AD #1648 – High Prices Hurting Sales, Lexus Creates Hoverboard, New Camaro Convertible Debuts

June 24th, 2015 at 11:48am

Runtime: 7:52

- Ford Reveals New Mobility Plan Details
- Ford-UAW Art
- VW Expands Metal Stamping In TN
- Lexus Creates Hoverboard
- New Camaro Convertible Revealed
- More Americans Priced Out of New Car Market

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45 Comments to “AD #1648 – High Prices Hurting Sales, Lexus Creates Hoverboard, New Camaro Convertible Debuts”

  1. DK Says:

    In regards to the piece on new car per capita rates, is it possible that fewer new cars are purchased due to longer life spans of newer vehicles? In the late 90s and early 2000s I still heard allot of people say they were not comfortable driving a vehicle over 100k miles. Today, I think the culture is adapting to the real life span of newer vehicles.

  2. Lex Says:

    My issue with your theory regarding an increase in Car Sharing due to the stagnation of household incomes and the ever increasing price of new and used vehicles is that as the demand for Car Sharing increases so will the associated cost. The simple Supply and Demand model. Autonomous driving technology will also increase the cost of the average vehicle in the next decade further discouraging vehicle ownership. The American automotive fleet will probably increase in age to fifteen years on average due to improved durability and the high cost of a replacement unit and other variables like increased fuel, insurance and registration fees.

  3. Jon M Says:

    John – It’s a little nit-picky perhaps, but did you just take the total population to calculate the % buying? There are a number of variables that could influence the percentage. I’m just curious and not trying to argue. Nevertheless, I would easily agree that many are being priced out of the new car market, thanks in part to all the fancy let-your-car-pay-attention technology. Personally, I’m not opting out of the new car market (I far too picky about condition to do so), but I am being more conscientious about how much I pay for my next vehicle when my lease expires soon.

  4. C-Tech Says:

    Looking forward to seeing a real hoverboard, even with a spindle grill.

    Another factor in new car sales is how long a vehicle lasts. Newer cars last longer than they did 20+ years ago. There is not as much need for a new car. Many vehicles are leased and rented and those good used vehicles are marketed as “like new”. When I do replace my 15 year old Jeep Cherokee, it may be with a certified used or former rental vehicle.

    One of the things that irks me about Sergio Marchionne is that he wants to reach 6 million in sales yet he abandones the convertible market by not producing a convertible 200 or Challenger.

  5. Buzzerd Says:

    New car sales- in today’s world car ownership isn’t necessary for millions of people because of things like Uber, car sharing, public transportation, better cycling infrastructure… I know people who own a older car and when they travel they just rent.
    Also in 1978 as a child you couldn’t wait to get your own car and house or apartment, unlike today, when it seems the parents have to leave to get away from their children and repossess their car.

  6. Rob Says:

    The future of new car ownership sounds like it’s on the brink extinction. I foresee Autonomus vehicles becoming the future of mass transit where fleets of cars are owned by large corporations or cities and people just pay membership fees or per mile rates. Essentially just like bus service now, with the convenience and flexibility of door to door service on your schedule. Great thing about Autonomus vehicles is they will be able to show up and return themselves to their home base.

  7. Albemarle Says:

    It would be interesting to look at average fleet age over the last 50 years or so as well. I think you would find they are getting older.
    While economics is certainly part of the reason, improved reliability and rustproofing must play a major role too. In the 1970′s, cars rusted out in 5 years. Now, they go over 15 years with little or no rust showing. People don’t have the same “tension for change”. It’s harder to justify changing a well running, rust-free car.

  8. Vic Says:

    C-Tech nailed it with his comment. New cars last longer than ever. And used cars are a good buy, since a 60,000 mile car isn’t ready for the scrapheap. I’d love to see an analysis of SAAR assuming that cars lasted as long as they did in the 50s and 60s.

  9. HtG Says:

    ownership rates

    The reality may even be worse. High lease rates, especially in aspirational brands, and lengthened loan terms are a pair of tools that are permitting many people to drive home their shiny wheels. And upholding the whole financial structure is a federal reserve that holds down rates and makes capital plentiful. If my car got whacked, stolen or otherwise, I’d probably look for a used car.

