives and price cuts, if they do that soon enough and strong enough, they’ll hold on to the lead for this year, but even with that BYD will likely still be on a path to overtake them at some point, if not 2024, then 2025 or 2026. Short of introducing exciting and compelling new mainstream products and a much lower priced, really high volume model, all Tesla can really do at the moment to maintain volume is offer discounts.
Similar position Ford and GM traditionally followed, remember the widely panned gen 3 Taurus held onto the #1 selling car status only because Ford dumped vast numbers into fleets at low or no profit because they were so committed to keeping the #1 title no matter what. As soon as they backed off that strategy, as it was unsustainable, Toyota and Honda pulled ahead and stayed there
Yeah, I think one of Teslas biggest shortfalls is its lack of new models. I know they’ve done some facelifting, but their design language is largely the same and I’m wondering if it’s going to be a tougher sell to get someone that’s already driving a Tesla, into a newer one that still looks and drives a lot like their old one. It doesn’t help that legacy automakers are diversifying their EV fleets, which feature new designs and designs inspired by familiar ICE cars. The Cybertruck is different for sure, but it’s never going to be a high volume seller. They spent time designing that, when they should have been refreshing their existing lineup.
I know that in the past, keeping one model around for years or decades worked well for some automakers (the Beetle immediately comes to mind). But I don’t think that approach will work in the 21st century. Especially in the EV space.
In Tesla’s defence, they went all on in on casting. Those dies and machines take much longer to break even than simple stamp steel components.
I think Elon is bored with Tesla now. To keep it viable requires more effort than he is willing to expend (and working for him requires more obsequiousness than most competent upper-level employees will put up with). His attention is wandering to AI-powered rockets and tunnel bored adaptions of (other people’s) human brains.
Then the board should replace him, frankly, because a CEO who’s bored of his job should not be the CEO anymore. There are literally dozens of people in the world qualified to run large global automakers, probably even hundreds, start the search committee now
They should, but the board is his friends & family, so they won’t.
Tesla’s product is the stock price, the cars are incidental.
If Musk leaves, they may find their stock price reflecting the actual value of the company. That would cost the shareholders more than just donating their entire current inventory of completed vehicles.
Yep, Tesla has been overvalued from day one (overvalued not meaning valueless, of course, they’re obviously a hugely valuable company by any measure, just not more than double Toyota)
They are essentially a meme stock.
I threw all the average new car values into a loan calculator to get a reference with the following results, with VA 4.15% sales Tax added to the loan.
New Car Avg. Price: $47,433
69 month Loan at 7.3% with $6,579 down.
Monthly Payment of $811.62 w/ taxes/fees included, $728 w/o
Total cost of vehicle is $62,581 W/ tax/fees, or $61,496 w/o.
Yes that’s right, on average consumers are paying over 14 thousand dollars in financing cost on new, depreciating vehicles, at a monthly cost of over 700 dollars, for 5.75 years.
Put it another way, total cost of financing a makes up the difference between a fully loaded CX-50 Turbo Premium Plus versus a 6-cylinder BMW X3 with a LOT of options. And while I am a Mazda fanboy/owner, I’d rather take the BMW for the same amount of money.
To be clear, this is irresponsible as an uncommon, occasional choice, but this is the average, meaning over half of new car buyers are spending more than this. This is not even remotely sustainable, and for once, I think it’s time to tell people to just lease the damn car they want if buying costs are this egregious.
Even though leasing is The Devil’s Work around these parts, it’s often times the best option. Even if the disdain is palpable.
I leased for the first time ever this week. There isn’t anything available now that I’m interested in keeping long term, especially with interest rates where they are.
Lease terms put most of the expense on the manufacturer, with a residual that simply won’t be realistic at the end of the term (I’d be surprised if this car is within $10k of the residual at the end of this lease).
That’s the whole game. Temporarily solve the problem and try again in a few years. Maybe it’s better then, maybe it’s worse, but at least it’s not worse, then worse again.
I just did the same thing a few weeks ago with a new Ford lightning. Got a good lease deal and if I want to buy it out after 36 months it will probably be cheaper to turn it in and purchase it off the dealers used lot the next day.
