I have a good friend who pre-ordered both an Audi RS6 Avant and a top-spec Ford Bronco shortly after both debuted. These were the pre-pandemic times, and no one I know assumed a semiconductor shortage that would fundamentally alter the industry was on the horizon. My friend just thought they were cool, and so he ordered them.
You can guess what happened next. Both vehicles were delayed and, by the time they were ready to be delivered, were already worth massively more than what he agreed to pay for them. This sometimes happens with desirable models, but not to the extent that occurred during the pandemic. He drove the RS6 Avant for a short period of time before succumbing to an offer too ridiculous to ignore. The Ford dealer tossed a ton of cash at my friend for the Bronco before he could drive it off the lot. Ultimately, my friend made a lot of money by not owning the cars he ordered.
While he’s quite financially astute in general, none of this was a plan. I asked him if he had any regrets about selling these cars, to which he responded that he “regretted selling any car I’ve ever owned” because they’d be so much more valuable now. Living adjacent to a downtown, he realized it made more sense to sell his other cars and use Uber for a while and wait for costs to come down.
The Morning Dump, as always, is not in a position to make spiritual, financial, or horticultural advice. My point here isn’t that there’s a smart way to time this out; my point is that it’s super hard. A big hedge fund has taken a big position in Hertz, partially premised on the idea of used car values rising. They are rising and probably will, but it’s difficult to be long something when it requires you to be short that same product.
Will a trade war make used cars more valuable? Probably. Will it make new cars more expensive? Yes. Will it make China more powerful? Maybe.
It’s Friday, so let’s take a break from all of that and instead focus on one of my favorite topics: Volkswagen making a hard thing even harder, Trucks Edition. And, finally, Ford’s gotta recall more trucks because time is a flat circle.
Hertz, And The Idea Of Being ‘Long Used Cars’
Ackman is going long used car prices https://t.co/XyicgC8IkF
— Joe Weisenthal (@TheStalwart) April 18, 2025
If you don’t know Joe Weisenthal, he’s one half of the Bloomberg show “Odd Lots,” which is both a newsletter/podcast and a larger social experiment. I’m a huge fan, and what works about the show is that Weisenthal seems endlessly fascinated by what’s going on in the present while his co-host, Tracy Alloway, is fixated on the (usually negative) outcomes.
The friction of those viewpoints is especially valid today, when nothing feels normal and the outcomes seem like they could be terrible for most people. This is a challenge for me because I don’t have a co-host. Inside me are two wolves, and one likes never having a shortage of things to write about, while the other wolf has a 401k he’d like to still be there in the future.
In the tweet embedded above, Weisenthal is using the shorthand of the financial internet to say that hedge funder Bill Ackman thinks that the value of used cars will be high enough, for long enough, to make Hertz a good investment. I’ll quote from Ackman’s long tweet for those of you who don’t want to use Vichy Twitter or listen to Bill Ackman.
His basic premise is that the car rental business is an oligopoly and that Hertz, though it made some bad bets, has good new leadership and could transform in the coming years. Perhaps, but it’s this bit I want to talk about:
Hertz is uniquely well-positioned in the current tariff environment, where auto tariffs are likely to cause used car prices to rise. Hertz owns a fleet of over 500,000 vehicles valued at approximately $12 billion. A 10% increase in used car prices would equate to a $1.2 billion gain on its auto assets – equivalent to approximately half of the company’s current market capitalization.
The company finalized its 2025 model year purchases with OEMs earlier this year on attractive terms prior to the tariffs being enacted, ensuring a favorable basis in the replacement fleet.
Just as a reminder, the two big things that matter to rental car companies are RPU and DPU. RPU is “revenue per unit” and DPU is “depreciation per unit.” Rental car companies keep huge fleets on their balance sheets, and minimizing depreciation is almost as important as maximizing the profit you make off each vehicle.
