Car Dealer Lots Are Flush With Unsold Cars as Sales Are Expected To Drop


#21

OEM warranties up to 7 or 8 years are not expensive at all for Toyota, Honda, Subaru, etc.

VW, Hyundai and Kia have pretty long warranties right off the bat.


#22

I don’t know why people conflate safe/guaranteed vs risky investments.

The car buyer is going to make those payments, period. It’s a guaranteed payout. There’s no guarantee you’ll make anything on any investment except treasuries held to maturity.


#23

You’re right about VW as it’s a 6 yr bumper to bumper. Hyundai and Kia’s long warranty is powertrain only, so people need to be aware of what the warranty covers.

Those extended warranties can get pricey. Toyota advertises that their extended warranty adds roughly $53/month to someone’s payment. If that’s a 60 month note, that warranty is over $3k!!


#24

Depends on the borrower. How’s the auto repo business these days?


#25

Kia/hyundai Bumper To bumper is 5 years/60k miles which is among the longest in the industry surpassed only by VW’s 72k mile warranty.


#26

Could be a sign of a recession is on its way. Of course many people think recession is a big bad ugly word, but in reality it’s not. It’s almost a decade now that the economy hasn’t seen any type of slowdown which means there is probably a more of a chance of an economic slowdown then an expansion.


#27

Speaking of extended warranties. My insurance policy has something called mechanical breakdown insurance. What it does is go over and beyond the warranty issued by the the car retailer. It cannot be added to a used car, only new. It’s a monthly fee added to your insurance premium.

MBI is available for new or leased cars that are less than 15 months old and with less than 15,000 miles.

Once you’ve purchased MBI, you can renew it for up to seven years or 100,000 miles (whichever comes first). After a $250 deductible on a covered loss, MBI covers repairs to all mechanical parts of the car (except for maintenance and wear and tear*).


#28

Annualized new vehicle sales are basically in-line with the averages from the past few years. Just because the economy continues to grow, doesn’t mean that new cars sales have to continue to rise in-line. There are several other important variables in-play here: 1. rising interest rates, 2. cheap CPO / used cars that have hit after artificially subsidized leases rolled off, 3. people generally keeping cars longer due to improved performance and lower maintenance costs. Doesn’t necessarily imply a recession.


#29

A recession is a comin’…that much is a given. When it hits or how bad it will be is the question. I agree though, looking at new car sales alone is not a good barometer.


#30

Besides the ones you mentioned, a big one is that those that deferred buying a replacement vehicle during the great recession have (probably) now replaced that vehicle. New sales going forward will not include the deferred-replacement sales.


#31

Makes you wonder about the vaunted German engineering from Mercedes, Porsche and BMW, eh?


#32

Wow, I have not heard of something like this. I’d be interested in seeing the list of exclusions on the warranty. If it’s a real bumper to bumper warranty, I would be VERY interested in the cost.


#33

Geico is now offering it (at-least in TX)


#34

Find enough ways to save here and there around the dealership and then you won’t have to lay off people during the downturn. Makes sense to me.


#35

I don’t know if trimming corners has positive long-term expectations. You may defer laying off employees for a little bit, but lay off customers instead. And then, employees are next.


#36

Geico offers it. I believe they are the only insurance companies that do. I have had it for years never used it. Usually get rid of my lease before the warranty is up.


#37

Fed has said they might pause interest rate rises, as well as pause rolling assets off the balance sheet.

Before that announcement, it looked like they were going to both continue to raise rates, AND also continue to increase rolling assets off their balance sheet. Which looked like a double-whammy in terms of bringing on a recession (rolling assets off balance sheet serves to lower bond prices and raise interest rates all by itself, coupled with the Fed also raising the short term rates… not good)

Now, wouldn’t be shocked if we are able to juice a few more good years out of this cycle. Any specter of normalization and the market takes a beating though!


#38

This is great news for leasehackrs because it means that deals will be plentiful as soon as the recession hits (which almost all major banks predict by 2020). If it is really bad like 2008 you will see some amazing deals as well as a drop in interest rates.

I think for most of us the timing is a critical variable. Those who need to re-up this year and can wait until the summer may find even better deals if inventory continues to rise and dealers get nervous. But Fed may still raise rates (currently paused) if economy continues to chug along, which would hurt leasing.

I am unhappy with my car and would love to offload it now but I’m not in a rush and it looks like it will pay to wait.


#39

Sales alone, no. But I think that the length of the Auto loans being given is troublesome. New car dealers are offering up 96 months in some cases now to stretch people’s budgets? That’s insane. A lot of people are going to be left holding the bag when this bubble pops.


#40

Agree 1000%. Being financially uneducated costs people (and in turn, the economy) a lot of money, and a small handful collect it all when :poop: goes sideways.

I’m not a “Follow Dave Ramsey and Suze Orman” guy, but there’s a sweet spot somewhere between their preachy mantras and where the typical consumer resides.