Car prices to plummet amid oversupply

[skyactiv]

Worthless story and I'll believe it when I see it. I don't think the auto makers want to go back to building as many vehicles as they can and flooding dealers with them. GM was the worst at it. The GM to dealer consignment vehicles had a sticker on them saying this vehicle is owned by General Motors and would be removed when sold. I miss those days.

The objective of the News is to earn profits by AD revenue. Rather it be local news channels, national news with the endless drug commercials or the dumb knee jerk networks people watch being entertained by hating people who aren't like minded.

 

[GON]

There remains worldwide excess capacity in the passenger vehicle manufacturing and assembly infrastructure. The extreme disruptions of the past few years are gradually being resolved and at some point we'll see a return to the days of more plentiful supply leading to lower pricing. Certainly every maker is working to increase output to take advantage of the current high price environment.
A wild card would be what happens with the economy. A recession would deflate retail prices almost instantly, although it doesn't look like we'll see one this year.

Not sure the USA will.ever see a recession again. Might see much,.much worse, and at that point vehicles will have very little value. But what we will likely see is monies will be printed to avoid a recession.

 

[fdcg27]

Not sure the USA will.ever see a recession again. Might see much,.much worse, and at that point vehicles will have very little value. But what we will likely see is monies will be printed to avoid a recession.

Recessions seem to be typically preceded by the usual very liberal lending standards and inflated asset values seen in a late economic expansion phase. We're seeing both now with absurd home values and longer term new vehicle loans. If wannabe buyers can't afford the payments, we'll just extend the loans to bring down the monthly nut. Also, a lot of what looks like inflation is really just a marking of prices to market to match current demand levels.
Recessions do serve a useful function in that they force the liquidation of a lot of bad debt and they also deflate asset prices to a more realistic level. Should we again face a 2008 level contraction, there won't be enough liquidity creation available to simply paper it over, as there wasn't in 2008.
You can paper over a minor event, like the flash recession in the second quarter of 2020, but a really broad and deep contraction is another beast entirely.

 

[RaymondP]

Could this be a "market adjustment" in our favor. After my last purchase experience a couple of years ago zero sympathy for any dealership.

 

[GON]

Recessions seem to be typically preceded by the usual very liberal lending standards and inflated asset values seen in a late economic expansion phase. We're seeing both now with absurd home values and longer term new vehicle loans. If wannabe buyers can't afford the payments, we'll just extend the loans to bring down the monthly nut. Also, a lot of what looks like inflation is really just a marking of prices to market to match current demand levels.
Recessions do serve a useful function in that they force the liquidation of a lot of bad debt and they also deflate asset prices to a more realistic level. Should we again face a 2008 level contraction, there won't be enough liquidity creation available to simply paper it over, as there wasn't in 2008.
You can paper over a minor event, like the flash recession in the second quarter of 2020, but a really broad and deep contraction is another beast entirely.

No argument from me, but might be worth reviewing the fall of the mighty roman empire, simply by changing the value of its currency.

In many parts of the US, it is reported the employment participation rate of working age adults employment is s under 50 percent. Combine that number with the monster huge debt and deficits, seems involuntary changes may be in the future.

 

[AZjeff]

In many parts of the US, it is reported the employment participation rate of working age adults employment is s under 50 percent. Combine that number with the monster huge debt and deficits, seems involuntary changes may be in the future.

How are able-bodied but not working adults living? Where is all of this enough to live on free money coming from specifically? Is this across all skill levels and work categories? Not disputing the 50 percent number but it just seems unrealistic. I personally don't know or know of anyone doing it.

 

[fdcg27]

How are able-bodied but not working adults living? Where is all of this enough to live on free money coming from specifically? Is this across all skill levels and work categories? Not disputing the 50 percent number but it just seems unrealistic. I personally don't know or know of anyone doing it.

Labor force participation rates for the entire country remain in line with the long term pre-covid level.
No state is below 50% although a few poverty pocket states are almost that low.
Here's a quick link to some data on this:

https://worldpopulationreview.com/state-rankings/labor-force-participation-rate-by-state

 

[JavierH19]

Good, took long enough. Now if only we could have an over supply and price plummet of sriracha sauce.

