Car affordability in 2022 and beyond

Generally speaking, people who trade out their cars every 3 to 5 years do not have much of an incentive to take care of their car.
Used cars ARE sometimes an option, but you have to be willing to cast a wide net and settle for a car that you would not normally buy.
MY strategery has always been to buy a nearly base model new car or truck from the previous model year, and drive it for 15 years.

My recently purchased vehicle only has one option - a $900 "value" package which is a the love child of a towing package and a convenience pack.
Before the dampanic, it was not uncommon to see steep discounts and <2% loan rates.
Inflation is fixing that, and pretty soon the additional 2-3 points in the auto interest rates will express itself in higher notes over a longer term.
I was SHOCKED to find out that the average US credit score is below 720....and that this is considered to be "good!"
People in this tier will pay 1-2% MORE on their "average" $700+ car payment.
It's a fairly horrible cycle.
People are commuting much further these days because cities are either lawless dystopian hellscapes, or city real-estate prices are driving commuters further and further away from work.
Sometimes it's schools.
...or.....
D.) All of the above.
SO....the average commuting distance is now 41 miles which alone puts 20,000 miles per year of depreciation and wear and tear on your car JUST TO GET TO WORK.

 

we've been selling cars 'as is' since i started driving 50 years ago, and i'm sure much longer than that.

it's the buyers responsibility, and i don't even know how a seller could make sure a car is perfect before putting it up for sale

 

So far used cars have been pretty much my only option. I've been a car owner for nearly 25 years and I don't know what buying a new car is like.

On paper I don't think the perfect car exists, new or used. Unless it's a restored 1966 1300cc VW Beetle.

That's my plan with the Avalon, to drive it as long as possible. But I put 30,000 miles on it within the first year.

 

You're a lot smarter than I am....

That's a good car to try and put 300,000 miles on!

Not as good as a 60's Vee-Dub maybe, but then....what is?

 

I hope we shut the Chinese out

 

If only the radio/infotainment center thing-a-mic-bob worked and it didn't just die a year after you pay $300 or $400 to have it fixed, and it didn't have fabric wheel wells that saturate with ice (we got like 6 inches of snow this morning), then it would be a great car to try and put 300,000 miles on.

 

I'm not so sure that is a good idea. Making a strong economic bond with the Chinese reduces the interest in risking it for some military nonsense ... by both them and us.

Besides, who wants to shutdown WalMart? <GRINS>

Elon Musk shows how to compete with China ... better engineering! In fact, the Chinese are trying to make a Falcon 9 style, landing launch vehicle.

Bob Wilson

 

A level playing field is all I ask

 

The outsourcing started I guess in the 80’s. Afraid it might be too late. In the 70’s virtually everything was still made in USA with a little Japan and Germany.
If I were to blame someone, it would be the early outsourcing companies, but what good does blaming do.
People buy what is the best deal, hard to change that. Spending $50 on vise grips from Malco didn’t work out. Interesting comments about it here. I may buy the other type of 10 inch I didn’t buy already, about $40 now on Amazon.

Malco Eagle Grip Locking Pliers Discontinued! - Pliersman

 

the fed tax credit is working

 

Yes I noticed all the lowered prices. The companies who outsourced and built China to what it is can’t take back what they did for greed now. Too late. A many sided coin this is.

 

I am reminded of a former President once claiming 'Trade wars are easy to win' and increased the China tariff to 25%.

The current President has left the rate alone. Yet reducing the China tariff say by half would have instantly reduced inflation by a measurable amount.

Bob Wilson

 

slower-gdp-growth-falling-inflation-us-economic-outlook-2024

 

Former thought China would be paying, probably still does. No, the importer pays, so charges us captives more over here. I think Present is going by the signed trade agreement where China promised to buy a certain amount of US goods. They haven’t yet fulfilled the commitment. I believe that’s why Present has been letting it play out. He also kept on the Fed chief. I just read most of that as it is a good question. More sides of coin. If each administration threw out everything from the previous, no one would sign anything with us. The government is not one man, it’s an ongoing institution.
In my article linked above it says one reason they can’t do the pliers is lack of skilled labor. This is a direct result of outsourcing those skills to China so their workers learn them. Ours forget them. All the little bags of tricks people developed in the US and elsewhere in manufacturing.

 

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Everyone does know that the “tariffs” are not paid by China?!? ... Right?!?

 

Pretty sure that's what #376 was getting at with "Former [POTUS] thought China would be paying, probably still does. No, the importer pays....".

 

Tarriffs done intelligently and usually phased in carefully over years with the least fanfare and emotion can cause business optimization decisions to move production to save money for competitive advantages.

While infrastructure build out occurs it will suck but theoretically it’s both a tax that funds the government (not insignificantly) and both entities share the cost via lost trade.

However the way these tariffs were done was to enrage the other party as much as possible which results in the other party fighting back in other ways so both suffer more and because the tariffs were instant there was no way to build out alternative infrastructure in other parts of the world.

Nixons open trade policy with China was in error, that was when you could have realistically motivated a different outcome.
Early 80’s outright bans on export and import of specific technologies and products would have been the second best time to avoid the China price on every product in our entire life.
Every year we did not tarriff or limit key industries was another year of exporting our supply base and core competencies that can never return without decades of effort.

Our dollars and tech have built out China to be able to do everything we should have been able to do and we are also loosing our IP edge as even that erodes.

Too little too late, but no tax is ever repealed, I expect the tarriff is lucrative even if it’s regressive mainly to the poor

 

If left alone economics often solves problems and evens the landscape

Walmart shifts to India from China for cheaper imports (nbcnews.com)

Walmart Shifts to India, Cuts China Imports (usnews.com)

As far as US based manufacturing - until we quit incentivizing individuals not to work and quit providing disposable income for them with entitlements -we will struggle to be competitive on the world stage of manufacturing.

That would be one of the main reasons for fearing Chinese Auto manufacturing. It is also one of the reasons tariffs were bought up. All things being equal the Chinese will beat the socks off any US Auto Manufacturer on labor cost - the US has no hope of competing there - it is impossible. Their only hope would be increased automation - (Giga casting etc.) - unfortunately/fortunately currently there are limits on technologies abilities and their use has been maximized currently in Auto Manufactuing.

If you think Auto Manufacturing has been moving to the regional Southeast US you are right - But the much hotter market for domestic Auto Manufacturing are the companies moving to Mexico for their Manufactuing. With the new US UAW Contract and the UAW pledge to infiltrate the Japanese, Korean and German Auto Companies in the US expect the domestic companies to begin accelerating their plans to manufacturer vehicles in Mexico and soon other South American countries.

Some U.S. manufacturers move supply chain to Mexico from China - Marketplace

As Tesla prepares a Mexico plant, a look at auto plants in Mexico | Reuters

Nearshoring Will Make Mexico ‘the Motor’ of US Electric Vehicle Industry (bloomberglinea.com)

U.S. automaker Ford opens $260 million campus in Mexico | Reuters

Mexico to Become 4th-Largest Manufacturer of Auto Parts by 2023 (americanindustriesgroup.com)

When one pays a Tariff who gets the money?
"A tariff is a tax on imported goods" if you guessed the Government you are pretty smart.

Who gives the entitlements - provides free housing, food, phones etc. that disincentives people to work in manufacturing - if you guessed the Government again - your right.

Who pays the cost of the Governments incentives, the Tariff's when they buy new goods and eventually the social and economic ravages of driving our manufacturing to other countries - the citizens foot the bill for theses Government shenanigans.