Ummm, Price Collapse?

Even if demand cools, the auto makers are so far behind on production they will be able to control future supply and not overproduce. They aren’t going to suddenly flood the market with new cars and crash the price. Did prices go down after the inflation of the 70’s? No…

 

And what’s to stop auto manufacturers from sandbagging future production?

 

Just wait until the debt markets start imploding - debt has fueled this fire since 2009. Fed just kicked the can down the road with suppressed rates and easy money. Now they are backed into a corner.

Personally, I'd love to see zombie companies and debt lemmings be destroyed so we can get back to sound monetary policy and fair market valuations in everything. Probably not in my lifetime, though.

 

The fed has been acting like a junkie for 21 years. They just keep finding ways to make money free.

rather than getting clean, we just keep getting addicted to a different drug

 

Wow. That shows where the demand is.

 

It's interesting to look at the opinions and see what people are noticing.

So living in Iowa where agriculture is king its like one big circle. When AG economy tanks the general non ag sectors is booming.

When you see 8 dollar corn and 17 dollar beans the non ag sector tanks or does shortly after.

My dad worked for Case and Agco for years and that cycle has been in place since the farm boom and bust of the early 80's

Wife works for a company that produces fishing products, basically everything but boats, electronics or motors. They worked people 60 hours a week for almost 2 years straight. They have over 20 million in inventory and have let go 22 people since last week.

The recreational sector is tanking with no shutdowns giving people less time away from work.

 

Hence Target/Walmart now having to sell certain coconsumer goods at discount. Pandemic hit, people stayed home, people needed household goods. They needed to stock up on demand. Now, people "free" to roam again, Target overstocked on certain good and need to sell at a discount to try and move them.

https://finance.yahoo.com/news/big-...er-big-discounts-morning-brief-100007992.html

 

Writing is on the wall. Gas is at all time highs. Inflation at extreme levels. Interest rates per the Fed's dot chart are going to keep rising.

It is unsustainable for these sectors to stay at their current values. Incomes are not rising to match. So something has to give once money is no longer "cheap" to get.

S+P 500 probably won't see Jan 1 2022 levels again til 2024.

 

I saw the 60 day at 4.15% as of February, but still...yes, delinquent payments on the rise.

https://www.marketwatch.com/amp/sto...-2020-a-potential-sign-of-trouble-11648070643

 

While nice to pay under MSRP, and I wouldn’t pay over, I wouldn’t go so far as to say paying MSRP right now is a fool’s move.

What percentage under MSRP was the average buyer getting before? 5-10%? It’s not a ton of money in the grand scheme of things. I’d venture to say most buyers were giving that discount right back via interest on their payments, since few are as diligent in the finance office as they are on the sales floor.

Eventually you’ll be able to negotiate down from MSRP again, but by that time the MSRP will just be higher, so you’ll probably end up not far off of what you would pay now. If interest rates go up, that will effect the total also.

All that to say I ultimately don’t think people will get a much better deal in the future than paying MSRP now. It’s just a matter of if you want one now or not. If anything it just makes it easier to shop for the time being.

 

The issue here... People went and bought cars with money they never really had(stimulus). These same people dont generally plan for the future or have a contingency plan if something happens.

 

I whole heartedly agree.

Inflated pricing on vehicles, boats, trailer, etc with money people didnt "have" in the first place.

Add to that, student loan payments continue getting pushed back....again, "giving" people money TODAY for said items, money that they will NOT have in the future.

 

They can only run that play out so long. Auto manufacturers are not tied together like OPEC, and each will try to undermine the other when they can.
Prices on material are high right now, and the global workforce is diminished. This workforce shrinkage will continue because of demographic shifts: the baby boomers are now retiring en masse, and most countries’ populations have shifted such that there is a proportionally smaller working/consuming class, and a much larger elderly/retired population that doesn’t consume hardly at all, and they don’t invest- they save. Small workforce and few consumers? Everything will scale down.
US demographics will not slip as badly as most, but we will still feel it- a lot. 10 years from now, the world will probably look very different.
I highly recommend Peter Ziehan to all of you, it is from his writing and speaking that I learned the above.
The pandemic effected us in many ways; supply chain disruption, workforce reduction, stimulus spending, vast changes to employment practices, wages, and global trade. This is all significant. But layered over the demographic shift that has started worldwide, it’s just a spark from a much larger flame.
And don’t forget that with Russian oil exports effectively throttled, possibly for the VERY long term, the effects on energy markets are going to add long lasting complexity to all of this.

I don’t think we’re getting “out” of this at all. I think as a nation we will have years of innovation and adjustment that will further isolate us globally from a world that won’t be able to produce for us as cheaply as we can for ourselves.

 

There will also be a supply glut to coincide with people losing jobs & spending less ... businesses that double-ordered in the wake of the Great Sickness will be sitting on inventory they can't move, so there will be deals on many things for folks who are prepared.

 

The crash is coming the stock, bond and housing market not to mention the devaluation of the dollar. This "great reset" is just the largest wealth transfer in history. Hyper inflation will be the death of the dollar. The dollar is going to get replaced as the worlds reserve currency and replaced by the yuan. Then it's gonna tank and over the weekend while your bank is closed the new "digital" dollar will replace it. Get your house in order this reset is global and is coming. Hard assets if you don't hold it, you don't own it. Prepare well brochachos.

 

This is all great conversation and insight! I am a little more hopeful now that I see many others are economically intelligent. Now if we can just get the 4 year colleges to teach the same!

 

Finances and financial responsibility should start much sooner than college.

 

yup my daughter went to an Ivy league school Dartmouth she graduated in 2015. I'm still trying to uncluster that F%$K. She's coming around though, a newly commissioned ensign stationed at NAS Pensacola going through the program as a NFO. "Talk to me Goose!" So it's doable just takes some work.

