The Affordability Crisis. I don’t want to come across as a rabid capitalist, but what the industry sees as a “crisis” I see as “the market at work.” Car prices, both cash-and-carry (e.g. $50,000) and financed (e.g. $1,000 a month) are high right now. This results in lower volumes. Net net, revenue is actually up, as prices are up more than volumes are down, relatively. Is this a crisis? Well, we’d all like to see more models available at lower price points… I guess. But we have used cars and CPO cars for those price points, no? I know I am in the minority for saying the following, and may get some hate mail for it, but are we charging too much for cars now, or were we charging too little for them before?
Exhibit A is from a recent Ford outlook presentation, showing how new car price increases have been lagging inflation for many years. Is it just that we are catching up to inflation now?
Exhibit B is a different look at the same issue (thanks to Colin Langan at Wells Fargo for putting me onto these data series): what percentage of personal income on the USA is spent on cars and car parts? It’s not exactly at historic highs, and by the time you adjust for the incredibly superior performance and quality of modern cars versus those of years past, current cars seem a bargain.
(Retrieved from the incredibly useful St. Louis Federal Reserve FRED online tool.)
Yes, I know this excludes gasoline cost (currently down) and insurance cost (currently up), ignores income distributions and inequalities, etc., etc. but over the long haul I think it’s hard to find much of a spike here. (And man, we were giving them away during TGR!)
Appreciating Teslas. (Warning: Cheap Shot ahead) One automaker that has done much more than its fair share in bringing that green line down is of course Tesla. Look at this amazing, amazing descent:
(If you don’t subscribe to Charlie’s weekly economic chart-o-rama, you should!)
Wow. Thanks Tesla, for helping out the average American car buyer! But now for the cheap shot (I did warn you)1:
April 12 2019, Elon Musk, in an interview/podcast with Lex Fridman, cited on Elektrek: “Buying a car today is an investment into the future. I think the most profound thing is that if you buy a Tesla today, I believe you are buying an appreciating asset – not a depreciating asset.”
Oops.
Uber turns a corner. To add to my pile of incoming hate mail: Sorry, Uber and Lyft, you are not “tech” companies, you are not “sharing” companies2, you are TAXI COMPANIES (with nice phone apps). There, got that out of my system. But unlike taxi companies, investors have been very happy to throw billions of bucks at you over the years, because they think you are a techie sharing economy something something.3 Anyway, all is well now, because… Uber just made a profit! But I am here to do my usual Grouch on the Porch thing and gripe about just how far they have to go before they ever compensate their long-suffering investors for all the bucks they’ve torched:
I know, the past doesn’t matter, it is the share price going forward that does, right? Sorry, I reserve the right to complain anyway…. Taxi company!
Well that’s it for today. Turns out my attic was more full than I thought, so you lucky few get another, a third batch of charts tomorrow or the next day. This is almost - almost - as much a gift as Deadpool 3!4
For those of you who want to pile on poor Elon, there is this: https://elonmusk.today/ Incredible. (The opinions of that website do not necessarily represent those of the management and sponsors (should we ever get any) of this blog.)
“Would you like to share my car with me? Cool! Now would you please share some money with me? Great. Sharing is so much cooler than that outdated scheme of just paying me for a ride!”
To give credit to Uber, they have developed a solid food delivery business, taking advantage of the average American’s utter unwillingness to leave the couch. (See the Jim Gaffigan bit where he predicts the next stage in food delivery evolution: “Can the driver just come in the house and put the pizza in my mouth for me?”)
Yes, I know, it’s now called Deadpool and Wolverine.