In Q4 of last year, the company improved its DPU ($460 per unit per month), but its RPU dropped ($1,393). Its DPU has long been terrible because the company made the decision to buy a bunch of electric cars right before a price war, and slowing demand/increasing inventory caused used EV prices to plummet. Hertz had to sell a lot of cars, specifically Teslas, at big losses. Even worse, people found the experience of renting an EV underwhelming, which impacted RPU.
The good news about bad fleets is that they turn over, and Ackman’s contention that tariffs could cause used car values to go up isn’t entirely wrong. That’s what most experts think, and wholesale used car prices continue to rise according to Manheim. Ackman says that the company has already agreed to purchase agreements with OEMs, therefore, the prices for its next fleet of cars will be low.
That is a short- to medium-term gain for the company, but what happens if tariffs and supply chain shocks cause new car prices to continue to rise? An increase in the cost of new cars usually makes used cars more valuable, so there’s a chance it all negates itself. But what if something causes the economy to worsen (like a recession) or rental car utilization to drop (Waymo in more places) at the same time that supply chains have been moved to North America, making cars way more expensive?
Rental car fleets are a good buyer for car companies that need to balance out a lot of production capacity, i.e., to move unpopular cars. There’s a reason why rental fleets lately have seemed biased towards Nissans and Stellantis products. The catch there, of course, is that the more a model is dumped into a fleet, the less valuable it is, which increases depreciation.
Being a car rental company is as much about balancing out these forces as it is about renting cars, and the continued existence of rental car companies shows this is not impossible to do. Hertz’s recent troubles also show, however, that it ain’t easy. If you’re holding onto a used car and trying to time the market as an individual, it’s even harder, which is why my advice is that normal people should buy and sell cars before they have to, but shouldn’t always buy or sell a car just because they want to.
The Old Boss Is Always A Dick Until You Meet The New One
Last week, I talked about how the tariffs imposed by the United States could drive some of our allies into the arms of the Chinese government. The counter to that is, while the United States may be difficult to deal with, it’s often still better than the alternative.
Definitely check out this New York Times news analysis: “China Wants Countries to Unite Against Trump, but Is Met With Wariness.” In particular, there’s the idea that Xi Jinping’s outreach might be a bit hypocritical:
During his travels in Southeast Asia this week, he has depicted China as a leading defender of the global order and indirectly cast the United States as an unreliable player. In Hanoi, he urged Vietnam to join China in opposing “unilateral bullying.” In Kuala Lumpur, he urged Southeast Asian nations to also “reject decoupling, supply disruption,” and “tariff abuse.”
“Chinese officials have quietly conveyed that the way the U.S. treats its longstanding allies and partners in Europe is a sign of what’s to come for Southeast Asia,” said Lynn Kuok, the Lee Kuan Yew Chair at the Brookings Institution in Washington. “With Trump’s steep, sweeping tariffs across the region, that message needs no reinforcement.”
But Mr. Xi’s attempts at presenting China as a paragon of free trade and a champion of the rules-based international order ignores years of Beijing’s own coercive economic behavior and generous subsidies for select industries that have often alienated the country’s trading partners and neighbors. It partly explains why the world’s eroding trust in Washington has not immediately led to newfound alignment with Beijing — that, along with the risk of retribution from Mr. Trump for siding with China.
Dare I say it, but this seems like a great opportunity for the Dutch to sweep in and claim the empire they lost in the late 18th century.
Volkswagen Doesn’t Know Everything, Part Zwei
A few days ago, I mentioned that it was pretty chill that Volkswagen’s CEO admitted the company didn’t know everything and could use some help. A lot of what VW has done lately is move away from projects that rely on a ton of engineers (like software company Cariad) and instead has looked outward to more flexible organizations.
That doesn’t seem to be working out for VW’s combined truck unit Traton, which was supposed to find efficiencies by getting all of its big truck subsidiaries together. Now, the McKinsey consultants are on the way, according to Manager Magazin:
Traton ‘s board of directors is currently nervously awaiting news. McKinsey has also been in-house at Volkswagen’s truck subsidiary for several weeks – and once again, the focus is on a project that’s going quite awry: TMS, the Traton Modular System.
