After a tough couple of years, consumers went into 2022 hopeful that unhinged automotive pricing and lean dealer lots would be a thing of the past. However, analysts and industry groups have gone from being cautiously optimistic just a few weeks ago to fairly sullen about the prospects of North American shoppers locating anything that could be considered a square deal.
Goldman Sachs recently issued a report that attempted to encapsulate the whole picture, citing sustained congestion at the ports, pandemic-related factory closures, market inflation, millions of people just dropping out of the workforce, and continued complications stemming from the semiconductor shortage. It estimated that vehicle pricing would fail to go down — and may even pitch up in the first half of 2022 — until all of the above issues have been addressed. But it was hardly the only group chiming in or suggesting that the hard times could last through 2023, as the goalpost for what should be deemed acceptable is moved yet again.
Yesterday, used-car giant CarMax announced it finalized a deal to acquire automotive consumer advice site Edmunds, in a deal worth just over $400 million.
CarMax promises it’s magnanimous, and that Edmunds and its advice will operate independently of CarMax and its sales.
Auto loan terms have been creeping up for as long as anyone can remember. Back in 1997, the average financing period on a new car was somewhere around 54 months. That crept up to over 60 months by 2004 and has only continued to climb. Over the past decade, the typical automotive loan term has ballooned by almost 30 percent. According to an analysis by Edmunds, the average financing period on a new vehicle sold in the United States surpassed 70 months in March of 2020.
While automakers’ recent introduction of loans extending up to 7 years (especially now that COVID-19 is hampering sales) has exacerbated the issue, we were already sitting on a 69-month average in October of 2019. Why would someone voluntarily agree to such a lengthy agreement? They may not have much of an alternative due to similar growth in vehicle transaction prices.
The automotive media slobbered over the redesigned 2015 Volkswagen GTI sporty hatchback ever since its introduction two years ago. I put 13,500 miles on mine over the past year and I agree that it is one of the great all-around fun cars available today.
I just went through the process of selling it, and that is when the real fun began.
If you’re looking to get the most money back when you drop your car onto the used market in five years, better get into something large and utilitarian.
Large and midsize trucks and SUVs grab the top five-year resale values in Edmund’s 2016 Retained Value Awards, with conventional and luxury midsize and large cars depreciating the most.
As you all know, the TTAC Zaibatsu prides itself on not having to worry about things like upsetting brands for telling it like it is for a given product. Of course, this does sometimes mean we get blackballed by said brands for not drinking the Kool-Aid, but we have our ways around those roadblocks.
Alas, Edmunds doesn’t have those ways, resulting in a series of ads retracted after a number of dealers took issue with the content.
We all know that the value of a car crashes the moment we drive it off the dealer lot. Some do more, some less. Edmunds compiled which brands and makes hold their value more than others.
On a brand level the most prudent cars are made by Acura (honorable mention to Lexus and Infiniti), and, for the more rugged types, by Jeep (honorable mention to Ram and Jeep.) However, people choose brands, but buy cars. So here are Edmunds’ “Best Retained Value Awards” by segment.
Something I’ve long maintained (and that has been backed up by many of the B&B) is that young people still like cars and do care about them. The issue of falling car ownership among young people is largely an economic one. The cost of living is going up while wages are stagnating. Gasoline is expensive. Student debt, smartphones and rent are more important obligations than car payments, insurance and fuel. All of that can be quantified with data.
What hasn’t been so easily demonstrable was that young people still like cars, despite the wishful thinking of many who cheer for the end to the automobile era. Now we finally have some good research that backs up my gut feeling.
Google’s autonomous car program tends to get the lion’s share of attention when discussing the tech giant’s auto initiatives. But lurking in the background is a more immediate project that has the potential to finally “disrupt” (as Silicon Valley types are so fond of saying) online automotive sales.
If you need proof that Lincoln really is down right now, here it is: they must be down, because Edmunds is kicking them. The same blog that tossed the Volt’s salad with an enthusiasm worthy of Tom Colicchio has placed its newest MKZ tester into the stocks for a bit of the ol’ public shaming. At the crux of the issue: the disgusting fact that, when fitted with the same tires found on the BMW M5, the Lincoln MKZ outperforms it in the Edmunds slalom test.
Just kidding. There’s more to it than that. Or is there?
Throughout the history of the automobile in America, one city has been synonymous with the industry and culture of cars. Booming with America’s great period of industrialization, Detroit became the Motor City, the hometown of an industry that created a blue-collar middle class and a culture based on personal mobility. But as America has entered the post-industrial age, as the focus of our economy has shifted from production to consumption, Detroit has been left behind. Long used to defining consumer tastes, Detroit was caught unawares by the changes wrought by globalization and the rise of information technology. And as America’s traditional auto industry struggles to redefine itself in the new economy, another Motor City is rising to meet the challenges of a new age.
If you read, maybe even follow Steve Lang’s advice on car buying, then you know how important and hard it is to fight the dreaded depreciation of your car. The minute you drive it off the dealer’s lot, it has lost a good chunk of its value. Some cars hold their value well, others not so much. Here are the best.
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- 6-speed Pomodoro I'm not opposed to an EV, but I have no idea what one would have to have or look like to compel me to buy one. The three things I look for in a car are seat comfort, sound, and a stick shift. I generally think I'm waiting for at least the generation after the next generation for engineers to figure out what makes EVs worth driving. That puts us around 2030, so why worry about it? But who knows. Maybe Honda will ace the compact sports EV with an s600amp and pull me in.
- THX1136 Agree with SCE, the cost alone puts me out of the equation. Would I like an EV Charger, sure but see previous sentence.
- IBx1 The only thing that stops a bad guy with a [Milwaukee Sawzall for stealing catalytic converters] is a good guy with a [Hydrochloric Acid 37%].
- SCE to AUX Well, this is one reason to go electric.
- THX1136 According to carbrain.com the cost for catalytic converter 'repair' is between $945 and $2475. They claim the converter cost itself can be up to $2250. Figuring $880 a unit doesn't seem too far out of line if the carbrain info is accurate. Wonder if gas theft is still going strong on the west coast also?