I’m generally not at all a fan of leasing, but with a couple exceptions. One if you can get a new EV at a 45k+ MSRP for under $350/mo with less than a couple thousand down, its a steal, let the tax credit apply and let the dealer take the depreciation hit.
Other is if a lease cost ends up coming out as lower than financing over X amount of time/miles. Depending on incentives it can, but very often isn’t, cheaper to just lease for a couple years if the financing costs are this extreme.
My Ioniq 5 was $0 down, $299/month, 10k miles / yr. MSRP $52k.
If I could replace my other, older car first, I’d love to take advantage of one of these EV lease deals. Pretty cheap way to put a car in the garage.
That really is an incredible lease deal. Total cost of ownership if you bought must have been at least 2-3x that for the same period. If I needed a new daily at the time those deals were around I would’ve taken the gamble honestly.
I figure it’s a low-risk way to try out an EV. I was curious about these and it seems like it could be a decent fit.
Damn, that is a good deal!
Or just settle for a nice used car or something else. I am fucking tired of this consumerist mind where you HAVE to have the car you want for social media or status points. Those are the morons complaining about the economy and then doing shit like that.
I widely agree with the sentiment, having friends and family that choose to shop new regardless, I feel it’s important to at least discuss the more responsible way of doing it, rather than throwing them to the sales wolves at a dealer just because they refuse to shop used. Also if you’re only talking 1-3 years old, depending on the rate differences and used prices, sometimes new can come out to be very similar to used cost with lower rates and used pricing being high. Thankfully that’s becoming less and less common, but I still see some cases of that happening near me.
If you are “fucking tired” of it, then just maybe don’t pay attention to it/give it space in your own life. Let that burden go.
Just a suggestion.
So did Aaron Rodgers give Danica the brain worms?
Had the same question.
Back when I got my first car loan in 2000, the rate was about 8%. People need to quit their bitchin.
In 2000 you could buy a Lexus or decently-equipped BMW for ~$35k and you could earn close to six figures with decent competence in PhotoShop.
$35,000 was extremely expensive back then, adjusting for inflation, it’s equal to over $65,000 now. The cheapest new BMW in 2024 starts at like $38,000 and you can certainly still get a decently equipped one for $65,000
Normal middle income people were not buying $35,000 cars in 2000, that was not considered a bargain priced value for a luxury sports sedan
It was expensive, but a lot of salaries were higher. Even a support player in a mortgage company could have probably covered the payments.
The average salary in 2000 was $35,000 ($65,000 today, inflation adjusted), the average salary in 2024 is $59,000, it’s gone down, but not by enough to mean that people who used to be able to afford $65,000 cars suddenly can’t. The people who were buying cars that cost 100% of an average salary in 2000 are still doing that today with no problem
Yes, but there were segments where they pay was a lot more. Anything in web development or anything involving housing was paying like crazy – and there were a lot of people in those industries.
There are still segments that pay a lot more, industries shifted as they often do from decade to decade
When my old man bought his first house, mortgages were over 20%. It was still more affordable then than it is now.
Housing will never be affordable like it did back then. Sad but true.
I just leased an Ioniq this week. It was a great deal (less per month than financing a Civic with over $10k down at current interest rates), but there was a lot of signing physical paperwork because of the ransomware situation.
As far as demand goes, I’m not sure it’s anywhere near the supply. The dealer I worked with had 56 AWD SELs on their lot, and there were hundreds of them within a small radius. I wouldn’t be surprised if there are more deals coming through this month to try to clear out 2024 models.
I’d say that Tesla (Elon) is likely to pull out all the stops to retain that #1 position, so for those wanting a new Tesla wait until the end of Q4 to make your deal or at least wait until the end of Q3. For those current Tesla owners be ready for your car’s value to take another hit thanks to the big price cuts Tesla is likely to do to retain that #1 spot.
This is surprisingly low to me, based on what I’ve been quoted with an 800+ score (mid/high 6s). It seems like either the horror stories of double digit rates are less common than conventional wisdom and/or automakers are giving out more promotional rates. Either way, it’s good news.