Traton is almost 90 percent owned by the Volkswagen Group. The Munich-based truck holding company is the parent company of the truck and bus brands Scania, MAN, International, and a VW-led subsidiary in Brazil. TMS was intended to unite the brands’ rival development organizations. The idea was for around 8,000 developers to work together to develop the next-generation truck kit. The new platform is expected to be available by 2028.
It’s hard to believe that 8,000 developers didn’t lick the problem right away.
Ford Recalls 148k Trucks Over A Brake Fluid Leak
Ford is taking its quality issues seriously lately and has pledged repeatedly that it’s making sure its new vehicles don’t suffer from the same issues that plagued the old ones. Well…
Per Reuters:
The automaker will recall 123,611 vehicles due to a fluid leak that could reduce braking performance and increase stopping distance. This affects certain 2017–18 Ford F-150, Expedition and Lincoln Navigator models.
Dealers are expected to replace the affected parts such as the master cylinder or the brake booster free of charge, the U.S. auto safety regulator said.
Separately, Ford is calling back 24,655 of its 2025 Explorer SUVs as a powertrain control module may reset while driving, which can damage the vehicle’s park system or cause an engine stall, according to the regulator.
I guess it’s good that Ford is catching problems earlier, though the Explorer issues could have been solved much quicker if the company had over-the-air updates available on more models.
What I’m Listening To While Writing TMD
It’s crazy that Oasis managed to blow up so fast and so completely by claiming, before it was even true, that they were “Rock ‘N’ Roll Star(s).” I guess it helps when your lead singer is a complete nut with supermodel good looks and zero self-awareness.
The Big Question
Have you ever bought or sold a car at the right time? How did you do it?
Top photo: Depositphotos.com
In 2021, my then-employer had a 2013 F-150 fleet truck that died and was probably going to be sent to auction. Being the reasonably handy person I am, I asked how much they wanted for it. Apparently no one had ever done that before, so they went up through the parent company’s fleet management who just asked me to make an offer. So, I took the KBB “fair” condition market value and deducted the estimate for repairs and maintenance (most of which turned out to be unneeded) from a shady independent shop, the difference being being a bit over $2k, I believe, and used that as my bid. They accepted, and one remanufactured starter and decal stripping session later, I drove it home.
Did some maintenance and repairs (tires, brakes, belts, plus a few other minor bits and pieces), drove it for about 6 months, and sold it for over $7k. Used the proceeds from that and the sale of our OBXT as a healthy down payment on my Ranger.
I find the idea of taking part in absurd mark-ups to be revolting. Everyone trying to get maximum profit on pretty much anything has made everything too expensive. Late stage capitalism seems to be upon us.
This is mid stage, once you start paying per litre of oxygen then you will know you have entered late stage.
In 1972 I used $2000 that I had saved up mowing lawns to buy a 1960 Maserati 3500 GT Spyder Vignale. In 1978 or so, while I was at college my mother apparently got tired of looking at it and sold it for $2000.
You can’t touch a drivable 3500 GT Spyder for less than $350,000 these days. One that might be my old car, or was at least in the right places at the right times, sold on BAT last year for $710,000 , except that mine had a removable steel hardtop
https://bringatrailer.com/listing/1960-maserati-3500-spider-2/
It’s still a sore subject in my family.
I think I bought my 2014 Sportwagen TDI at the right time. I bought it in April 2020 with 37k miles, for $13,500. I got 1.9% financing and it’ll be paid off next month! I did a nationwide search and Sportwagen TDIs with similar miles (mine has 67k now) are listed for $15-16k. Inflation adjusted, my car is worth roughly the same as it was when I bought it. I have no interest in selling it, it’s joining my Super Beetle as my other “forever car,” but it’s still interesting to see how well it’s held its value.
Drove onto the Honda dealer lot and got $4500 cars for clunkers for my 87 Wrangler and drove off with an 2009 Element in my favorite color. I often regret not having a Wrangler but damn that Element is 1000% more useful. My kids driving it now.
