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Channel-Stuffed US Car Dealers Cut Prices; Hope To "Sell Their Way Out Of This"

Tyler Durden's picture




 

While loathed to admit it, US auto makers have done it again. As we have vociferously explained month after month (and has been vocally denied until now by the car makers themselves), much of the recovery in auto sales has been a massive channel-stuffing make-work program (mal-investment once again triggered by 'false' signals created by Fed intervention). Now, as the WSJ reports, Detroit's big 3 are trying to sweeten discounts to clear a massive inventory of unsold vehicles from dealer lots (desparate not to start a profit-killing price war). "We believe we can sell our way out," said GM, but as Morgan Stanley warns, "the best of the U.S. auto replacement cycle is over." Good luck...

 

As we noted recently,

Confused why the various US manufacturing indices have been on a tear in the past few months? Perhaps the fact that GM dealer lots are so full of cars they just couldn't wait for even more deliveries has something to do with it. Which is also why in addition to reporting sales numbers for November that were largely in line with expectations, amounting to 212,060 (even if total Chevy Volts sold YTD of 20.7K were -0.6% less than in the same period in 2012), or 13.7% more than last year (estimated called for 13.% increase), of which a whopping 51,705 was in the form of "channel stuffed" units to be parked on dealer lots.

 

In fact, as the chart below shows, in the past three months, GM channel stuffing has exploded and soared by 150K units (the most ever for a 3 month period) from 628.6K to 779.5K. This represents the second highest amount of channel stuffing and is lower only compared to the 788.2K units "stuffed" exactly one year ago.

 

 

And now via WSJ,

Detroit's big auto makers are trying to sweeten discounts to clear unsold vehicles from dealer lots, but not so much to start a profit-killing price war.

 

It is a balancing act making Wall Street investors nervous. Analysts aren't sure whether the moves to counter a January slowdown in sales—particularly new discounts on large pickup trucks—will undermine the rising prices that have helped rebuild profits during the past three years.

 

...

 

On Tuesday, automotive sales tracking firm ALG Inc. warned industry inventory levels in January were the highest since August 2009, when the recession was in full force. It took U.S. dealers in January an average of 59 days to sell a new vehicle, nine days longer than the same period a year earlier and the highest level since the 68-day peak in 2009.

 

 

None of the auto makers say they plan to reduce production to counter the inventory overhang. Paring output would reduce pressure to discount, but auto maker's book revenue when they ship vehicles to dealers and any slowdown would hit first-quarter revenue.

But the Car makers still believe in miracles...

They are counting on dealers to cut the backlog—without a wholesale change in manufacturers' incentives or production schedules.

 

"We believe we can sell our way out," said GM spokesman Jim Cain.

 

...

But this is not going to end well...

GM and other car makers figure "it is cheaper to offer these incentives than to shut the plants. The problem is once you turn it on, [discounting] it is hard to turn it off, and now we are looking at another challenging month with February."

 

But there are signs that the pain threshold has been crossed in some models.

 

...

 

After four years of rapid growth, the U.S. new-car sales pace "appears to have stalled," Morgan Stanley analyst Adam Jonas said in a research note earlier this week. "We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to."

Dealers are not as confident...

"With inventory levels reaching a point not seen since August 2009 and extreme weather not letting up, we fully expect a short term rise in incentives," said Eric Lyman, an ALG vice president in Santa Barbara, Calif. "The danger is that this turns into an escalating arms race for market share," Mr. Lyman said.

It would seem, once again, that we never learn...

 

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Wed, 02/12/2014 - 18:23 | 4429926 zaphod
zaphod's picture

Funny that all three "US" manufactures are above the "Average". What does that tell you?

Wed, 02/12/2014 - 18:36 | 4429969 TruthInSunshine
TruthInSunshine's picture

Yellen has formally recommended that American consumers use student loan monies, refi mortgage monies, reverse mortgage funds & credit cards to buy/lease as many new vehicles as they can.

She's working on a bailout package for the student loans, mortgage monies and credit card debts that aren't repaid, because she recommended using those funds to buy depreciating vehicles instead, as I write this.

"Go forth and consume, debt slaves. Rearrange those debt funds in your consumption portfolio."

Sincerely,

Mrs. Debtfire (aka Janet Yellen)

Wed, 02/12/2014 - 18:40 | 4429984 CrazyCooter
CrazyCooter's picture

What is wrong with an executive order demanding all federal employees buy a new American auto?

