AuthorTopic: Nobody Wants Old Carz  (Read 406 times)

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Nobody Wants Old Carz
« on: January 28, 2018, 07:39:58 AM »


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Published on the Doomstead Diner on January 28, 2018






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As regular readers Inside the Diner know, a couple of months ago my long time dependable wheelz the 1989 Mazda MPV finally gave up the ghost as the right front strut gave out from rust.  I have owned said vehicle for over a decade, and it was one of the best Used Carz I ever owned, nothing ever went wrong with it, I only replaced the tires and battery once (unfortunately quite recently).  This occured in a very fortuitous location, just as I was pulling out of its parking spot in front of my digs.  Had it occured while I was driving at any speed at all above around 30 mph, it could have been a very nasty accident.  As it was, I just backed it into the spot again and jumped in one of my other Old Carz a 2002 Ford Explorer SUV to go on my Prep Run to Walmart



Cost for repairing the strut and other stuff in rusty condition on the underbelly of the vehicle estimated at a minimum $1000 by the Car Doctor.  This is $100 MORE than I paid for the whole car in working condition a decade ago!  Since I also own two other old carz, keeping the 3rd one around was overkill even before the strut gave out, and it DEFINITELY did not pay to fix it up!   So I left it sitting in the spot while I debated with myself what to do with it?



The tires and battery I put on last year by themselves were around $500.  I have hardly driven the car all year, they are still practically new.  Then, the innards are still real good, engine and tranny very dependable.  Always started even in the coldest weather.  So it must be worth SOMETHING for the parts, right?  So I go over to a couple of the local car fixit places and see if they will take it and give me something for it.  One place said they wouldn't take it at all, the other place said they would take it but not give me any money for it, and I had to pay for it to be towed there.  I did not take this offer, and the vehicle remained sitting in its parking spot as winter arrived.



I then tried to GIVE the car away to my Taxi Driver James and one of the Maintenance Men in my complex Tanner who dropped in a couple of weeks ago to fix my boiler.  James expressed no interest, Tanner had some interest because he fixes carz himself and probably could have got it road worthy again for the cost of just the struts.  However, he decided he had too many projects already he was working on, so he didn't want the car either.  So at this point I have no means of divesting myself of this still pretty good vehicle without paying to do it.  So it sits some more in the parking spot as winter sets in.






Then, last week on Friday I get a FINAL NOTICE from the management company here, your vehicle will be TOWED!  It is ILLEGALLY PARKED.



First off, I never got even a preliminary warning notice before this Final Warning, coming on a Holiday Weekend.  Second, it's not illegally parked, it's registered and insured just needs fixing. The management company of course has their OWN rules regarding inoperable vehicles, but this is not a part of the code of law.  They don't want their parking lot cluttered with inoperable vehicles, and I don't blame them for that.



So on Tuesday I drop in to visit with the Property Manager to make my complaints about lack of adequate warning and the fact the vehicle is not illegally parked, which of course go nowhere.  The car will be towed regardless.  So then I investigate finding a junkyard that will tow it for Scrap Value, and find ONE such place in the Mat-Su Valley, Rusty's Auto Salvage.  The internet website promises they will take ANY car and give you some money for it.  Actually getting through to this place on the phone was quite difficult.  They are part of a National Chain of such places, and if you sit too long on hold on the phone call the system automatically transfers you to some call center down in the Lower 48.  They of course will not pick up carz residing in Alaska or Hawaii.  I can understand that.



When I finally do get through to them after about the 6th try, there is some dickering about having the Title on hand, which I had to find so then I had to hang up and call back after I found it, which amazingly I did!  Now it takes another few tries to get through again, but I am persistent if nothing else so finally I get Rusty's on the line again.  After all of this, now they tell me they won't pick it up because "You are not in our area of service".  WTF?  This place is in Wasilla (home of Sarah Palin) which borders Palmer where I live, and I am right on the Palmer-Wasilla border!