Once. Bought a new base 5s manual Fiesta in 2014. Gas was cheap, so small cars were not in demand. Ford had destroyed Fiesta’s reputation with the auto DSG. Found it ordered by a local dealer, was on a train from Mexico. By the time it arrived Ford had put a 1k incentive on all Fiesta’s, and offered another 1k incentive it you financed through Ford credit, and in the mail I received from Ford a $500 coupon off any new Ford. Because it was a manual there was a 1k deduction on the window sticker. Drove away with brand new car for $12,925.00 before trade in, put 163k miles on it in 10 years, really fun and reliable. Was not planned, just sheer, dumb luck.
What Traton needs to do is drop that Scania 16L V8 into an International and get on with it already. Not sure what Euro vs. EPA emissions are these days (usually EPA was more stringent, but who knows now) but that engine is streets ahead on power and torque over anything currently state-side.
US-market trucks are so outclassed it’s ridiculous. I came across a YouTuber who obtained permission to import a new Scania 770S to the US for exhibition purposes, and he has been giving test drives to local truckers with spectacular results. Supposedly International is going to introduce a Scania-designed engine into the US, but not a V8.
Stumbled backwards into my stock Bugeye WRX a couple months before I started hearing reports of what turned out to be Covid. Paid $3k.
I’ve usually bought cars at the end of their life and just kept entropy at bay for awhile, so this is a pleasant change. It had 10k on a rebuilt motor and is solid if shabby-looking.
I don’t know that I’ve ever bought or sold at the right time, we did just sell our Forester and get more than we thought we would for it from Carmax, and leased a $52k Prologue for under $300 a month for 3 years, so maybe we’re getting there.
I took advantage of a subsidized finance offer right when my old car was hitting 250k miles and had some upcoming major work needed. Sold it for an okay price to the first serious buyer. I wanted it gone and got it gone with some jingle in my pocket. It paid for the wall charger for the new vehicle.
I just buy what I want, then get rid of it when I am bored with it and/or my needs change. This has resulted in my owning a lot of cars for short times, a number for long times, and a couple for REALLY long times (going on 30 years for my Spitfire, almost 15 for my BMW wagon). And a lot of fun along the way. I don’t worry about the money side of it much. I only buy cars that are properly priced to start with. The day I spend even MSRP on a car will be a cold one in Hell. Closest I have come is $500 under on the Soul I bought my Mother in 2023. Overpaid due to the times, but worth every penny in that car *NOT BEING MY PROBLEM* for at least five years.
I don’t really think that TODAY, cars being sold to rental fleets really affects their value much. It’s not like the ’90s where the Detroit Big 3 literally OWNED the rental Big 3, and the rental fleets were literal dumping grounds for dreck. Today, they fleets pretty much buy what everybody buys, and they are generally quite well-equipped. And they keep them a lot longer today. It was rare back then to get a rental from the top tier fleets that was more than a year old, today three years old is not unusual.
Hertz most assuredly screwed the pooch with their EV silliness though, and much of it self-inflicted because they didn’t invest in chargers for the damned things at their locations. I’ve rented a couple, but only because it was one-day trips where I would not drive far enough to have to worry about charging at all (and for the first year or so there was no charge for bringing them back empty). And of course the fact that NOBODY wanted to rent them meant they had to discount the hell out of them – many times the very cheapest thing you can rent at a location is an EV. That has got to hurt given the higher up-front cost. Literally it usually cheaper to rent a $50K+ Model 3 or Y or an even MORE expensive Polestar than a <$25K KIA or Hyundai shitbox. Not that I care, if I am renting it’s not my money being spent, I get something good.
I think better warranties and CPO programs helped encourage nicer fleet cars and longer in-service periods too. Even if it ends up high miles for the year, having warranty thrown in adds some peace of mind for a buyer, and banks like it better too with OEMs often have like-new financing rate promos.
I’ve only ever timed the market well once by dumb (and rather unfortunate) luck.