Hell, if they get Congress to pitch in, the whole nation can be required to buy a new car every year, just like health insurance!

Regards,

Cooter

Wed, 02/12/2014 - 18:48 | 4430009 0b1knob
0b1knob's picture

"What is wrong with an executive order demanding all federal employees buy a new American auto?"

Why stop with FEDERAL emplyees?  Everybody in the pool, as Pelosi might put it.  In Singapore they require cars to be junked after ten years.  For safety reasons of course. Remember this Zerohedge blast from the past about how Germany deals with the problem?

http://www.zerohedge.com/news/2013-03-17/where-channel-stuffed-german-cars-go-die

 

Wed, 02/12/2014 - 18:51 | 4430036 NotApplicable
NotApplicable's picture

In the US they'll do it to save the planet.

Meanwhile, I just keep my '92 Dodge Ram purring like a kitten.

Wed, 02/12/2014 - 18:56 | 4430055 TruthInSunshine
TruthInSunshine's picture

If that vehicle is paid off, and especially if you're not paying interest on the underlying debt to any number of too-big-to-jail financial entities, that's awfully close to "terristy" behavior and I may have to report this my local Party Member.

Wed, 02/12/2014 - 19:26 | 4430202 Never One Roach
Never One Roach's picture

Looks like Uncle Sam's employees are all going to get new cars, right.

Wed, 02/12/2014 - 19:46 | 4430280 Ness.
Ness.'s picture

They just a got 39% raise with the stroke (off) of (with) a pen.  Wha-la!  It's magic!

 

But as Gob Bluth so eloquently explained to us in Arrested Development.  This is no trick.

 

"It's an illusion Michael.  A trick is something a whore does for money...               or cocaine."

 

http://www.youtube.com/watch?v=X1WSH0VzoaM

Thu, 02/13/2014 - 00:07 | 4431126 Midas
Midas's picture

Don't call my escorts "whores."   --GOB

Wed, 02/12/2014 - 19:54 | 4430325 Fox-Scully
Fox-Scully's picture

I thought the new car was included in the price of the premium for signing up for Obamacare.

Wed, 02/12/2014 - 21:20 | 4430575 The Gooch
The Gooch's picture

Better add the Trucoat!

Thu, 02/13/2014 - 03:26 | 4431452 StychoKiller
StychoKiller's picture

Well, so much for that minimum-wage raise...(annd, it's gone!)

Wed, 02/12/2014 - 18:51 | 4430032 Canadian Dirtlump
Canadian Dirtlump's picture

for a reference honda is at 87 up from 56 last year. Mazda is at 99 up from 78. Mitsubishi is at 144 up from 107. VW is at 117 up from 95. Toyota is at 68 up from 57.

 

There seems to be a general trend of inventories being higher than what has been the case.

Wed, 02/12/2014 - 19:02 | 4430089 geotrader
geotrader's picture

How about Acura, Lexus, and Infiniti?  Or are they lumped into Honda and Toyota?

Wed, 02/12/2014 - 21:05 | 4430519 Canadian Dirtlump
Canadian Dirtlump's picture

Lumped in based on the chart i saw. You

Wed, 02/12/2014 - 19:46 | 4430283 walküre
walküre's picture

They will all need to idle and cut production VERY SOON. No two ways around it. Demand is NOT going to pickup and .gov is NOT going on a spending spree anytime soon.

Layoffs and plant closures will follow and BOOM we're back at 2008. Nice roundtrip with a quadrupling of the federal balance sheet and NOTHING to show for.

Wed, 02/12/2014 - 19:47 | 4430294 TeMpTeK
TeMpTeK's picture

Cash for 3 year old Clunkers..

Thu, 02/13/2014 - 03:22 | 4431451 StychoKiller
StychoKiller's picture

All they gotta do is add some OnStar® spybot(s), Euro kill switches and customers will be swarming all over those dealerships! :>D

Wed, 02/12/2014 - 18:30 | 4429937 ugmug
ugmug's picture

Obama is going to hand out 'Obama cars' to go along with all those Obama phones.

 

Wed, 02/12/2014 - 19:04 | 4430038 TruthInSunshine
TruthInSunshine's picture

I want an Escalade with 24" wheels and a free gasoline EBT Card (one can buy postage stamps with EBT Cards, which I just learned yesterday whilst watching a FSA member buy a gigantic pack of 4ever stamps) and an Obama/Biden 2012 rear window sticker.