I finally do get the TRUTH out of the phone dickhead, which is that the car is simply too old and they make no money on such cars, it costs more to pick them up than they can get for them on the scrap market.  The scrap market is currently totally in the toilet, at least here in Alaska.  I still think they could make some money on just the practically new tires and battery, but that is irrelevant because they just won't come get it.  I should sue them for False Advertising, but I don't need ANOTHER legal headache.  So, I am back to square 1, which is to either pay myself to have it towed off the property, or just let whatever company the management SUPPOSEDLY has contracted to come get these rusting hulks of Industrial Civilization and send them to the Land of Away.



https://www.hemmings.com/blog/wp-content/uploads//2011/10/junkyardUSA_1000.jpg



Why do I say "supposedly"?  Well, because it is now Wednesday the following week after the "Final Notice" and the vehicle is STILL sitting in the parking spot!  I suspect the management company has exactly the same problem as a corporation that I had as an individual trying to dispose of this automobile, which is that it doesn't pay for anyone to pick it up for FREE.  In fact I don't think anyone but Rusty's, the same folks I tried to get rid of this vehicle even will DO this job at all for free, and the management company doesn't want to pay towing costs either!



So I am just letting the car rest to see how long (if ever) somebody comes to tow it away?  There is another car to the right of the Mazda in the Winter Picture that had a Tow Notice dropped on it over a year ago, it is still there as you see. lol.



The really sad thing here is that Mazda is still actually a very good car, and could provide transportation to a relatively poor person here in the FSoA for just around $1000 in fixup costs.  Less if you know how to fixup carz yourself.  If I didn't have 2 other carz currently in good working condition, I probably would invest the $1000 to fix it.  I have an emotional connection with that vehicle and it saddens me to see it go to the Land of Away. ūüôĀ



The issue with carz though for poor people is not how much they cost to BUY, because you can buy quite good ones quite cheap if you shop around.  The issue is how much they cost to run and maintain.  At $3/gal, say you have a 15 mile commute to work every day.  That was how far I had to commute around when I first moved to Springfield, MO during my super-broke period in the early 1990s.  Springfield has REALLY BAD public transportation, none of which took me anywhere near my job, which actually was in 2 locations for a while, one on the east side of town, the other on the west.  In the middle of the day I had to go from one location over to the other one.  My TOTAL commuting distance around town for the day was around 30 miles.  I arrived in Springfield on the plane with no car, but I brought my bike along.  For the first 6 months I was there, I operated with no car, just the bike.  If it was today with a car that gets say 20mpg, it would have cost me $4.50 every day to go to work.  As it was, I did it for free on the bike until I had enough $Moolah$ saved up to buy a used car, my treasured 1989 Toyota Tercel 4WD which I picked up for $1500 and then another $1500 to fixup the transmission.  That car lasted me around 15 years, all through my years of trucking and also as an itinerant gymnastics coach.



http://starmoz.com/images/toyota-tercel-4wd-11.jpg



Mine was Blue with rust around the wheel wells, but otherwise the same car



After the daily gas expenses, you have the maintenance issues.  New tires alone cost you $100 a piece these days, and you can't buy just one when you have a blowout.  At the very least you need to buy two, front or back so they match up for handling reasons.  Really though, to do it right you gotta go all the way round and buy all 4 new ones.  When (not if) you get hit with this catastrophe, it wreaks havoc with the monthly budget of the poor person.  More money goes on the Credit Card, another day Deeper in Debt.  You also have regular oil changes to do, every 1500 miles or so @ $70 a pop now around here these days.  Not a huge expense since it is usually just once a year or so unless you do a lot of willy-nilly Happy Motoring, but it adds up.



Then there are the legal expenses for keeping an automobile.  Insurance is the biggest one, even with my SPOTLESS driving record of over 1,000,000 accident free miles including 18 wheelers, with just basic liabilty insurance no fire, theft or flood it costs $1000/year.  Then you also have vehicle registration fees with the DMV, and in most places you need to have it INSPECTED on a yearly basis. The inspection cost isn't usually too high, but INVARIABLY the garage you bring it to for the inspection finds something costly that "needs" replacement, like the brake pads for instance. They won't pass the car for inspection unless you replace those worn brakepads!  You are now captive to the system, just like with the folks running the medical racket.  We won't make your car "healthy" and "legal" unless you PONY UP!  In the past, mechanics did very well running this racket.  Not so good anymore though.



So incrementally, there are fewer people all the time buying in the used car market at the SAME time there are ever more of these old vehicles being dropped on the market.  Sense a Supply-Demand imbalance here?  The Junkyards can't sell the parts, not enough buyers.  Scrap metal prices have cratered also.  So they are not making any money on this bizness anymore, at least here in Alaska.  If it was profitable, they would be here in the blink of an eye to pick up the vehicle.