 

[SC Maintenance]

Labor force participation rates for the entire country remain in line with the long term pre-covid level.
No state is below 50% although a few poverty pocket states are almost that low.
Here's a quick link to some data on this:

https://worldpopulationreview.com/state-rankings/labor-force-participation-rate-by-state

Something about the labor force does seem off.

Labor force participation rate is about normal, as are total private sector employees. We all know the federal and local governments have more workers than ever. Yet employers say they can't find labor?

I have a theory. Well really the theory of analysts like Peter Zeihan and Neil Howe.

• Peak boomer retirement was December of last year. Half the boomers - the largest generation - are over 65 now.
• At the same time, Gen X behind them is a very small cohort.
• You do have a lot of millennials. There in between.
• You have an extremely small Gen Z - my kids - coming out of school. They have their own issues as a whole also.

As much as they say about older workers, all macro statistics show that senior workers are always the most skilled and productive.

So, you lack enough older workers - for management and skilled positions
You lack the lowest level / lowest paid workers - just starting out.
You have a reasonable amount of workers in the middle - but their neither highly skilled yet, but they won't take low pay.

So your system is way out of balance, causing macro friction. And its not going to change, for at least a decade, maybe longer.

 

[fdcg27]

Lots of people in my age cohort retired earlier than planned due to the pandemic and most will not return to the labor force. I thought seriously about retiring in 2020 and would not have returned but decided to remain and am still in the active labor force. We are seeing increasing numbers of people retire where I work and there aren't enough good entry level candidates to fill the openings, even at $22.00 an hour plus benefits.
The demographics you cite may be the reason for this.

 

[97K15004WD]

It appears that "Labor Participation" rates use data generated by companies that are collecting taxes from their employees. 1099 contractors don't seem to be represented in this mix as most of the contractors I know work on their own and report taxes annually. Therefore, they would not be reflected in the numbers on a monthly basis.

I did not see a definition of "employed" in the FRED data, so maybe I'm wrong. Based on what I've read though, "employed" means "wage" or "salaried" worker.
"to provide with a job that pays wages or a salary"

https://www.merriam-webster.com/dictionary/employed

A lot of people I know that were laid off, or under-employed, went out on their own as sole proprietors - quite a few. And they are making more money than before, but only pay taxes annually as they are under the threshold for quarterly or monthly. Also, they seem to be happier and have more free time.

That's just what I'm seeing.

https://fred.stlouisfed.org/series/LBSNSA45

About half way down the page: "A state's labor-force participation rate is the number of all employed and unemployed workers divided against the state's civilian population."

So based on this definiton, it's based on wage reports and salary reports. Not 1099 info, like from Uber, Air BnB, Lyft, Amazon Flex, etc.

In other words, I think the data is missing the Gig Economy, at least partially. And if that statement is true, then the numbers are not an accurate reflection of the economic input or output of these workers.

 

[CKN]

How are able-bodied but not working adults living? Where is all of this enough to live on free money coming from specifically? Is this across all skill levels and work categories? Not disputing the 50 percent number but it just seems unrealistic. I personally don't know or know of anyone doing it.

There is not a single program that pays an able bodied person a LIVING WAGE to sit in a basement. This has been repeated over and over on here-I have asked for proof and nobody can provided it.

 

[Rmay635703]

Many Japanese cars are in very short supply. No deals and limited choices still...

Mainly because Toyotas production appears to be inflexible

 

[edyvw]

There is not a single program that pays an able bodied person a LIVING WAGE to sit in a basement. This has been repeated over and over on here-I have asked for proof and nobody can provided it.

Those comments are astonishing. Actually, it is an achievement.
I want to see someone living from some program.
The BIG problem is housing which is fueled by income inequality.
Vail Resort crisis two years ago is prime example of that.
They bought bunch of properties in the Summit County here in CO when prices briefly went down at initial stages of COVID. Then, they sold bunch of that to wealthy individuals and others rented. Those properties were rented before to seasonal workers.
Then first normal season came after initial stage of COVID and they were: well, why not enough workers? They must be lazy, want everything for free.
Yeah, working for $13/hr really doesn’t get you far in a place where 300sq/ft is going for $500-600k. The rent was astonishing bcs. people who bought places from Vail Resorts now want to make money.
Then Vail Resorts said: we will just house you in bunk beds, 6 in studio, bcs. you are lazy. Of course all got COVID.
All that time social media was full of these comments: lazy, living on welfare, my generation would suck it up, etc.
Yeah, I want to see them earning $13 and living in a place like that. Therefore, no workforce. Simple! No one is going to come and say: yes, I will work for free, actually subsidize multibillion dollars company bcs. they wanted to squeeze every single $ out of pandemic. Same happened at Stevens Pass, WA etc. wherever they own ski resorts.