Wed, 02/12/2014 - 19:08 | 4430121 texas sandman
texas sandman's picture

New, improved, cash for the shit you're currently driving program in 5, 4, 3, 2........

Wed, 02/12/2014 - 19:15 | 4430162 disabledvet
disabledvet's picture

"cash for clunkers." great program actually.

the industry never liked it because...indeed "they will sell themselves out of this Depression."

and indeed...they haven't.

me thinks this rises above the level of the "community bankers association."

Wed, 02/12/2014 - 19:35 | 4430244 Never One Roach
Never One Roach's picture

I can buy a new car with MyIra, right?

Wed, 02/12/2014 - 18:28 | 4429941 buzzsaw99
buzzsaw99's picture

imo the excess inventory won't clear as fast as last time. pretty much everyone i know (even broke people) who wanted a new car already have one. the dealer i bought my car from only a year ago calls twice a month (spam) begging me to trade it in already. never had that happen before.

Wed, 02/12/2014 - 18:35 | 4429966 NoDebt
NoDebt's picture

Selling a backlog of inventory at discounted prices into a weak market.  I only have one thing to say to that:  "There has never been a better time to buy a new car!"

OK, wait a month or two and then go waste some salesman's time pretending you're an interested buyer.  It's cheap fun.  I used to do it back in college- go for a test drive in a new car when you're feeling bored.  It worked OK up by Villanova (I used to tell them my rich Dad was going to give me money for a new car, all dressed up in my preppy pants and sweater vest- HA!).  Not sure if that would work everywhere, but it worked there 20+ years ago.

Wed, 02/12/2014 - 18:47 | 4430006 NOTaREALmerican
NOTaREALmerican's picture

In KaLi you'd have to be Chinese to pull that off.  

All the kids of the tiger moms are in college, many of them have rich parents.   Chinese are doing quite well right now.

Wed, 02/12/2014 - 19:22 | 4430179 disabledvet
disabledvet's picture

wait until that property market buckles.

once those zeros start getting subtracted...well...those are "assets that are borrowed against."

again. stick with land. everything else is an over inflated ego with a microphone.

http://www.youtube.com/watch?v=0GNJ1SQpxFI
well...not everything.

Wed, 02/12/2014 - 19:41 | 4430271 Never One Roach
Never One Roach's picture

NotaReal is right. I swung by a BMW dealership [for the free coffee and donuts] and it was more then half full with young Chinese buying new BMWs. Some with their parents...others with classmates. I asked the sales lady where they were from mostly and she said Mainland and loaded with cash.

Crazy stuff.

Wed, 02/12/2014 - 19:49 | 4430290 walküre
walküre's picture

cash straight from the printers in their basements or some such shit

shadow banking is one helluva drug

Wed, 02/12/2014 - 18:59 | 4430071 Miffed Microbio...
Miffed Microbiologist's picture

My observation as well. There are 80 people at my job. I'm the only one without a new car. Most of these cars are high end, even though many of their owners make less than half what I make. I can't imagine what the financing is. Plus the increase in insurance and licensing for having a new vehicle. I get those same spams all the time as well. I'm considering dropping a new engine in my car if it goes. I learned the hard way it's the total cost of ownership, not just the purchase price.

Miffed;-)

Wed, 02/12/2014 - 21:03 | 4430520 Omen IV
Omen IV's picture

i dont need a new vehicle but have been waiting for the right time - the right time  - is when they give me a number that i believe........ i am stealing it

Thu, 02/13/2014 - 03:29 | 4431458 StychoKiller
StychoKiller's picture

Praise be that no car dealers know my phone number (or the fact that my Dodge Dakota is a 1990 model!)

Wed, 02/12/2014 - 18:29 | 4429942 NoDebt
NoDebt's picture

"Rebate technology" and fleet sales.  The only damned thing the US auto industry has known since the 1970s.  Dumbasses.

Wed, 02/12/2014 - 19:35 | 4430120 cowdiddly
cowdiddly's picture

What? You don't want a new luxury plastic model with planned obsolescence, @OnTracking, a black box data recorder and the new options of vehicle to vehicle communications and remote stop features for the PO Po?

My next car will be a frame off restoration 55 Cadillac Coupe Deville with 9 coats of pussy stick to the side baby blue and any kind of negro spinners my heart desires and the total build will still be cheaper. Bitchez

And yea, you can Channel Stuff em.

