In reply to infinitenexus :
One thing about the mantra- "don't buy new cars" - if nobody bought new cars, there would be no used ones. Especially since somewhere around 12M cars are removed from the road every year. Or more now- that was a decade ago.
In reply to alfadriver :
We'll be the smart ones and buy all the E30s. Those other people can buy all the new cars 
Nothing wrong with buying a new car. If you can responsibly afford it, there is value in the purchase. Maybe it doesn't make sense in that cars today are so good that buying off lease doesn't pose any risk in reliability or safety, but the folks who rail against it "you lose half the value as soon as it's off the lot!" are ignoring some stuff. In the before times, that particular monetary argument held some water strictly in the numbers. That said, there is value in the purchase. Your money goes towards value in peace of mind or any other number of things. Maybe the newest model is safer, or more economical, or a new color, or has better seats, more features, better looks, more power, LSD, or whatever. On the other end, maybe you're like my boss. Buy new, and drive the same car for 15-20 years. Fiscally, that is the most responsible.
I'm out here in a 23yo free car, but there are absolutely valid reasons to buy new. Wish I still had my Fit.
Sometimes buying new makes sense. Say when the reliability of the vehicle you're driving is the #1 priority. When time spent fixing a daily driver means you're not doing other things that either make money or give you more happiness. Everything is a trade-off.
So far I've only bought one new car - my 2003 Jetta TDI wagon. New wasn't my first choice. I originally wanted an older Passat TDI wagon, but the ones I found for sale had over 100K miles on them with asking prices over $10K (this was back in 2002). Plus, when buying a used TDI, you are at the mercy of the previous owner's maintenance habits. Since proper maintenance is so critical to the longevity of a TDI, there is value in knowing 100% of the maintenance history that is hard to put a monetary number on. So I bought new and I was happy with that decision for the ~10 years I drove the car, averaging almost 33K miles per year.
Ian F (Forum Supporter) said:Sometimes buying new makes sense. Say when the reliability of the vehicle you're driving is the #1 priority. When time spent fixing a daily driver means you're not doing other things that either make money or give you more happiness. Everything is a trade-off.
So far I've only bought one new car - my 2003 Jetta TDI wagon. New wasn't my first choice. I originally wanted an older Passat TDI wagon, but the ones I found for sale had over 100K miles on them with asking prices over $10K (this was back in 2002). Plus, when buying a used TDI, you are at the mercy of the previous owner's maintenance habits. Since proper maintenance is so critical to the longevity of a TDI, there is value in knowing 100% of the maintenance history that is hard to put a monetary number on. So I bought new and I was happy with that decision for the ~10 years I drove the car, averaging almost 33K miles per year.
We bought our Mazda 5 new for two reasons: First was the 0% financing that wasn't available for used cars, and second was that finding a manual transmission one in the used market was nearly impossible! It was awfully reassuring to know that for at least the first three years, my wife was driving around in something that I didn't have to fix, though!
In reply to Steve_Jones :
Saying that there is no benefit to the manufacturers because they have a fixed profit per car is at best a half-truth, because they also do have control over how much that unit profit is. They select that amount based on what the market will bear, which is much greater when there is a shortage. Consider:
1) MSRP's growth has substantially outpaced supply chain inflation. They're 'market pricing' the MSRP the same way, and for the same reason, as the 'market adjustments' dealerships are using. This is major manufacturer benefit #1.
2) Manufacturers used to reduce their per car profit by providing both public (advertised to customer) and private (volume based to dealership) per-car incentives to the dealerships that cut heavily into their profit per car sold. This is major manufacturer benefit #2.
For example, I'm looking at trucks right now. Similarly spec'd window stickers in 2019 were 30% cheaper MSRP than they are now, and if you might recall, you couldn't hardly sneeze in the direction of a dealership without them throwing another 20% at you in direct (dealership to customer) and indirect (manufacuturer to dealership to customer) incentives even before negotiations with the dealership started.
Pre-pandemic, they were over-producing and relying on reduced per-car margins to drive enough volume to ensure inbentory turnover and give acceptable total profits. Intentional, not, or somewhere inbetween, currently they have reduced revenue through under-producing but are enjoying the same total profits at less risk through greater margins and no excess inventory... If I turn it around, where's the actual downside in this to the manufacturers?
I'd love to hear how your hypothesis compliments (rather than contradicts) the current environment of less risk for greater reward though.
In reply to Driven5 :
Thank you.
While I do not have a dog in this fight, I do have a nose, and recognize a rotting fish when I smell one.
