Quote:
Originally Posted by IK6SPEED
As new car sales are imploding, that has an effect on the used car market (and prices).
Less new cars in the pipeline means fewer cars to enter the used market.
They go hand in hand, not in inverse.
You are also assuming USA has not hit peak car ownership which rest of World hit over past 24 months or so and it seems USA hit in 2018.
Thus not all current cars will be replaced as Uber and Lyft have taken hold, becoming more mainstream.
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I mostly agree. Though I see Lyft and Uber as increasing demand for autos and not really dampening it as much as you might expect. As they allow people to shift their cars into revenue vehicles quickly they will increase demand from some buyers.
The problem for German car manufacturers is both this end and the other end I talk about below (used market) prioritize reliability and operating costs over almost all else. So the overall market may not collapse, but the winners and losers may shift mightily.
Quote:
Originally Posted by CLABRO
Yeah, the leases aren't as good as they used to be, but it shouldn't be too shocking. The average cost of a new car has skyrocketed across all manufacturers thus lease prices inevitably have to increase as well.
Last I checked, the average new car price was something around $38,xxx. The average new BMW price was something around $56,xxx. Average cost is at an all time high and will most likely continue to increase for some time.
Used car market is going to continue to explode as it already has been. The average car age on the road is like 12 years old which only continues to get older. Quality and reliability has improved throughout all manufacturers so more cars are lasting longer and more people are driving these cars longer. Factor that with the new car average price hitting all time highs (many people/families cannot afford these cars, but that's another topic) so people look to CPO and pre-owned and you have an exploding used car market and a stagnate or decline in new car sale volume.
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This is going to put serious pressure on manufacturers like BMW and Mercedes to shed their poor reliability image. They've already started down this road by expanding their CPO cars to have various amounts of unlimited mileage coverage for 1 year (3 years with extensions).
These warranties will expand over time and put their feet to the fire to ensure their cars are actually able to last a while otherwise they'll lose sales in the secondary market and primary market (as the resale values staying low are a direct drag on leasing rates).
You couple that with the uprise of advanced luxury and technology in mainstream car brands and the sideways swipe coming from Tesla who is doing a great job of appealing to the tech hungry nature of the younger market. The used market being the primary market for car sales profitability is a serious headwind for German car makers.