Used car bubble: when does it pop?

[mgil]

I dunno who has been looking around for cars, new or used, but the prices are absolutely batshit crazy.

I was going to replace a car soon, but made some deals to delay having to buy something new/lightly used.

From what I can tell, prices should crash late this fall.

Anyone else have insight here, beyond the autorags?

[5hout]

I don't see it popping, but slowly deflating back to inflation adjusted normal, beginning in a year or two. None of the supply factors appear to be easing, and many of the cars sitting in lots (in some cases this means literal grass fields, no one is paying a new car price for a car that sat unfinished in a grass field for a Michigan winter) depreciating waiting on parts are going to end up written off/scraped/sold out in small doses. Demand is incredibly high, and pent up, and even semi-desirable new vehicles are on silly wait lists.

Also, as used cars are requiring more weeks of work to afford than new cars (https://www.andersoneconomicgroup.com/e ... h-in-2021/, i.e. in the last year a new car took 3 extra work weeks to buy, a used car took 6 extra work weeks. This isn't going to pop, this is going to hold out/slowly correct as supply eventually fills pent up demand.

Conflict of Interest declaration: My wife works at AEG.

[mgil]

@5hout, thanks for the info. I’m hoping that it’s sooner rather than later.

It will be interesting to see what happens will all of those manufacturer leftovers.

[DoctorWho]

Is the cause supply chain problems for new cars?

[5hout]

Is the cause supply chain problems for new cars?

I think it's one of many causes.

1: Decreased supply of new cars (positive price pressure on used cars)
2: General non-car Inflation (used cars still cheaper, as budgets get tighter people look to save).
3: Increased car demand (per http://ti.org/antiplanner/?p=19775 Dec driving over 100% of pre-pandemic levels, other forms of transit down) this causes both a substitute demand increase (people are shifting other forms of transit, when traveling, to cars) and a increased vehicle miles means people are wearing cars slightly more (minor demand increase).
4: Increased knowledge of "buy a gently used car" This may be a bullshit factor, but more and more people (especially the r/personalfiance brigade) have realized 2 year old cars have a lot of life in them and why pay the depreciation hit to buy new.
5: Pent up demand extending the car shopping season longer. Car sales generally exhibit strong seasonality, but pandemic life has evened this out somewhat (also supply chain issues) meaning in many markets demand is sustained throughout the year, limiting ability to get deals.
6: While (per above article) inflation is shafting many people, a strong sub-set of people are doing very well financially during the pandemic and this seems to be driving some of the demand increase as they look to upgrade/move into a more desirable car. Some of the highest inflating cars are toy cars (Electric Hot rod/Tesla Y). This is sucking volume out of the market especially in the fun/toy car areas.
7: Increased demand as people decide to road trip/use campers vs air travel.

[DoctorWho]

I would have bet that driving is way down compared with pre-pandemic. Really surprising.

Thanks for the info.

[murphyreedus]

The KBB trade-in on my 10-year old truck with 150k+ is about the same as it was 3 years ago when I bought it, with like 60k fewer miles.

Still really happy with the "give the dealer some cash to go find exactly what we want at auction" thing we did for my wife's latest vehicle.

[mikeylikey]

Is the cause supply chain problems for new cars?

I think it's one of many causes.

1: Decreased supply of new cars (positive price pressure on used cars)
2: General non-car Inflation (used cars still cheaper, as budgets get tighter people look to save).
3: Increased car demand (per http://ti.org/antiplanner/?p=19775 Dec driving over 100% of pre-pandemic levels, other forms of transit down) this causes both a substitute demand increase (people are shifting other forms of transit, when traveling, to cars) and a increased vehicle miles means people are wearing cars slightly more (minor demand increase).
4: Increased knowledge of "buy a gently used car" This may be a bullshit factor, but more and more people (especially the r/personalfiance brigade) have realized 2 year old cars have a lot of life in them and why pay the depreciation hit to buy new.
5: Pent up demand extending the car shopping season longer. Car sales generally exhibit strong seasonality, but pandemic life has evened this out somewhat (also supply chain issues) meaning in many markets demand is sustained throughout the year, limiting ability to get deals.
6: While (per above article) inflation is shafting many people, a strong sub-set of people are doing very well financially during the pandemic and this seems to be driving some of the demand increase as they look to upgrade/move into a more desirable car. Some of the highest inflating cars are toy cars (Electric Hot rod/Tesla Y). This is sucking volume out of the market especially in the fun/toy car areas.
7: Increased demand as people decide to road trip/use campers vs air travel.

Alright, you seem like you know what you're talking about here.

