NYTimes Auto Affordability Article

[SC Maintenance]

And I was pointing out that the median

I understand to everybody here I screwed up the words, median, and mean, mean meaning average

I am pointing out that using your 10% number would mean a car would have to have cost either $1100 or $1500 in 1975 using either one of those words so that 10% number is not a good number to use

“I showed that is incorrect. No matter if you use Median or Mean a car (any car) did not cost $1,100 in 1975 and using (in this case) the MEDIAN income in 1975 was $11,000 The MEAN was $15,000”

https://www.multpl.com/us-median-income/table/by-year

10% used to be the total per year cost recommended max. So payments, insurance etc. Not the msrp.

Just like 33% used to be the recommended Max home debt.

Not saying I agree. But that was the prevailing logic.

 

[JeffKeryk]

sorry, I keep forgetting the economy is doing great, prices are down and affordability is rising every day!

Yeah, not sure how much more of this I can afford...

 

[RBT]

The M2 money supply has been steadily increasing this entire year and at a slightly greater velocity - usually means more inflation ahead because broad liquidity is increasing again, which can support more spending and higher asset prices, and can add inflation pressure if it outpaces the economy’s production and velocity stays firm. View attachment 332796

Excellent point. There are a couple of reasons for it, but the amount of money printing that the government is doing as it runs $1TN annual deficits means that higher than desired inflation will stick around for the foreseeable future. People don't realize that issuing debt increases the money supply, as did the Fed's various quantitative easing programs. (The Fed is now completely insolvent on a balance sheet basis but they hide it by offsetting the losses with a deferred asset.) This is why all this talk of cutting interest rates substantially is silly talk but probably meaningless at the margins. (For those of you who read politics into this, my view is that the current choices we typically get are like picking stomach cancer v. colon cancer.)

As far as what the average person can do, borrowing money prudently is probably not a bad plan (this doesn't include financing cars - financing depreciating assets is never a good idea) as if inflation runs 3-4% for the foreseeable future, that 6% loan to buy a home in a good area is actually carrying a real rate of 2-3%, plus you are getting the tax write off. So after that you are probably pushing 1-2% before you calculate any growth or income produced by the leverage. Same analysis on the business side for some prudent leverage that generates income, tax deductions, etc.

As far as the cost of cars go, there's an ass for every seat. There are plenty of affordable vehicles on the road but people really just like the expensive ones and have fallen into the trap of thinking that they "need" all these things. I think the NYT does a good job with these articles, although as a long time reader there is no question that the timing of them is influenced by the political bent of the staff. But overall they are still interesting and salient.

 

[PWMDMD]

It's not all a race to the bottom and china can manufacture very high quality components as well as whole products, all while providing, usually a western corp, a healthy profit margin.

As far as the difference between the West and China? We still don't have that "cheat at all cost" attitude here and we still care about reputation and what the customer opinion. Over there, since everything is state owned, even partially, the state can mandate things on a whim, so hard work may be all for nothing. What matters is appeasing the ruling party and making sure they are happy, not the customers. There is simply no quality culture because it's not normally rewarded. Soviet union communism operated pretty much the same way, people had no incentive to do above the bare minimum. In fact, if you stood out, you oftentimes got punished.

Tell that to my last three big appliance purchases (two dishwashers and a clothes washer), all made in the USA, all dead within 3 years. The first time the service guy came out for the washer he said there were several screws missing internally from the factory and that was just the start of the problems.

 

[alarmguy]

10% used to be the total per year cost recommended max. So payments, insurance etc. Not the msrp.

Just like 33% used to be the recommended Max home debt.

Not saying I agree. But that was the prevailing logic.

*LOL* Im laughing at myself as I drink my coffee. Only because of the intricacies of this 10% thing. Which I initially messed up with MEAN and MEDIAN.

Anyway Good point! I would still argue (not with you) that the post first bringing into this 10% discussion nothing changes from 1975. Insurance and interest would have been relative in 1975 dollars and cost of the vehicles as well as litigation.
However that would make the 10% number even more unrealistic for 1975. When salaries were 12 to 15,000 a year depending on which statistic one chooses. New Cars didnt cost 10% of that income then and they do not cost 10% of incomes today.