 

[72C10]

I think we will see a difference in prices overall once student loans have to be paid back again in a few months.

There has been too much money floating around the last several years.

 

[thastinger]

I hope truck prices drop, as they are exactly 50% higher than they have traditionally been, when adjusted for inflation, via the CPI (consumer price index)

A $38K truck in 2009 should be $55-56K and have incentives/discounts, Instead, that very same model with no additional features is now $79,999 with 5% to 10% dealer mark-up.

Someone has to subsidize the EV sections of the manufacturer.

 

[thastinger]

It appears that "Labor Participation" rates use data generated by companies that are collecting taxes from their employees. 1099 contractors don't seem to be represented in this mix as most of the contractors I know work on their own and report taxes annually. Therefore, they would not be reflected in the numbers on a monthly basis.

I did not see a definition of "employed" in the FRED data, so maybe I'm wrong. Based on what I've read though, "employed" means "wage" or "salaried" worker.
"to provide with a job that pays wages or a salary"

https://www.merriam-webster.com/dictionary/employed

A lot of people I know that were laid off, or under-employed, went out on their own as sole proprietors - quite a few. And they are making more money than before, but only pay taxes annually as they are under the threshold for quarterly or monthly. Also, they seem to be happier and have more free time.

That's just what I'm seeing.

https://fred.stlouisfed.org/series/LBSNSA45

About half way down the page: "A state's labor-force participation rate is the number of all employed and unemployed workers divided against the state's civilian population."

So based on this definiton, it's based on wage reports and salary reports. Not 1099 info, like from Uber, Air BnB, Lyft, Amazon Flex, etc.

In other words, I think the data is missing the Gig Economy, at least partially. And if that statement is true, then the numbers are not an accurate reflection of the economic input or output of these workers.

Right, the 19 year old who is selling pics of her feet on onlyfans, making 30K a month, isn't reflected in these statistics.

 

[LeakySeals]

I’m in SO NH currently looking for a used car for my GFs son. His current car has rusted to the point it won’t pass inspection. I’m not seeing any drop in prices, any increase in supply. 3–5 K cars are extinct or scams. I see a few older vehicles between 6-10k that may or may not pass inspection, and if they do may only pass for a couple years because of their age and rust. With the interest rates going up, he could be paying on a vehicle in the junkyard. If he moves up to a 15K car most of his paycheck will disappear. He’s only a year out of school so he has not established himself yet. It’s not like he could move out anyways. There is also a lack of real estate and rental properties in this area. 2K a month to live in a little box. 500k for a tiny ranch. Times are tough for these kids.

 

[supton]

I’m in SO NH currently looking for a used car for my GFs son. His current car has rusted to the point it won’t pass inspection. I’m not seeing any drop in prices, any increase in supply. 3–5 K cars are extinct or scams. I see a few older vehicles between 6-10k that may or may not pass inspection, and if they do may only pass for a couple years because of their age and rust. With the interest rates going up, he could be paying on a vehicle in the junkyard. If he moves up to a 15K car most of his paycheck will disappear. He’s only a year out of school so he has not established himself yet. It’s not like he could move out anyways. There is also a lack of real estate and rental properties in this area. 2K a month to live in a little box. 500k for a tiny ranch. Times are tough for these kids.

I’m north of you but will echo the sentiment. I’m about given up on the used hunt and will just buy new, and maybe hand it down in a few years.

 

[wpod]

Right, the 19 year old who is selling pics of her feet on onlyfans, making 30K a month, isn't reflected in these statistics.

I would show anything for 30K per month but nothing I have to show is cute enough to bring in an income..