"The wallet-busting era of car ownership"

1
This week's Consumer Price Index showed insurance prices up 22% over the last year, the largest annual jump seen in data that goes back 40 years. It's the latest sign the American driver is facing the worst price shock in a generation. Costs are soaring at every turn, from decades-high borrowing costs for car loans to insurance rates that are rising at the quickest pace on record. It's an affordability crisis slamming consumers in an area where they have little ability to cut back. The average interest rate on an auto loan is the highest in almost 20 years, according to Bankrate, a surge that reflects the Federal Reserve's rate-hiking campaign. Loan rates can also be influenced by other factors including credit scores and the cost of the car. Auto prices have dropped some, but remain well above the prices seen before the pandemic.

The average transaction price of a new car was roughly $47,200 last month, according to new data from Cox Automotive, down from the peak in 2022 but still about $10,000 more than the average price on the eve of the pandemic. A used car, on average, is $18,600 — nearly 40% higher than in 2019. Perhaps the most stunning, and stickiest, car-related cost surge has been auto insurance. It was a key factor that contributed to this week's hotter-than-expected inflation report. Insurers are playing catch-up after pandemic-era distortions that pushed their costs up, which were ultimately passed to the consumer. Repair costs—already on the upswing higher as cars get more high-tech and costlier to fix—have surged. Supply chain snafus made parts hard to find; mechanics, too, were scarce and demanded higher wages in a tight labor market.

"These things were percolating behind the scenes, but the industry didn't feel it during lockdown," said Joseph Wodark, an executive at risk-assessment firm Verisk. "All of these things converged post-pandemic and insurers were left on their heels," Wodark said. No one was driving during lockdown so there were no collisions — insurers actually gave money back to policyholders. Then the economy opened back up, drivers hit the road again and higher instances of crashes returned — with insurers having to pay out more than they were taking in from customers. It's a long, state-by-state slog for insurers to get rate hikes approved. That's why the rate increases are only happening now. The longer it took to address that issue, the deeper in the hole the insurers were and the more price increases they actually needed," said Yaron Kinar, an analyst who covers insurers at Jefferies.

"The system at this point just has a lot of inflationary forces," Allstate CFO Jess Merten said at a conference last month. Merten said more states are allowing steeper rate increases, "or else the companies who do business in their state are going to pull back." "I think consumers are feeling the pain. There's no question about that," he said. There are indicators that show some car owners are increasingly pinched—a rare signal of trouble for the otherwise strong U.S. consumer. Data from the New York Fed shows delinquency rates for auto loans are at the highest since the 2008 recession, which their researchers note is more pronounced among more recent borrowers—those who faced higher car prices and had to borrow more at a higher rate to cover it. JPMorgan CEO Jamie Dimon said on Friday that the bank has noticed some cracks in the subprime auto market, where borrowers have low credit scores (or limited histories).
https://www.axios.com/2024/04/13/car-pr ... ce-repairs
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: "The wallet-busting era of car ownership"

2
Several years ago, I looked at the cost of car ownership in more detail. I've forgotten the numbers, which are probably no longer high enough, but the cheap car we had at the time (bought for $1500 cash) was costing us between half and three-quarters of a shekel per mile. Our current cars, which are paid off, are probably costing us between three-quarters and a shekel per mile, given the higher costs of fuel, insurance, and so forth. A fancy new car would probably cost two or three times that.

When I was looking that close, I was also thinking about the time investment in transportation. If I'm driving two hundred miles a week, and paying three-quarters of a shekel per mile, my car is costing me $150/week. If I'm spending five hours in the car to cover that two hundred miles, I'm also devoting several hours at my job every week to earn the $150. If my job pays $30/hour, that's more than five hours, since I'm also paying payroll taxes--call it seven hours, to just pull a number out of thin air.

Part of what had me thinking about the time involved in car travel was that, because we had one car, I was doing most of my commuting by bicycle. People I knew were thinking I was committing a LOT more time to my commute, but when I factored in the time to earn the money to pay for the bike, I was actually committing less time to my commute by bicycling. And my ride to work was about thirteen miles. It took me fifteen minutes longer point-to-point by bicycle than by car, because traffic lights (necessary because there is other traffic on the road system) were a bigger factor than the 45-MPH road that was half of my commute.

