There is possibly light at the end of the tunnel in the used market; Joe Biden says the feds will stop buying gas-powered cars at some point in the future; and Bill Ford is rich. All that and more in The Morning Shift for December 9, 2021.
1st Gear: Used
It is not a good time to be buying a car, and it hasn’t been for months. A friend recently told me a tale of woe about his experience buying a Ford Flex through Carvana, in which the car showed up at his doorstep, was unloaded, and promptly refused to start. That was all after overpaying to begin with, because that’s what buying a new or used car is now, overpaying for a guess.
Like in any market, deals can still be had, depending on the time and place, but the broader metrics of used tell a consistent story: Demand remains high and supply remains low. While that may remain true, Automotive News has a new story that also offers some hope that things might turn around in January, as the supply of new cars gets better and also some people have just given up on buying a car for now, lessening demand.
Cox Automotive’s Manheim Used Vehicle Value Index, which tracks vehicles sold at Manheim’s U.S. auctions, rose 44 percent in November compared with the same month in 2020. The November index increased 3.9 percent from October, according to data released Tuesday. Those numbers were adjusted for mix, mileage and seasonality.
That probably will mark the end of new records for the Manheim index in 2021, Cox Automotive Chief Economist Jonathan Smoke told Automotive News on Tuesday.
“In the weekly numbers, we’ve already seen moderation over the last couple of weeks, which is exactly what we were anticipating,” Smoke said. “So we think November is the peak for the year. Prices are probably going to stay about where they are — or the index is going to stay about where it is — through the end of the year.”
New-vehicle inventory problems continued to plague dealers, forcing them to spend more money to obtain used-vehicle supplies for their lots. This pushed wholesale prices to new heights across all segments in November, according to Alex Yurchenko, chief data science officer at Black Book.
“Cars of all sizes and vans had the largest increases as used and new inventory in those segments declined to much lower levels compared to other segments of the market,” Yurchenko said in a news release.
Yurchenko said Black Book expects used-vehicle prices to increase again in December but at a much lower rate because the volume of new-vehicle inventory is beginning to level off and consumer demand is softening as a result of record-breaking used prices at retail.
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I have been praying for months that someone doesn’t rear-end me and total my car or some such and force me into the used market, which seems like hell. Just gotta get through winter, it sounds like.
2nd Gear: Joe Biden Signs Executive Order To End The Feds Buying Gas-Powered Cars By 2035
This policy will be immediately reversed in 2025 by whatever troglodyte Republican who gets elected president, but, for now, we can try to be hopeful that that doesn’t happen and this does, even if it is also too little too late.
The government owns more than 650,000 vehicles and purchases about 50,000 annually. Biden’s executive order said that light-duty vehicles acquired by the government will be emission-free by 2027.
Total federal government operations will reduce emissions by 65% by 2030 under the plan. The government will seek to consume electricity only from carbon-free and non-polluting sources on a net annual basis by 2030 and have net-zero emissions by 2050.
The order noted the U.S. government is “the single largest land owner, energy consumer and employer in the nation” and can transform “how we build, buy and manage electricity, vehicles, buildings and other operations to be clean and sustainable.”
In January, Biden vowed to replace the U.S. government’s fleet with electric models. Only 0.5% of the government’s 657,000 vehicles were electric as of 2020. In 2020, the government spent $4.2 billion on vehicle costs, including $730 million for fuel.
If you’re ever anxious about this or that moment in history, I recommend reading some history, like an actual history book. You will learn:
- We can’t help ourselves
- The past continually repeats itself
- Somehow, at the crucial moments, humanity usually makes a way
3rd Gear: Mercedes’ Hands-Free Driving System Gets Approval From The German Government
This would be a Level 3 autonomous system called Drive Pilot, which has problems but is likely a whole lot better than what Tesla offers, though that is a low bar.
The highly automated system allows the driver to focus on other activities while a car equipped with the technology is in heavy traffic or on congested highways, Mercedes-Benz said in a statement on Thursday.
Germany’s KBA authority approved the system based on technical requirements laid out in United Nations regulations.
“The KBA is setting national, European and international standards in road safety on the road to autonomous driving,” said the authority’s president, Richard Damm, in a statement.
Beyond the U.N. regulation on technical requirements, countries also have to pass legislation clarifying where and how such systems can be used, as well as issues of liability.
As soon as legislation in China and the United States is in place, Mercedes-Benz will offer the system in those markets, [Markus Schaefer, Daimler chief technology officer] added.
I feel like, once the big boys of the automotive world get semi-autonomous systems that actually work up and running, all of the consternation over Autopilot and Full Self-Driving will feel quaint. Regardless, these things are happening, whether you like that idea or not.
4th Gear: Bill Ford
Ford’s Chair exercised some stock options recently, according to Bloomberg, a reward for being born into a wealthy family.
The great-grandson of founder Henry Ford chose to use cash to pay exercise costs on the options rather than sell some of the resulting shares, according to a regulatory filing.
The transaction leaves Ford, 64, with about 20 million shares, including restricted stock. That total also includes about 15 million of the founding family’s special class of super-voting stock. His holdings would be worth about $400 million based on Ford’s latest price.
“The decision to exercise these options to purchase almost 2 million shares of common stock reflects Bill’s confidence in the future of the company and our plan to create tremendous value for all of our stakeholders,” Ford Motor said in an emailed statement.
The Detroit Free Press has taken this opportunity to declare Bill Ford a hero or something, and also contrast Bill Ford with Elon Musk, who has been selling some of his stock in Tesla in recent days. I’m not sure the comparison makes any sense, as multi-millionaires and billionaires simply treat their assets different than you or I might. Selling or holding their stock, in other words, might mean nothing at all about how they feel about the future of their companies, as it might be done for tax purposes, it might be done because of how their compensation packages are structured, it might just be a straight gamble. Their plans also might change tomorrow. Anyway, congratulations Bill Ford.
5th Gear: NHTSA Is Aware Of Tesla’s Video Games
You can play video games while driving in a Tesla, we were reminded this week, and the National Highway Traffic Safety Administration says it’s looking at the situation, according to Bloomberg.
The U.S. National Highway Traffic Safety Administration said Wednesday it is reviewing a recent software update by Tesla Inc. that allows drivers to play video games on a dashboard screen while the vehicle is moving.
“We are aware of driver concerns and are discussing the feature with the manufacturer,” the agency said in a statement. “The Vehicle Safety Act prohibits manufacturers from selling vehicles with design defects posing unreasonable risks to safety.”
The agency recommends that in-vehicle devices “be designed so that they cannot be used by the driver to perform inherently distracting secondary tasks while driving,” it said.
“For all other visual-manual secondary tasks, the NHTSA guidelines specify a test method to evaluate whether a task interferes with driver attention, rendering it unsuitable for a driver to perform while driving,” the agency said. “If a task does not meet the acceptance criteria, the NHTSA Guidelines recommend that the task be made inaccessible for performance by the driver while driving.”
Distracted driving claimed 3,142 lives in 2019, according to NHTSA.
Tesla did not immediately respond to a request for comment.
I like that “thousands of people died” is followed with “Tesla couldn’t be bothered to comment,” that really sums up things nicely.
Reverse: André Milhoux Is Born
This is the entirety of his Wikipedia entry:
André Milhoux (born 9 December 1928) is a former racing driver from Belgium. He participated in one Formula One World Championship Grand Prix, the 1956 German Grand Prix on 5 August 1956, but had to retire after 15 laps due to an engine failure. He scored no championship points.
He scored no championship points.
Neutral: How Are You?
Three days in Los Angeles so far and two of those days it has rained. This is not going to plan.