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Here's a similar off-topic link to Bloomberg (except this one doesn't have any connection to hard assets like cars or investable businesses like rental companies):
Maurice said: "My dad's wisdom was never buy someone else's problem."
Unfortunately, mine almost always did buy someone else's problem. Prior to sometime in the 1970s there weren't laws (or at least enforceable ones) against "rolling back" odometers. Winding back the mileage on used cars before reselling them was pretty much standard practice among dealerships, so a car showing 35,000 miles might well have had two or three times that much wear.
Once, after buying a late model Chevrolet with around 30,000 miles showing on the odometer from the local dealership, and experiencing a lot of mechanical problems, my dad happened to run into the car's former owner who explained that he was a sales rep for a big Michigan company and had put nearly 90,000 miles on that car over about 3 years of ownership. Dad was fit to be tied.
I've known folks who did very well with used cars. I'm not one of them. The last one around '85 I even took to a reputable repair shop before buying and paid to have it examined. Checked out OK. Than before I even got the d** thing home the radiator burst and I had to divert to the same repair shop that had checked it out a day earlier. A year later most of the cheap Bondo filler used to cover rusted spots had fallen out.
So, I prefer to buy new even if it means getting a lesser equipped car or pickup and than to hold them for 10-20 years. Pickup trucks especially. Not as disciplined as Maurice apparently is, so have sometimes violated that rule with cars and traded earlier.
* So as not to go completely off-topic: The press has been reporting a glut of late model used cars on the market for a year or two. So, if I were in the market today I'd probably roll the dice a little and at least look at some of them. And @Ted - Your accumulated wealth is worthless unless you (1) spend it or (2) give it away.
Thanks for posting and something for me to think about. My 3 yr lease is up next month and I have extended it till Dec 1st. Lots to think about, as I was considering buying a 2018 Honda Accord coming out in Oct. How will cost of new be and maybe I should pay my 2014 car off or shop for 2017 lease or buy. I am retired, age 83 and wife and I only drive 9,000 mile year. I also have a 2007 Honda Civic with about 55,000 and great shape.
It would be interesting to model the market for new cars. For people looking to get a new car every few years, it may not affect their lease vs. buy decision much. Leasing should be getting more expensive for the lessee (lower residual value for lessor), but an owner would face the same residual value problem trading in a late model car.
I didn't see mentioned in the article anything about increased longevity of cars (just a glut due to a seven-year run of increased new car sales). That longevity, combined with dropping resale prices, argues for people deciding to hold cars much longer.
This in turn could push people to buy rather than lease (leases are generally only for a few years). Slower turnover could also gradually shrink the used car supply and the market could self-correct.
For a reminder of what happens when a product lasts "too long", here's the best I could do in digging up an old ad for Stride Gum, a product that advertised it lasted too long. (There's a better one with factory workers talking about the problem, but I haven't found it yet.)
The increased dependability of most cars built in past several years makes decisions easier. Also Certified used cars with warranty's are helpful. I believe they have to be something like under 40,000 miles and 4 years.
Don't know about 'have to be', but a year ago I bought a Toyota-certified used Prius w/ a 1y / 12k warranty, and actually had to use it, which is pretty rare for a Prius in my experience of family owning a half-dozen. (Ends in another couple weeks.)
All I can tell you about the used car market is that I get 1-2 letters per week from dealers telling me how much in demand my 2009 Silverado pickup is which only makes me think the I should hold on to this treasure.
Just traded a 2007 Accord for a used (4500 mi) hybrid Accord. I have bought low-mileage Hondas since 1999 and never been disappointed. It's not necessary to pay a Honda dealer to certify the car; you can negotiate the coverage, which is really a profit center for the dealer. Factory warranty is 3/36K and is transferable. Cerftification gives another year and ups mileage to 48K. In my case, I bought the latest Accord from a Ford dealer who took the car in trade from someone who developed MS a few months after buying it. BION, the Ford dealer tried to sell me tire insurance, windshield insurance, and an extended warranty.
All I can tell you about the used car market is that I get 1-2 letters per week from dealers telling me how much in demand my 2009 Silverado pickup is which only makes me think the I should hold on to this treasure.