  10. HtG Says:

    Mark ups, too

    The margins in finance are also what allows dealers, new and used, to make money even when they say they’re being squeezed in sales.

    So everyone is stretching. Personally, I don’t feel compelled to buy the new cars I see. Maybe this is a factor for others for whom cars are appliances, which are indeed more reliable and durable.

  11. Chuck Grenci Says:

    So why are average car costs going up and up; well there is inflation, there is mandated content, there is content that people once tried find it hard to do without with their next purchase. Apparently the American buyer hasn’t reached ‘saturation shock’ quite yet, with the SAAR still climbing, so it will be difficult to know when it becomes critical and sales stall or plateau. Seemingly the manufacturers are not gouging the public (on most models) as competition is still steep especially on the high volume models but with the numbers John mentioned (cars at around 30.5k and household income at 55k average) it is becoming a stretch for a lot of folks to be/stay in the new car market.

  12. GM Veteran Says:

    I agree with Lex, though I also believe that vehicle miles driven will behave like energy. In chemistry class, we learned that energy is conserved. In other words, it doesn’t go away, it merely changes form. I don’t buy the potential massive decrease in auto sales theory because I don’t believe that Americans are going to suddenly and dramatically reduce the number of miles that they travel. Even if they change their ownership habits, the number of mile will, in general, remain the same or increase. They will travel those miles in a car, regardless of who owns it or how it is piloted. So, with the level of miles being driven remaining constant, how will car sales decrease? The number of parties actually buying cars may be reduced, but they will buy more of them (car sharing services, etc.). Cars won’t magically start lasting longer, so they will still need to be replaced at roughly the same rate. Autonomous cars may eventually allow a family to own one car rather than two, however that one car will wear out sooner and need to be replaced more often. So, the study predicting a large reduction in car sales is fundamentally flawed.

  13. Kit Gerhartki Says:

    People are being priced out of the new car market, especially those who think they need a 5500 pound SUV to go a couple miles to get groceries at Walmart. Those people can get a barely broken in used one for half the price of a new one. Also, as C-tech said, cars last MUCH longer that they once did. My first car, a ’57 Chrysler was badly rusted in 10 years, went through 3 generators, a starter, and a hose or two, in about 80K miles. The 392 hemi had another 200K miles left in it, or a few miles, 1/4 mile at a time in a dragster, but the way the car rusted, it amazes me that I still see these cars in shows.

  14. HtG Says:

    I’ll add that consumer buying power is also being boosted by a stock market that in turn is aided by low interest rates. So this helps at least some segments of the population to at least come up with a down payment, and means that looking at average household income misses another source of money for consumers.

  15. HtG Says:

    GM ADAS at Freescale FTF

    Whaa? So GM’s John Capp, their safety boss, appeared at Freescale Semi’s forum to talk safety and increasing autonomy. One thing he talked about was vehicle to pedestrian communication which would be direct, peer to peer, allowing real time responsiveness. Freescale will merge with NXP, creating the largest supplier of semi tech to the auto industry. If you want to see Capp speaking, start the linked keynote file at about 1:17.

    Plus, Apple’s Steve Wozniak spoke earlier today about autonomous cars and smart cities, though the video hasn’t yet been posted. Stay tuned.

  16. pedro fernandez Says:

    I’m looking around to replace Crapolla and I am suffering from used car sticker shock. 8 yr old Yaris hatchbacks with over 100k mi and even more, nothing to be found for less that $6k around these parts. Thinking I’m better off with another corolla, but too many years driving Corollas, I want a change and I like hatchbacks.

  17. Enn Norak Says:

    There was a time when, on a really quiet night, one could hear the car rust. fortunately, the quest for improved fuel economy has resulted in the use of lighter materials such as aluminum, magnesium, and carbon fiber. These materials are also resistant to corrosion which makes the basic structure of the car last longer.

    With current mechanical technologies like reliable fuel injection instead of the dreaded carburators back in the day, people feel less motivated to trade their cars as often as they used to.

    Many luxury features have trickled down to lesser cars which reduces the need to trade up.

    For most people, the negotiation process itself is enough to motivate one to delay the purchase of a new vehicle.