 

[zzyzzx]

Imagine a bar discontinuing all $5 beer and replacing them with $10 glasses of wine. How long would it still be in business?

 

[alarmguy]

I dont know, looks not so crazy to me. I do see it in the supermarket but we dont eat much. Meaning we dont waste money on snacks or any type of drinks which kill you.

Just the basics, Dairy, Meat, Produce. Drink water at home. Easy stuff (ok an occasional 12 pack of Yuengling Black and Tan, real American beer )

https://www.macrotrends.net/datasets/2497/historical-inflation-rate-by-year#google_vignette
|..

 

[edyvw]

Excellent point. There are a couple of reasons for it, but the amount of money printing that the government is doing as it runs $1TN annual deficits means that higher than desired inflation will stick around for the foreseeable future. People don't realize that issuing debt increases the money supply, as did the Fed's various quantitative easing programs. (The Fed is now completely insolvent on a balance sheet basis but they hide it by offsetting the losses with a deferred asset.) This is why all this talk of cutting interest rates substantially is silly talk but probably meaningless at the margins. (For those of you who read politics into this, my view is that the current choices we typically get are like picking stomach cancer v. colon cancer.)

As far as what the average person can do, borrowing money prudently is probably not a bad plan (this doesn't include financing cars - financing depreciating assets is never a good idea) as if inflation runs 3-4% for the foreseeable future, that 6% loan to buy a home in a good area is actually carrying a real rate of 2-3%, plus you are getting the tax write off. So after that you are probably pushing 1-2% before you calculate any growth or income produced by the leverage. Same analysis on the business side for some prudent leverage that generates income, tax deductions, etc.

As far as the cost of cars go, there's an ass for every seat. There are plenty of affordable vehicles on the road but people really just like the expensive ones and have fallen into the trap of thinking that they "need" all these things. I think the NYT does a good job with these articles, although as a long time reader there is no question that the timing of them is influenced by the political bent of the staff. But overall they are still interesting and salient.

I disagree. They think they deserve it!
Which is really dangerous mindset, and honestly, supper annoying one.
Once 7-8yrs ago I was taking kid to daycare and there was sign: parents have an awesome day, you deserved it. I am like: “what am I doing that 3 billion or more people don’t?”
Some 16yrs ago I was sitting with one pilot from one Eastern European country while we were at Air War College, drinking whiskey and smoking cigars. His kid comes home from school and tell his dad: “hey, teacher told me I am special.”
My friend just nodded. Kid leaves and he tells me: “hey, I will not carpool tomorrow, need to visit teacher.”
He went to teacher and told her: “my kid didn’t invent HIV cure, got Nobel etc. Stop telling him he is special. In few months he is going back home and those kids over there will eat him alive if he comes with attitude that he is something special.”
We tell kids immediately that they are some special beings that walk this planet. By the time they make some money, they think they are entitled to three car garage, big luxury SUV etc.
Entitlements and expectations are killing us as society. There was a good article recently as to why Finland is one of the”happiest “ countries. Author argued that if you meet average Finn (he is Finish) you might really having trouble understanding how is that possible. But key is in life expectations. I must say he has a point. I met numerous people here that are genuinely unhappy because they live in 2,500sq ft house and not 4,000 sq ft house. That they don’t drive latest, baddest SUV with 35” tires etc. I actually witnessed couple who spent so much money into decking up two JEEP’s that they divorced as that resulted in bankruptcy. Parents of four small kids.
So Corolla with manual? That is for amateurs, who won’t bankrupt, though.

