Used Car Prices Drop 3 3 In New Report

Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.

The CPI Update Is Good News

It’s easy to get lost in the ups and downs of economic news as reported by financial pubs and networks, which has more of a short-term impact on markets and is therefore more relevant for traders than it is for the average person. Unless you are a professional trader or a masochist it’s probably best to ignore it if you don’t find it fun. I find it a little fun. Yesterday’s “Consumer Price Index” (CPI) release from the Bureau of Labor Statistics is good news and provides a little more useful information. This is highly simplistic, but the CPI report is an imperfect-yet-helpful measure of how much stuff costs and it’s one of the key indicators of inflation/deflation and therefore an indicator of where the economy is going.

BOOM: IT’S COOL: Headline CPI rises just 0.1%. Core CPI rises just 0.2% Economists had been looking for a 0.3% headline gain, and a 0.3% core gain. YOY headline inflation down to just 7.1% Futures absolutely EXPLODING higher https://t.co/CKafFzS5ys pic.twitter.com/Maoz6lzl9I — Joe Weisenthal (@TheStalwart) December 13, 2022 People were expecting the report to be higher. It’s lower, which is good because that means that inflation is maybe edging down:

— Carl Quintanilla (@carlquintanilla) December 14, 2022 The hope is that this news encouraged the Federal Reserve to not raise interest rates, meaning that it’ll remain easier for people to borrow money to buy cars and houses (and businesses to borrow money for investments). In reality, interest rates are probably going to go up, but this might be the last rate hike for a while. The fun thing about the CPI is that it breaks down the cost of stuff into a lot of smaller categories. Here’s the one we care about:

The first seven numbers are month-over-month seasonally adjusted month-over-month changes going back to May and the last one is an unadjusted 12-month change. New vehicle prices are still up 7.2% from where they were a year ago, but they leveled out in November. Used car prices? Those keep dropping and are down 3.3% from a year ago. Not to be a downer, but that doesn’t mean cars are cheap. They are not. They are still up about 33% compared to normal if depreciation still acted like it was supposed to act. Here’s some good news to end the story:

— Liz Ann Sonders (@LizAnnSonders) December 14, 2022 As a whole, people are earning wage increases faster than the cost of goods is increasing.

Toyota Doesn’t Expect To Sell A Ton Of New Prii

Here’s a curveball. There’s been a lot of interest in the new 2023 Toyota Prius within our readership. It was the most read-about car from the LA Auto Show. Hell, just this morning we’ve got a new Prius review and new Prius pricing and people seem to be curious. Is Toyota expecting a huge number of sales from this newly redesigned model? Nope. They’re expecting the opposite. At the same press event Emily was at Toyota execs said they expect to move about 35,000 of the hybrids a month, at least according to Automotive News’s Larry P. Vellequette, who was also at the event (the “P” stands for: Pretty Cool Guy): It’s a fair point. If you want to look like an environmentalist you’re probably getting an EV. The new Prius is attractive and quicker than the outgoing model and still extremely efficient. It’s also a great solution for people who need a car but don’t have easy access to a home charger. I’m hopeful this is wrong and the new Prius does better than 35,000 a year (assuming they can make more). […] And yet, after spending the first few generations of its life as a cultural touchstone for cutting-edge environmentalism, the Prius is now just another hybrid in a Toyota lineup chock-full of hybrids — albeit one rated at up to 57 mpg and featuring a more powerful 2.0-liter engine. In a declining sedan market, the Toyota Prius will have to compete on equal terms against other hybrid sedans.

You Might Pay For Waymo Self-Driving Car Rides In SF

Reuters with the scoop that Google’s Waymo applied for a permit to charge people to take self-driving taxi rides in San Francisco. Currently, GM’s Cruise is the only company operating fares there with driverless cars. If Waymo follows suit, and it looks like it will, it could go a long way toward autonomy actually making money. It’s one of the jokes of “driverless cars” that most of them still have backup human drivers that sit there in case something goes wrong. It’s a job designed to be replaced by computers. From the article: It’ll reportedly take months for approval, but San Francisco is a good test case for driverless cars since it has hills, weird weather, crowded streets, Uncle Jesses, cable cars, and all manner of other challenges. The company has made its autonomous driving “more assertive,” Chatham said.

