Ok You Figure It Out.
Posted: Thursday, March 12, 2009
by straight talk
Here is a compilation of some of the latest prices from our big three car manufactures according to the local paper. I'll just pick a low, middle an high range of vehicle pricing to keep this short. All without Tax, Tag and Title. And all the low end, no frill models. Can you afford these vehicles?
Ford
Chevrolet
Focus $15,520
Cobalt $15,560
PT $15,970
Taurus $25,170
Malibu $21,605
Sebring $19,840
Flex $28,550
Impala $23,790
300 $25,150
So now we have the base prices mind you of these cars. Of course the low end the start point and I didn't even list the high point. Now even with the discounts, rebates and gimmicks one can easily see that ones monthly payment will be much higher then $300.00 a month and that is most likely by fact rock bottom unless you are putting a lot of money down or a trade with equity [ha].
Now aside from the AP reporting today that:
"The Federal Reserve said Thursday that household net worth dropped by a record 9 percent from the level in the third quarter."
Now it used to be banks would lend over value and a person could carry that into the finance with little to no down payment. However, with dealers and banks usingp auction ricing [what the dealer pays] many who finance don't have any equity hence no deal. Also the banks won't lend unless there is sufficient value, meaning down payment or trade value in the deal. Now by their own mouth 9 out of 10 upside down. Another buzz word for the industry. Now how bad are things? Well get this, dealers are actually calling and emailing people to solicit sales. No, not any new market campaign, it is called starvation.
So what is the point of this exercise? Well just who can buy these cars? Yes who can buy these cars? Now if we exclude the ones that have the dollars who pay cash or lease, have a job and making over $75,000 a year, the retired, who are left? They used to be average working people who could finance that car for 60 or 72 months, no longer. Oh, you understand all this and don't need to hear about it? Ok I'll accept that but that does not change a darn thing as far as these companies or any car company goes? Zero percent interest, if you qualify. Financing for everyone, if you qualify. We have plenty of money to lend- really, if you qualify? No application will be refused, just not accepted unless you, yes qualify.
Now these car companies will sell cars with the sales tax incentive and then what? Yes a good question because you will all get pumped up as to how wonderful things are going when the government stats show a sales increase and many will say see, we told you so, but at some point the well of buyers will dry up. There is just not enough of them to sustain this economy or who want or need that new car and those that do buy many don't need credit or financing. Used cars you say, well get this have you checked the prices on used. Yes you see the adds then look at the fine print, with $3999 down cah or trade equity, really. The same applies for fiance. Yes and one can go down the list of potential business closings this year for the same reasons.
Restaurants, lets see, only those that have can afford to eat out and you see the results of that, retail stores, already on the way and more unemployment, but why bother, you know "help is on the way". Do you know anyone outside of these politicians who can tell you who that help is really for? Well it isn't for those that buy and fuel this machine we call an economy, the little guy.
So worried, rightly so, because as the little guy goes so does your retirement, 401K, business and really the entire enchilada. I write for us all not to throw stones or abuse or demean but out of concern for my family and yes yours. Would you place history over them?
Robert T. Melaccio Sr. 2009 Copyright 2009 Robert Melaccio
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Top-level comments on this article: (2 total)To paraphrase the Three Stooges- If I could figure that out I wouldn't need the talcum powder. Good work here.Please log in to respond to this comment.Thanks Ken, there seems to only a few of us running around that understand this problem. Be safe in your travels and keep us posted, best wishes, RobertPlease log in to respond to this comment.
At their peak before the "black swan", US auto sales were 17 million units. This year, they will be below 8 million - and falling. The "scrapage rate", or break even, is 13+ million units.
Man, it is just simple math, and your great article drives home the point.Please log in to respond to this comment.Thanks for reading and the comments. It sees these high end university grads can't do the simple math? Do we really want to believe that? Then again maybe, just maybe there is more to this then meets they eye? Perhaps to achieve ones goal the longest route is the best? Best wishes,Please log in to respond to this comment.
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