Cars are expensive. I bet the overwhelming majority of new cars are sold to people like you with good credit and lots of income. I’m in the same boat credit-wise (no idea income-wise but I ain’t hurting as a DINK) and still don’t see the value proposition in a new car. For the average transaction cost, I could have a fun, clean, desirable older car that’s finished depreciating and a kitchen update.
I agree, which is why the constant affordability emphasis is so weird.
Yeah it sucks that cars are getting more expensive, but the people who buy them aren’t typically hurting and a few thousand bucks or a couple points of interest aren’t (or shouldn’t be) deal breakers.
It’s a good point (also, bathroom not kitchen update here. If the Subaru had been fine and not worrisome I’d have probably kept it another 20k miles at least), but the sense of the market I have is that there are a lot of people on the sidelines looking for a reason to come off of it. All these things start to add up.
I think the tide is really turning on incentives, etc and people who had a bad taste in their mouth from the 2021-23 dealer greed games will start to get back in.
I was really hoping to be one of those people, but prices went up so far that they’re now ridiculously inflated even after coming down a bit. I thought they were insane in 2019 even with in-the-biz pricing. If they fall enough to make me think it’s a good deal, it’s going to be because the economy is imploding and I’ll be in the unemployment line.
I still haven’t decided if I’m one of those people or not. So I guess I’m on the sidelines.
I’m fortunate in that any car purchase I make in the next year or two is entirely discretionary and probably a minimally depreciating toy, so it’s just a matter of deciding whether or not I can stomach the price up front.
That’s right. Powell said this morning that rates aren’t going anywhere. Combine that with the reality that prices aren’t ever going back down voluntarily, and you’ve got the recipe you describe.
I think the emphasis is important, but not to the people buying the cars now. Pricing the bottom 95% out of the new car market means that the used cars trickling down don’t really meet the needs of 95% of people. I’m reminded of being a broke-ass college student in the late-00s, when the only used cars available for cheap were body-on-frame SUVs that literally cost more than payments on a base Civic to fuel. New cars that a normie can pay off before the warranty expires are a good thing for society.
I don’t disagree.
And the emphasis on fancy tech that is crazy expensive to repair when it breaks is going to make even the used cars prohibitively expensive to own. Not a problem for the rich person who buys a new one every few years, but a big problem for the market as a whole that is driving a 12 year old car on average.
I think you underestimate how many people make horrible financial decisions in a car dealership. People want the shiny new thing. They want the “status symbol”. The dealership just feeds them a monthly payment number and they don’t care about the details.
“It’ll be tight, but I can make $900 a month work (@9.9% for 84 months with $2500 in dealer add-ons)”
That was the point of my first post though.
If financially responsible and sober-minded people are getting quoted 6.5 or 6.9%, and the average for all new-car buyers is 7.3%, there can’t be too many 9.9% free-spenders driving up the average.
Exactly – Joe Minimum Wage can’t make that terrible decision very many times in his life. Joe Stock Broker can buy a new Benz every 2 years, though.
Its felt to me like the line defining those of “good credit and lots of income” is moving upward faster than income is. So that group is getting smaller. Purchasing a brand new car is feeling less and less achievable to the average middle class, where we believe, like housing, it was once a very simple thing to purchase once you made middle class. You didn’t have to, as you point out. But you could have. Now many of those people I think feel like they should be able to, but when they run the numbers, it doesn’t work.
It absolutely is. From Reagan to COVID, wealth was transferred from the middle class to the upper class. Since COVID, it’s been transferred from the middle class the lower class. I’ll take it over what we had (despite my very real losses in inflation-adjusted income that will soon cause me to walk away from my OEM career) but there just aren’t many people left who can buy expensive things. Slightly-less-poor people still can’t buy $60,000 cars.
Let’s not kid ourselves, the upper class are still getting their cut from everyone else. Any wealth redistribution below the 1% line is background noise in the grand scheme of global finance. It’s the 46 billion dollar paychecks that are @#$%ing over everyone who isn’t independently wealthy.