Building Cars Is Hard, Part 917

The problem: Building cars is super hard, you guys. Gonna go to Bloomberg (via Yahoo!) for an update on just how much cash it takes to make cars and why the company had to ditch a just-announced tie-up with Mercedes to build vans in Europe: I am sympathetic here. At The Autopian we’re doing video. We’re recording a podcast. We’re writing features. We’re launching memberships. We’re buying crazy cars. It’s a lot. Some days, it’s probably too much. It’s hard to stop. I got a nice email from a reader reminding me it’s my job to prevent David and Jason from burning out. I could… improve there.

The Flush

Are you more or less likely to buy a new Prius than any previous generation one? Would you hold out for the faster PHEV Prime or are you good with the FWD standard hybrid? Support our mission of championing car culture by becoming an Official Autopian Member.

The Volvo XC40 and Escape are the only two SUVs that did well on new IIHS test The men who helped Carlos Ghosn escape had a far worse fate The 2023 Subaru WRX Miraculously Only Costs $31,625 The World’s Biggest Shipping Company Wants To Ban Gas-Powered Trucks Apple Delays The ‘Apple Car,’ Admits It Must Have Steering Wheel And Pedals

Got a hot tip? Send it to us here. Or check out the stories on our homepage. Photos: BLS, Toyota, Rivian, Waymo To me the base FWD would be plenty sufficient. We live in Florida, and take an annual summer trip. No need for AWD, and 19″ wheels are a step too far economically. Speaking as someone who is rarely rational when it comes to cars, and who is glad that car companies make vehicles for non-rational people, I have exactly the same interest in this generation as in any other. I am a bit surprised they bothered with another generation, perhaps the taxi and rideshare sales provide a solid floor. I finally found my unicorn. A low mileage (12K miles), 9 month old demo unit 2020 Mini Clubman JCW (300hp version) for $34K. Sticker was $49K, and this car belonged to the regional Mini rep as his company car, meaning it was fully serviced at dealers and never really beat on. I bought it and have been in love for the past nearly 2 years. I had always wanted one, but couldn’t justify the cost for the 228hp versions, and once the 300hp was announced, I couldn’t justify $50K for a Mini. This was the best of both worlds. So much so that I was on vacation and had a well optioned out Rav4 for a week. Couldn’t wait to get back in my own car. Had to use my wife’s 2019 Mini S for a few days, and while you’d think they’d be similar, they’re not at all. The regular Mini is like a GTI in that it’s quick and twitchy. The Clubman is more like an S4 in that it’s deliberate and powerful. Anyways, that’s just my way of saying that being rational doesn’t always make people satisfied, even when they know that it’s the right thing to do. ….all jokes aside I agree with both of you. Having an emotional connection to cars is what separates enthusiasts from normies, and neither of you have to even begin to justify your choices to the guy who drives an overboosted, rough riding, farting, torque steering CUV that no one other than car blog frequenters could pick out of a lineup. I like to have SOME level of rationality to my cars (thus my love of hot hatchbacks) but if I was forced to drive something that was solely about being as rational as possible I’d probably take the bus instead. I was planning to shoot for an upper-end Honda Accord Hybrid. Looks like the Prius might be back on the table. I still need to drive my father’s Camery Hybrid to see how that fits my expectations. Another useful comparison is to price things in ounces of gold. Consider how much gold an hour of minimum wage labor could purchase in 1972, versus how much gold an hour of minimum wage labor can purchase today. They differ almost by an order of magnitude. …and THIS is why most people are priced out of owning new cars, and why it is that today, the wealthiest 20% drive the new vehicle market. How about internet access? This is a new expense in our lives that is REQUIRED for work and school. Health insurance? Not covering as much as it used-to. Auto repair? Only going up with more advanced features. Yes, you can buy cheap food, but good, healthy food is going up quickly. Home and car purchase prices are just one example of the current cost of living climate. This willfully ignores the social changes that have occurred over time. Changing from typical households having a single income to having two incomes