Blame Oil Price or EVs for Car Market Crash? Auto Recession Has Started

(edited)

This is a great article addressing the overcapacity of the American auto industry. Sedans are blamed for the collapse in sales, jobs loss, and recession. 

However, EVs are overwhelmingly sedans. Tesla and other EV producers continue to ramp-up manufacturing plants in the face of low oil prices and the lack of sedan demand. 

Additionally, rebate and incentive expirations drive producers to reduce profits and prices. To prevent the looming disaster, Tesla and other EV manufacturers are betting on low-cost Chinese production; all these are signs of a continued American auto manufacturing disaster. 

The article also subtly addresses a critical long-term cultural consequence of America's degradation, the Detroit Auto Show is moving to June next year. Mercedes, BMW, and Audi are not attending this year; the excuse of bad weather, is at best, disingenuous. The largest car market is now China. Detroit in the 1950s was considered the Paris of the west. Today, after liberalism and anarchy, the city is bankrupt in every way. There are signs of life returning, but very slowly and with major caution. 

The Next American Car Recession Has Already Started

 

Edited by Microbio-glutonist
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2 hours ago, Microbio-glutonist said:

This is a great article addressing the overcapacity of the American auto industry. Sedans are blamed for the collapse in sales, jobs loss, and recession. 

However, EVs are overwhelmingly sedans. Tesla and other EV producers continue to ramp-up manufacturing plants in the face of low oil prices and the lack of sedan demand. 

Additionally, rebate and incentive expirations drive producers to reduce profits and prices. To prevent the looming disaster, Tesla and other EV manufacturers are betting on low-cost Chinese production; all these are signs of a continued American auto manufacturing disaster. 

The article also subtly addresses a critical long-term cultural consequence of America's degradation, the Detroit Auto Show is moving to June next year. Mercedes, BMW, and Audi are not attending this year; the excuse of bad weather, is at best, disingenuous. The largest car market is now China. Detroit in the 1950s was considered the Paris of the west. Today, after liberalism and anarchy, the city is bankrupt in every way. There are signs of life returning, but very slowly and with major caution. 

The Next American Car Recession Has Already Started

 

This is a classic example of the volatile oil prices' effect on auto makers who cannot instantly respond to changes in consumer preferences driven by high or low gasoline prices at the pump.

Tesla's only hope is that it learns from the big automakers' mistakes. One thing Tesla should get loud and clear from this is that people don't want fuel economy or no fuel when gasoline prices are low. when gas prices are affordable, we want SUVs and utility vehicles because they are simply more practical and usable. this whole notion that people are waiting in the wings to buy Teslas because it's the right thing to do is silly.

As for the auto show, which is always been a huge deal here, I'm not sure where the disconnect is. But I would guess that apathy and ability to look at anything and everything online drives a big part of the auto makers who have pulled out. 

 

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Perhaps this is because young people are not as crazy about cars as their parents were, or because of Uber and Lyft, or because people want their next car to be an EV and they're waiting for new, more affordable models. I read an article that surmised that total car sales would go down as EV sales go up for that reason.

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(edited)

You're cherry picking the data to paint a false picture. Sedan sales are cratering in the US and it's not just US car makers. You can see the top 4 selling sedans in the chart below are Japanese. The rightmost column is yoy from 2017 to 2018. Notice Tesla's growth. Yes it's dramatic because they're filling all those reservations but the trend is clear.

317876726_sedansales.thumb.PNG.dc0751644dcc220f913b60578c5966ad.PNG

On 1/14/2019 at 8:53 AM, Microbio-glutonist said:

To prevent the looming disaster, Tesla and other EV manufacturers are betting on low-cost Chinese production; all these are signs of a continued American auto manufacturing disaster.

No. The only Teslas that will be made at GF3 in China are the cheaper versions of Models 3/Y. All S/X and more expensive versions of 3/Y will still be made in the US for worldwide export including China.

This is probably to take advantage of cheap labor/materials/no tariffs in China to make up for lower priced versions thus achieving close to or same profit margin as the higher priced version Tesla models.

By the way 80% of Bloomberg is clickbait gibberish.

Edited by shadowkin

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On 1/14/2019 at 4:53 PM, Microbio-glutonist said:

This is a great article addressing the overcapacity of the American auto industry. Sedans are blamed for the collapse in sales, jobs loss, and recession. 

