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Thread: Good cars bad for business?

  1. #1
    Vulture of The Western World Eric's Avatar
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    Good cars bad for business?

    Good cars are killing the car industry. Also that there are just too many of them. Sound nutty? Well, think about it a minute.

    After decades of consumer complaint - most of it legitimate - about the iffy quality of its products, the car companies (the American companies in particular) performed the equivalent of a parking brake 180. New cars last almost forever now. A 150,000 miler used to be exceptional; now it's routine. Back in the '70s, the typical new car was good for about 5-7 years and maybe 100,000 miles - by which time it was a tired old beater ready for the seedy used car lot or the crusher.

    Modern cars rarely rust out, either.

    Even after 10-15 years, they usually still have intact floorpans and often, pretty decent paint. That rarely happened prior to the '90s - unless the car in question was treated like a holy icon, never driven in poor weather and always kept under cover in an enclosed garage when not in use.

    It was once - and not too long ago - pretty exceptional to see a 20 year old car in service as a daily driver. It's commonplace today. In fact, the average age of the typical car you see out there is now 7-8 years old, a record.

    This has been a disaster for the car industry, as you can imagine.

    People have clued in. They know that with decent care and a little luck, they can expect to need a new car not once every five years or so but maybe once every eight to ten. Yet the car industry continues to pour forth new cars - on the order of 18 million of them every year - on the assumption that people need them. Which they don't anymore. New cars are more than ever a discretionary purchase and when the economy slips a little (let alone has a coronary and flatlines) people eschew the new - and keep on driving Old Faithful.

    Thanks to the superior quality of the modern car, they may be able to do that for the next ten years. Can the industry tread water that long?

    Next the issue of Too Many.

    No one with any sense wants to tip the hat to that pernicious old collectivist Karl Marx, but intellectual honesty forces an admission that he was right about one thing - overcapacity. The market, in theory, is supposed to be a self-regulating machine that constantly balances supply and demand. That hasn't happened with new cars. The supply of new cars is as glutted as Dan "Hoss" Blocker's arteries. There are acres of brand-new cars just sitting in storage - and in the pipeline - with no one to buy them. GM's Saturn division stopped making 2009s because there are so many brand-new 2008s left over (as of almost May 2009) that building even more finally struck even GM as madness.

    It is much, much harder for anyone to make a buck in today's market because of the issue of Too Many. As recently as the mid 1990s, for example, there were no Japanese luxury brands at all. Within a decade, there would three (Lexus, Acura, Infiniti) competing for the same buyers that Lincoln and Cadillac mostly had to themselves as recently as the '80s. Benz and BMW massively increased both their product line and their market presence. Then came Audi, Jaguar - etc. All fighting over more or less the same piece of real estate, since the number of people in the market for a luxury had increased only slightly. Rather, the pieces of the pie just got smaller - and the competition ever fiercer.

    Same thing within a given category of vehicle SUVs for example.

    There used to be about half a dozen makes/models. Now there are twice that, easily. Probably three. The same is true of virtually any category of vehicle. Look around, everyone's making one of whatever it is. Which makes it that much harder to make a buck on one. Marx said this inevitable over-competition for diminishing profit would end up being the proverbial rope with which capitalism would hang itself.

    Perhaps he had a point.

    The fix, of course, is obvious - but will not be allowed to happen. And that fix is to allow Mr. Death to do his thing. General Motors may no longer be viable. And not to pick on GM; the same goes for the rest of them, too. The great herds of cars will have to be thinned. Not every brand needs to have a full range of vehicles from economy compacts through luxury SUVs.

    Let the market sort out which cars - and which companies - can survive.

    The current desperate attempt to keep the status quo on life support via seemingly unlimited infusions of just-minted Federal Reserve Notes is perhaps well-intended but only delays the inevitable.

    And lets us indulge the fantasy that there can never be too much of a good thing.

    Be assured there can be. Just take a look around.
    Last edited by Eric; 04-23-2009 at 08:00 AM.

  2. #2
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    I have a suggestion that is more bad news for the car companies...

    We need to have legislation (and as a conserative, I hate laws) that mandates:

    "The Right To Repair, Without the Repair Cost More Than 10% of the Vehicle For At least 10 - 12 years.)

    How I've been screwed over the years: 1990 BMW - $700 for windshield wiper motor, $1994 BMW - $1500 for an automatic radio antenna aerial. My 1995 ISZU Trooper fuel pump was $800, and the starter was $700, and the gasket replacement (for the coolant connecting tube) was $800. 2002 Volvo S80 with failed ABS - $1500 to replace. Daughter's 2005 Ford Tarus: $2500 transmission rebuild.

    We need some kind of protection against these land mines!

  3. #3
    Ridin Dirty dom's Avatar
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    dBrong, those are some serious costs for repairs. Sad part is that is normal.

    Eric, excellent article. There is a mistake in it though.

    "No one with any sense wants to tip the hat to that pernicious old collectivist Karl Marx"

    I'm sure there are a lot of people with sense that would tip the hat to good ole Karl Marx!

    I mean here we are executing his predictions.

    There will be a time when everyone is ready for change, it will be a mass movement and wanted by all. It has started dude, look at all the bailout crap.

    "Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato "
    -Mussolini
    All within the state, nothing outside the state, nothing against the state.

  4. #4
    DonTom
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    Quote Originally Posted by Eric View Post
    Good cars are killing the car industry.
    IMAO, it all started with the tougher smog requirements. Getting rid of the carburetors and putting in EFI made engines run so efficient that they now last almost forever, even though some of the small stuff isn't as good (such as plastic pulleys now used).

