Auto Loan Debt is Spiraling Out of Control

[braumeister]

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Originally Posted by Gumby Around here, regular gas is about $3.30. Diesel is $4.99 That's a lot to make up by increased MPG.

Several years ago I rented a small Hyundai diesel car in the UK, and averaged over 58 mpg while putting over 1,000 miles on it. Ignoring the much higher cost of petrol over there, I was impressed.

[Koolau]

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Originally Posted by Gumby Around here, regular gas is about $3.30. Diesel is $4.99 That's a lot to make up by increased MPG.

Good point. Of course, Diesel has about 12% more heat energy to start with. In total, the diesel cycle itself is about 30% more fuel efficient than gasoline. That puts gas and diesel on a roughly equal footing per dollar (all else equal.)

[ShokWaveRider]

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Originally Posted by Koolau Good point. Of course, Diesel has about 12% more heat energy to start with. In total, the diesel cycle itself is about 30% more fuel efficient than gasoline. That puts gas and diesel on a roughly equal footing per dollar (all else equal.)

I LOVE diesels, unfortunately America does not.

[Andre1969]

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Originally Posted by ShokWaveRider I LOVE diesels, unfortunately America does not.

You can probably thank GM, more specifically Oldsmobile, for that. Although plunging fuel prices and improved economy of gasoline engines as the recession of the early 80s faded, and fuel injection and overdrive automatics became more common, that probably played a pretty big role as well.

[Turbo29]

Yes Oldsmobile did that but just as it looked as though diesels might come back, VW put the knife in them.

I had one of the VW diesels that they bought back at a big premium due to their emissions cheating scandal. It was a great car but the offer they made to buy it back was too good.

[JoeWras]

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Originally Posted by Andre1969 You can probably thank GM, more specifically Oldsmobile, for that. Although plunging fuel prices and improved economy of gasoline engines as the recession of the early 80s faded, and fuel injection and overdrive automatics became more common, that probably played a pretty big role as well.

I actually like GM, although I currently have a Subaru.

The disaster called "Oldsmobile Diesel" is an automotive disaster like no other* (OK, maybe anything AMC, LOL). The Olds diesel was an absolute, unmitigated, piece of s---! And I can say that because I forgave them and had a 2000 Alero, which actually did me right for the first 10 years.

* - my friend's parents had one and they were always more than happy to let us borrow it to go to the movies or whatever. They didn't like it, so let the kids use it. Ha ha. It was so flaky, and it left us high and dry a few times, although usually it would self heal. Just a nasty piece of unreliable equipment.

[CardsFan]

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Originally Posted by Koolau I remember mgmt. of megacorp sitting down all the staff people and 'splainin' JIT to us. I spoke up (silly me) and asked what if one little supplier failed to meet the required timing. I was told that we would choose suppliers that wouldn't fail. For the next 15 years, I watched failure after failure of JIT. But guess who the brunt of the extra effort fell on. Service groups like mine that had to rush things through once suppliers managed to get their shipments through. Suddenly the JIT was all on us! YMMV

Oh, I remember those days. At one point I was in charge of inventory (among a host of other things), and our products had some rather large margins (up to 80%) for our highest profit margin items.

New controller, and then President comes in and asks me to justify the inventory. So I put together a spreadsheet showing turnover. As I recall the average rate was pretty good, but there was one item that had a rate of less than once a year, and we had $50k of it.

I pointed out the raw material takes weeks to produce (in any quantity), and we never know when the orders will come in. But when they do, the customer will need it in days and we will make $200k in profit. But if we don't have it they will go elsewhere, and may never come back.

Believe it or not, he really listened, and when he became President of the company he was a good supporter of my efforts.

[athena53]

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Originally Posted by Andre1969 Plus, some of those old car payments of years gone by, don't seem so low if you throw inflation into the mix. For example, there was a famous campaign, "$56 a month for a '56 Ford!" Now, I don't know what the terms of it were. A '56 Ford could be had for as little as $2000 for a totally stripped down base model, but I'm sure a decent one would be around $3K. Anyway, adjusting for inflation, that $56/mo would be about $609 today. I bought a new 2000 Intrepid in the fall of 1999. Total out the door price was $22,389. I put $2K down, financed the rest at 0.9% for 60 months. Payment was $347.66. Adjusting for inflation, that would be about $618 nowadays.

Except that nobody had 72-month car loans back then.

