Quote:
Originally Posted by widebody911
Simply put, the automotive bubble has burst.
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+1
Yes, it's unfortunate that all the ancillary/related businesses will take a hit, but the fact of the matter is most of these businesses were not sustainable in the first place and as such, should be allowed to take those hits.
We created an a bunch of "economic growth" that was artificially propped up by the (frankly idiotic) belief that we need 5 cars out there for every man, woman and child in America. A lot of this "growth" was spurred by the (mistaken) belief that the average person does (or should) buy a new car (tens of thousands of dollars) every 2-3 years.
It was an industry built on sand. The "sand" is this idiotic assumption that normal people do this, can afford to do this and will continue to do this in perpetuity.
It further has been exacerbated by the (again, mistaken) belief that normal people will go to dealers for service and willingly spend out-of-pocket hundreds or thousands of dollars for oil changes, fluid top-offs, tire rotations and "inspections" of stuff (not repairs) on their new $40,000+ vehicles.
Dealerships got away with this stuff for years due to an apathetic and stupid public that was awash in funny money. They got complacent and got addicted to it. Now the gravy train has derailed and we're back to an era of what I call "economic honesty". In other words, people actually look at what they can REALLY afford (hard currency in hand, not what they're told their McMansions are worth and what they can borrow against it in the form of HELOCs). For the average family, this is probably in the hundreds of dollars, maybe a few thousand dollars annually for TOTAL household vehicle costs (i.e. loan payments, repairs, gas, parts, registrations, insurance, etc.) Not tens of thousands of dollars as people have been mistakenly led to believe, and got used to the notion of.
Nobody in the auto industry or any of the related industries (insurance, parts, service, sales, etc.) has bothered to ask the OBVIOUS question regarding sustainability for the last 10 or 15 years - the question about WTF we were collectively thinking to ASSume that everyone could (and would) afford this forever.
Like housing, it's an industry that got addicted to Stupid. Now it's paying the price. And the price will be steep. At least when it's all over, we'll have something that's sustainable and commiserate with what people can REALLY afford and what REAL demand informs - not made-up, fake, artificial demand.