changes what a unit of income is. The cost of living is always going to be some deviation away from typical household income. Trying to frame it in terms of the value of an hour of individual work is just denial of that reality. If single incomes have to bid for resources against dual incomes, they’re going to lose out. But the cause of the “problem” (it’s not really a problem – it’s a cultural choice we’ve made) is that we’ve normalized two income households. “…and THIS is why most people are priced out of owning new cars” Still no. Even my explanation above isn’t enough to explain this. There isn’t one reason. New cars have become unaffordable for a combination of reasons. Some of which have to do with inflation, and culture, and monetary policy. But also because we don’t have a free market for vehicles and we’ve chosen to mandate in significantly higher prices. “Another useful comparison is to price things in ounces of gold.” This is the most incorrect thing you said. The price of gold is not well correlated to inflation. It’s driven by politics and speculation and supply changes and half a dozen other things. https://www.nber.org/system/files/working_papers/w18706/w18706.pdf https://apnorc.org/projects/bipartisan-dissatisfaction-with-the-direction-of-the-country-and-the-economy/ Social changes aside, if inflation-adjusted hourly wages remain steady or improve, which is what the official numbers are telling us has happened, then that means two incomes today should definitely be able to enjoy a higher purchasing power than one income could 50 years ago. But when you look at the cost of housing per square foot, healthcare, college, or even quality unadulterated food, this isn’t the case. This is a large reason why most people are in debt. Without debt, they can’t afford anything, because wages ae no longer commensurate with the cost of the living standard to which people have become accustomed. All of the technological advancements made since then, the smart phones, the computers, the gadget-laden new cars, do not make up for the fact that the necessities are becoming increasingly expensive in terms of the amount of labor required to obtain the requisite money to afford them. There are no shortage of people living very modestly, working harder than ever, and living paycheck to paycheck while drowning in debt to do so, when 50 years ago, one income would have provided a comfortable living. This is ALMOST like the ‘Apple computers are overpriced’ argument, except when you compare them spec for spec (albeit that’s hard now with Apple Silicon), they almost always were roughly the same price as an equivalent PC when you took a metal case, glass screen, high res screen, backlit keyboard, good touchpad, etc into account. Apple just chooses not to participate in the sub $500, plastic shitbox market that most people are just fine playing in. A specced out Hyundai costs very close to as much as an equivalent BMW or Audi. BMW and Audi just choose not to sell an Elantra competitor. Honda has dropped base trims lately, but I think that’s more motivated by profits if not just directing the limited available chips to higher-profit trims. It’s just become cheaper to build them all the same way. Even when you could buy a Civic DX without A/C still in the 8th gen 15 years ago, it had power windows -probably because it would have been more expensive to build it with the roll-up winders, vs. say power locks, you just leave off the actuator or whatever. Yet now it’s cheaper to build all trims with push-button start, and just leave off the sensor on the door handle so you still have to click the button… Today’s new car sales reflect the wishes and desires of the upper 20% of income earners. The used car market better reflects the wishes and desires of those who can’t afford to buy new. Note what retains value, and what doesn’t. Used Tesla Model 3s, Toyota Prius, Honda Civics, and the like, retain their value well, indicating that MOST automobile operators, who can’t afford to buy new, mostly value efficiency, reliability, and low operating cost. There is high demand for those vehicles and with the car market lunacy over the last few years used versions were selling for almost new prices. The high-end luxury SUVs, especially European ones, sell very well, but do not retain their value well by comparison, and end up as land fill fodder, when those resources wasted on making those vehicles could have instead been used to make something fuel efficient and long-lasting. They sure do, because with