However, EVs are overwhelmingly sedans. Tesla and other EV producers continue to ramp-up manufacturing plants in the face of low oil prices and the lack of sedan demand. 

Additionally, rebate and incentive expirations drive producers to reduce profits and prices. To prevent the looming disaster, Tesla and other EV manufacturers are betting on low-cost Chinese production; all these are signs of a continued American auto manufacturing disaster. 

The article also subtly addresses a critical long-term cultural consequence of America's degradation, the Detroit Auto Show is moving to June next year. Mercedes, BMW, and Audi are not attending this year; the excuse of bad weather, is at best, disingenuous. The largest car market is now China. Detroit in the 1950s was considered the Paris of the west. Today, after liberalism and anarchy, the city is bankrupt in every way. There are signs of life returning, but very slowly and with major caution. 

The Next American Car Recession Has Already Started

 

I thought auto loans are just maxed out at the moment. In 2016, Americans applied for and racked up $564.6 billion in auto loans. By the end of 2017, that number had jumped to $568.6 billion.

https://www.finder.com/car-loan-statistics

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1 minute ago, Auson said:

I thought auto loans are just maxed out at the moment. In 2016, Americans applied for and racked up $564.6 billion in auto loans. By the end of 2017, that number had jumped to $568.6 billion.

https://www.finder.com/car-loan-statistics

 

Good point! 

It appears many people are taking the same strategy with iPhones and autos. 

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5 minutes ago, Microbio-glutonist said:

Good point! 

It appears many people are taking the same strategy with iPhones and autos. 

Probably just a pause as the banks getting a bit tighter with lending criteria. I'm not sure how the total loan figures are calculated but I assume its on the list price of the car so its exaggerated as most won't pay that amount off just give the car back and stop making the payments after the 3 or 4 year term.  Lots of student loan debt too will never be paid off.

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2 hours ago, shadowkin said:

You're cherry picking the data to paint a false picture. Sedan sales are cratering in the US and it's not just US car makers. You can see the top 4 selling sedans in the chart below are Japanese. The rightmost column is yoy from 2017 to 2018. Notice Tesla's growth. Yes it's dramatic because they're filling all those reservations but the trend is clear.

317876726_sedansales.thumb.PNG.dc0751644dcc220f913b60578c5966ad.PNG

No. The only Teslas that will be made at GF3 in China are the cheaper versions of Models 3/Y. All S/X and more expensive versions of 3/Y will still be made in the US for worldwide export including China.

This is probably to take advantage of cheap labor/materials/no tariffs in China to make up for lower priced versions thus achieving close to or same profit margin as the higher priced version Tesla models.

By the way 80% of Bloomberg is clickbait gibberish.

4

Wow! That is a dismal looking chart. The YTD (140,317) vs. YTDLY (1,667) is insane. Is that current today, or December? 

Now that's Cherry Picking! :)

Everything on that chart is horrifying, which confirms Bloomberg is a highly credentialed and respected source. In fact, after about five free clicks, you must subscribe to get through the paywall, which is why you may not view the more in-depth reporting. Quartz is also an excellent high-end source that has a paywall. 

https://qz.com/1489228/beyond-the-tesla-bubble-the-future-of-electric-cars-is-being-scripted-in-china/

Every Internet source these days has ads and popups, so I agree with you that awareness of delusional people seeking to use illegitimate sources for troll status is sad. 

Cheer-up!  

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(edited)

1 minute ago, Auson said:

Probably just a pause as the banks getting a bit tighter with lending criteria. I'm not sure how the total loan figures are calculated but I assume its on the list price of the car so its exaggerated as most won't pay that amount off just give the car back and stop making the payments after the 3 or 4 year term.  Lots of student loan debt too will never be paid off.

And, $50 billion a month in reverse QE and higher interest rates. 

Edited by Microbio-glutonist
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4 minutes ago, Microbio-glutonist said:

Wow! That is a dismal looking chart. The YTD (140,317) vs. YTDLY (1,667) is insane. Is that current today, or December? 

Now that's Cherry Picking! :)

Well if it was current today that would be impressive of Tesla to have sold 140,317 cars YTD in 16 days. The chart is from December 2018. So the yoy is Dec 2017 to Dec 2018. Do you want to revise your statement about cherry picking? 😀

I know you're a Commie China hater so it will make you really upset that Bloomberg is a Commie China lover.