    -Don- Reno, NV


  5. #5
    Ridin Dirty dom's Avatar
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    Yeah, I think you are absolutely right DonTom. The efficiency and reliability of the internal combustion engine has been completely maximized, as well as most the other systems on cars.

    "Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato "
    -Mussolini
    All within the state, nothing outside the state, nothing against the state.

  6. #6
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    Quote Originally Posted by dom View Post
    Yeah, I think you are absolutely right DonTom. The efficiency and reliability of the internal combustion engine has been completely maximized, as well as most the other systems on cars.
    I don't think that the 'repairability' issue has been addressed at all. Let's make the auto manufacturers have some built in diagnostics.

    For instance: the fuel pump pressure, the coolant temp, brake pressure, the O2 sensor readings, and other vital signs. This might cost $50 a car, but I doubt much more.

    Also you can't 'bury' functions in the inside RR Mirror - tell me about it - Volvo wanted $1,000 to replace the RR Mirror - I did it with a junk yard mirror for $75 - come'on - it gotta be easier than that.

    If auto manufacture's can achive an easily repairable, semi-self diagnosing vehicle, then it will lower costs, and allow us 'motorheads' to drive for much less of a cost!

    If Detroit did this, I think they could regain the US car market.

  7. #7
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by dom View Post
    dBrong, those are some serious costs for repairs. Sad part is that is normal.

    Eric, excellent article. There is a mistake in it though.

    "No one with any sense wants to tip the hat to that pernicious old collectivist Karl Marx"

    I'm sure there are a lot of people with sense that would tip the hat to good ole Karl Marx!

    I mean here we are executing his predictions.

    There will be a time when everyone is ready for change, it will be a mass movement and wanted by all. It has started dude, look at all the bailout crap.
    Roger all that!

  8. #8
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by DonTom View Post
    IMAO, it all started with the tougher smog requirements. Getting rid of the carburetors and putting in EFI made engines run so efficient that they now last almost forever, even though some of the small stuff isn't as good (such as plastic pulleys now used).

    -Don- Reno, NV

    No question that was a big factor. For example, loose tolerances were no longer feasible. Modern engines thus had to be machined and assembled to exacting tolerances, which translates into superior materials/quality control during manufacture.

    On the other hand, of course, I can rebuild a carbureted small block Chevy from the oil pan to the carb for about $1,500. It'll then be good to go for another 100,000 miles.

  9. #9
    Ridin Dirty dom's Avatar
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    "On the other hand, of course, I can rebuild a carbureted small block Chevy from the oil pan to the carb for about $1,500. It'll then be good to go for another 100,000 miles."

    I love Chevy! I actually picked my short block up for $1200, new (well remanufactured).

    There was a place up in Maryland you could block shop right off racks like Costco.

    Had a buddy pick up a 383 stroker short block for $2000. This was a few years ago though.

    "Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato "
    -Mussolini
    All within the state, nothing outside the state, nothing against the state.

  10. #10
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by dom View Post
    "On the other hand, of course, I can rebuild a carbureted small block Chevy from the oil pan to the carb for about $1,500. It'll then be good to go for another 100,000 miles."

    I love Chevy! I actually picked my short block up for $1200, new (well remanufactured).

    There was a place up in Maryland you could block shop right off racks like Costco.

    Had a buddy pick up a 383 stroker short block for $2000. This was a few years ago though.

    Yep!

    Now compare that with the cost of a new ECU or EFI system for a modern car. You haven't even touched the engine itself yet and you're looking at hundreds, if not $1,000 or more.

    Now, new car engines will run reliably (for the most part) for longer without needing minor adjustment. But when their systems start to fail, the economics of keeping it going go south real quick.

  11. #11
    Ridin Dirty dom's Avatar
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    Smile

    Yes sir. It's the way it has to be.. The nature of the beast. I mean paying a lot for repairs sucks and all, but it keep the industry running. The way I see it, everyone has three choices


    1. pay the prices
    2. learn how to fix things yourself
    3. or buy older cars that parts are cheaper for

    I chose options 2 & 3 a lot time ago, I'm a knuckle buster what can I say.

    "Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato "
    -Mussolini
    All within the state, nothing outside the state, nothing against the state.

  12. #12
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by dom View Post
    Yes sir. It's the way it has to be.. The nature of the beast. I mean paying a lot for repairs sucks and all, but it keep the industry running. The way I see it, everyone has three choices


    1. pay the prices
    2. learn how to fix things yourself
    3. or buy older cars that parts are cheaper for

    I chose options 2 & 3 a lot time ago, I'm a knuckle buster what can I say.
    Same here!

    I don't mind spending money on something like a neat old muscle car (or similar) but otherwise, a car/truck is transpo - a fast-depreciating money pit/disposable consumer item, just like a microwave or 'fridge. Therefore, I buy inexpensive, rugged older stuff I can fix myself.

    No doubt this has saved my huge coin over the years....

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    Eric,

    Great article, excellent point!

    I have a 15 year old Jeep Grand Cherokee V8, that has about 150,000 miles on it. I bought the vehicle new back in 1994, it has been the most reliable vehicle I have ever owned. It drives and performs just as good as the day I bought it brand new. The engine and transmission are original and have never been rebuilt. Even the shocks are original and still work perfectly.

    I still drive it to work every day and would have no qualms taking it on a long trip even a 3,000 mile in each direction cross country trip.

    The exterior looks new, same with the interior. Even the leather seats have held up very well.

    In fact I am getting the best gas mileage ever with my Grand Cherokee. At 150,000 miles it's just broken in with many miles (God willing) to go.

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