 

My 9 year old is outside right now walking behind a mower because he wants a new baseball bat. He is going to be surprised when I tell him he has to do it for 5 more weeks. He will receive cash every time he mows so it will be interesting to see if he chooses the long term goal or defaults to the baseball card section at the store.

 

Reading "The Creature From Jekyll Island" ... I could use a "Dummies" condensed version right about now ... !

 

The biggest lesson I’ve learned as a parent with the kids is to have them work first and then receive the reward for the work. It didn’t work so well to receive the reward and try to get them to work. They also take much better care of the things they have worked for. I often think about setting up a summer Boys to Men’s club where I would teach these basic yet crucial concepts. Change and rotate tires, how a car works, landscaping, fence building, welding, finances, excel spreadsheets, how to treat women with respect as long as they are getting it in return (maybe how to pick a good woman!), shake someone’s hand correctly, mind their own business, take out social media company infrastructure and all of the above.

 

Hows the book otherwise? Lol

 

I see 4th graders who don't know how to show a specific currency amount multiple ways. They cannot add or subtract random sets of coins nor can they tell you the different ways to make a dollar.

The standardized state assessment does not test personal financial literacy nor does it test reading time or elapsed time (I say does not test but there have been a few questions over the past 4-5 years).

Parents do not teach these skills so what little they get in the classroom goes nowhere. Same goes for literacy (RLA) - kiddos who struggle with Reading and Writing continue to have a hard time well into high school because they get zero help at home.

 

I went to college and have student loans. My wife did the same. We got hers paid off and now are working on mine. I will say, I wish I would have learned more about how interest was applied before taking the loans(very predatory in my opinion). We knew going in what it would cost and whether it would be worth it.
Just turning 30 and looking at our finances, I think it was worth it. We will have everything but the house and solar(a utility to me) paid off by the time I am 32. Our interest rates are all below 3 percent. We might buy some land somewhere and build a cabin... hopefully. Try and get away from all the BS.

 

Sad but VERY VERY true.
You can see a kid that has support at home and a kid that doesn't. It goes a VERY long way. And that support at home could be as simple as asking what they learned at school("hey show me what you learned today")

A school can't teach a kid EVERYTHING. They are piling on social emotional learning onto all the crap they have to go over already... It never ends.

 

Anecdotal story, but still...

For a variety of reasons (ranging from the quality of our local schools to the cost of the local private school), we enrolled our son in the local private school. (It's pretty handy, actually - I work on an Army post and the school is maybe 3 minutes outside the post, so my son has the constant threat of Dad storming over there if he misbehaves...heh)

Anyways, they had them started on basic algebra - in *3rd* grade. (We're talking stuff like x-2 = 4; nothing big, but still.)

My son is a solid middle-of-the-pack performer (LOL), and yet I can't tell you the # of times I've watched him buy something @ Casey's, or Subway, etc.....and then watched the cashier struggle with the math. Half of the time, after 10 or so seconds, my 7th grade son will TELL THEM how much they owe him.

I think you're right on - it's not just the schools, although that's a large part of it. It's the support @ home as well. Even in the classes where my son has not done well, the teachers tell me "It's so obvious your son loves you and your wife; and it's so obvious you love him as well...it shows in the way he talks about you and in your engagement level."

********

On a related side note, not that I'm any historical expert, but I did write a thesis paper on the factors related to, and causes of, the '08 recession and bailouts. I've noticed that many of the things we saw prior to those events are happening again.

 

Speaking on just the new tundra since it’s the only truck I can compare prices on. I have a 2020. The 2022 comparable to my 20 is about $3500-4k more, if memory serves when I looked up the pricing. I would venture to say dealer add-ons are both in the same ballpark. So right off the back your $3.5-4k more. Now add in the dealer discount, hold backs, and what nots. It’s not pocket change. I got a 2020 SR5 SX package plus some dealer add-in’s for $38.5+/- OTD. You can’t even get a base 22 work truck for that OTD. Point is people are paying MSRP for a depreciating vehicle just because they want to keep up with the he Joneses. And I get it, it’s there money, but in this economy, it’s best to wait it out. Not to mention I don’t want to be a guinea pig for a billion dollar company. Obviously vehicle prices will go up, but taking the same example I gave of my truck, I should be able to buy the same 22 SR5 just $3.5-4 over what I paid. So around $41-42k OTD. A co-worker just bought a 22 base work truck for $50k. I am not even going to tell you what I think of him and his decision. Wishful thinking, but if people who had no need to buy at MSRP, dealers would be selling at MSRP.

 

Lmfao, accelerate baby!

Y'all better buckle up for this one. The airbags wont be going off.

 

I’m not comparing past models to the 22. I’m talking about paying MSRP for a new, current model, vs waiting a couple of years to buy a new truck (a 2024 Tundra for example) when they’ll sell below MSRP. That truck your coworker bought at 50k MSRP will almost certainly be close to 55k MSRP for a 2024 version. If he’d waited a couple of years then negotiated 10% off, he’s still paying the same 50k.
Not sure I’m explaining clearly enough. My point is that while dealers will likely start selling below sticker at some point, the sticker is just going to be higher to begin with.
Not debating the merits of buying a 22 Tundra, I have no interest in one myself. I just doubt anyone will get a new one cheaper by waiting a year or two.

 

I took it the other way around. Yes, vehicles will just continue to rise in price. But if I recall correctly my brand new 08 SR5 was $32k OTD. Compared to my 20 of $38.5k that’s only $6k over a 12 year span. With this inflation it possible to see a $5k price hike over the next 2 years. One thing is for sure, I personally don’t think these trucks are worth what they cost.