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6 minutes ago, shadowkin said:

Well if it was current today that would be impressive of Tesla to have sold 140,317 cars YTD in 16 days. The chart is from December 2018. So the yoy is Dec 2017 to Dec 2018. Do you want to revise your statement about cherry picking? 😀

I know you're a Commie China hater so it will make you really upset that Bloomberg is a Commie China lover.

So much hate! So sad. Thank you for confirming the data. 

Edited by Microbio-glutonist

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11 hours ago, Microbio-glutonist said:

So much hate! So sad. Thank you for confirming the data. 

All I have to say is the green tax credits make Tesla very profitable. I wonder if the Chinese will copy Tesla after letting them set up a factory there ? I have said this before and I will say it again. A 2 ton high performance EV cannot be green. A bit like the Mclaren P1 or Porsche 918, both hybrids but I don't think anyone would argue they are green. 

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(edited)

On 1/14/2019 at 2:20 PM, Rodent said:

 

As for the auto show, which is always been a huge deal here, I'm not sure where the disconnect is. But I would guess that apathy and ability to look at anything and everything online drives a big part of the auto makers who have pulled out. 

 

Maybe  Detroit no longer has enough safe hotel rooms.  Or enough policemen to assure no street muggings.  Or nobody dares go out to eat at night for fear of getting robbed.  The destruction of a city's  basic infrastructure is disastrous.  To understand that in a Detroit context,take a hard look as the current status of the iconic Union Railroad Station: -  today a massive building surrounded by steel wire fence, and abandoned.

Old American industrial cities are like that.  I remember arriving at night in Buffalo by train, to alight onto a deserted platform in a dreary and empty industrial area, no phone around, no taxis, no policemen, no waiting room.  You stand around on that cold snowy platform and wonder when you are going to be mugged. I think it was pushing midnight.  What next, walk to the hotel in town?  Got a street map, anyone?  

Edited by Jan van Eck
typing error
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(edited)

10 hours ago, Jan van Eck said:

Maybe  Detroit no longer has enough safe hotel rooms.  Or enough policemen to assure no street muggings.  Or nobody dares go out to eat at night for fear of getting robbed.  The destruction of a city's  basic infrastructure is disastrous.  To understand that in a Detroit context,take a hard look as the current status of the iconic Union Railroad Station: -  today a massive building surrounded by steel wire fence, and abandoned.

Old American industrial cities are like that.  I remember arriving at night in Buffalo by train, to alight onto a deserted platform in a dreary and empty industrial area, no phone around, no taxis, no policemen, no waiting room.  You stand around on that cold snowy platform and wonder when you are going to be mugged. I think it was pushing midnight.  What next, walk to the hotel in town?  Got a street map, anyone?  

Detroit declined so far since the 1950s, while cities like Shanghai and Shenzhen are now amazingly high-tech metropolises. Capitalist America, the leader of the Free World borrowed and lent Communism the wealth and economic freedom of their children's future. Detroit is but a sign of what's to come. With $250,000,000,000,000 in unfunded liabilities and debt, America finds it impossible to sustain its lifestyle.

"A quarter of a quadrillion dollars," it just rolls off the tongue. 

America's socialists, like AOC, de Blasio, Newsom, and Beto, are scurrying to find ways to spend as rapidly as possible. 

However, it's no wonder China's economy is failing now. The problem with socialism is that you always run out of other people's money. America, once an icon and bastion of freedom and opportunity, has chosen Socialism, thereby surrendering to totalitarianism and leaving China without a dimwitted dolt to exploit. 

You can't really blame America's youth for revolting. They are born into servitude and reminded each day what a great place America has been for those who bankrupted it. The elderly want to preserve the system until they die, then...well...they couldn't care less what happens after they're gone. 

It is truly a shame to observe the decay of such an amazing country. The Democrat presidential candidates point to their agenda and accomplishments with pride: legalized drugs, gender insanity, "free unaffordable healthcare," paid vacation for all, free college tuition, sanctuary states/cities, open borders, legalized homeless camping,...

As long as the world allows America to continue to print $100 bills for $0.165 each and demand $100 in products and services for those notes, the insanity will continue. The per capita GDP in many LDCs is less than $300 per month. America creates $300 in notes for 50 cents, then demands a month's labor. And, Americans borrow the 50 cents to cover the cost of the printing. 

Insanity. Somehow, they think this system is going to continue.