    The car industry is adopting new technologies at a very fast pace. Cars today can even have their own WiFi hot spot. It appears that ever-improving technology will be the new driver of obsolescence that motivates people to buy new vehicle.

    My cars last a long time because I adhere to the factory recommended maintenance schedule and have all scheduled maintenance, including oil changes, done by an authorized dealer. Nevertheless, there comes a point in time, usually just before a 5-year warranty runs out, when a low-mileage car still has a reasonable residual value and the dealer who maintained it and knows the car, will be happy to buy it from you for good price.

  18. HtG Says:

    15 You really got some service out of old Ca’Rocinante, Pedro. How many miles now?

  19. pedro fernandez Says:

    8k away from 400k. needs tires, brakes, struts, some rear suspension work not to mention an interior that has seen better days. Scared to throw in over a grand and then have it die on me due to all the miles. And they have not been easy, highway miles at all, mostly bumper to bumper traffic, frequent stops in the unforgiving So Fl heat.

  20. Brett Says:

    A used Toyota Matrix or Pontiac Vibe, Pedro? Both considered Corollas by Toyota. 4 doors and a hatch.

  21. Kit Gerhart Says:

    15 Now is a good time to buy a Prius, new or used, with the cheap(er) gas, but I’d be uninclined to recommend one to someone who keeps cars as long as you do, both because of the battery, and all of that power electronics. It might go 20 years and 400K miles, but if stuff failed, it could be expensive.

  22. Kit Gerhart Says:

    19 Yep, they’re practical, and generally reliable. CK had trouble with leaky aluminum wheels, but used steel wheels would be cheap.

  23. HtG Says:

    Yep, here too. The Vibe/Matrix has to be one of the best all around packages I’ve ever seen.

  24. HtG Says:

    Check this out, Pedro.

    my sister has one too.

  25. pedro fernandez Says:

    Yep, Brett and HtG, a used Matrix (Vibe) makes a lot more sense than a much inferior Yaris, similar money and the latter will beat you up after awhile with tight interior space and choppy ride.

  26. Bradley Says:

    Hey! Someone has to be at the bottom.

    I thoroughly enjoy my 2009 Yaris Sedan with 5 Speed. It has 120k miles on it. And when I filled up this morning it got 43mpg.

    Things to understand. The sedan is longer than the Hatchback and the Manual transmission has 5 gears compared to 4.

    I also added a lot of sound deadening and a nice stereo system.

  27. Kit Gerhart Says:

    25 All of the automatics are 4-speed, but they still get decent mpg. The second generation, 2009 and later, used a 2.4 as the “hot rod” engine, rather than a more highly tuned 1.8. The base engine in both generations is same 1.8 as Corolla.

  28. Bradley Says:

    I also owned a 1992 Toyota Tercel. The Yaris is a luxury car in comparison. However, I did enjoy the pure simple transportation concept of the Tercel.

  29. Kit Gerhart Says:

    A friend of my sister’s had a Tercel, I think a 1980. I drove it some, and thought it drove fine, at least around town. That car was an odd ball, though, in being a very basic front driver, but with the engine mounted longitudinally. I never knew why they did that.

  30. pedro fernandez Says:

    The Yaris is still my first choice, but as a used car, it is not a real good buy, you are paying for the fact that it was built in Japan and it’s great on gas plus very reliable, but you can get “more” car for similar money with either a Corolla or Vibe, I guess that rear seat will be down most of the time, since there is only 2 of us and barely ever carry passengers in the rear.

  31. pedro fernandez Says:

    I have a neighbor who bought 2 Tercels last year, I’m sure it was an economy related decision. They always used to buy larger US vehicles.

  32. Bradley Says:

    Toyota was offering 0% for the first time, when I got my Yaris.

    That put me at a $250.00 a month. Which when gas prices went high I was spending less money than driving my truck to work.

  33. pedro fernandez Says:

    Autotrader is not a good place to buy cars, Craigslist has better prices and more selection from individual sellers.

  34. pedro fernandez Says:

    Bradley is a believer, poor Yaris gets a bad rap from so-called automotive experts, they don’t understand that some people just need basic, economical, reliable transportation. No direct injection, CVT, computer controlled HVAC systems, power everything, which ends up breaking down and needing repairs.