Wed, 02/12/2014 - 22:13 | 4430760 NoDebt
NoDebt's picture

My other car is a 78 Malibu with 38K original miles, a 383 stroker small block with a blower on top.  Carburetor-fed, mechanical fuel pump, no computer anything anything.  I even have a spare 60s-era points-style distributor on the shelf in case an EMP blast takes out the electronic module in the ignition.  I'm good.

Wed, 02/12/2014 - 18:30 | 4429954 Its Only Rock N Roll
Its Only Rock N Roll's picture

I only see 2 US manufacturers.  Chrysler is Italian...and their products still blow.

WE ARE IN A RECESSION FOLKS

 

 

Wed, 02/12/2014 - 18:39 | 4429989 Its Only Rock N Roll
Its Only Rock N Roll's picture

Wonder what this does for the collateral on all those subprime ABS that were pumped out the last 18 months.  The recession gives you defaults and the collateral is crap.  Ally will need another bailout of some sort.  GM bought Americredit...what a fabulous waste of capital that will end up being. 

Auto maker shit show part duex.

Wed, 02/12/2014 - 18:45 | 4430008 NotApplicable
NotApplicable's picture

"We're gonna need a bigger Ally."

Wed, 02/12/2014 - 20:02 | 4430357 caShOnlY
caShOnlY's picture

GM bought Americredit...what a fabulous waste of capital that will end up being. 

on the contrary, a fantastic buy for GM.   Now they can hide billions in bullshit auto loans while telling the world they are number 1 in sales!!  Same old shell game as before, just going to last longer because obummer loaded them up with cash and tax credits.  Smell this corporate pile of fecal matter for what it is and don't buy the shit it produces.  ALL JUNK. 

Thu, 02/13/2014 - 00:09 | 4431130 Its Only Rock N Roll
Its Only Rock N Roll's picture

Loan book will implode and cost of capital will not stay cheap forever.  Will unwind quicker than you think.  But you are right...just a big shell game right now.  Collosal waste of capital and massive mal-investment.

FICO score of 550 and no down payment??  No problem!  We have a deal for you!  LOL

 

Wed, 02/12/2014 - 18:43 | 4430000 Winston Churchill
Winston Churchill's picture

A recession inside a depression.

History rhymes.

Wed, 02/12/2014 - 18:31 | 4429957 I woke up
I woke up's picture

They should redesign the vehicles to shorten up their planned obsolescence timelines.  Stop offering replacement parts too <sarc>

Wed, 02/12/2014 - 18:49 | 4430015 NotApplicable
NotApplicable's picture

Step 1) Stop putting drains in oil pans.

Wed, 02/12/2014 - 19:09 | 4430107 TruthInSunshine
TruthInSunshine's picture

@I woke up - I have a client who owns a chain of new car dealerships who constantly bitches that cars don't break down often enough.

True story.

GM is introducing a new model for 2015 called the Grand Krugman which self-destructs at precisely 24 months after purchase.

Wed, 02/12/2014 - 19:17 | 4430164 swmnguy
swmnguy's picture

Better yet, 24 months and 1 week after, or at 50,001 miles, whichever comes first.

Wed, 02/12/2014 - 20:06 | 4430375 TruthInSunshine
TruthInSunshine's picture

The Grand Krugman has no warranty.

The hood is welded shut, too.

Wed, 02/12/2014 - 18:33 | 4429959 FishHockers
FishHockers's picture

Losta cars, No Buyers

Wed, 02/12/2014 - 18:32 | 4429960 Cryogenic
Cryogenic's picture

Guess the president can just make yet another executive order / laxative to clear the blockage via mandatory scrapping policy.

Wed, 02/12/2014 - 18:33 | 4429964 Its All Good
Its All Good's picture

No, see everyone else has it wrong.  Inventory is building up because we have had bad weather (during winter of all things...).  Just wait until spring and everything will get all better really fast. This time for sure!

 

Wed, 02/12/2014 - 18:37 | 4429977 delivered
delivered's picture

Misallocation of capital engineered by the Fed leading to the most feared word in the CB language - Deflation. Could it be that maybe, just maybe, the front loading of sales to consumers coming out of the Great Recession combined with decreasing real income levels and a bevy of new expenses (e.g., Obamacare) are all finally starting to catch up with the consumers. We'll see but once a price war starts out in the auto space, look for it to spread into other sectors of the economy as retailers can't allow the auto industry to steal what little purchasing power the consumer has left.

