chip shortage devestating new car sales

Quote: JimRockford

Retirement is on the horizon but not quite yet. Not ready to bail on the USA. I'll probably stay put. Kids live nearby and there will be grand-kids by then.
I get the appeal of RV life but I don't think it's for me. I have to think it works much better for an individual than a couple. Imagine having to agree on where to move to all the time and a trailer would be kinda close quarters for the Rockfords.

Keep your options open. I would never do RV, rather hotels and airbnb. Or answer roommate ads but they are harder as you get older. In my late 30s people wanted someone younger. Guy who tool all of us late 30s and over ended up scared to death of us. Made relocation an adventure though!

Quote: terapined

RV life
I'm living the dream

Yeah, crammed into a tiny space and constantly on the move. Sounds like living the nightmare to me.

Quote: Evenbob

Yeah, crammed into a tiny space and constantly on the move. Sounds like living the nightmare to me.

Me too. Give me an airplane and a Hyatt and I would be much happier.

Passenger cars that sold over 100,000 units in COVID year 2020

1. 294,348 Toyota Camry
2. 261,225 Honda Civic
3. 237,179 Toyota Corolla
4. 206,500 Tesla Model 3
5. 199,458 Honda Accord
6. 137,988 Nissan Altima
7. 110,665 Ford Fusion
8. 105,475 Hyundai Elantra
9. 102,652 Chevrolet Malibu (average 8554 per month)

2020 was the final model year for the Fusion in North America, effectively ending what was left of Ford's 4-door car lineup in North America.

Chevy Malibu seems to be the latest victim of chip shortage. Chevy Equinox And Malibu Hit Hardest By Microchip Shortage At GM

Sales in 2nd quarter are barely enough to keep the Malibu afloat.
8,636 Jan
8,636 Feb
9,715 Mar
1,654 April
1,591 May
1,654 June

The Toyota Camry was presumed to take the best-selling passenger car in the U.S. for 20th consecutive year. It would be funny if chip shortages change the rank this year. Toyota's hoard of chips has run out and they intend to cut production by 40% in September.

Just dropped the car off for service. I estimate they have at best 1/3 the inventory they should be carrying. New cars had a "inventory price adjustment" of $250-1,000 on the window.

TSM raising prices
Stock going up
Yea baby

Using 2.40% annual interest rate (equivalent to 0.0010 lease money factor) if you borrow $40,000 your monthly payment on an 84 month loan would be $517.78 per months and you would still owe $23,675 after 36 months and you would average $64.32 in interest per month (over 36 months).

An 84 month loan is a relatively long term for most people, and most banks won't consider a longer term than that. A bank loan puts no mileage limits and does not require you to fix your car after an accident, even one that causes cosmetic damage only. If you end up upside down on the loan (i.e. you owe more than the value of the car) that is your responsibility.

Quote: AZDuffman

Just dropped the car off for service. I estimate they have at best 1/3 the inventory they should be carrying. New cars had a "inventory price adjustment" of $250-1,000 on the window.

A couple complain they are at the end of their lease term and they want to send them a check for the residual price stated in their lease contract, along with a $300 fee that was also stated in original contract.

But the manufacturer refuses to give them the title saying they must go to a dealer. They contacted 9 dealers who want to charge an additional ridiculous fee. If the fee is high enough the lease might end up being much more expensive than an 84 month bank loan.

Presumably the dealer would rather the couple give up and just turn the car in so they can resell it at a profit.

Quote: Pacomartin

Using 2.40% annual interest rate (equivalent to 0.0010 lease money factor) if you borrow $40,000 your monthly payment on an 84 month loan would be $517.78 per months and you would still owe $23,675 after 36 months and you would average $64.32 in interest per month (over 36 months).

An 84 month loan is a relatively long term for most people, and most banks won't consider a longer term than that. A bank loan puts no mileage limits and does not require you to fix your car after an accident, even one that causes cosmetic damage only. If you end up upside down on the loan (i.e. you owe more than the value of the car) that is your responsibility.



A couple complain they are at the end of their lease term and they want to send them a check for the residual price stated in their lease contract, along with a $300 fee that was also stated in original contract.

But the manufacturer refuses to give them the title saying they must go to a dealer. They contacted 9 dealers who want to charge an additional ridiculous fee. If the fee is high enough the lease might end up being much more expensive than an 84 month bank loan.

Presumably the dealer would rather the couple give up and just turn the car in so they can resell it at a profit.

I worked in auto loans about 18 months, yet I never learned about leasing because I plan to never lease and never suggest people lease. My brother bought a car and when he was buying the salesman in the next pod was doing a delivery for a guy off that day. He noticed for $4 a month more they could own not lease. Customer thought they were getting clipped and refused! But to me that is leasing in a nutshell, let people think they are getting a better car at the same cost.

We had 84 month loans then but I doubt I did 3 in a year. Today people seem to be accepting them. Meanwhile I am paid off and happy.

Quote: AZDuffman

We had 84 month loans then but I doubt I did 3 in a year. Today people seem to be accepting them. Meanwhile I am paid off and happy.

The whole point of using an 84 month loan is simply to show how bad a deal a lease can be. If I were to compare a lease to a 60 month or even a 72 month loan, people expect the loan to be better.

Look at Subaru Sales with the worst two months of the COVID pandemic highlighted, and then last two months with the chip shortage. Dealers are scamming leaseholders and forcing them to give up their cars instead of buying them out just so they have something to sell.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2017	43,879	45,500	54,871	52,368	56,135	52,057	55,703	63,215	55,120	54,045	51,721	63,342
2018	44,357	47,249	58,097	53,170	60,146	59,841	59,426	64,088	57,044	55,394	56,782	64,541
2019	46,072	49,081	61,601	57,288	63,972	61,511	64,106	70,039	51,659	55,531	56,893	62,364
2020	46,285	51,695	32,611	30,620	51,988	53,911	51,458	57,885	60,103	61,411	50,413	63,558
2021	46,400	48,300	65,726	61,389	56,558	42,877	50,125	0	0	0	0	0

Quote: Pacomartin

The whole point of using an 84 month loan is simply to show how bad a deal a lease can be. If I were to compare a lease to a 60 month or even a 72 month loan, people expect the loan to be better.

It used to be rare for people to trade before the loan was up. When 60 became the norm the manufacturers started to worry because it was meaning fewer cars would be sold long term. I once went 66 to get off the lot but refinanced down to 60 within a month or so. Promised myself never to be that car jacked up again, mostly haven't. Been payment-free about half the time since 2005. Next buy payments will be purely an opportunity cost thing.

1/3 of people lease. Let them, it has made a mostly stable car market. Scary is that they are starting used car leases now. In a generation they will probably be normal and owning your car might not be normal.