Edited by Microbio-glutonist

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(edited)

I would refer the readershp to the situation in Kansas City, Kansas (KCK) (which is not the same place as Kansas City, Missouri, sitting on the banks of the Mississippi where the Missouri River intersects).   KCK has a big budget problem: it cannot raise enough revenue, primarily from property taxes, to cover the costs of maintaining its outlying streets.  thus KCK is adopting the policy and practice of removing the asphalt layer and letting those low-intensity outlying streets go back to gravel (and dirt).  One of the problems with dirt roads is that they create a lot of dust.  Another problem is that during the rainy season, in the Spring and sometimes later Fall, the roads become mud.  

American sedans are designed as "road cruisers," big machines that are perfect for cruising down the Interstate at 70 miles an hour. The manufacturers make them wide and low so they are effortless to drive, with big automatic transmissions and torque converters and a cruise-control to set the speed and keep it there for a thousand mile run.    Now when the road-cruiser meets mud, it sinks away and you have to rire a tow truck to haul it out of there.  Not very practical when you live on a dirt road in KCK. 

Now you can see why the locals go out and buy themselves a four-wheel-drive, either a Jeep-type truck or a "utility vehicle," which the marketing crowd calls the SUV   (the "S" stands for "sport," because everything out of Detroit is totally youth-culture, never mind that the average age of a Buick buyer is about 70).  As America continues to collapse and the roads become impossible and the bridges fall down into the river,  Americans respond by buying truck-type vehicles with lots of ground clearance and a big motor to power that beast out of the mud.  In effect, the country is headed back to 1910, when all the roads were either mud or cobblestone, and then only in the cities.

The only "sedans" that would work in this new, retrograde America, would be a version of the Peugeot Citroen, where they have "hydropneumatic"" suspension, with an air pump and a system that lets the driver pump air into the shock absorbers and raise up the entire car body, and all -wheel drive, so that you can keep going in the mud.  The one auto that does this superbly  (OK, not the body lifting part) is the Subaru big Sedan, which has this clever system of selective brake application to spinning wheels so all the engine power is shifted to the one wheel that still has traction.  You can climb out of any riverbank even better than a tank with that car.  

Detroit's answer historically has been the "Detroit Locker," a locking rear differential with a set of clutch plates in there that lock up when one wheel is spinning, so that power goes to both the slipping wheel and the wheel with traction.  That worked rather nicely, but still is not the same as 4-w-drive.  To no surprise, the customers go to the 4wd or all-wheel-drive systems, and if those are offered on "utility" vehicles, that is what they will buy. The problem with Detroit Sedans are, thus:  (a) too small, not big sedans as in the old days, and (b) the traction system does not meet customer needs,especially in snow and in suburban areas going back to dirt roads.  So don't be surprised that nobody is buying Detroit Sedans, and that they end up discontinued.  Nobody buys stuff that is expensive and no bloody good.

Edited by Jan van Eck
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3 hours ago, Microbio-glutonist said:

Detroit declined so far since the 1950s, while cities like Shanghai and Shenzhen are now amazingly high-tech metropolises. Capitalist America, the leader of the Free World borrowed and lent Communism the wealth and economic freedom of their children's future. Detroit is but a sign of what's to come. With $250,000,000,000,000 in unfunded liabilities and debt, America finds it impossible to sustain its lifestyle.

"A quarter of a quadrillion dollars," it just rolls off the tongue. 

America's socialists, like AOC, de Blasio, Newsom, and Beto, are scurrying to find ways to spend as rapidly as possible. 

However, it's no wonder China's economy is failing now. The problem with socialism is that you always run out of other people's money. America, once an icon and bastion of freedom and opportunity, has chosen Socialism, thereby surrendering to totalitarianism and leaving China without a dimwitted dolt to exploit. 

You can't really blame America's youth for revolting. They are born into servitude and reminded each day what a great place America has been for those who bankrupted it. The elderly want to preserve the system until they die, then...well...they couldn't care less what happens after they're gone. 

It is truly a shame to observe the decay of such an amazing country. The Democrat presidential candidates point to their agenda and accomplishments with pride: legalized drugs, gender insanity, "free unaffordable healthcare," paid vacation for all, free college tuition, sanctuary states/cities, open borders, legalized homeless camping,...

As long as the world allows America to continue to print $100 bills for $0.165 each and demand $100 in products and services for those notes, the insanity will continue. The per capita GDP in many LDCs is less than $300 per month. America creates $300 in notes for 50 cents, then demands a month's labor. And, Americans borrow the 50 cents to cover the cost of the printing. 