The laws of supply and demand win again. Just too much inventory with too few buyers means the price has to fall. Unless of course the Fed and Washington save the day and request the Fed start purchasing these autos direct from the dealers. So watch for every Fed employee driving a new GM in the coming months as they realize a parking lot the size of Deleware would be needed to store this inventoyr.

Wed, 02/12/2014 - 23:46 | 4429991 JuliaS
JuliaS's picture

In 2008 the first wave of babyboomers went into retirement. The trend is expected to be gathering pace for at least another decade.

When the economy is structured like a ponzi scheme, everything collapses. Lack of fresh participants is the end of every pyramid.

Babyboomers are net sellers of everything except health care.

I wouldn't be investing in any car maker in this environment, unless it makes ambulances or funeral coaches.

Wed, 02/12/2014 - 19:22 | 4430189 FoodStampPrez
FoodStampPrez's picture

Heating bills for most of the country are starting to come due...and they are HUGE. Mine doubled from last year.

Wed, 02/12/2014 - 18:44 | 4429998 NOTaREALmerican
NOTaREALmerican's picture

I donno, my TBTF financial institutionnnnn (that should be said with low repectful voice:  instituu-shunnnnnn) is having record auto-bling loan applications.  

Of course,  I think most of the bottom 90% is going for higher-end German automotive-iron now.  

Even a Chrystler 300 with oversized tires, tinted windows, and loud trash-class exhaust can't complete with German bling.

What do the top 10% drive now that the trash-class is into Benzezez and Beamers?

Wed, 02/12/2014 - 19:38 | 4430255 RafterManFMJ
RafterManFMJ's picture

It's pretty odd that back when I could afford a new 5 series I couldn't actually afford one, but now that I can't, I find I actually can.

Wed, 02/12/2014 - 21:04 | 4430528 eucalyptus
eucalyptus's picture

top 10% uber or black car everywhere. driving a car is so prole.

Wed, 02/12/2014 - 18:45 | 4430007 Uber Vandal
Uber Vandal's picture

One would think that the "extreme weather" would help sell more vehicles due to vehicles that are damaged or outright destroyed in accidents or are otherwise consumed by road salt and other ice melting agents.

"With inventory levels reaching a point not seen since August 2009 and extreme weather not letting up, we fully expect a short term rise in incentives," said Eric Lyman, an ALG vice president in Santa Barbara, Calif

 

Wed, 02/12/2014 - 18:48 | 4430019 kito
kito's picture

kyle bass taking a big stake in GM. my guess is that the stock goes way up. because while kyle preaches to the doomer crowd, he quietly makes a killing in the stock market. 

 

http://www.bloomberg.com/news/2013-12-04/hayman-s-bass-says-gm-is-most-c...

 

 

Wed, 02/12/2014 - 18:57 | 4430034 John Law Lives
John Law Lives's picture

"We believe we can sell our way out," said GM...

Don't look to me.  I plan to maintain my 13-year old car until it quits.  I hope that will be many years (and miles) down the road.

Big3FUBAR.

Wed, 02/12/2014 - 18:56 | 4430061 Seasmoke
Seasmoke's picture

Same here. Hoping to get another 8 years out of the machine. And then avoid them again and buy another used German auto.

Wed, 02/12/2014 - 19:40 | 4430246 JuliaS
JuliaS's picture

I pulled my Chrysler through 20+ years. Still not a single rust mark. Quality metal all around. A few times I had to pay for repairs more than the car was worth and did it simply because it'll likely outlive anything produced by them since. The radiator finally blew a month ago. A trip to the junk yard and I'll have it running again in no time.

Wed, 02/12/2014 - 18:55 | 4430042 wmbz
wmbz's picture

No problem at all, simply extend the payment terms to say 10-12 years. Most "consumers" have no idea what the true cost is, they just want to know...How-much-a-month?

$79.00 a month for 10-12 years no problem. Paying for a POS.

P.T. Barnum knew exactly what he was talkng about!

Wed, 02/12/2014 - 18:53 | 4430044 Seasmoke
Seasmoke's picture

Cash for Non Clunckers.

Wed, 02/12/2014 - 19:03 | 4430085 Rising Sun
Rising Sun's picture

Gimme some MOAR food stamps Barry so I can get me some new fucking wheels.