You can see where this leads of course.  As time goes by, more people will simply abandon their cars if they can't sell them to some greater fool out there.  Nobody will come pick them up for free, even if they work OK.  If it is a large parking lot arrangement like a Walmart, if Walmart doesn't pay a tow company to come get it, it just will sit there.  Just lonely abandoned carz, nobody loves them anymore. lol.



https://www.web2carz.com/images/articles/201711/lost_car_parking_garage_lead_1511192666_800x600.jpg



The techno-FUTURE of Elon Musk of course says that we will be substituting his less-than-reliable and very EXPENSIVE EVs for ICE powered vehicles.  However, if increasing numbers in the population can no longer afford even Used Carz they can pick up for $1000 and under, HTF are they going to affor Tesla Model 3s coming in at $30K and up?  That's the El Cheapo model also, and isn't doing too well in terms of production and reliability so far.  Most of the Tesla models go for a good deal more than this, coming in at 6 Figures as playtoys for the 1%.  You don't make much profit just selling expensive carz to Doctors and CPAs though.  The market isn't big enough.



This also affects the total Carz Economy through declining sales of gasoline and less taxes being collected on those sales.  The Highway Trust Fund gets its money from these sales, so there is less revenue to maintain the roads, which then means more blown tires and damaged shock absorbers and higher maintenance costs for the vehicles.  So at some point this economy will collapse under its own weight when there are too few people driving too few carz too few miles using too little gas.



Old carz aren't the only abandoned vehicles of the Age of Oil that are being discarded and left to rust into oblivion over the next few centuries, old airplanes also have their final resting place as well.  Here's an airplane boneyard in the Mojave Desert.



http://www.michaeljohngrist.com/wp-content/uploads/2009/mojave%20boneyard/mojave%20desert%20boneyard1.jpg



As you can see, quite a decent percentage of these are military aircraft.  These are planes you and I paid through the nose for with our taxpayer dollars, and many if not most of them never got used at all except for training missions for the pilots.  However, like the carz, they need to be replaced on a regular basis to get the latest, greatest technology in your Death from Above machines.  You also of course have to keep the aircraft manufacturers like Boeing & McDonnell-Douglas bizzy.  So like the carz, these old machines keep piling up in the junkyards, the flotsam & jetsam of the Age of Oil.  For the planes, at least so far they are getting shipped to the Land of Away, out of sight and out of mind in the Mojave Desert.  However, considering the fact they are made mostly with an aluminum skin that doesn't  rust and the desert doesn't get much rain, these hulks will be there for a LOOONG time to come.



Interesting to imagine what some future Species of the Genus Homo will make of them in 10,000 years?



 


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Online Eddie

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Re: Nobody Wants Old Carz
« Reply #1 on: January 28, 2018, 10:04:37 AM »
I usually donate my old cars to charity. The non-profits want them here...but I suppose it's easier and cheaper to recycle them down here.
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Online RE

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Re: Nobody Wants Old Carz
« Reply #2 on: January 28, 2018, 10:57:05 AM »
https://www.zerohedge.com/news/2018-01-27/it-just-gets-worse-and-worse-record-32-used-car-trade-ins-are-underwater

"It Just Gets Worse And Worse": A Record 32% Of Used Car Trade-Ins Are Underwater

We have frequently written about the unsustainable trends in new car sales in the United States created by the combination of lower rates, easing underwriting standards and voracious demand for new securitizations by wall street and pension funds that will do just about anything for an extra 20bps of yield. 

This week we find that according to the latest Edmunds' data, many of the same problems also afflict the used auto market.  The most startling takeaway from the report is that the percentage of used cars being traded in with negative equity values - which means that dealers lenders are willing to accept an immediate loss for new transactions - continues to rise and currently stands at an all-time high 32.4%, up from under 20% in 2009.  Moreover, the average balance of the negative equity also continues to rise and stood at a record $5,130 last year, up over a quarter from $4,075 a decade earlier.

Expert Who Called Dotcom Crash Issues Surprising New Prediction

Something strange is going on in the financial system. And according to The Wall Street Journal, it’s causing some investors to move massive amounts of money out of the banking system.

This confirms that banks and finance companies are making riskier loans to keep up revenue as vehicle sales slow. and here's why.

The record percentage of underwater loans on trade-ins suggests that car owners are trading in their vehicles sooner than they had previously. According to Bloomberg, "a consumer is often the most underwater on his or her auto loan in the first few years of ownership, because the value of the vehicle drops fastest over that time. By the fourth year, for example, the borrower has paid down a big chunk of the loan, catching up to the depreciation they took in the first few years."