My current commute route is, alas, very bicycle-UNFRIENDLY, even for a person who has a fair bit of time on busy roads on two wheels. It's a bummer.
Eventually I'll figure out this signature thing and decide what I want to put here.

Re: "The wallet-busting era of car ownership"

3
I've reached the age where I simply don't drive as much as I did. From well over 100K a year to about 1200 miles a year has made a significant difference; my major cost is insurance, I buy perhaps six to eight gallons of gas a month; the car has long been paid off so some maintenance and annual inspections are about it.

Locally gas is at or under $3.00 a gallon.
To be vintage it must be older than me!
The next gun I buy will be the next to last gun I ever buy. PROMISE!
jim

Re: "The wallet-busting era of car ownership"

4
Cars are expensive to own and maintain properly. We have two Toyota RAV4s both were bought cash deals. and they sit in the garage most of the time since my wife retired a couple of years ago. We could cut down tone car but then it would be who gets the car when the other needs to use it. We don't have public transportation out here in the burbs of Denton, TX so a car is essential. Both are Hybrids so gas cost are low and maintenance is low, just oil change and inspection once a year. I finally had to put new tires on mine since the factory tires were worn down to the caution depth.
Facts do not cease to exist because they are ignored.-Huxley
"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." ~ Louis Brandeis,

Re: "The wallet-busting era of car ownership"

12
senorgrand wrote: Thu Apr 18, 2024 12:59 pm I would love to live nearer the city center and walk and take the bus instead of driving. Maybe once my youngest take's my wife's car, we can go down to one vehicle and save some scratch.
Yesterday, I had a continuing education course, maintaining my architectural license even though I’m retired, I took the bus and light rail.
Image
Image

"Resistance is futile. You will be assimilated!" Loquacious of many. Texas Chapter Chief Cat Herder.

Re: "The wallet-busting era of car ownership"

13
BearPaws! That was a seriously deep and fascinating analysis of the cost of transportation to your life. It certainly makes sense in a novel sort of way to consider a longer physical commute to actually provide you greater freedom in your life.
"It is better to be violent, if there is violence in our hearts, than to put on the cloak of non-violence to cover impotence. There is hope for a violent man to become non-violent. There is no such hope for the impotent." -Gandhi

Re: "The wallet-busting era of car ownership"

14
Bisbee wrote: Thu Apr 18, 2024 1:32 pm BearPaws! That was a seriously deep and fascinating analysis of the cost of transportation to your life. It certainly makes sense in a novel sort of way to consider a longer physical commute to actually provide you greater freedom in your life.
Thanks. My analysis was, in part, in effort to help others wean themselves from car-dependency.

I was part of a local sub-culture that focused on "car-free" and, in my case, "car-free lite." I have been on bicycles since I was three, and worked in a few bike shops over the years, the last three times as service manager. Because of the car-free ethos, many of us set out to see what we could do with our bicycles.

For a short while, I did handyman stuff, arriving to clients' houses by bicycle, using a Surly Big Dummy and a Bikes at Work cargo trailer to haul stuff. I focused on the small tasks that the guys with F250s and thirty-foot cargo trailers ignored. I still have the bike and trailer, and have hauled some scary loads--one time I hauled what turned out to be almost eight hundred pounds of mulch home from a Lowe's, on a trailer rated for three hundred pounds. It's all about the low gears...
Eventually I'll figure out this signature thing and decide what I want to put here.

Re: "The wallet-busting era of car ownership"

15
I find a growing trend of drivers displaying bicyclist rage to be deeply disturbing. Similar to a hatred of motorcyclists who split lanes or otherwise do things that drivers cannot do on the road, this anger at bicyclists is a horrible reflection of our growing loss of shared humanity being displaced by an ego-centric car culture that emphasizes grandios displays of power due to inherent defensiveness. Our society is encouraging a fight-back attitude yet we don’t know who the actual targets are it seems.
"It is better to be violent, if there is violence in our hearts, than to put on the cloak of non-violence to cover impotence. There is hope for a violent man to become non-violent. There is no such hope for the impotent." -Gandhi