 

And hurry it the fuck up Barry you dumb asshole!!!

Wed, 02/12/2014 - 19:10 | 4430123 Duc888
Duc888's picture

If these pieces of shit weren't loaded with all that motherfukken SPYWARE GPS bullshit....

I would buy a new car...

 

"We know everyone who breaks the law, we know when you’re doing it. We have GPS in your car, so we know what you’re doing,” Ford’s Jim Farley told a Vegas crowd on Wednesday, according to Business Insider reporter Jim Edwards.

“By the way, we don’t supply that data to anyone,” Farley continued......."

 


http://www.thedailysheeple.com/ford-vice-president-publicly-admits-they-...

 

 

So fuck you scumbags.  Choke on your fucking carz.  I hope they bury your ass in one like a coffin.


Wed, 02/12/2014 - 19:10 | 4430131 Spungo
Spungo's picture

"the dealer i bought my car from only a year ago calls twice a month (spam) begging me to trade it in already. never had that happen before."

My friend experiences this as well. He bought a Ford Fusion maybe 2 years ago and they won't stop calling him, leaving desperate sounding voice mails.

Wed, 02/12/2014 - 19:12 | 4430143 Westcoastliberal
Westcoastliberal's picture

Dealers here in SoCal are stuffed to the max; offlot storage looks full to me, and are those 2013 leftovers?  As I recall last time this happened they were forced to sell last year's less popular leftovers with a 40-50% discount!

Wed, 02/12/2014 - 21:28 | 4430610 eucalyptus
eucalyptus's picture

some dealers have 2012 leftovers!

Wed, 02/12/2014 - 19:12 | 4430145 swmnguy
swmnguy's picture

It's either "Loath to admit," or "Loth to admit" (alternate spelling of).   Loath (or "Loth") is an old adjective meaning hostile or unwilling.  "Loathe" is a verb, with which we're probably all familiar.  They're different words.   You could say you "I loathe to admit it," but that's not the old expression you were going for. 

/language nazi off

Wed, 02/12/2014 - 19:13 | 4430151 Duc888
Duc888's picture

Spungo: ""the dealer i bought my car from only a year ago calls twice a month (spam) begging me to trade it in already. never had that happen before."

My friend experiences this as well. He bought a Ford Fusion maybe 2 years ago and they won't stop calling him, leaving desperate sounding voice mails."

 

___________________________________________________________________________________________

 

Ask the asshole if he has a hot daughter of legal age.  Mebbe you can glue her fucking eyes shut....LOL.  Give here a little throat yogurt ifyaknowhaddImean.

 

Everyone has a price.  Find out his price.

Thu, 02/13/2014 - 04:47 | 4431517 MisterMousePotato
MisterMousePotato's picture

I cannot fucking believe I gave you a happy up twinkle for that. That's gonna cost me more in the afterlife than anything else I've done so far this year.

Wed, 02/12/2014 - 19:16 | 4430170 gwar5
gwar5's picture

If it wasn't for cheating there would be no necronomy at all.

 

And the other shoe hasn't even dropped yet. The Greatest Depression.

Wed, 02/12/2014 - 19:17 | 4430172 swmnguy
swmnguy's picture

Only one thing to do.  Give out longer-term loans to less credit-worthy car buyers.  Why should the car last longer than the payment?

Wed, 02/12/2014 - 19:20 | 4430173 Duc888
Duc888's picture

 

 

" In Singapore they require cars to be junked after ten years."

 

Japs gotta get rid of their rides when the odo turns 49,999K  Latest thing is you can take your 10-12 year old shitbox here in the States with 200K on the speedo and swap out the engine for one with 49K on it for well under 3K. 

It employs the local mechanic (keep your money local) and beats the fuck outta the local muni shitbags who want nothing more than for the sheeple to buy "new" every two years so they can fuck them in the ass with propertry taxes.

Wed, 02/12/2014 - 19:30 | 4430212 Dr. Destructo
Dr. Destructo's picture

Yep. Rebuilt my old truck's engine for $2.5k. People didn't understand why I didn't jump on the 'cash for clunkers' scam, and now they understand. It's got a few dents in it and it turns like a ship, but it's mine goddammit.