Any special thoughts on used truck market, for someone who might be looking to get into a late ought's to early 2010's 3/4t or diesel?

Wait? Bite the bullet now?

[JonA]

Any special thoughts on used truck market, for someone who might be looking to get into a late ought's to early 2010's 3/4t or diesel?

Wait? Bite the bullet now?

Late 00s diesel trucks were already bubbling because they were the latest generation without major emissions equipment and easily tunable to obscene HP.

Unless you get a broken down rust bucket, you are going to pay top dollar now for a diesel truck of that generation.

[5hout]

@mikeylikey

My understanding is mostly osmosis b/c of wife's job and some reading on behalf of clients, but my non-professional understanding is (as JonA says and as I strongly agree with) older diesel project trucks are fucking expensive.

https://www.truckinginfo.com/156036/emi ... -weve-been

2007, 2010, 2013 are the big emissions control changes for trucks. You probably want pre-2013, which are pushing a decade old right now and that's pretty much outside the window of "just any old thing will do, you can fix it up". A project truck is it's own thing, but outside of total rebuilds idk man. Wife's cousin rebuilt 2 so far, but he is a highly skilled welder with a dedicated metal fab building at his house. That's not the average "project truck" skill level, and the problems he has had make me question getting a beat up one with failing electronics.

Now, that said, I don't see (and the experts agree, at least the last time we talked about this at a bar), the market for good used trucks getting better. Emissions control isn't getting any easier or cheaper, the # of well maintained heavy pre-electronic trucks is ever decreasing. More required parts are getting added, and that's added cost upfront and added repair costs. Yes, cars/trucks are lasting longer and require less repairs, but the truck demand is sky high and emissions regulations are keeping the new prices high, plus all the above shit for the used market.

I'd guess your best bet is buying one now, or waiting 2-3 years and hoping the economy shits itself bad enough that all used truck/car prices fall (and you don't lose your job during such an event). The cost effective alternative is going for an older, more repairable truck, but without any of the creature comforts that make the late 00s/early 10s so desirable on a comfort vs complexity/cost of repair scale.

[Oldandfat]

I,was going to trade/sell my 10 year old truck for half of what I paid, and buy a,brand new Ridgeline. Once in a lifetime high price for my trade and take advantage of the fact no one wants the Honda (in my area).

But my wife doesn’t want the Honda either. Says I have to buy a tundra.

I’ll just keep saving my money. “This too shall pass”.

[Oldandfat]

Truck prices will drop as fuel prices rise

[mbasic]

Try buying equipment for construction right now...backhoes, cranes, and shit. It's fucking crazy. New or used. It shows no sign of letting up.....

Just f me

[mbasic]

Truck prices will drop as fuel prices rise

I used to think this ; the last time it really didn't pan out so much

[mikeylikey]

Try buying equipment for construction right now...backhoes, cranes, and shit. It's fucking crazy. New or used. It shows no sign of letting up.....

Just f me

The construction frenzy can't last forever. Methinks a lot of people spent their stimulus money on decks and home offices.

Eventually my intuition says that has to level out and then there should be a precipitous drop in demand for equipment.

Medium duty trucks seem to sit in the intersection of the construction boom and the used car phenomena aforementioned.

@5hout thanks for the info.

[DoctorWho]

Whatthink
https://www.govplanet.com/jsp/s/search. ... SkQAvD_BwE

[mgil]

Whatthink
https://www.govplanet.com/jsp/s/search. ... SkQAvD_BwE

I looked into getting a HMMWV (humvee) a few years back because they would go for so little at auction. However, there’s usually a fairly extensive process (read: $$$$$) to get these things fully operational and road legal.

[Oldandfat]

Truck prices will drop as fuel prices rise

I used to think this ; the last time it really didn't pan out so much

Just wait for it. If they don’t drop, they will at the least come back down to earth. 8k rebates for tundra will happen.

Which “last time” are you referring to?

[DoctorWho]

Whatthink
https://www.govplanet.com/jsp/s/search. ... SkQAvD_BwE

I looked into getting a HMMWV (humvee) a few years back because they would go for so little at auction. However, there’s usually a fairly extensive process (read: $$$$$) to get these things fully operational and road legal.

It looked like <$10k vehicles are a starting point at auction, so thanks for confirming that they are still pretty cheap at auction.
Wondering about whether it could be licensed as a 25 mph vehicle in NJ.

[mgil]

Truck prices will drop as fuel prices rise

I used to think this ; the last time it really didn't pan out so much

Just wait for it. If they don’t drop, they will at the least come back down to earth. 8k rebates for tundra will happen.

Which “last time” are you referring to?

He’s likely thinking of diesel trucks.