cars more than almost any other consumer good, they trickle down to the lowest stratum of society eventually. The lower income person driving a 15 year old Civic today is a direct beneficiary of Honda making improvements to their vehicles in the decades leading up to 2007. There weren’t a lot of people daily driving 1972 Blazers (or Civics) in 1987. I also dispute the notion that the cheapest item is out of reach for most. The average new vehicle skyrocketing in price doesn’t preclude the cheaper vehicles still existing. After all, you can still buy a new Mirage, Civic, Corolla, Prius etc today at a price very comparable to long term trends in vehicle costs whatever the measure. A 2015 NADA survey found that the average new car buyer made an individual income(NOT household income) of $80,000 a year, which put the average new car buyer in the upper 20% of wage earners for that time period. This is for all new cars, including the least expensive models, on up to the high-end exotics, and everything in between. When my dad was a janitor making minimum wage, he was able to save for a brand new MGB GT within less than 2 years. He paid cash. As an engineer today making more than 5x minimum wage, it would take me a lot more effort and perseverance to save for a brand new Mazda Miata and pay cash for that. Many states have a higher minimum….Illinois will be $13/hr on January 1, which would allow you to buy a $29K Miata in 2,240 hours, again, less than 10% higher in 50 years. Given how much better a 2023 Miata is in every way over a 1972 MG, I hardly think that’s an onerous price to pay. It isn’t shocking to me that new car buyers are on average in the top 20% of incomes, where we argue I think is how long this has been the case. I submit that your father was an outlier; not a lot of minimum wage workers were buying new cars either then or now. If you take a look at the Bureau of Labor Statistics’ CPI Inflation calculator website and check the current (Nov. 2022) value of $12,500 in January of 1995, the calculator returns a value of $24,759. What can you buy today for just under $25 grand, assuming that you can actually pick it up at MSRP? A 2023 Corolla SE (not a base model) has an MSRP of $25,045 including destination. A 2023 Subaru Crosstrek base with optional CVT stickers at $26,220 with destination. Not bad for the coveted (and therefore more expensive) crossover form factor! Both of these vehicles are light-years ahead of a 1995 neon Highline in every measure! So is the point that the worker of today can’t afford something like a Corolla SE or a Base CVT Crosstrek? Or that they are unwilling to buy anything but a loaded model? Today the average delivery driver wage in Milwaukee is $18.85, 2.6 x minimum. and far fewer are union. High seniority UPS drivers make $40/hour, 5.5 times minimum. A nice house is $300,000. So 50 years on that driver is effectively being paid less…but what’s the solution? A good start would be to have our currency backed by something tangible(used to be backed by gold and silver, but that was done away with with the end of Bretton Woods), and to go back to the old method of calculating inflation so that wages and entitlements like Social Security could be adjusted accordingly and with greater accuracy to real-world conditions. Stop the endless money printing and taxpayer-funded corporate bailouts as well. But there is no magic bullet solution at this point. This country is on the path to collapse, due to decisions made long before I was born. I don’t know, but maybe there should be a cap on profits and a limit to the way comp packages work for executives in that the top position at the company can only make X amount more than the lowest, and that includes non-monetary compensation. IE: If the janitor makes $40K a year, the highest paid executive can only make 10 or 15x that TOTAL. There’s no ‘$1 salary and $4M in stock’ or anything to work around the rules. Maybe also make executives and board members personally liable for criminal misdeeds by the companies also. Profits are just unpaid wages, essentially. If the company is only allowed to keep 15% of the revenue as profit and you can’t just give them to shareholders or executives or sit on them the way Apple does, maybe it’ll force them to actually pay people what they’re worth. The average used car costs what, $28k now? I make what is considered good money by today’s standards, and if I were paying the average mortgage and still had a student loan to worry about, I’d be priced out of even that. $28k is what my dad paid for an 2001 Audi TT Quattro with 225 horsepower back in 2003, and that was a $600/mo payment! And yet at the same time, the top selling vehicles are vehicles that cost much more than a Mirage.