 

[JeffKeryk]

I disagree. They think they deserve it!
Which is really dangerous mindset, and honestly, supper annoying one.
Once 7-8yrs ago I was taking kid to daycare and there was sign: parents have an awesome day, you deserved it. I am like: “what am I doing that 3 billion or more people don’t?”
Some 16yrs ago I was sitting with one pilot from one Eastern European country while we were at Air War College, drinking whiskey and smoking cigars. His kid comes home from school and tell his dad: “hey, teacher told me I am special.”
My friend just nodded. Kid leaves and he tells me: “hey, I will not carpool tomorrow, need to visit teacher.”
He went to teacher and told her: “my kid didn’t invent HIV cure, got Nobel etc. Stop telling him he is special. In few months he is going back home and those kids over there will eat him alive if he comes with attitude that he is something special.”
We tell kids immediately that they are some special beings that walk this planet. By the time they make some money, they think they are entitled to three car garage, big luxury SUV etc.
Entitlements and expectations are killing us as society. There was a good article recently as to why Finland is one of the”happiest “ countries. Author argued that if you meet average Finn (he is Finish) you might really having trouble understanding how is that possible. But key is in life expectations. I must say he has a point. I met numerous people here that are genuinely unhappy because they live in 2,500sq ft house and not 4,000 sq ft house. That they don’t drive latest, baddest SUV with 35” tires etc. I actually witnessed couple who spent so much money into decking up two JEEP’s that they divorced as that resulted in bankruptcy. Parents of four small kids.
So Corolla with manual? That is for amateurs, who won’t bankrupt, though.

@edyvw my past being homeless is my SuperPower. I never wanna be homeless again; that's the bottom line. And now I don't need much. Just a home and a little food. The rest is fluff. I will say, being able to help others in need is one of the best parts of having a little money now.

 

[Capt W]

I think we do ourselves a disservice by characterizing Chinese vehicles as junk. Given Fords issues with phasers and 10 spd transmissions, GM V8 engines self disassembling, Toyota with engine failures, and Stellantis all around poor rep, who is to say the Chinese are worse? As with many things, they likely have varying levels of quality. My whole house inverter is sourced from China and by all accounts, it's one of the best in the industry.

You might be 100% correct. The overarching issue, however, is that people seem to forget China is an adversary on most fronts, and an actual enemy on others. They're not a peer, competitor, or any other fuzzy word. They are currently an enemy who specializes in intellectual theft, industrial espionage, and has basically never created anything on their own. "Borrowing" the work of others without remorse is actually based in Confucian teachings, but I digress.

Most people conveniently forget this in their quests for cheap Amazon crap. Personal convenience has sadly taken the place of any semblance of patriotism.

If and when we're at war with them, how will most people survive without their online-sourced garbage?

 

[edyvw]

@edyvw my past being homeless is my SuperPower. I never wanna be homeless again; that's the bottom line. And now I don't need much. Just a home and a little food. The rest is fluff. I will say, being able to help others in need is one of the best parts of having a little money now.

It is all about perspective. I was child soldier at 14. For two years I have not seen table salt. I still remember with nostalgia when I got American MRE with some chocolate inside. USAF dropped some supplies. I can still taste that thing today, 30+ years later. Not that I didn’t have abundance of chocolate before, but circumstances put things in different perspective. Years later I tried same chocolate out of curiosity and it really didn’t taste that good. But that taste of that particular chocolate at that time that was parachuted to us, was something special. I hope my kids never experience anything similar. But Peace Corp or similar experience would do them a lot of good I think.
I really don’t need garage subscription to make me happy. And I hope my kids develop same attitude.
There is whole field in political science that a lot of problems we are going through in the West is consequence of unprecedented economic activity since the end of WWII, that made generations lose perspective on hardship.

 

[jghall00]

You might be 100% correct. The overarching issue, however, is that people seem to forget China is an adversary on most fronts, and an actual enemy on others. They're not a peer, competitor, or any other fuzzy word. They are currently an enemy who specializes in intellectual theft, industrial espionage, and has basically never created anything on their own. "Borrowing" the work of others without remorse is actually based in Confucian teachings, but I digress.

While that may have been true at one point, and is likely still true to some extent, I don't think it represents fully what has happened with respect to Chinese industrialization. By moving so much of our production to China, we've enabled Chinese competitors to surpass us in many areas, such as solar panel production and electric vehicles. Granted, there are still many areas where the West holds the advantage (semiconductors, aircraft), but that's not true for all areas. Especially in battery design and production, the leaders are now Chinese using homegrown tech. One of the benefits of Chinese industrialization is that it made renewables cheaper here. So the U.S. was sourcing cheap panels from China, which created jobs on the solar design and installation side here. Because panel manufacturing is largely automated, focusing on the deployment side arguably created more domestic jobs than production would have created by driving down the costs of deploying solar.

