Inflationary Times

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  • Route 45

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    Went to Meijer yesterday with the wife. A case of Diet Pepsi was $15.99. It wasnt all that long ago you could grab them for $3.99 a case. Heck, last week they were $12.00 a case.

    I am not sure how some people are affording grocerys. I know we are now buying a lot of Meijer and Kroger brand stuff now.
    Kroger had Coke and Pepsi products for $8.99 a case today with a Kroger card. I picked up a couple. It can sit there if I see it at $15.99 a case.
     

    BehindBlueI's

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    Most every one is a fixed income for the most part at least in the short term. And before folks say, but Social Security, etc. Social Security recipients actually are eligible for a COLA increase that tracks inflation better than most people's paycheck unless someone job hops.

    And just my pet peeve on the use of fixed income term, as that's really most folks in the short term, and not as applicable to some folks as many think.


    The term "fixed income" came from the notion that someone who was disabled could not pick up an extra shift, moonlight, etc. Their income was therefore fixed. While all of us have a finite income, we don't all have a fixed income.

    On topic, inflation is nuts on a lot of things. I've been truck shopping. Comparing window stickers across 2022 trucks, base prices for the same truck went up about $4k over the course of the year. That is to say the exact same truck shipped at the end of 2021 is $4k cheaper than the exact same truck shipped a few months ago. No other changes. I honestly thought gas prices would drive truck prices down and the chip shortage would have eased a bit, but nope, not yet anyway.
     

    gregkl

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    Is this assuming the recession/inflation will improve, stay the same, or get worse?


    .
    I can't answer that. As far as chips, the world needs more capacity and it takes awhile to get a plant online. That is currently moving forward regardless of economic conditions.

    If we recede, typically we should see prices come down and supply go up. But this is a weird recession and there is a fairly large pent up demand for autos.

    It will take some layoffs and real loss of income to reduce the demand enough to see early relief of supply chain shortages.

    Just my opinion based on the automotive news I follow.

    Personally, I would like to see it improve quickly. We are now two years past the timing of when I wanted a newer car for my wife. And my long term strategy of having two decent cars paid off by retirement is now out the window.
     

    BehindBlueI's

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    Some industry "experts" are predicting mid to late '23 at least for things to get better in the car market.

    I think part of the problem for me personally is the vehicles I'm interested in are ones that have high demand and are also looked at by people who are more recession proof than many. The car market is nuts for everything right now, but it's not going to relax for the Bronco, Raptor, C8 Corvette, etc, even if the mainstream car market dips. There's a huge pent up demand.
     

    actaeon277

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    The term "fixed income" came from the notion that someone who was disabled could not pick up an extra shift, moonlight, etc. Their income was therefore fixed. While all of us have a finite income, we don't all have a fixed income.

    On topic, inflation is nuts on a lot of things. I've been truck shopping. Comparing window stickers across 2022 trucks, base prices for the same truck went up about $4k over the course of the year. That is to say the exact same truck shipped at the end of 2021 is $4k cheaper than the exact same truck shipped a few months ago. No other changes. I honestly thought gas prices would drive truck prices down and the chip shortage would have eased a bit, but nope, not yet anyway.

    That's an adjustment I'm trying to make.
    Last year, I want something, I just work another shift. There was work enough no one said anything about it.
    Now that I retired... I'm gritting my teeth. Got something fixed on the vehicle.. $$$
    Need a new muffler$$$$
    OOps, forgot to pay health insurance, so now it's a double month $$$
     

    Ingomike

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    I think part of the problem for me personally is the vehicles I'm interested in are ones that have high demand and are also looked at by people who are more recession proof than many. The car market is nuts for everything right now, but it's not going to relax for the Bronco, Raptor, C8 Corvette, etc, even if the mainstream car market dips. There's a huge pent up demand.
    A winter of extreme heating bills and tumbling markets will begin to take its toll on even recession proof buyers. I do not truly see that the wealthy are the driving force in this, it is upper income buyers.
     

    BehindBlueI's

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    A winter of extreme heating bills and tumbling markets will begin to take its toll on even recession proof buyers. I do not truly see that the wealthy are the driving force in this, it is upper income buyers.

    I doubt it. Demographics tend toward younger Boomers and older Gen Xers who are home owners and likely have kids out of the house. One or two earners, at least one likely in their peak earning years, and not yet retired. Rising interest rates will help offset some of the rising costs for those with cash squirreled away, and disposable income is enough that rising heating costs or grocery prices aren't significant in decision making. I've been wrong before, but I don't see the upper end car market collapsing on the stuff idiots like me in my generation want any more than I see things like the Chevelles and GTOs collapsing until the Boomers are dead and Gen X is close.
     

    Ingomike

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    I doubt it. Demographics tend toward younger Boomers and older Gen Xers who are home owners and likely have kids out of the house. One or two earners, at least one likely in their peak earning years, and not yet retired. Rising interest rates will help offset some of the rising costs for those with cash squirreled away, and disposable income is enough that rising heating costs or grocery prices aren't significant in decision making. I've been wrong before, but I don't see the upper end car market collapsing on the stuff idiots like me in my generation want any more than I see things like the Chevelles and GTOs collapsing until the Boomers are dead and Gen X is close.
    I didn’t say it would collapse but it will not be what we have seen the past three years. Most optimistic prognosticators are saying reset to 2018-2019, a handful of cars had waiting lists but very few unlike today. And yes, boomers will be the wealthiest generation of all time for a long time. However I see who is driving many of these over priced and hyped vehicles and they ain’t wealthy.