I ordered a base 2 door manual bronco as soon as ordering opened up. The only option added was the prewired switches. Problems with the hard tops delayed it about 18 months. All told with taxes etc it was $32k since the dealership honored MSRP on pre ordered ones.
10 months after I got it, I was rear ended while at a total stop at a red light. 100% other persons fault. A bent frame later, based on comps, insurance payout was like $45k. Basically I was forced to “sell” at the top of that market, which was nice money wise. But I wasn’t about to spend that much on a used replacement and new ones were still unobtanium, so I had to go in a different direction.
Even now, used 2022 two doors with manuals and 25k miles are like $30k, and new base models are $38k. It was a fun enough vehicle, but $40k after taxes etc for the base model is a pretty big ask.
There is a lot of media buzz here in Canada about people cancelling trips to the US in response to the current BS. It’s expected to hit the tourism/hospitality sector pretty hard and I imagine visitors from other countries are following suite. It seems like a bad time to be in the car rental business.
Somewhat related is that as airlines are reducing flights to the US due to this, they are redeploying their fleets to move more people within Canada and that is expected to reduce prices up here. Economics really is Voodoo. Dogs and cats living together…
What do you mean by this?
“I guess it’s good that Ford is catching problems earlier, though the Explorer issues could have been solved much quicker if the company had over-the-air updates available on more models.”
Did someone invent a way to fix leaks remotely with software?
Separately, Ford is calling back 24,655 of its 2025 Explorer SUVs as a powertrain control module may reset while driving, which can damage the vehicle’s park system or cause an engine stall, according to the regulator.
Since when do powertrain control modules hold fluid?
It’s like blinker fluid, but I think it’s got a different viscosity.
Never forget, Quality is Job One at Ford!
Car, no (I’ve only owned 4 having lived in NYC). Property, yes, which proved to be far more fruitful.
I sold a 15 year old Prius, which had died a death by a thousand cuts, to an online bulk buyer who came and picked it up from my driveway before my neighbors, the town, or my wife had an issue with it.
I think that is probably the best timing I have had since my general car ownership strategy is buy something used but pretty nice and drive it until it is absolutely used up.
Traded in my ’97 K1500 SCLB with 199,850 miles (and about $2k in pending maintenance) for a new ’07 K1500 ECSB. Dealer told me if I had brought it in with over 200k (less than a week’s extra commuting), he would have only given me $500.
He claimed he was going to offer the ’97 to his brother, so I think we both won.
It is hard to sell your car at the right time because it is hard to time any market. The basic idea is easy to state across cars or any market: buy low, sell high. But in terms of advice, that is about as useful as saying the way to win in the NBA is to score more points than the other team. True, but sort of useless.
Cars might be more difficult to time. Outside of certain classics, they are typically a depreciating asset. Houses, stocks, bonds each have their ups and downs, but as an asset class they trend upward in the long run.
My last two vehicle transactions were opposite ends of the spectrum as far as timing. I bought my Prius in 2021, right before inflation went nuts and gas prices shot up thanks to Putin being an asshole. I got a moderate mileage car that sips gas when diesel for my truck was north of $5/gallon (or even worse? I can’t remember how high it eventually got).
Unfortunately, last summer I held onto said truck for about one year too long and it bit me hard. Multiple major mechanical failures that ended up costing basically as much as the truck was worth to fix. And I wasn’t going to just pay it and try to keep the truck long enough to justify the cost because it already cost me one family vacation and nearly cost me another. Some things you can’t put a price on, so I sold the thing for about $500 profit, when I could have easily gotten $15000 six months earlier before all the problems.
Sadly, even as cheap as the running costs for the Prius are, it still hasn’t saved me enough to offset the bath I took on the truck, so as usual when trying to time the market I’ve still come out behind.
