People are buying used cars more and more, Android Auto is coming to Toyota, Porsche is done with diesel, and more. This is The Morning Shift for Monday.
1st Gear: A Lot of You Are Buying Used Cars
Your pay is probably going to go down next year, and 2018 remains a bad a year in the scheme of years, and yet there are always the cars. The cars are there to be had. They are there to be bought. Whatever car you want, if you have the money. Used? Sure, if you want. New? Sure, if you’re some kind of moneybags.
Most people are opting for the former, according to The Wall Street Journal.
Because fewer and fewer normal people have Too Much Money, and new cars are getting more and more expensive. Like, over $30,000 expensive:
While used-car values have also increased in recent years, the gap between the price of a new and preowned car has also widened and is now at one of its largest points in more than a decade, according to car-shopping website Edmunds.com.
New-car prices have steadily climbed in the years following the recession as companies packed vehicles with more expensive technology and buyers shifted away from lower-priced cars to bigger and more expensive sport-utility vehicles and trucks. The average price paid for a car hit an all-time high of $36,848 in December of 2017 and remains at near-record levels, according to Edmunds.com.
“Customers forget a new car is now more than $30,000 and they expect it to be $20,000,” said Brian Allan, a senior director at Galpin Motors Inc., a Southern California dealership chain.
Used car prices have also risen, though still pale in comparison to the increase in new car prices:
Used-car prices are also up, defying expectations that the influx of off-lease cars would depress values. Prices have been rising in part due to a slowdown in repossessions and vehicles coming off rental-car fleets—two sources of used cars that are typically older and less expensive.
Buyers paid an average of $22,489 for a three-year-old used car in the second quarter of 2018, up $865 from the prior-year period, according to Edmunds.com. That is still well under the average $35,828 paid for a new car last quarter.
This all tracks, though the WSJ article is also worth it for the quote from Mr. Average Car Buyer.
Justin Scholz, a 35-year-old banker, was stunned by the new-car sticker prices when he went shopping this spring for a new SUV for his growing family. He had been eyeing the Lexus RX hybrid but felt the $66,000 price tag was unusually high. He looked for 0% finance deals and couldn’t find many out there.
“In the past, I entertained new because you could get a 0% interest rate for 60 months,” he said. “New was a small premium compared to used. Now, the gap is much bigger.”
I also have “entertained new” in the past.
We all insist on huge, expensive cars, and then we can’t afford them, but because we insist upon this madness, companies don’t want to make small cars. So we have to buy used, huge, expensive cars.
This is all your fault.
2nd Gear: Porsche’s Diesels Are All Dead, RIP Porsche Diesels
Porsche built its first diesel ten years ago, a version of the Cayenne that carried an Audi diesel motor. Now, after Dieselgate tainted Porsche’s parent company Volkswagen, Porsche is following the rest of VW and is saying it’s done with diesels for good.
From the BBC:
The Porsche chief executive said the company was “not demonising diesel”.
“It is and will remain an important propulsion technology,” Oliver Blume said.
“We as a sports car manufacturer, however, for whom diesel has always played a secondary role, have come to the conclusion that we would like our future to be diesel-free.
“Petrol engines are well suited for sporty driving.”
Separately, Porsche is also investing over $7 billion in a luxury electric SUV. Life comes at you fast, I suppose.
3rd Gear: Android Auto Is Coming to Toyota
Toyota was one of the last holdouts for putting Android Auto in its cars. This is great news for people who buy new cars, of which there are fewer and fewer.
For the first time, Toyota will allow Android Auto devices to connect directly to its cars, after announcing compatibility with Apple Inc.’s CarPlay in January. Previously both platforms could only connect with Toyota vehicles using SmartDeviceLink, a telematics system developed by Ford Motor Co. that controls how Android Auto and CarPlay look on the dash and limits their access to car data.
The addition of Android Auto may attract customers who had stayed away from Toyota vehicles because of the lack of connectivity. More than 80 percent of smartphones use the software from Alphabet Inc.’s Google, with the rest using Apple’s iOS system, according to data compiled by Bloomberg Intelligence. An announcement could come as early as October, according a different person familiar with the plans. The people didn’t want to be identified discussing information that isn’t yet public.
4th Gear: Car Subscriptions Are the Future, Though Lincoln Is Having a Hard Time
Did you know Lincoln had a car subscription program? No? It sort of did. It had a pilot program. Which is done now.
Every time I talk to the Volvo people they say that Care by Volvo, the company’s subscription product, is attracting young customers at rates they’ve never seen before, but that’s probably because Volvo remains a brand that appeals to young people.
Anyway, Lincoln has had no such luck, according to Automotive News:
Subscriptions sound revolutionary: Consumers pay a monthly fee for the convenience of swapping vehicles often and letting someone else take care of maintenance and insurance. But the cost of operating such a program can make the price tag surprisingly expensive, and Lincoln says the pilot it started this year in California has had little demand. Many of those who sign up cancel after only one or two months.
While Lincoln has no plans to discontinue the program, officials say they’ll have to alter it — including getting dealerships more involved — if it’s to grow beyond the pilot.
“I’ve been surprised how few people are genuinely interested in that type of ownership,” Robert Parker, Lincoln’s director of marketing, sales and service, told Automotive News at a Lincoln press event here. “If you had asked me a year ago, I would have said this is the next big thing. A lot of people are struggling to make the math work.”
Lincoln’s program costs between $500 and $950 a month, which is an expensive way to get access to a Lincoln, and the company says that few people have been using it long-term, meaning that most have been using it as a stopgap. The price surely has to come down, but for people conditioned to make a car payment every month—which is most people—subscriptions still feel like a viable option for the future.
5th Gear: Unions Are Mad in Columbus, Ohio, Over a Planned Autonomous Shuttle Service
I lived in Columbus for a year and would not have ever guessed that they’d be on the forefront of anything, but here we are. A startup called May Mobility wants to launch a low-speed, autonomous shuttle service in the city, and the Transit Workers Union—which represents 850 bus drivers and other workers—is pissed. The startup wants to get only three autonomous shuttles up and running to begin with, but the union says that this is all a slippery slope to our robot future.
According to Automotive News:
“Folks might wonder why we descended on Columbus, but this is as serious a threat as there is,” said John Samuelsen, the union’s international president who announced the “People Before Robots” campaign last week against the automation of public transportation. “The threat is the use of automated technology to replace workers. I’m not having any of it without a fight.”
Officials insist the service, which is to open to the public in December, is unrelated to municipal bus service, but the rhetoric and actions taken in response could foreshadow a tense new landscape for autonomous companies.
Samuelsen said the threat of autonomous technology to employment and wages is arriving quickly. He cites safety and human maneuverability concerns as arguments against what he calls the “dehumanization” of transit, pointing to the work of human operators to help people with disabilities enter and exit buses.
And yet Auto News also reports:
In 2016, the U.S. employed 687,200 drivers for transit and private services, which is expected to grow by 6 percent, or about 40,000 jobs, by 2026. The median pay for a transit bus driver in mid-2017 was $40,780, according to the Bureau of Labor Statistics.
Unions have reason to be worried long-term, but short-term it feels like drivers are going to be with us for quite a while.
Reverse: All Hail Honda
Neutral: What Kind of Maniac Actually Buys a New Car?
I also like burning money for pleasure, but, in all seriousness, the math has never made sense to me.