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There may be a car market implosion but it will have little to do with loan defaults. Manufacturers are filling parking lots with completed vehicles awaiting computer chips and when the supply of chips rebounds there is going to be a massive glut of cars and trucks to sell. https://ohionewstime.com/put-in-the-park/143283/
There may be a car market implosion but it will have little to do with loan defaults. Manufacturers are filling parking lots with completed vehicles awaiting computer chips and when the supply of chips rebounds there is going to be a massive glut of cars and trucks to sell. https://ohionewstime.com/put-in-the-park/143283/
The average loan term for a new car also hit a record high of 70.6 months in March. The most common term currently is for 72 months, with an 84-month loan not too far behind.
I said that leases are very similar to 72 month loans. I think of them as 72 month loans, with a buyback arrangement at 3 or 4 years.
I wasn't very clear, but I meant that leases and 72 month loans are the most common way of acquiring vehicles.
The average new vehicle loan amount was $35,392 in Q1 2021.
I normally pay cash for cars but I’d certainly consider a 0% or extremely low rate loan. My credit has been 800+ forever. The cash does more for me in my portfolio earning money than it does sitting in my driveway depreciating.
Ditto for new cars. I inquired about a new 911 GTS and was told by the stealership their 2021 and 2022 allotment of 911s is already sold out, and people are paying $30,000 in added dealer markup. In cash.
New car buyers are skewed towards high income married households and much lower income singles. 40% of SUV buyers are 6 figure households. 37% of pickup buyers make less than $50k. My guess would be that in a big recession, the pickup truck used car market will collapse.
Are you serious with that question? Do you not know how modern cars work? Just about everything is computer controlled and interconnected. Everything form the infotainment to the engine management is run by individual computers that talk to each other and chips are essential to that processing. Especially with the infotainment that manages not only your radio but also talks to the body control modules, HVAC, and the required back up camera system. The chips that run the displays are in high demand worldwide not just for cars, but for TVs and gaming computer graphics cards (that are being used heavily to mine cryptocurrency these days).
So no, they cannot complete the cars without the chips that run them.
Most of my kids have 6 or 7 year car loans. Some for new cars, some for use. One has never held a job for more than two years (maybe less) they just bounce from job to job and she was only making about $10 an hour when she got the loan. She could afford the loan payments, but got a shock from car insurance, taxes, and registration costs. Also repair costs. It has a warranty, but it does not cover most of the things caused by the terrible, Michigan roads.
It's not possible for many important systems. Many cars have multiple ECU systems such as ESP/antilock, AWD, the newer suspension systems, and fuel and ignition. Without the chips, the car wouldn't work at all since they were designed to use these systems.
The bad part about all these chips is that if you ever had a chip go bad they can cost thousands to replace.
Hopefully, what you really mean is why can't they build cars to accept more generic chips or have multiple sources for the chips. And those are questions the industry is addressing at the moment but it will take years to re-engineer the design and production process. Wouldn't it be nice if we could just install any cpu and memory chip, load up the software, and be good to go? The chips and memory are probably less powerful than what is in your smartphone and we don't seem to have a chip shortage impairing smartphone production.
Last edited by oceangaia; 07-06-2021 at 07:30 AM..
The chips and memory are probably less powerful than what is in your smartphone and we don't seem to have a chip shortage impairing smartphone production.
The chip shortage is hitting just about every manufacturing sector.
Not the same problem. Smartphone shipments will be up 12% this year. The chip issue with smartphones isn't that they can't supply the number of chips that they previously did but that they can't increase supply as rapidly as demand is increasing.
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