You can make money if you buy at the bottom of the depreciation curve. It’s hard to get hurt buying a $1k car in almost any case. My dad used to get $100 cars and drive them for years until something catastrophic most of the time he could junk it for more they he payed. I sold some cars in 2020 just because I wanted to get rid of some that had been sitting a while and had no real use for them if I held on to them a few more months I could have probably gotten 2 – 4x what I threw them out for. Hurtz is a weird concept because they have always been a bit high on their used cars but kind of lead the way for real market value of BEVs they sent some to auction in late 2023 and got realistic values then liquidated around that value. Beyond that they are always over priced. Because new car prices became so inflated and people wanted unrealistic money for used and we are just coming off of that with new MSRPs still needing to come down its hard to tell what will happen. I think people have realized that market adjustments should only go down not up. If you don’t buy the cars at that price they will figure it out. The whole let them rot thing seems to be understood and no one is walking around with a few thousand of free money to do stupid things with. We are still in a repo time so those cars will come in and sell for cheap along with a lot of damaged cars from extreme weather again more cheap cars. Plus those people with the repo cars can only get a “cash car” or an insane buy here pay here deal so could see weird things in certain markets with certain vehicles.
I’ve made my money back a few times.
2001 Miata SE – Basically already fully depreciated, so that’s not hard.
2017 Chevy SS – bought new during one of their amazing 20% off sales. Traded in a year later to a VW dealer for the same price. Miss it, but insurance premiums skyrocketed when Australia shut down the Holden plants.
2020 Chevy Bolt – bought new in 2021 at a great discount since it was the prior model year and used as a loaner. Traded in just a few months later for what I paid (thanks to the battery recall that GM was fumbling at the time). Rising used car prices thanks to the pandemic allowed this, but did screw me on the price of the car I was replacing it with.
We don’t talk about the losses on many other cars…
I sold my 2016 SS earlier this year for about what I paid for it new in a 20% off sale.
Obviously the dollars are worth less than 9 years ago, but I also got 34,000 miles out of the deal.
I sold my 1963 Valiant convertibertible bought for $300 in 1971 for $350 4 years later. That’s about it for me.
I got $1500 from insurance for my totaled 68 Ford Galaxy that I bought for $75. Great ROI.
Bought a 2010 Golf TDI in September of 2014 for $13,XXX. Sold it back to VW in January 2017 for almost $17,000. Considering Dieselgate broke out almost exactly one year after I bought my TDI, I’d say my timing was bang on.
I got in on that accidentally too. I bought a 2013 Jetta TDI new for $15k put about 40k miles on it and sold it back to VW for around $19k.
I bought my current car off a family member in the summer of 2021 and thought I’d sell my Acura TL for a hefty sum of money given the state of the used market at the time, but it wasn’t that straightforward. Despite everyone online bragging about their Carvana offers, they offered me less than $2,500. The KBB buying program that involved taking the car to a local dealership showed a much higher quote originally, but of course, during the appraisal process, they heard “failing transmission noises” and only offered me $1,000 or so. Carmax gave me the best offer, so I took it. I wasn’t up to dealing with the hassles of selling it privately at that time in my life.
We got our CX9 right when the pandemic car market was flipping. The dealer had 12 CX9 Touring Plus trims on the lot and were discounting them $5k off msrp. The trade in value of the CX5 had gone up $2500 from the time we started shopping for the CX9 too. By the time the plates showed up for the CX9, the dealer had 0 new CX9s in stock. I also got lucky later that year when I traded in my MK7 GTI for $5000 more than it was worth the year before, and I paid MSRP for my 2022 Civic Si. The sales manager honored the handshake deal we made when Honda announced the new Si and I put a deposit down on their first one at MSRP.
Aren’t the Dutch responsible for apartheid?
Traded in my Leaf a couple of weeks ago for a pittance, so yeah no used car bump for me. Didn’t want to deal with Craigslist or FB scammers.
Traton’s “8000 developers” made me immediately think of “The Mythical Man-Month”. Throwing more people at a project is often counter productive. The added overhead of coordinating more people consumes time and resources, and many issues don’t have enough parallelism to benefit anyway.
I think I bought my pickup at the right time since in March of 2020 used car prices were reasonable and that $3000 F150 was worth $5000 by late summer