Auto Credit Bubble To Burst?

cawacko said:
From Jesse Colombo:

""Since 2010, total outstanding U.S. auto loans increased by $445 billion or 64% to over $1.1 trillion as Americans took advantage of record low interest rates to finance automobile purchases. The auto sales boom of the past decade is driven by cheap credit""



But hey, Janet Yellen didn't keep rates too low for too long. She said all was ok.




https://realinvestmentadvice.com/gm-cuts-14700-jobs-as-auto-bubble-begins-to-burst/
Click to expand...


pull another all nighter genius?

hey when you get the time, explain how you became a dopey Libertarian........this oughta be good
 
reagansghost said:
pull another all nighter genius?

hey when you get the time, explain how you became a dopey Libertarian........this oughta be good
Click to expand...

So help me understand. Are auto loans unimportant in terms of the overall economy and thus not worthy of being discussed? Or do you not understand them and this is how you respond in such situations?
 
cawacko said:
So help me understand. Are auto loans unimportant in terms of the overall economy and thus not worthy of being discussed? Or do you not understand them and this is how you respond in such situations?
Click to expand...

shut the fuck up genius, this is just another irrelevant useless thread from you

would you have voted for Barry Goldwater?

be honest
 
cawacko said:
So help me understand. Are auto loans unimportant in terms of the overall economy and thus not worthy of being discussed? Or do you not understand them and this is how you respond in such situations?
Click to expand...

Just where is the bubble? The number of loan will decrease but is there a question of Americans ability to pay them back?
 
As long as they pay back the loans, there is no bubble to burst. Car manufacturing is in deep doo doo as this weeks news illustrated. They are doubling down in the wrong direction though. Cutting affordable car production in favor of higher end electrics and such just opens the US market wider for foreign competition. China has been reportedly considering getting into the car exporting business. Toyota and Hyundai both got their foot in the door by going into the lower price point arena first.
 
Kacper said:
As long as they pay back the loans, there is no bubble to burst. Car manufacturing is in deep doo doo as this weeks news illustrated. They are doubling down in the wrong direction though. Cutting affordable car production in favor of higher end electrics and such just opens the US market wider for foreign competition. China has been reportedly considering getting into the car exporting business. Toyota and Hyundai both got their foot in the door by going into the lower price point arena first.
Click to expand...

The big part of it is high number of car sales were driven by low interest rates. What we are seeing now is global auto sales dropping and GM and Ford announcing layoffs as will other manufacturers. Remember back to the mid aught's when real estate and mortgage lending jobs were booming. That was all bubble driven. Same here in the auto industry.
 
cawacko said:
The big part of it is high number of car sales were driven by low interest rates. What we are seeing now is global auto sales dropping and GM and Ford announcing layoffs as will other manufacturers. Remember back to the mid aught's when real estate and mortgage lending jobs were booming. That was all bubble driven. Same here in the auto industry.
Click to expand...

Libertarian orthodoxy per chance?
 
cawacko said:
The big part of it is high number of car sales were driven by low interest rates. What we are seeing now is global auto sales dropping and GM and Ford announcing layoffs as will other manufacturers. Remember back to the mid aught's when real estate and mortgage lending jobs were booming. That was all bubble driven. Same here in the auto industry.
Click to expand...

Auto doesn't have the same reach though as mortgage lending. If GM or whoever collapses, sucks for a handful of cities, but that won't affect most of america in any meaningful ways.
 
Kacper said:
Auto doesn't have the same reach though as mortgage lending. If GM or whoever collapses, sucks for a handful of cities, but that won't affect most of america in any meaningful ways.
Click to expand...

A slow down/bubble bursting in the auto sector alone won't derail the economy but it's not the only asset bubble we face from years of interest rates being so low.
 
cawacko said:
A slow down/bubble bursting in the auto sector alone won't derail the economy but it's not the only asset bubble we face from years of interest rates being so low.
Click to expand...

Obama's bond bubble is the only thing that could really trigger something dire, but there does not seem to be any reluctance in people to purchase US treasuries at lower interest rates, so I am sure most institutional folks will gladly roll them over at higher interest rates over longer terms. Credit card rates have been going up well ahead of the fed rates, so I am not sure the damage you think will happen hasn't already happened. Some of the offers I have seen in my own mail box are quite ridiculous interest rates compared to the ones I have and my credit score. One of my existing companies I have been with since I was 18 just increased my credit 50% without being asked at a much lower interest rate than what a lot of the lines out there are offering for new borrowers.
 
Hello reagansghost and cawacko,

reagansghost said:
pull another all nighter genius?

hey when you get the time, explain how you became a dopey Libertarian........this oughta be good
Click to expand...

I don't get it. Cawacko made a very non-challenging thread which is worthy of a respectful discussion. Then you, reagansghost, jump in and try to bite his head off. And you only go downhill afterwards. What is it that you are trying to accomplish? If this thread is not for you, why post in it at all?