Re: "The wallet-busting era of car ownership"

17
Bisbee wrote: Thu Apr 18, 2024 1:59 pm I find a growing trend of drivers displaying bicyclist rage to be deeply disturbing. Similar to a hatred of motorcyclists who split lanes or otherwise do things that drivers cannot do on the road, this anger at bicyclists is a horrible reflection of our growing loss of shared humanity being displaced by an ego-centric car culture that emphasizes grandios displays of power due to inherent defensiveness. Our society is encouraging a fight-back attitude yet we don’t know who the actual targets are it seems.
Definitely an issue. I’m extra vigilant on my bike or motorcycle. Unfortunately riding a bicycle is not an option for my wife. Balance and heat sensitivity due to MS is a concern in places like Houston.
Image
Image

"Resistance is futile. You will be assimilated!" Loquacious of many. Texas Chapter Chief Cat Herder.

Re: "The wallet-busting era of car ownership"

18
My car is almost paid for, I bought it just before the pandemic. The manufacturer and dealer I bought it from have been sending me e-mail after e-mail trying to talk me into buying a new vehicle. First there were the "you're prequalified" e-mails, then e-mails on how much I can get when I turn mine in, then e-mails with pics detailing what the monthly payment would be on a 2024 model of the vehicle I have... Car prices have gone through the roof and interest rates are high, so I'm not interested.

I live a bit over 5 miles from town, it's downhill going to town and uphill from there getting to my house, no public transit. There is limited transit service in town, it's only along the main street and the state highway. If the terrain was flat, I might consider a bicycle or tricycle. A car is a necessity unless you want to spend money on Uber or Lyft rides.
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: "The wallet-busting era of car ownership"

20
CDFingers wrote: Thu Apr 18, 2024 6:02 pm The answer, certainly, is to make sure Musk gets a $56 billion pay off. That's the ticket. [/s]

https://www.axios.com/2024/04/18/elon-m ... ay-package

CDF
He's more worthy than other car CEOs. He's pushed the envelope on more sustainable autos than anyone else and coupled it with a network to charge them. He's definitely a whackadoodle, but what are you going to do?

Now if we could just get our asses out of cars and onto trains... Newsom has shown us that's a pretty expensive venture, though.

Re: "The wallet-busting era of car ownership"

23
Bisbee wrote: Thu Apr 18, 2024 1:59 pm I find a growing trend of drivers displaying bicyclist rage to be deeply disturbing. Similar to a hatred of motorcyclists who split lanes or otherwise do things that drivers cannot do on the road, this anger at bicyclists is a horrible reflection of our growing loss of shared humanity being displaced by an ego-centric car culture that emphasizes grandiose displays of power due to inherent defensiveness. Our society is encouraging a fight-back attitude yet we don’t know who the actual targets are it seems.
And, it gets worse as an almost direct function of how many miles of bike lanes a community has.

I'm not the only one to twig to this.

I have some history and some level of specialized training on this issue, and I could go on ad astra about the specifics, but my friend John Schubert said it quite well: "Bike lanes do one thing well--make cyclists and motorists irrelevant to each other until the moment of impact." Given that the majority of motorist-vs-cyclist crashes happen in or around intersections (the end of your driveway is, technically, an intersection), and given that bike lanes make intersections more complicated (like making a two-lane road a four-lane road makes its intersections more complex), and that complexity adds chances for crashes, it doesn't take long to see why I'm vehemently against bike lanes.

But, more to Bisbee's observation, the anti-bicyclist hostility ramped sharply since COVID-19 hit, in my own experience. From 2008 until 2019 or so, I did more trips on bicycles than in my car, to include commuting, grocery shopping, running other errands (including the mulch haul mentioned above), and socializing. Since moving house a couple summers ago, my bicycling mileage has dropped to effectively zero, in part because the new-to-me house is farther from the city center, and ANY utility cycling would involve a couple miles of a two-lane road with a 45 MPH speed limit and no good places for motorists to pass me. I'm just not going to put myself in that position. Too many people depend on me being able to help them every week.
Eventually I'll figure out this signature thing and decide what I want to put here.

Who is online

Users browsing this forum: No registered users and 2 guests