    I think the truck market is heading to a reset. This insane price increases for trucks is unsustainable with soaring fuel prices and interest rates.

    We should revisit this in a year and see where we are…
     

    Ingomike

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    You don't have to be wealthy. You just have to be able to make payments.
    And that was my point in so identifying them, many of those that buy expensive vehicles like the Raptor on the ability to make payments will be affected by changes in the economy. Those buying with wealth are not so much affected.

    Those with wealth can buy anytime whereas payment buyers are greatly affected by the interest rates, job insecurity, and inflation costs. The difference between BBI and I is I believe a lot of the vehicle frenzy was from all the free money and easy job acquisition with income increase. When that disappears I believe the frenzy will subside to more normalcy, types of things that were hot and unobtainable in 2016 will still be, but normal stuff is heading back to normal.

    I have been watching a truck that is a 2017, RAM diesel, it was priced at new invoice and likely would have gotten that a few months ago but now it has been on the lot for 7 weeks and had a couple of price reductions. In reality, historically the truck would be about 40%-60% of invoice at 5 years old, this market is unsustainable.
     
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    BehindBlueI's

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    And that was my point in so identifying them, many of those that buy expensive vehicles like the Raptor on the ability to make payments will be affected by changes in the economy. Those buying with wealth are not so much affected.

    Those with wealth can buy anytime whereas payment buyers are greatly affected by the interest rates, job insecurity, and inflation costs.

    Raptors are selling at $10-$20k over sticker and not sitting on the lot. Those buyers aren't concerned about their heating bills or a couple of points of interest rates. Broncos, same. That will likely ease as production increases, but I seriously doubt we're back to '18-'19. Rebates would have to gigantic just to offset the increase in base MSRP. Manufacturers have every incentive to stay lean and not overproduce. Combine with truck fleet sales have a ton of pent up demandl, as the manufacturers are focusing on customer orders and higher trim trucks.

    So, while it's possible I don't think it's likely for the 'halo' and high demand trucks to see much movement in the next 18-30 months. XLTs and Lariats? Maybe. Truck prices aren't going down now, though, they are just going up more slowly.
     

    Ingomike

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    Raptors are selling at $10-$20k over sticker and not sitting on the lot. Those buyers aren't concerned about their heating bills or a couple of points of interest rates. Broncos, same. That will likely ease as production increases, but I seriously doubt we're back to '18-'19. Rebates would have to gigantic just to offset the increase in base MSRP. Manufacturers have every incentive to stay lean and not overproduce. Combine with truck fleet sales have a ton of pent up demandl, as the manufacturers are focusing on customer orders and higher trim trucks.

    So, while it's possible I don't think it's likely for the 'halo' and high demand trucks to see much movement in the next 18-30 months. XLTs and Lariats? Maybe. Truck prices aren't going down now, though, they are just going up more slowly.
    As I said, let’s revisit this in a year or so and see where we are trending.

    Why are you so sure that buyers that currently can make payments on a Raptor at $10-20k over will not be affected by the changing economy, inflation, and interest rates? Case in point, I know a boat salesman that bought a new loaded corvette a year ago, customer traffic at the dealership has fallen significantly, as with cars some boats still have strong market demand but he doesn’t have many to sell, he would not be in the market to make that purchase today. I just do not understand how you believe the economic changes will have no affects…
     

    gregkl

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    Since 2001, the SAAR(Seasonally Adjusted Annual Rate) has been around 17 million vehicles per year. This is to replace aging vehicles, wrecked vehicles, new drivers(car owners) and population growth.

    In 2020, the SAAR dropped to 10.5 million. We may have had a decrease in wrecked vehicles, I don't have stats on that, but vehicles still aged and we added more drivers.

    Since then, we have come back to an approximate SAAR of 13 million.

    Before Covid, we had hit 19 million. Our president was expecting the SAAR to drop back down to the 16-17 million range. This was before Covid.

    The gap between the average SAAR of 17 million and where we are at currently contributes to the pent up demand that is there.

    A recession with increasing interest rates may slow car sales even more, but we are close to the point that the majority of the 13 million cars being purchased today are because of NEED, not want.

    Once interest rates come back down and the supply chain gets straightened out, buckle your seatbelts, we will be back to 17 million-ish SAARs.

    BTW, the auto industry really can't sustain 19 million cars a year. The capacity is not there. When we were doing that, we were running almost 24/7 to keep up. We did but we welcomed the break when sales dropped.

    Oh, and a healthy, balanced auto industry operates at 16-17 million SAAR.
     
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    bobzilla

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    I’ve been looking for a 2nd or 3rd gen accent or Rio hatch to build a real “racecar”. What was $1500-2k just a year ago is now $5k
     

    gregkl

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    I’ve been looking for a 2nd or 3rd gen accent or Rio hatch to build a real “racecar”. What was $1500-2k just a year ago is now $5k
    Sometimes I think about buttoning up my Cherokee XJ and selling it. But then I think, what could I get to replace it? So I keep working on it, one door latch at a time, lol.
     
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