Everyone must be entitled to their own view. Unless their view is nothing but hatred and ragging on others for legitimate views.

If you disagree with cawacko the thing to do is show why another view is better. Or sit back and watch somebody else do it.

Derailing threads you don't like is immature. You'll come across much better if you simply take issue with the crux of the discussion and explain your own position.

Bravo to you, cawacko, for ignoring a rather obvious attempt to turn the thread into just another food fight. Well handled. That's maturity and wisdom talking. Feather in your cap.
 
cawacko said:
From Jesse Colombo:

""Since 2010, total outstanding U.S. auto loans increased by $445 billion or 64% to over $1.1 trillion as Americans took advantage of record low interest rates to finance automobile purchases. The auto sales boom of the past decade is driven by cheap credit""



But hey, Janet Yellen didn't keep rates too low for too long. She said all was ok.




https://realinvestmentadvice.com/gm-cuts-14700-jobs-as-auto-bubble-begins-to-burst/
Click to expand...
It's not just that. It's also the degree to which people are willing to go into debt for cars. I haven't had an auto loan in ten years. The misses and I combined only drive about 10k miles per year. So we've mostly bought inexpensive used subcompacts and put those car payments either into our retirement fund our paying down our mortgage. By doing that we saved up enough that the most recent car we bought was a Lincoln....paid cash.

Most of the couples we know own the following combination of cars, an SUV or Minvan and a full sized pick up truck or two SUV's. Both financed with monthly payments of around $700. That's $1400 per month in car payments. That's not including insurance, maintenance and feeding two gas guzzlers.

What a waste of money.
 
Mott the Hoople said:
It's not just that. It's also the degree to which people are willing to go into debt for cars. I haven't had an auto loan in ten years. The misses and I combined only drive about 10k miles per year. So we've mostly bought inexpensive used subcompacts and put those car payments either into our retirement fund our paying down our mortgage. By doing that we saved up enough that the most recent car we bought was a Lincoln....paid cash.

Most of the couples we know own the following combination of cars, an SUV or Minvan and a full sized pick up truck or two SUV's. Both financed with monthly payments of around $700. That's $1400 per month in car payments. That's not including insurance, maintenance and feeding two gas guzzlers.

What a waste of money.
Click to expand...

you got it, I've been in the low six figure bracket for years and still buy only 5-6K sweet used cars, saved thousands and thousands and get great mileage
 
Mott the Hoople said:
It's not just that. It's also the degree to which people are willing to go into debt for cars. I haven't had an auto loan in ten years. The misses and I combined only drive about 10k miles per year. So we've mostly bought inexpensive used subcompacts and put those car payments either into our retirement fund our paying down our mortgage. By doing that we saved up enough that the most recent car we bought was a Lincoln....paid cash.

Most of the couples we know own the following combination of cars, an SUV or Minvan and a full sized pick up truck or two SUV's. Both financed with monthly payments of around $700. That's $1400 per month in car payments. That's not including insurance, maintenance and feeding two gas guzzlers.

What a waste of money.
Click to expand...

Cars are a depreciating asset and a horrible investment. You and the wife were smart to not spend much money on them. But this is America and people have a love affair with their cars. (Living in SF we can get away having only one car and that's with a baby).

Low interest rates push people to buy more than they can afford. But rates don't stay low forever.
 
Kacper said:
As long as they pay back the loans, there is no bubble to burst. Car manufacturing is in deep doo doo as this weeks news illustrated. They are doubling down in the wrong direction though. Cutting affordable car production in favor of higher end electrics and such just opens the US market wider for foreign competition. China has been reportedly considering getting into the car exporting business. Toyota and Hyundai both got their foot in the door by going into the lower price point arena first.
Click to expand...

It opens the market for lower end, lower margin, less profitable vehicles. The facts are that right now, Americans want large, high occupancy, versatile vehicles, are not concerned about gas prices and are willing to pay inflated prices for those big assed vehicles. That's currently where the profits are and Americans are will to pay premium dollars for their big assed vehicles.

Of course they could end up back in the same trap that almost killed them in 2008 when gas prices sky rocketed and the bottom dropped out of the truck/SUV market. However this time it appears GM is hedging it's bets by investing in more fuel effiecient technology for when the bottom falls out of the market for big vehicles again as its bound to do. Ford is doing the same thing.

I do think there is some validity to Wacko is pulling an issue out of thin air that's currently a non-issue. It could become an issue if Americans decide to stop spending such a large percentage of their budgets on big assed cars but currently this is hardly a bubble. It's more like a strategic redeployment. It's not like GM and Ford will stop making sedans all together. They will just make these less profitable vehicles else where.
 
You must log in or register to reply here.
Back
Top