Auto Industry Doomed?

[Glenn Black]

http://4.bp.blogspot.com/_pMscxxELHE...noverJan09.jpg

Fleet age is typically 8.5 years. Taking current auto sales rate and dividing it into number of licensed vehicles in US, we get an average turnover rate of 25.5 years.

It has never been this high before (data starts in 1967)

Will your current vehicle last for 25.5 years? I didn't think so.

Talk to Avis, Tilden, etc. They blow through thousands of new vehicles every month due to accidents. Eventually they run low and have to buy new ones. Or will they? Rent a Wreck may get a whole new level of competitors. If they stay with just new rental cars, will this eventual inventory replacement be in time to save the auto makers?

In Cuba, many vehicles are still 1950's vintage vehicles. Maybe we can keep them running? Unfortunately, planned obsolescence has been designed into today's vehicle, unlike the 1950's.

[cjppjc]

Re: Auto Industry Doomed?

Will your current vehicle last for 25.5 years? I didn't think so.

.

I don't think so either. I don't think it will last 20 years:eek:

[Mn_Mark]

Re: Auto Industry Doomed?

Will your current vehicle last for 25.5 years? I didn't think so.

Actually that is quite possible with good care. My last vehicle lasted 18 years before I sold it (not because it quit working, but just because I wanted another.)

I got my current vehicle in 2001 and expect to have it for at least another ten years, and would happily have it another 20.

I read a book named "Drive it Forever" which laid out the way to care for a car so you get 400,000 or 500,000 or even a million miles out of it. Quite possible if you are careful about changing oil, avoid jackrabbit starts and stops, keep the road salt washed off, and so on. If you can learn to replace yourself the main things that routinely wear out, like brakes, water pump, and so on, it is quite affordable. I enjoy working with my car so it's like a hobby that pays for itself many times over.

Anyway, yes, cars can definitely last 25 years if cared for. (Not that they will the way most people care for them, and beyond that some car models are just cheap crap that won't last anyway.)

[GRG55]

Re: Auto Industry Doomed?

http://4.bp.blogspot.com/_pMscxxELHE...noverJan09.jpg

Fleet age is typically 8.5 years. Taking current auto sales rate and dividing it into number of licensed vehicles in US, we get an average turnover rate of 25.5 years.

It has never been this high before (data starts in 1967)

Will your current vehicle last for 25.5 years? I didn't think so.

Talk to Avis, Tilden, etc. They blow through thousands of new vehicles every month due to accidents. Eventually they run low and have to buy new ones. Or will they? Rent a Wreck may get a whole new level of competitors. If they stay with just new rental cars, will this eventual inventory replacement be in time to save the auto makers?

In Cuba, many vehicles are still 1950's vintage vehicles. Maybe we can keep them running? Unfortunately, planned obsolescence has been designed into today's vehicle, unlike the 1950's.

I read somewhere that the number of registered vehicles in the USA exceeds the total number of active drivers licences. Pretty easy to see what that means...

[Supercilious]

Re: Auto Industry Doomed?

I have recently put 10% of my portfolio in F common (perpetual options ) @1.87.

That was a risky move, but I was tired to sit on the sidelines and watch the numbers. I'm now about 70% cash (still have the TLT shorts) and getting really bored and impatient. Still have no gold (physical or paper), but I may enter gold soon if there is a clear opportunity.

[GRG55]

Re: Auto Industry Doomed?

I have recently put 10% of my portfolio in F common (perpetual options ) @1.87.

That was a risky move, but I was tired to sit on the sidelines and watch the numbers. I'm now about 70% cash (still have the TLT shorts) and getting really bored and impatient. Still have no gold (physical or paper), but I may enter gold soon if there is a clear opportunity.

Any reason you decided on F common instead of higher up the food chain with their bonds, especially given the yields? Just seems the reward to risk on the bonds is better than the common at this point?

[pmmeaney]

Re: Auto Industry Doomed?

I'm an avid listener to Click and Clack (the Tappit brothers) on NPR. They've long argued the value of buying used cars and running them till they die. They should be made honorary members of iTulip for the sound advice they give to the greater public.

[Supercilious]

Re: Auto Industry Doomed?

Any reason you decided on F common instead of higher up the food chain with their bonds, especially given the yields? Just seems the reward to risk on the bonds is better than the common at this point?

I believe the slingshot effect will be stronger for common even if it happens in a short sucker's rally. On the other hand the common can be wiped out completely .. but that are the risks of option trading

[don]

Re: Auto Industry Doomed?

A return to a production/consumption economy, with a concomitant shrinkage of the FIRE economy, would place production technology and expertise at a premium.

How important would Detroit's production base (fixed capital) and its tool making skill pool be in that transition?