[Koolau]

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Originally Posted by CardsFan Oh, I remember those days. At one point I was in charge of inventory (among a host of other things), and our products had some rather large margins (up to 80%) for our highest profit margin items. New controller, and then President comes in and asks me to justify the inventory. So I put together a spreadsheet showing turnover. As I recall the average rate was pretty good, but there was one item that had a rate of less than once a year, and we had $50k of it. I pointed out the raw material takes weeks to produce (in any quantity), and we never know when the orders will come in. But when they do, the customer will need it in days and we will make $200k in profit. But if we don't have it they will go elsewhere, and may never come back. Believe it or not, he really listened, and when he became President of the company he was a good supporter of my efforts.

My megacorp bought into every "flavor of the month" program and enforced it rigidly until it so utterly failed that everyone else quit doing it. How we made money always surprised me - but we did, in spite of our "follow the crowd" attitude. YMMV

[Another Reader]

Gas prices just jumped here in the Bay Area. Locally, Costco went from $4.399 to $5.099. The strategic reserve must have run dry... Might want to rethink those high gas consumption vanity vehicle purchases for now...

[CaptTom]

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Originally Posted by Koolau My megacorp bought into every "flavor of the month" program and enforced it rigidly until it so utterly failed that everyone else quit doing it. How we made money always surprised me - but we did, in spite of our "follow the crowd" attitude. YMMV

I guess we must have been co-workers!

So, have the just in time delivery and reduced inventory fads died with the pandemic supply chain failures? Have the MBA's learned a lesson?

[Gumby]

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Originally Posted by Another Reader Gas prices just jumped here in the Bay Area. Locally, Costco went from $4.399 to $5.099. The strategic reserve must have run dry... Might want to rethink those high gas consumption vanity vehicle purchases for now...

This says it was "supply issues due to snags at refineries". Nothing to do with the US strategic reserve.

https://www.latimes.com/california/s...-united-states

and

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“After declining for 98 consecutive days, the national average reversed course” on Sept. 21, “as fluctuating oil prices and tight supply due to planned and unplanned maintenance work at refineries on the West Coast and Midwest contribute to rising pump prices,” AAA reported.

https://www.thecentersquare.com/wash...9104465b9.html

[Koolau]

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Originally Posted by Gumby This says it was "supply issues due to snags at refineries". Nothing to do with the US strategic reserve. https://www.latimes.com/california/s...-united-states

Here's a thought. Maybe we (USA) should finally build some more refineries but what do I know?

[JoeWras]

Gas has stabilized the last two weeks. But... They're closing offshore platforms for the hurricane now. Coincidence that my nearby station went up 3cents for the first time in months?

[Chuckanut]

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Originally Posted by Another Reader Gas prices just jumped here in the Bay Area. Locally, Costco went from $4.399 to $5.099. The strategic reserve must have run dry... Might want to rethink those high gas consumption vanity vehicle purchases for now...

The strategic reserve is down quite a bit.

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The US's strategic petroleum reserves have dropped to their lowest level since 1985. Stockpiles have fallen to 453 million barrels after President Joe Biden ordered a record release to ease gas prices. Analysts say releases from global reserves have contributed to the sharp fall in oil prices.

Let's hope we don't have a real oil shortage crisis anytime soon.

https://www.forbes.com/sites/rrapier...h=3fbfa9df77c7

[Another Reader]

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Originally Posted by Gumby This says it was "supply issues due to snags at refineries". Nothing to do with the US strategic reserve. https://www.latimes.com/california/s...-united-states and https://www.thecentersquare.com/wash...9104465b9.html

I was being a tad facetious...but I did not know about the refineries.

[Montecfo]

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Originally Posted by SecondAttempt I can assure you he is dead wrong about that. Auto manufacturers may very well be getting what they need so if he qualified it "for auto manufacturers" perhaps he is right, But as an industrial customer buying the same kinds of FPGA and DSP chips they are, the shortage is as bad as ever. The rise in interest rates will dramatically reduce the price of new and used cars I expect because no one will be able to afford to finance one!

He indeed was referring to autos.

[W2R]

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Originally Posted by Another Reader Gas prices just jumped here in the Bay Area. Locally, Costco went from $4.399 to $5.099. The strategic reserve must have run dry... Might want to rethink those high gas consumption vanity vehicle purchases for now...

I just got gas at the Exxon station around the corner, and it was $2.95. It hasn't been that cheap for at least 6 months. I don't doubt what you are saying, but gas prices here are dropping for some reason I can't figure out.

[athena53]

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Originally Posted by Another Reader Might want to rethink those high gas consumption vanity vehicle purchases for now...

Ah, but most of the time people don't think about that... till the price of gas goes up and you read the sad stories about people who can't afford to fill their trucks now...but I acknowledge, with deepest sympathy, that those who need a truck for work can be in dire straits.

[Koolau]

Here in the heartland, the prices have started back up and are hovering just below the magic $4/gallon. Fortunately, Sams has gas for about 40 cents/gallon less. YMMV