Insanity. Somehow, they think this system is going to continue.

Socialism is not always the more expensive way to do something - yes it required higher taxes however the end result is often a much more efficient system that costs less. The taxes go up but the outlay in after tax money goes down. In Canada our healthcare costs 2/3 of the US system and our outcomes are better -plus our taxes are lower than California. New ideas that are being proposed in the US should not be denigrated prematurely. (like you are doing in your comment) They need to be analysed and explored.

Your medicare is already a good example for you.

As far as car sales. I am making my cars last since I see the EV's on the close horizon now. I wonder how many others are doing the same? Transitioning to EV's is difficult without disrupting existing production and then getting beaten up by Mr. Trump for no real reason.

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(edited)

3 hours ago, Jeff_Calgary said:

Socialism is not always the more expensive way to do something - yes it required higher taxes however the end result is often a much more efficient system that costs less. The taxes go up but the outlay in after tax money goes down. In Canada our healthcare costs 2/3 of the US system and our outcomes are better -plus our taxes are lower than California. New ideas that are being proposed in the US should not be denigrated prematurely. (like you are doing in your comment) They need to be analysed and explored.

Your medicare is already a good example for you.

As far as car sales. I am making my cars last since I see the EV's on the close horizon now. I wonder how many others are doing the same? Transitioning to EV's is difficult without disrupting existing production and then getting beaten up by Mr. Trump for no real reason.

5

First off, in its budget, the U.S. government is expected to spend $4.407 trillion. Most of this, about 62 percent of expenditure, pays for mandated benefits such as Social Security, Medicare, and Medicaid. Interest on the U.S. debt is $363 billion. If interest rates double, the spending on interest would be greater than military spending. Social programs and/or the military would have to be cut to pay the interest on the debt. The Free World would lose a majority of the protections provided by the American military.  

As for the abuse of the current "dollar system," without the abuse, Americans would not be able to buy Canadian products and services. Canada would need to turn to the second largest economy, which it turns out has some SOCIALIST and COMMUNIST problems with Canada as we write. 

Canada is second only to Russia in landmass.

Canada is about 25 times bigger than California. California is approximately 403,882 sq km, while Canada is approximately 9,984,670 sq km. Meanwhile, the population of California is ~37.3 million people (1.6 million fewer people live in Canada)(2016 estimates). 

Canada, unlike California, utilities its vast natural resources (oil, timber, fisheries, etc.) in ways that California's socialists preclude. 

California switched from a Representative Democracy to a Direct Democracy in the early 1900s. Socialists and progressives wanted more control to influence the outcomes of elections. The referendum, recall, and initiative processes were intended to usher in greater voter control and reduce the influence of large corporations and wealthy individuals. 

Factions are created with Direct Democracy, as factions of individuals choose to enrich themselves at the expense of others.  

However, Federalist 10, Published on November 22, 1787, under the name "Publius", Federalist No. 10 is among the most highly regarded of all American political writings.

No. 10 addresses the question of how to reconcile citizens with interests contrary to the rights of others or inimical to the interests of the community as a whole. Madison saw factions as inevitable due to the nature of man – that is, as long as men hold differing opinions, have differing amounts of wealth and own differing amount of property, they will continue to form alliances with people who are most similar to them and they will sometimes work against the public interest and infringe upon the rights of others. He thus questions how to guard against those dangers.

Californians ignored the warnings of the Founding Fathers and are paying the price. 

California is on the brink economically. 

Homelessness is a major problem (see this).

Medicaid and Medicare are not the answer. Canada is fortunate in location and natural resources; otherwise, it would not have a backdoor into America's dollar printing machine. 

Keep waiting for your EV, it will be a while.

 

 

Edited by Microbio-glutonist

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Good rant but a bit off topic.

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12 minutes ago, Jeff_Calgary said:

Good rant but a bit off topic.

 

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17 minutes ago, Jeff_Calgary said:

Good rant but a bit off topic.

The take away on all the EV euphoria is that a faction of the public desires "Eco-friendly" transportation greater than Liberty, Freedom, and Sovereignty. This faction would certainly see others lose everything in exchange for EV adoption around the world. 

Given that goal, maybe Canada's liberals are willing to trade the attributes of the Free World for PRC standards? Like, the use of EV vans on its citizens held against there will in the PRC?  Canada Pushes for Modern EV Vans in China!

The most important thing is EV. Everything else is secondary.

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