  35. Kit Gerhart Says:

    A Yaris is one of the cars I test drove before buying my MINI. Yeah, they are a lot different cars, but similar in some ways, like having small, not-too-powerful 4 cylinder engines, and the 2 door hatch Yaris I drove was similar in size.

    The MINI has much sportier handling, is probably quieter, and and is more relaxed at highway speed with a taller top gear with its 6-speed, than the Yaris’ 5-speed. For basic transportation, though, especially if not much highway driving is involved, the Yaris is fine, and has a much better reliability record that some cars, like MINI. My MINI has been fine, though, but it has an easy life, and not many miles.

  36. XA351GT Says:

    To be honest they priced me out of a new car a long time ago. I bought my 1989 Mustang GT new in Oct. 1988 for $16,200. With every option available except for the Auto trans ( I got the stick) So flash forward today a comparable Mustang GT is over $40 K . Nearly 2 1/2 times the price of the 89 . My pay unfortunately hasn’t gone up 2 1/2 times since then. Hence the reason I own a 98 and 01 ZX2 with 140K and 128K on them and just bought a well maintained 98 F150 with 214K . If you do the routine maintenance they will last 20-25 years easy . Anyone living where they use salt brine to pretreat the roads in winter make sure you was the undercarriage as soon as the roads have cleared that crap is eating everything under the cars. Brake lines caliper slides, chassis, fuel lines. Really nasty stuff. I’d love to own a new car ,but unless I settle for any new car and not what I really want I don’t see it happening anytime soon.

  37. Bob D Says:


    Is it possible to pull together historic data on new car price and household income to see how that ratio trends over the past 70 years? That would seem to show if things are getting better or worse in pricing people out of the market.

  38. pedro fernandez Says:

    #36 Me too, in 86 I bought a Camry LE for approx $13.5k in ’98, the Corolla for the same price, cannot touch anything new for nowhere near that unless it’s got no A/C, Not an option down here.

  39. Kit Gerhart Says:

    According to a couple sites I found, $16,200 in 1989 would equal about $33K in today’s money. Wouldn’t a new zero option Mustang GT, with an MSRP of about $33K be at least as well equipped as a “loaded” ’88? I suppose the ’88 might have sunroof and/or leather that a new zero option one wouldn’t have, but if you really compare prices of today’s mainstream cars with those of the “good old days,” today’s cars are a pretty good value.

  40. HtG Says:

    Securitization of debt has allowed more people to finance their cars. No matter what level, new or used or beater, the markets have an appetite for car payments. Maybe it’s because the ghouls in their towers on the Hudson understand people will make their car payment, as it means transportation to work. I don’t know how a historical comparison lets us understand how times have changed, unless we also take into account changes in financial products.

    The idea of a new car is a little odd to me, as I doubt most normal people can even tell the difference these days. It isn’t like the old days when then new year’s cars would appear in the fall and it was a big deal. Who can really tell if your driving a ’99 Porsche Boxster or a ’15? Do you care?

  41. HtG Says:

    “…most normal people can even tell….”

    I mean to say that if you’re concerned with what the Jones’s think, they can’t tell the difference at all.

  42. Kit Gerhart Says:

    Here is one of many “correct for inflation” tools, most of which come up with similar results.

    “Official” inflation takes into account a lot of things which may, or may not affect any of us personally. For example, the high inflation, but even higher interest rates in the late ’70′s and early ’80′s were a good deal for my parents, who had no debt, but some money that did well in high interest CD’s.

  43. HtG Says:

    Just keep your wheels clean and well maintained.

    You are a winner.

  44. pedro fernandez Says:

    There are so many horror stories from customers re their bad experiences with local dealers and their price games they play. Ex. there is a Nissan dealer about 200 mi from here that advertises on the net Versas automatic for less than $10k (impossible) You know that is not true, I just wonder what BS they give you when you show up there and try to buy one for that amount. I read that they charge $800 dealer fee and overcharge for everything and the cars are already waxed and undercoated and you have to take it, cause it’s already been done to the car.

  45. Kit Gerhart Says:

    44 Maybe it’s 10K, if you have a trade in that’s worth 10K, or something like that.