As Bloomberg explains, for borrowers who do trade in their underwater cars, lenders are essentially giving them the money to pay down their loan. The dealer sells the used car, and whatever balance remains on the old loan is folded into the new loan. The borrower might get a longer-term loan than he or she had before to help keep monthly payments manageable. That means that loan balances are getting bigger relative to the value of the new car, and the debt will be paid off slower.

Confirming this, Moody's analyst Jason Grohotolski notes that the growing proportion of underwater trade-ins means that at least some borrowers are getting deeper and deeper in debt with every car they buy. This will - eventually - translate to bigger and bigger losses on loans for finance companies whenever the economy heads south, the same way lower down payments slammed mortgage lenders after the credit and housing bubbles burst.

"It’s this cycle that just continually gets worse and worse," Grohotolski said. "It has to stop, and it doesn’t have a favorable outcome."

Meanwhile, the average used car price continues to rise and stood at $19,400 as of Q3 2017. This suggests that, since most people simply roll their negative equity into their new loans, many used car buyers are likely sitting on loans where ~15-20% of their outstanding balance simply reflects their negative equity from their previous car.

But wait, there's more.

Despite rising average used car prices and rising negative equity, average monthly payments for used cars have managed to stay pretty much flat since Q3 2011.  Obviously, monthly payments are determined by 3 variables: beginning loan balance, interest rate and term.  While interest rates have (at least until recently) come down since 2011, they haven't declined nearly enough to offset a $2,800 increase in starting principal balance which indicates that, like new car loans, used car loan terms are getting stretched out further and further to manage monthly payments.

* * *

Record "underwater" trade-ins are just one of the many facets of the deteriorating US auto market, which has been slowing down in the past year, and in 2017 new vehicle sales fell 1.8% to 17.2 million in 2017, the first decline since 2009...

... even as loan volumes for new and used car purchases was on track to be higher than ever. Suggesting more trouble lies ahead, Moody's said that the growth in the average amount financed for a new car outpaced median income growth between 2013 and 2016, suggesting borrowers are getting more strained.

This can be quantified directly by observing surging delinquency and default rates for subprime auto loans. With few ways to keep the business flowing as demand slows, one staple remains which, of course, is to reach out to less creditworthy borrowers. As a result, delinquencies are soaring for subprime auto loans and in the third quarter reached the highest rate in more than seven years, according to New York Fed data from November.

While few deny that the US auto segment, and especially its financing subset is in a bubble, there is broad consensus that unlike subprime mortgages, the bursting of the auto loan bubble will not have dire consequences. In fact, according to a surprisingly rosy take by Bloomberg, "any pain from car-loan trouble will likely be just a shadow of the housing bubble collapse, because the auto debt market is much smaller." There were around $9 trillion of mortgages outstanding at the end of the third quarter, compared with $1.2 trillion of auto debt, the New York Fed said.

And so far, many of the bonds backed by subprime auto loans are performing well thanks to built-in protections for investors. Wells Fargo analysts said in a note Wednesday that bonds issued by two of the biggest subprime auto lenders -- Santander Consumer USA Holdings Inc. and General Motors Co.’s finance arm -- have room to reach prices not seen since before the financial crisis.

Of course, where this analysis falls short is assuming a linear deterioration once the bubble pops; as the last financial crisis demonstrated, once the waterfall effect of bursting asset bubbles is in play, the fallout quickly turns exponential, and no rational assessment will do the ensuing collapse justice. As such, the real question is whether auto loans will be the trigger for the bursting of the next consumer debt bubble, or just one of the many dominoes to fall.

Meanwhile, Wall Street is back to its usual antics. Since auto loans performed relatively well during the financial crisis, it encouraged new lenders to step into the space, according to Dan Zwirn, chief investment officer of Arena Investors. Rrisky car loans can be bundled into bonds and sold to yield-starved investors, who are eager to buy them, and as the chart below shows, that's precisely what is going on.

And, according to Zwirn, that also gives cheap funding to finance companies to reach out to riskier borrowers.

"The same sorts of excesses are happening in car loans that happened in residential mortgages,” Zwirn said. "Ultimately, when the overall fixed-income market has an issue, even if this is not the cause, car loan debt will likely suffer greatly."

And since Zwirn's hedge fund had to shutter a decade ago precisely because it did not envision this particular scenario, Zwirn's caution deserves particular attention..

For now, the stable economy and low interest rates are helping keep borrowers afloat for now said Moody's Grohotolski. But once there is a slowdown, and rates start rising aggressively, lenders will face a reckoning.