So given that reality, people are not as poor as you’re claiming they are. If they were, then the Mirage would be a top seller. Regarding the Prius… moving 35,000/month is still not bad… that’s 420,000/year. The problem the Prius has is that it’s not the most efficient go-to green car on the market anymore ever since the Tesla Model S went on sale. In my view the Prius should be Toyota’s cutting-edge green car. And on that basis, this new Prius should have been a BEV. But it’s not. But it still looks like it will be a very good car. It just won’t be a game-changer like the 1st and 2nd gen Prii were. The generation of Prius that comes after this one better be a BEV though. The Flush: I’m just as inclined to buy one of these new Prii even with the smaller (but still bigger than my Fit) trunk. It’s still a roomy hatchback with a low TCO and Toyota reliability. When it comes time to replace my 2008 Honda Fit, a 2010+ Prius will again be on my used car candidate list… as well as the 1st or 2nd gen Fit, Chevy Bolt and other cars. The last time I was shopping for a car (December 2019), only the 2009 and earlier Prii were within my budget. But those earlier ones have unacceptably small trunks for me… so I ended up with the Fit. For one, it’s the perfect sized car, not waaay too wide and tall. I’m not a fan of the instrument cluster, but it’s not too bad. It’s the first Toyota is a very long time to make it to production without a stop in the styling department for a beating with the corporate ugly stick. Maybe all those people were working from home during COVID and weren’t aware of the project and it slipped by unscathed. I could easily live with the base spec FWD, as I happily drive a front drive Golf now. But I might be tempted to treat myself to the PHEV. Since this car is actually small enough it would fit the parking spot where I would be able to charge it at home. Fortunately, I intend to have several more years of use out of my current car, but this really is the first new vehicle I have seen in a long time that has made me think that this is the way I would go when replacement time comes. My GTI was rated at 24 city and I was lucky to hit the low 20s while commuting…and the Kona N is rated at a lackluster 20 but frequently returns in the low to mid teens on the two days I’m due in to the office at 9am and have to fight rush hour both ways. Part of me is like “DC’s traffic and streets are so horrific that nothing I drive is going to touch its city ratings” but the other part of me feels some guilt over incinerating dino juice at such a rate. Fortunately both my turbo 4s have been capable of exceeding their highway ratings by 3-5 MPG routinely so it evens out a bit in the long run. For those reasons a hybrid or PHEV will definitely be under consideration for me next go around…and while I don’t think the Prius will be on my list there’s a chance that the Crown will be. Anyway, 35,000 doesn’t seem low enough to drive the demand to the point of insane markups, but I will give Toyota a hearty FU for the artificial scarcity approach they’re taking with the GRC and I hope they don’t get the wise idea to try it with other stuff. BS like that is a big part of the reason why the market is so bonkers and it puts cars that are supposed to be attainable for the average Joe into rich people territory. Less likely, but only because I already own an ’07, and since I bought it to save money, it would make no sense to spend ~$30k for only 7-8mpg and new technology that I don’t really need. If I did get a new one, the standard would be fine, but the electric range of the PHEV would be nice to have. Stop calling it inflation. It is not inflation. Inflation is when businesses are losing money and the consumer’s dollar isn’t going nearly as far. Profiteering is when businesses are all posting record profits quarter after quarter and consumers can’t put food on the table. It’s not fucking inflation. It’s profiteering. “Is Toyota expecting a huge number of sales from this newly redesigned model? Nope. They’re expecting the opposite. At the same press event Emily was at Toyota execs said they expect to move about 35,000 of the hybrids a month” This here needs some very, very significant correction and context. Because, uh, 35,000 per month? No. That’s half a million a year. I