Wed, 02/12/2014 - 20:48 | 4430473 shutdown
shutdown's picture

"The holder of a COE is allowed to own a vehicle for an initial period of 10 years, after which they must scrap or export their vehicle or bid for another COE at the prevailing rate if they wish to continue using their vehicle for a further 5 or 10 years."

A point of clarification:  While it's true that most people in Singapore scrap their cars after their ten year COE (the S$75,000 fee to own and operate a particular car) expires, the law doesn't require it. The COE is quite high therefore there are very few beaters on the road. We do see older vehicles on the road, not often, but occasionally, and usually expensive beauties. 


Wed, 02/12/2014 - 19:24 | 4430184 Dr. Destructo
Dr. Destructo's picture

The best feature on my vehicle is that it cannot be shut off remotely.

No amount of luxury features can ever beat that.

Besides I could be crazy or something, but in order to buy something or even service a loan don't you need to have some sort of income? And lets say your income is welfare, don't you need taxpayers or something?

You see where I'm goin' with this...

Wed, 02/12/2014 - 19:26 | 4430203 Duc888
Duc888's picture

"OK, wait a month or two and then go waste some salesman's time pretending you're an interested buyer.  It's cheap fun.  I used to do it back in college- go for a test drive in a new car when you're feeling bored."

 

Test drive.

Funny that, I worked for a dealer (stealer) for 38 days in the early 1990's.  I took a brand new 'Vette out with the dealers son and put about 90 of the hardest miles that gdamned car would ever see on that thing.  We brought it back in and it barely ran.  It was smoking from like everywhere.  Overheated, warped rotors....pretty much destroyed the slush-box.

It would not even idle anymore.  

They sold it 90 days later as a "demo".

Demo indeed.

Ahhhh the good old daze.

Wed, 02/12/2014 - 19:26 | 4430210 TORNasunder
TORNasunder's picture

Longer term loans are already common; http://www.usatoday.com/story/money/cars/2013/10/28/long-term-car-loans/...

84 months are becoming common and there are 96 month ones! The above article is from Oct '13, avg loan rate is 3.94% My understanding is that if you can walk in and breath you'll get approved for a loan now, communications skills not required.

Economic Crash = when the infinite growth model is checked by reality.

Wed, 02/12/2014 - 21:53 | 4430683 edotabin
edotabin's picture

yeah...weren't home mortgages stretched out to 40 years before it all crashed?

Wed, 02/12/2014 - 21:55 | 4430693 FredFlintstone
FredFlintstone's picture

Interest only takes it to infinity.

Wed, 02/12/2014 - 19:30 | 4430215 R_Soles
R_Soles's picture

Here in Ontario, where we have a corrupt government, deficts that make Calif proud, and rising unemployment, the dumbass government leaders can't figure out why the economy has stagnated and car sales are flat and based on the above likely to show declines soon no matter how they jimmyfutz( my boss's old phrase) the numbers. Oh, and a fukin 13% sales tax on GD everything making the second hand market, and the underground economy . simply thriving. A POS 20 k car here is 24k after taxes, fees, tithes, charges,inspections,freight,indemnity fund charge and warranty e3xpenditure. Good luck with all of it

Wed, 02/12/2014 - 19:28 | 4430216 The Heart
The Heart's picture

Got three Klunkers that escaped the round-up who will all survive the EMP for sale. Bids only start at 500,000 Gold one-ounce coins each. Quick-sale for the first 1.455.555 mill one-ounce coins offering that reaches the off shore office line first. Phones open after this message is sent. Good luck to all bidders.

Might be able to give a few of those coins away to folks that could use them here and there where ever they are valued for something, while they are.

Wed, 02/12/2014 - 19:43 | 4430266 BlankfeinDiamond
BlankfeinDiamond's picture

Fuck it. I want something that goes real fast and gets really shitty gas mileage.

http://www.youtube.com/watch?v=fl8mQhxhE_Q

Wed, 02/12/2014 - 19:46 | 4430287 AccreditedEYE
AccreditedEYE's picture

I just don't understand. Kyle Bass said this was a no brainer long after the government sold their stake! How could this happen?

Wed, 02/12/2014 - 20:09 | 4430324 yogibear
yogibear's picture

It ain't a problem until the CEOs of all three fly into DC with their private jets begging for help. Like last time. Let the lots keep filling up. Remember that photo of a race track filled up with imported cars and trucks from the ports? 