Most people conveniently forget this in their quests for cheap Amazon crap. Personal convenience has sadly taken the place of any semblance of patriotism.

If and when we're at war with them, how will most people survive without their online-sourced garbage?

We'll do what we always do: adjust. But I hope it never gets to that point because there's a lot of wasted human capital expended fighting pointless conflicts. China needs to do something about its overcapacity for sure.

 

[OVERKILL]

While that may have been true at one point, and is likely still true to some extent, I don't think it represents fully what has happened with respect to Chinese industrialization. By moving so much of our production to China, we've enabled Chinese competitors to surpass us in many areas, such as solar panel production and electric vehicles. Granted, there are still many areas where the West holds the advantage (semiconductors, aircraft), but that's not true for all areas. Especially in battery design and production, the leaders are now Chinese using homegrown tech. One of the benefits of Chinese industrialization is that it made renewables cheaper here. So the U.S. was sourcing cheap panels from China, which created jobs on the solar design and installation side here. Because panel manufacturing is largely automated, focusing on the deployment side arguably created more domestic jobs than production would have created by driving down the costs of deploying solar.

The reason for that is predominantly due to the conditions used to manufacture the panels, which is done using mine-to-mouth coal. Yes, when you don't have any semblance of Western regulation, things are going to be much quicker, and cheaper, to setup. This is something we need a pick a position on. The world is a fish bowl, requiring a 10-year environmental assessment, scrubbers, carbon capture...etc. which incents industry to just buy it from China where the government rubber-stamps a permit to mine and burn with impunity. We achieve none of the goals laid out as the basis for our regulation (reducing emissions), and not only is the end result worse in terms of pollution created during manufacturing, but then we have to ship this stuff, using Bunker-C, halfway around the globe to "save the planet". It's lunacy manifest, we are gaslighting ourselves into believing the other half of the equation doesn't happen simply because we don't see it.

Whole thread on this here:

Thread 'Nothing is cheaper than mine to mouth coal'

Mar 26, 2024

Except maybe massive hydro, obviously geographically limited, with HUGE CAPEX.

Some might recall the previous Seaver Wang piece I shared here:
Cogeneration in China - Solar production | Bob Is The Oil Guy

Talking about solar module production with onsite coal plants. Well, he's got another thread up:

Quoting the thread here:

Other people: "Wow Chinese manufacturers are killing it with cheap electric cars + solar! How do they manage it? Truly an inspiration to the world!"Me: "I recommend taking a gander at the environmentally blighted area near Baotou...

• OVERKILL
• Replies: 22
• Forum: General and Off Topic

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[pasadena_commut]

TPMS monitors

Monitoring tire pressure is a good idea. Putting a battery powered sensor inside the tire is a bad one. If they just modified the rule to require TPMS sensors to be serviceable without removing the tire from the rim it would solve most of the problems associated with them. There are aftermarket units that can mount on a standard tire stem, and that would be one sort of solution. My impression is that adding air to a tire with one of those is a bit of a PITA.

However, there is no reason a rim cannot have a second hole through it. Imagine rims came with a second tire stem sized hole, and it was fitted with a permanent TPMS adapter port. A TPMS sensor could be attached to that port. If the sensor fails the tire could be deflated, the sensor replaced, and the tire reinflated. It's possible that deflating the tire might not even be needed if the hole through the port was small enough one could remove the old one and screw on the new one before the tire bled much air. In any case, no need to take the tire off the rim. It would even be a safety measure, because there are a lot of people now driving around with dead TPMS sensors, because they don't want to pay for the labor to change it, whereas the alternate design would reduce the cost of changing one.

 

[pasadena_commut]

But, having said that, there are reliable vehicles available under $15,000. So maybe expectations regarding new vehicles should be tempered.