I do not yet recognize the rationale for this kind of maanipulation, but I do suspect that it is being managed at an industry level or perhaps as a derivative. Not saying I am right, just telling what it smells like to me.
I
In reply to Driven5 :
I'll type more later, but if the MSRP went up 30%, it's not pure profit. The costs to build the vehicle also went up. If I produce a widget for $5 and sell it to you for $10 then my costs goes to $8 for some reason, I'm not making more since you now pay $13.
In reply to NOHOME :
Honestly, it's not all bad though. We used to oversupply the demand. We are currently undersupplying the deman. However, one potential good reason for this to continue short term is if they plan to ultimately end up in a place of better balanced supply vs demand. This would mean prices will decline without actually returning to the full relative cheapness we've enjoyed for a long time now, but would be a better and more sustainable business model in the long run. In order to achieve that they would have to ease into balancing the supply vs demand, rather than overcorrecting to the current circumstances. The result of that would be a continuing and gradual easing of the current supply vs demand imbalance.
Steve_Jones said:
If I produce a widget for $5 and sell it to you for $10 then my costs goes to $8 for some reason, I'm not making more since you now pay $13.
Your entirely non-data based rationale continues to actively contradicts what the actual financials are showing. The per unit profit to the manufacturer has increased. Period. Every argument you have made so far falls apart when faced with that reality.
A more accurate example would be you used to make a widget for $5 that you would stuggle to sell of them each year for $10,. Your cost went to $6 but you're unable to get as much material to make as many as you used to even though demand has also increased, so you now can sell at $13 and have no loss of annual salary for less actual work performed and no risk of needing to slash margins to keep inventory turning at the rate of production.
In reply to Driven5 :
This speaks to what I dont underatand. If the whole market shortage thing is neutral to the automaker, then why are they reporting recod profits?
The per unit profit went up because they're using the limited supply to build the more profitable stuff as any good business would do.
I sell you 100 widgets a month, 50 I make $5, 50 I make $8. That's $650. I have trouble getting supplies so I can only make 70 a month, guess what, all 70 will be the ones I make $8 on, that's $560. I'm making more per unit profit, but I'm not making more on less, there's no benefit to me in that scenario. You now only have 70 to sell with a demand of 100, there's a benefit to you, you can charge more.
There is an advantage as a seller when demand is higher than supply, no doubt. That advantage does not carry over to the supplier since they could sell more IF they could actually make more.
The car dealers love the shortage, they're making more on less, the manufacturers hate it, and they are 2 different players in the game even though they have the same name on the jersey.
Steve_Jones said:I sell you 100 widgets a month, 50 I make $5, 50 I make $8. That's $650. I have trouble getting supplies so I can only make 70 a month, guess what, all 70 will be the ones I make $8 on, that's $560. I'm making more per unit profit, but I'm not making more on less, there's no benefit to me in that scenario.
In that scnario, you might be right, but that scenario is very much NOT the one the data actually shows happening right now. The manufacturer profits are also effectively back to pre-pandemic levels. So in your example you'd actually be choosing to up the price to a ~$9.25 per piece average (In a more realistic reallocation: $6 on 28 and $11 on 42)... In which case there is most certainly an overall benefit to you.
In reply to Driven5 :
Ok, it's a big scam to fleece the car buying public, you figured it out. There is no supply issue. You and NoHome got it right.
That being said, there actually is a very niche market for automotive data specifically, and it's what I did for 30 years before selling the company for a decent chunk. I used to know what I was talking about, but that's cool.
In reply to Steve_Jones :
Wow... If that's your takeaway, obviously you haven't bothered actually read (and understand) anything I wrote. Perhaps you've just been too busy playing with your 'jump to conclusions' mat. LOL.
In reply to Driven5 :
Did you already post the data you're referencing and I missed it?
In reply to Driven5 :
You kept saying what I wrote was fiction, but have now edited that out. It's insulting to me when it's actually what I did for a living, and was one of the best at it. It would be like telling you you're wrong as an engineer, even though I'm not an engineer. You didn't know it was my specialty, so no hard feelings, just frustration. It's an odd specialty anyway :)
There is a lot of data that's not reported to the public, so take a lot of "they're making record profits off of consumers" with a grain of salt. Also know that 80% of the links you'll find with a google search are using data, from the company I founded, and manipulating it for an agenda.
