Peter Grant has published two pieces the auto industry, and the issues it's likely to see in the near future.
From "Proof the US Auto Industry is in Serious Trouble":
We've already seen how the US auto industry (and Europe's, too, for that matter) is threatened by a tidal wave of vehicles coming off lease over the next few years, as well as technological obsolescence. Used car prices are predicted to drop by as much as 50% over the next few years, which will undoubtedly force new car prices to decrease as well - otherwise few will be willing to pay them, since the new-to-used differential will be so great.
There's another reason why vehicle prices are going to have to drop. It looks as if many of us are struggling to afford them at any cost.
He then follows that up with more evidence - including pictures of used car inventory parked in overflow lots like airport runways, etc.
I can speak first hand to some of this as my three cars now are as follows: a 98, a 2000, and a 2008. In large part because the two older ones still work and so why replace them, and well...
Had a 2002 car with 140k miles that got sandwiched in an accident. No worries, found a used 2000 of the same basice body style and less miles for less than the insurance company paid me. Then the previous 2000 car, a fairly nice luxury model of german make cleared 200k miles and finally, finally, a couple years back, gave up the ghost so hard on the transmission that it would literally cost more to fix the car than the blue book value to purchase it - if one could be found.
Unlike the previous totaled car, no such luck. Also, still recovering from the double whammy of clients closing their doors after the 2008 collapse, and kids medical bills, didn't have cash on hand for something we could trust. So went for a reliable Japanese make from the late 2000's, and will be getting the loan for that cleared within the next year as I've overpaid it every month.
In the meantime, I've observed:
- Better gas mileage from V6 cars from the mid 90's than modern, "efficient" four cylinders. A lot of the blame here is on weight - all of the extra airbags and safety equipment - despite the better efficiency and horsepower for the engine size.
- Used car prices go up, and new car prices go up far, far faster. Thanks to cash for clunkers killing the available pool the prices have been driven up on anything remotely reliable. Even if I wanted a new car vice a recent model used, it will be a while before I see the point in spending that kind of money for the latest gadgets.
- Used car places - especially the more reputable, new-dealer style ones like Carmax - are selling cars like hotcakes, with financing, because poeple don't want to have a clunker, but end up in debt for 4-5 years on a car that is often out of warranty, and needs repairs on systems, no matter how reliable the brand, before it's even paid off.
- Frankly, the market for $2-4000 vehicles is at best a crapshoot, with poor maintenance, falling off body parts, failed accessories, etc. being the norm.
- While we're on failed accessories - one other reason I hate new cars. Sure, the gadgets are cool, and so are power locks, but I've tolerated one flaky door lock on the 200k car that finally died for it's last few years (hey, got 15 out of it), and seen power windows, locks, radios, climate controls, and other electronics and motor-related things go out on cars. The more parts or complexity you add, the more things there are to go wrong. Thank god consistency of manufacture has kept the failure rate fairly low.
- Repairs have gotten hideously expensive. The V6 I specifically drove was a friend's Intrepid from the mid/late 90's. Comfortable, adequate power, handled well, and better mileage than many early 2000's economy cars. That said, Chrysler learned the wrong lesson from its then -merger with Daimler-Benz. One of the two cooling fans went out. They were no longer manufactured as separate fans but a combined unit, and the cheapest I could find for a replacement fan set was $500. By comparison, a '92 Saturn cost me all of $150 parts and labor to replace the fan.
- Stupid design choices. I'm specifically looking at Dodge and Chevy here. I've climbed into smaller Kia's that felt less claustrophobic, and Dodge's have developed a knack for placing sharp angles right where my knees rest.