suspect they meant 35,000 of them per year. This would be in line with a general downward trend on the Prius and in line with 2020-2021 numbers which were 43,525 and 59,010 units for the year respectively. So, 35,000 Prii a year. “That’s bad!” Actually, that’s still quite good. Within the compact segment, that would have the Prius outselling the Impreza, WRX, Bolt, Ioniq, Insight, Leaf, and Golf. Yes, outselling the Impreza, the official car of “say you vape without saying you vape, bro.” And when they sell 40,000+ (which is a very realistic number based on prior sales,) they get to crow about exceeding expectations. “It’ll reportedly take months for approval, but San Francisco is a good test case for driverless cars since it has hills, weird weather, crowded streets, Uncle Jesses, cable cars, and all manner of other challenges.” And all the people. But oh well. Gotta kill a few pedestrians to make an omelette, right? And isn’t that the whole purpose of public roads? To put the public at risk so you can beta test your private company’s technology at public expense! “CEO RJ Scaringe apparently concluded that, in partnering with Mercedes to jointly produce electric vans in Europe, Rivian would be biting off more than it can chew.” And this is how you know that RJ Scaringe is, in fact, not even remotely qualified to be the CEO. Sorry not sorry. But that’s just outright stupid and wrong. Signing a deal with Mercedes, a company with over 100 years of experience building cars, in a joint venture where technology and expertise in building cars will be shared, is somehow a negative? You give them some motor and battery and ECU stuff, and Mercedes gives you a century of expertise and a factory to build them. It is the ultimate no-brainer. Yes, there is some risk with the added workload. But for fuck’s sake, you’re struggling with what you have because you need exactly the knowledge on offer! This is a deal that would fix your factories, and you walk away?! PicardFacepalm.gif You are not smarter than Mercedes and you are not even remotely smart enough to fix your problems yourself. Resign and put Frank in charge, before your dumb ass takes the company the way of Workhorse. Are you more or less likely to buy a new Prius than any previous generation one? Honestly? Not really – and not because I dislike the Prius. I actually do like it. I hate the unreadable center pod and the insultingly cheap interior and atrocious build quality and engineering defects of the early ones. But I’ve seriously considered the XW30 and XW50 (that’s ’09+) for a runabout, or preferably a 2017 CT200h. The Jeep gets a whole 12MPG highway with a tailwind. But given my intended usage pattern? I would not significantly favor the new Prius over the XW30 or XW50. I would probably disfavor it due to the reduced cargo space, as I frequently need to haul large but fairly lightweight parts (think over 3 feet in two dimensions, but less than 100lbs, usually 2-3 at a time.) This. All of this. I think Toyota is plenty OK with that volume of Prius sales. The RAV4 Hybrid alone seems to be on track to exceed all but the very best ever year of Prius sales in the U.S. (2007, ~181k). The Corolla Hybrid was a bit limited in trim/features for its first few years so it didn’t really steal from the Prius, but expanded its lineup this year. While the new Prius pricing is up a couple grand from the current one, the Corolla hybrid is a couple grand less. Hybrids are commonplace enough that anyone that would have looked to a Prius for a small efficient car, they’ll try to move to the hybrid Corolla now. So the Prius has to be a bit more niche, maybe almost halo, for Toyota’s hybrid lineup as they try to entice people into hybrids in segments like minivans and SUVs where larger displacements/V6s usually dominate. Plus Corolla Cross Hybrid hits the market soon which won’t have the Prius’ MPG, but does have the same 194hp 2.0L hybrid powertrain and will be priced similarly. No doubt Toyota expects that to be a big volume seller. I don’t know that I want one, but I am very curious to see how the new Prius drives. If I were to get a hybrid car, it probably would be near top of my list however. With the new Accord lineup so hybrid heavy, for similar money I think I’d stick with the Prius. If you’re asking whether or not I’d prefer the newest one over a previous gen, I’d definitely like the newer one. Not a huge fan of Emily’s turtle-car (although, like her, I do kinda appreciate it for what it was and how long it stayed what it was.)