Used vehicles, which have depreciated. You are implicitly assuming that cars being sold now will be as reliable as they age as previous generations have been, and that may not be true. For instance, every generation of new vehicles picks up more and more computers. Aging electronics can be a problem, and each and every one of those computers is manufacturer, if not model, specific. Personally I expect computer failure and replacement to be a significant expense on modern cars 15 years down the road. Assuming that their direct injection motors and/or turbochargers have not exploded before then.

Also, I hate actuators! Actuators in the HVAC system, actuators in the doors. These wear out when a car gets up to 20 years (maybe sooner) and they can be a PITA to access. Buried in the dash, between two components which cannot be removed, no access to the screws. Almost like they designed them to be hard to replace. In theory they can sometimes be serviced, but the plastic cases become so fragile that the little tabs which hold them closed snap off if you look at them wrong. Makes me think back very fondly to cars which didn't have any of those, just mechanical linkages. Most cars now I have to fight with the HVAC system to get it to do what I want, whereas when it was all mechanical, just set the 3 dials and a couple of buttons and it just did what it was told.

 

[jghall00]

Used vehicles, which have depreciated. You are implicitly assuming that cars being sold now will be as reliable as they age as previous generations have been, and that may not be true. For instance, every generation of new vehicles picks up more and more computers. Aging electronics can be a problem, and each and every one of those computers is manufacturer, if not model, specific.

Every used vehicle I've owned has made it to 200k miles. The only ones that didn't were sold before that for other reasons. But there's probably some bias because four of them were Hondas. My Altima is about to cross 200k, as is my Expedition. I've never had a blend actuator fail. The electronics have probably been the most reliable parts of my vehicles.

 

[pasadena_commut]

I've never had a blend actuator fail.

1998 Honda Accord EX 4 cyl. Front passenger side door lock actuator failed at ~14 years, and they dropped one by one over the years until now none of the four work reliably. These are a PITA to replace and I have not worked up the desire to tackle that. We grew up with cars that didn't have power locks, so not having them again isn't that big a deal for us.

All 3 HVAC actuators failed. Messed around with that for a long time thinking it must be the electronics, no way that all 3 were out, but they were:

https://honda-tech.com/forums/honda-accord-1990-2002-2/1998-ex-no-heat-3378445/

We know the history of that vehicle, as it belonged to the In-Laws before us. It wasn't abused, all these actuators failed from "natural causes".

 

[97prizm]

Domestic carmakers can and have made small, affordable cars…generating a profit from them is the problem.

Margins are slim on small, affordable cars, so they have to be produced and ultimately sold in massive quantities, and the US market can’t support the volume.

Years ago it was said that GM made roughly $3,000 profit off of their small cars vs $10,000 in profit off of an Escalade.

 

[jghall00]

1998 Honda Accord EX 4 cyl. Front passenger side door lock actuator failed at ~14 years, and they dropped one by one over the years until now none of the four work reliably. These are a PITA to replace and I have not worked up the desire to tackle that. We grew up with cars that didn't have power locks, so not having them again isn't that big a deal for us.

All 3 HVAC actuators failed. Messed around with that for a long time thinking it must be the electronics, no way that all 3 were out, but they were:

https://honda-tech.com/forums/honda-accord-1990-2002-2/1998-ex-no-heat-3378445/

We know the history of that vehicle, as it belonged to the In-Laws before us. It wasn't abused, all these actuators failed from "natural causes".

I had a 2000 Accord, same gen as the 98. The transmission started slipping before I lost it to a radiator crack and subsequent head gasket failure in Quartzsite, AZ. Even with the slipping transmission it made it well over 200,000 miles, but it was only 12 years old at that point, so I guess I hadn't worn out the electronics. The transmission failure was my fault, due to lack of timely fluid changes. I had to drive it like a manual to manage the slipping 1 - 2 shift.

 

[Owen Lucas]

Years ago it was said that GM made roughly $3,000 profit off of their small cars vs $10,000 in profit off of an Escalade.

Not sure if it is still true, but Nissan and VW made the most profit per vehicle. Porsche was up there as well.