In reply to yupididit :
For example:
https://www.macrotrends.net/stocks/charts/F/ford-motor/revenue
2021 Revenue is all the way down at 2011/2012 levels, and yet...
https://www.macrotrends.net/stocks/charts/F/ford-motor/gross-profit
2021 gross profit is squarely at 2019 levels.
Does anybody have reason to believe that 2022 will be significantly worse for the manufacturers than 2021?
If I'm not mistaken, these are the numbers as directly disclosed to the public per legally required guidelines by the corporations themselves.
In reply to Driven5 :
They had cars in 2021, shortage really hit in Feb. 2022
Steve_Jones said:In reply to Driven5 :
Ok, it's a big scam to fleece the car buying public, you figured it out. There is no supply issue. You and NoHome got it right.
That being said, there actually is a very niche market for automotive data specifically, and it's what I did for 30 years before selling the company for a decent chunk. I used to know what I was talking about, but that's cool.
Steve:
I started this thread because of perception. The 1000 foot view from above is that that the auto industry is taking advantage of a good crisis to make a buck off the consumer. If so, so be it, these are the times we live in. The gas industry and the housing industry and the food industry and the resource industry are all doing the same thing, so its is just the times we are living in. I was more interested in seeing if anyone had insight into how the game was being played.
It seems that you have much better insight than I do. I will accept your view that there is no game being played on the consumer, but will submit that perception is that there is.
We can end the thread here because I don't see where there is much more to add to the question I asked.
In reply to Steve_Jones :
You're right, I used the word 'fiction' once, and quickly edited it to be "non-data based"... And to which I stand by that statement. You may know where to get the data and how to read it, but I have yet to see in any of your oversimplified examples where you're actually utilizing it.
I'm not arguing in any way shape or form that there is no supply chain shortage or that their cost of business hasn't gone up. I'm not even arguing that the manufacturers are (partially or entirely) in the wrong on how they're handling it. I am however arguing (strongly) against your repeated assertion that they have no control over their ability to benefit from this, and are not actively doing so at all.
Regardless of whether or not 2022 is going to be worse than 2021, the 2021 vs prior years data that I'm seeing still tells me that the manufacturers are certainly managing to actively ensure they maximize any available benefit through all of this. Maybe not to the same degree as some dealerships, but looks like they're still partaking to me... Not that I necessarily blame them for it either.
I've been on both sides of both outcomes to know that SME vs non-SME in no way ensures right vs wrong. So if you've got the data to prove me wrong, I'm open to it. Just no more unsupported and condescendingly oversimplified examples, please.
I priced a large piece of equipment today. Lead time was an estimated 9 months, though everything seems to be blowing past lead times. The interesting part was a disclaimer that said the manufacturer reserves the right to raise the price in the future, AFTER receiving the order and in the middle of production! I would have to agree to the increase or cancel the order. Manufacturers are expecting rough times. They are making their money while they can. When it's a buyer's market, I don't see consumers turning down rebates. This year's record highs may be next year's record lows.
In reply to NOHOME :
The problem, like everything else, is also that is a huge grey area. If they don't take advantage of it at all, their business fails. If they don't hedge their bets on how much to take advantage if it, and things get worse, their business fails. If they take to much advantage, they're unscrupulous. Where exactly is the line. Beyond that, every level of the supply chain is at least doing enough to try to ensure their own longevity. The more layers in the supply chain, the worse the total impact to the consumer.
In reply to Driven5 :
The oversimplified examples were used because it's easier than explaining a deep dive, which can be boring. Some of the data I see is proprietary and can't be shared. Are there games being played? sure. Mostly on the dealer end, but the issue there is if you don't have much to sell, you sell to the highest bidder. Does that seem fair to the lowest bidder? Not at all. Games on the manufacturer? Again, sure, they're moving stuff around to build the most profitable stuff, since they can't build everything.
The question asked was "is the public being gamed by the automakers?" insinuating there is game playing going on by the makers to purposely defraud the consumer. I stand by the following concerning that question:
1. The manufacturer is different from the dealer
2. The public is not the manufacturers customer, so they have no incentive to defraud the public.
3. A supplier does not benefit from keeping supply low, a retailer does. The suppliers would love to build and sell more cars to the dealer
4. Supply will not get back to previous levels for at least 2 years, and might not get back to "surplus" levels for much longer because buying habits are changing.
In reply to Steve_Jones :
I have not agreed with what you seemed to be saying on this thread, and d5 has explained his points better.
I do agree 100% with the 4 points you just made.
Goes to show how much different a conversation on the inter webs gets, than face to face!
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