Flashback Feb 2009 -  Right before the Cash for clunkers - UNSOLD CARS AROUND THE WORLD

LOL, Barry Ritholtz.... Going to do another?

http://www.businessinsider.com/unsold-cars-around-the-world-2009-2

Cash for clunkers #2 if it gets bad enough. 

Obama has no debt ceiling so he can spend like a drunken sailor. How about we make Cash For Clunkers $9000 this time? Since you have Mrs debtfire infinite debt is possible.

We just had housing bubble #2. The auto industry will want their bailout candy again. 

Rinse and repeat.


 

Wed, 02/12/2014 - 20:36 | 4430438 TheABaum
TheABaum's picture

Obviously, this is a lack of aggregate demand and we need Keynesian stimulus.

Wed, 02/12/2014 - 20:37 | 4430440 americanspirit
americanspirit's picture

If a dealer wants to give me a couple of thousand to drive a new car off his lot I might consider it. And I don't mean a couple of thousand off his price. I mean a couple of thousand, period, for me to take the car off his hands. Otherwise he can stand there and listen to his open fly flap in the wind.

Wed, 02/12/2014 - 20:43 | 4430448 toadold
toadold's picture

Low end buyers can get the financcing for a car but then discover they can't afford the insurance.  On one car I looked at the inaurnce amounted to 2/3 of the car payment. I predict a lot of cars are going to sit around in lots until their rubber and plastic degrades the car into junk.

Wed, 02/12/2014 - 21:02 | 4430516 eucalyptus
eucalyptus's picture

i've been in the market for a vehicle and will be purchasing in the next two weeks and you wouldn't believe the confidence of honda, bmw, and audi dealers. all act like their shit doesn't stink even though i've seen some models sit on their lots for 6 months+.

 

Wed, 02/12/2014 - 22:18 | 4430774 yogibear
yogibear's picture

Honda, BMW, and Audi all could get top dollar. Honda was asking over sticker at one time and getting it. With the stock market near all time highs they know the wealth effect and everyone is going for the top Audis, Mercedes BWMs, Porsche, Maserati and Ferrari autos. You have a hundred and a half thousand burning a hole in your pocket what you going to do?

So many traders awash in money from the Fed juicing equities.

Nice commission on a Audi S8 $120,000

BMW M6 Grand Coupe $115,000


It's the low-end  having the issues.

Wed, 02/12/2014 - 22:25 | 4430800 eucalyptus
eucalyptus's picture

Not looking at 6 figure sticker prices, but if what you say is true then inventories shouldn't be sitting so long at these dealers when they clearly are.

Wed, 02/12/2014 - 22:23 | 4430801 klockwerks
klockwerks's picture

I own 2 cars both 2003 and paid off since 2004. At 68 thought it was time to get a new one to last the rest of our life. Looked at the Lexus GX, 1 dealer to a million population and like you they didn't seem to interested in selling. Very little inventory and keep in mind, loaded comes in at 71K and we were paying cash. He bragged about selling 700 cars a year, 1 guy, right! I did email him after looking and asked about adding on some aftermarket upgrades, no responce at all. We still will get one but the next town is a 45 min drive and there are 2 dealers and maybe 1 of them want to sell a car. Kind of interesting that the selling of a car doesn't seem to interest them in the least.

Wed, 02/12/2014 - 21:53 | 4430681 Lord Drek
Lord Drek's picture

I'm a millennial. We're not buying cars. I ride a bicycle everywhere. No road rage, no insurance, no worries.

Wed, 02/12/2014 - 22:21 | 4430789 10mm
10mm's picture

Like from the movie They Live. We got one that can see.

Thu, 02/13/2014 - 03:56 | 4431478 pupdog1
pupdog1's picture

The very large Toyota dealer I fired a couple of years ago for horrible service has a stunning number of unsold cars packed on its lot--new and used. Acres of them, so packed that you can't walk between them.

My current dealer is much smaller, and isn't nearly so overstuffed with cars, but many previously no-discount showroom cars have huge discount signs on them now. Pleeeze buy me.

So what happens when Kenyacare (policies or fines) sucks the last of the economic life out of the 80 or 90%?

 

Thu, 02/13/2014 - 06:33 | 4431590 firestarter_916
firestarter_916's picture

"it is cheaper to offer these incentives than to shut the plants."

So it sounds to me, since labor is the highest costs to production, that these cars and trucks are over priced,, all the time.  Fukers! If you pay retail for anything, including any car or truck, you're as dump as your local Congressman.

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