@Mark. Wow. I had no idea '09 Chevs were in such high demand!
Got a similar letter re my current car a few months back from an area Toyota dealer. But in checking local dealerships, they didn't have any Camrys with 6-cylinder engines on their lots. Or I might have taken a look. Just 4-bangers. Wasn't interested in dropping from a 300 HP V6 in my Mustang down to a 4-banger.
4 banger here: 2005Camery & love it. Now if I had 4 - 200+#'s Plus 4 sets of clubs in the trunk, I just might have a merging problem. What you need to get is a V4-V8 !!!! Derf
I've had some nice 4-bangers. And they've come a long way in recent years.
However, up here in northern Michigan we've got a lot of distracted & impaired drivers poking along at 10 mph under the limit and weaving from side-to-side on our predominately 2-lane roads. It's dangerous to follow them because you'll soon have a dozen cars tail-gating you. And when you decide to pull out and pass you want to get around them as quickly as possible.
Some are gabbing on their phones or playing with their tablet devices. Many are drunk, smoking weed or high on other substances. A really sad commentary on the current state of affairs.
Comments
Regards,
Ted
220 Tons Of Snow ? Bills Prep For Game
http://www.mutualfundobserver.com/discuss/discussion/17162/mikem-220-tons-of-snow-bills-prep-for-game
@Ted: Weather Channel
Unfortunately, mine almost always did buy someone else's problem. Prior to sometime in the 1970s there weren't laws (or at least enforceable ones) against "rolling back" odometers. Winding back the mileage on used cars before reselling them was pretty much standard practice among dealerships, so a car showing 35,000 miles might well have had two or three times that much wear.
Once, after buying a late model Chevrolet with around 30,000 miles showing on the odometer from the local dealership, and experiencing a lot of mechanical problems, my dad happened to run into the car's former owner who explained that he was a sales rep for a big Michigan company and had put nearly 90,000 miles on that car over about 3 years of ownership. Dad was fit to be tied.
I've known folks who did very well with used cars. I'm not one of them. The last one around '85 I even took to a reputable repair shop before buying and paid to have it examined. Checked out OK. Than before I even got the d** thing home the radiator burst and I had to divert to the same repair shop that had checked it out a day earlier. A year later most of the cheap Bondo filler used to cover rusted spots had fallen out.
So, I prefer to buy new even if it means getting a lesser equipped car or pickup and than to hold them for 10-20 years. Pickup trucks especially. Not as disciplined as Maurice apparently is, so have sometimes violated that rule with cars and traded earlier.
* So as not to go completely off-topic: The press has been reporting a glut of late model used cars on the market for a year or two. So, if I were in the market today I'd probably roll the dice a little and at least look at some of them. And @Ted - Your accumulated wealth is worthless unless you (1) spend it or (2) give it away.
I didn't see mentioned in the article anything about increased longevity of cars (just a glut due to a seven-year run of increased new car sales). That longevity, combined with dropping resale prices, argues for people deciding to hold cars much longer.
This in turn could push people to buy rather than lease (leases are generally only for a few years). Slower turnover could also gradually shrink the used car supply and the market could self-correct.
For a reminder of what happens when a product lasts "too long", here's the best I could do in digging up an old ad for Stride Gum, a product that advertised it lasted too long. (There's a better one with factory workers talking about the problem, but I haven't found it yet.)
Got a similar letter re my current car a few months back from an area Toyota dealer. But in checking local dealerships, they didn't have any Camrys with 6-cylinder engines on their lots. Or I might have taken a look. Just 4-bangers. Wasn't interested in dropping from a 300 HP V6 in my Mustang down to a 4-banger.
What you need to get is a V4-V8 !!!!
Derf
However, up here in northern Michigan we've got a lot of distracted & impaired drivers poking along at 10 mph under the limit and weaving from side-to-side on our predominately 2-lane roads. It's dangerous to follow them because you'll soon have a dozen cars tail-gating you. And when you decide to pull out and pass you want to get around them as quickly as possible.
Some are gabbing on their phones or playing with their tablet devices. Many are drunk, smoking weed or high on other substances. A really sad commentary on the current state of affairs.