"We could be in a continued state of risk-building on lenders’ balance sheets," Grohotolski said. "You may not necessarily recognize all of that risk until an unexpected downturn. There could be a meaningful increase in losses."

* * *

For now, besides the modest decline in total sales and surging delinquencies among subprime borrowers, there are few signs of an imminent storm in the new or used auto markets. However, chaos in the used-car market - once it accelerates - will hurt OEMs.

As we pointed out in June, Morgan Stanley recently predicted that the surge in used-car inventory - driven by a flood of off-lease vehicles - would saturate the market, resulting in as much as a 50% crash in used car prices over the next couple of years which would, in turn, put further pressure on the new car market, which has already resorted to record incentive spending to maintain volumes.

Used Car Prices

What can borrowers do when prices inevitably crash? Last year, the New York Times reported that lenders are increasingly taking delinquent borrowers to court, and winning - garnishing their wages for years for cars that were, in many cases, worth far less than the amount they're paying.

For working-class borrowers who are struggling in an economy with stagnant wages, this burden could create serious problems for the household budget, and beyond. It also means that once the current low-rate, credit funded sugar high ends, it will be the middle class that pays for it, as usual.

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Offline azozeo

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Re: Nobody Wants Old Carz
« Reply #3 on: January 28, 2018, 11:57:30 AM »
That's a shame you can't off-load your MPV.
Can the high school auto shop class use a donation.
Maybe somebody at the shelter or men's mission needs wheelzzzz  :icon_sunny:
I know exactly what you mean. Let me tell you why youíre here. Youíre here because you know something. What you know you canít explain, but you feel it. Youíve felt it your entire life, that thereís something wrong with the world.
You donít know what it is but its there, like a splinter in your mind

Online RE

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Re: Nobody Wants Old Carz
« Reply #4 on: January 28, 2018, 02:59:36 PM »
That's a shame you can't off-load your MPV.
Can the high school auto shop class use a donation.
Maybe somebody at the shelter or men's mission needs wheelzzzz  :icon_sunny:

Too late, the management company's towing contractor finally came to take her to the Land of Away on Friday.  They took her, now they own her and she is their problem.  At least it didn't cost me $75 to have her towed myself.

RE
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Offline azozeo

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Re: Nobody Wants NEW Carz
« Reply #5 on: January 28, 2018, 03:51:29 PM »
That's a shame you can't off-load your MPV.
Can the high school auto shop class use a donation.
Maybe somebody at the shelter or men's mission needs wheelzzzz  :icon_sunny:

Too late, the management company's towing contractor finally came to take her to the Land of Away on Friday.  They took her, now they own her and she is their problem.  At least it didn't cost me $75 to have her towed myself.

RE



We certainly have an epidemic of wheelz with no homes.

I was listening to one of those lectures by Jared Rand (Rand Corp.) family member.
about a week back & he stated that more vehicles are deliberately produced than can be off'd to the sleeple....
The excess newbies go to the land of misfit rides. Literally, they are crated up into metal shipping containers &
left to rot in the desert. He didn't say WHICH desert, I suspect the African desert. I about stained my depends
over that one until I found out the reason why this is done year in & year out. If the car mfgs' reduce work staff
to accommodate the actual need for new carz, there would be blood in the streets with massive unemployment.
SO somewhere on google earth sits enormous amounts of rotting new carz.... mmmm mmm mmmmmmmmmm
I know exactly what you mean. Let me tell you why youíre here. Youíre here because you know something. What you know you canít explain, but you feel it. Youíve felt it your entire life, that thereís something wrong with the world.
You donít know what it is but its there, like a splinter in your mind

Offline K-Dog

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Re: Nobody Wants Old Carz
« Reply #6 on: January 28, 2018, 04:02:08 PM »
Lets not even talk about what's in my driveway.  If you are really curious you can see on Google Earth.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline azozeo

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Re: Nobody Wants Old Carz
« Reply #7 on: January 28, 2018, 04:18:00 PM »
Lets not even talk about what's in my driveway.  If you are really curious you can see on Google Earth.


December to remember ....

A new Lexus stealth SUV wrapped up with a red frickin' bow.  :evil4:
I know exactly what you mean. Let me tell you why youíre here. Youíre here because you know something. What you know you canít explain, but you feel it. Youíve felt it your entire life, that thereís something wrong with the world.
You donít know what it is but its there, like a splinter in your mind

 

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