DINK here also. My sales child at the dealership was shocked at my high credit score, possibly because I drove to the dealership in an 8 year old Subaru. Meanwhile he’s engaged with a kid on the way, livjng with his parents and leasing an Audi S5.
I certainly don’t know his entire financial situation, but that seems a touch irresponsible for my taste.
Me too, but if I were locked out of the housing market by prices going up so fast that the necessary 20% down payment was going up by more dollars per month than I could save, I’d maybe have different priorities.
Who puts 20% down? I know that’s the tipping point for PMI, but I don’t think most lenders are expecting 20% from buyers. I’m pretty sure 0% down programs are back (that always works out well).
I’m an idiot that put 20% down! Put 20% down last year on a 15-year mortgage @ 5.75% on my first house in my late 30’s.
Congratulations on buying your first home! You are definitely not the norm of first time buyers that have 20% down and not buying so much house that you could qualify for the payments associated with a 15 year loan.
Thanks. Was fortunate to get a job that moved me from a HCOL to a LCOL area while still getting HCOL pay since they have to bribe people to move out here.
I’m not saying it’s a stupid move. It’s just not common or required in many markets.
Good work! With any luck you will be able to refinance at sub 4% in the next five years and free up some cash for your cars ;-). 15-year loans are the way to go if you can pull them off.
While the 0% down usually isn’t a great idea, waiting until you’ve saved up enough for a 20% down payment, plus closing costs and now potentially your agent’s commission is a battle that many people will never win the way things currently are. Yes you’ll pay more with PMI but in the long run you are more likely to still come out ahead vs waiting.
Last year I needed some new appliances and Lowe’s ended up having what I wanted and to get the best price I needed to use their credit card. The store that had the items in stock I wanted is in a mid to lower income area. So when I did the application and it came back approved for a massive credit limit the girl was very shocked and had to double check that she was seeing that right. Apparently she had never seen anyone approved for that high of a credit limit.
I’ve seen similar at car dealers where they are shocked by my credit score and disgusted that I’m only spending ~50% of what I was approved for and I’m putting down some real money too.
I got the same treatment when I bought my first home in 2004.
I heard more than once about I could ‘just refinance’ the huge interest-only adjustable rate mortgage in a couple of years and kick the can down the road.
Spoiler: I was more right.
A few years ago when I was finalizing a BMW lease that I had put the maximum security deposits on to lower the rate (because it was chaeper anyways and a bad business deal had intruded into my personal credit score) I was chatting with the manager, at a dealer where they sell a lot of fully loaded cars, and I said I was surprised that more people didn’t do this, and he said most people just don’t have the cash… it perplexed me, if you don’t have the cash maybe you should buy/lease a cheaper car.
During the short time I sold cars, people would generally be prepared to put almost nothing down. They usually hoped their trade in could check the box for a down payment and finance the rest.
If you needed more than say $500 thrown in out of their wallet, you were probably creating a problem for your sale that day.
I don’t know how real it is or if it’s just a bait and switch to get people into dealers but Mazda’s been advertising 0-0.9% interest rates lately for well qualified buyers on some models. Which makes me think there must be others with similar specials going.
Toyota gave my dad 3.5% last month in addition to several thousand off a new hybrid, so yeah the deals are out there.
Usually the catch on those is that you can have the low/zero rate OR you can have a rebate. You’re still paying interest, it’s just charged up front and rolled into the principle.
I think it is a combination of both mfg financing incentives and the fact that many of those people who will only qualify for a double digit interest rate have simply been priced out of the market and thus make up a smaller percentage of buyers than they used to.
That 69 month average loan is just brutal, because that indicates there are some real chonkers out there canceling out swaths of 3 and 4 year loans.
I would be very interested in the median new loan term, as I suspect it’s in the 50s somewhere.
Elon catching a stray on a Danica Patrick note? You are one limber typer. lol
I woke up singing H-O-T-T-O-G-O because of you.
Just hours after thinking about how much I hate MH for throwing out pop earworms in TMD, I saw a Pink Pony Club bumper sticker and it all came back again.
He must be secretly operating a CIA PSYOP.
Mwhahahaha