Nissan 370Z Forum - View Single Post

Mergnthwirker · 07-13-2009, 09:36 PM

Of course, almost no cars can be expected to appreciate.

But I just ran into the following article (on Autoextremist.com) which I thought was provocative. Basically it suggests that the cars we buy now will be in very high demand within two years. So enjoy the heck out of your Z with the expectation that now is an ideal time to buy one, and you may face much lower depreciation than in years past.

QUOTE:
Greg Martin has more than three decades of auto retail experience in a variety of capacities including new cars, used cars and leasing. He presently heads The Private Client Group, serving clients acquired over the years and acts as a "market maker" by providing new car dealers with trade-in figures. Here's what Greg wrote:

The Great Used Car Boom of 2012. It is coming, the numbers make it a certainty. Consider that U.S. new car sales are expected to be in the region of 9.5 million this year and are projected to be 10 to 11 million units next year. In addition, 12.5 million units have been coming off the road by various means consistently for the past several years. DMV data estimates that approximately three million new driver's licenses are issued annually. The average car on U.S. roads is 9.4 years old.

You see where this is going: Pent-up demand is at an all-time high, while supply is shrinking.

But wait, there's more! New vehicle prices are poised for a big increase. Recently mandated emissions and MPG standards are soon to add $1300 to the cost of a new vehicle according to the manufacturers, although some other estimates are much higher. The bankruptcy of two-thirds of the domestic industry has accelerated the loss of capacity, even while import manufacturers have been shuttering plants. Although excess capacity still exists, it is likely to be largely absorbed by the expected rebound in sales the next couple years.

The inevitable result is something the car companies haven't had in a long time: Pricing Power. So now we have painted a picture where demand is mushrooming, prices are skyrocketing, and the days of "any warm body qualifies" financing and sub-vented leases are pipe dreams of the past.

So what choice does the beleaguered American consumer have? Buy used! Signs of this trend have already begun to appear. Although YTD new cars are off by 41%, used cars are up by 3%. Compounding the imbalance of supply and demand is a shortage of used cars, due in large part to a lack of trade-ins. Future supply is due to further constrict as the number of off-lease cars begins to dwindle. Rental car companies are also extending the useful life of their fleets almost exponentially. By 2012 we can look back on this market as the "good ol' days" when by comparison used cars were bargain priced.

What does all of this portend for the dealers? The consumer? Insightful consumers should view the November-December-January time period as a buying opportunity. Historically, the used car market weakens at the end of the calendar year as demand softens and a flurry of trades come in on the new models. I anticipate this year should be no exception, but do not expect prices to approach the depressed levels of last year. Most late-model cars are now worth at least the same and in many cases significantly more than what they sold for last winter.

By next spring the used car market will be gathering momentum like a runaway train, and if you haven't bought your ticket your chances for a good buy will be rapidly vanishing. The opportunities for inexpensive auto ownership (little depreciation) will be great, particularly in the luxury segment.

Focus should be on cars that will be in shortest supply in the coming years. Generally this would include later model, lower mileage cars of current body styles, ideally with a least one and at most two years of depreciation realized. I'll have more next time... Greg Martin, The Private Client Group, Roswell, Georgia. gregmartin123@bellsouth.net

END QUOTE

Who knows what will happen to gas prices, and the economy? But I know for sure that I'll enjoy the heck out of my Z and avoid driving a wimpy electric green machine for as long as I possibly can. It may not be politically correct, but A) it's fun and B) now is a good time to do it!

What do you think?

07-13-2009, 09:36 PM	#1 (permalink)
Mergnthwirker Base Member Join Date: Jun 2009 Location: Connecticut USA Posts: 243 Drives: '09 370Z PW MT6 S Rep Power: 15	Why the Z might be a GOOD investment Of course, almost no cars can be expected to appreciate. But I just ran into the following article (on Autoextremist.com) which I thought was provocative. Basically it suggests that the cars we buy now will be in very high demand within two years. So enjoy the heck out of your Z with the expectation that now is an ideal time to buy one, and you may face much lower depreciation than in years past. QUOTE: Greg Martin has more than three decades of auto retail experience in a variety of capacities including new cars, used cars and leasing. He presently heads The Private Client Group, serving clients acquired over the years and acts as a "market maker" by providing new car dealers with trade-in figures. Here's what Greg wrote: The Great Used Car Boom of 2012. It is coming, the numbers make it a certainty. Consider that U.S. new car sales are expected to be in the region of 9.5 million this year and are projected to be 10 to 11 million units next year. In addition, 12.5 million units have been coming off the road by various means consistently for the past several years. DMV data estimates that approximately three million new driver's licenses are issued annually. The average car on U.S. roads is 9.4 years old. You see where this is going: Pent-up demand is at an all-time high, while supply is shrinking. But wait, there's more! New vehicle prices are poised for a big increase. Recently mandated emissions and MPG standards are soon to add $1300 to the cost of a new vehicle according to the manufacturers, although some other estimates are much higher. The bankruptcy of two-thirds of the domestic industry has accelerated the loss of capacity, even while import manufacturers have been shuttering plants. Although excess capacity still exists, it is likely to be largely absorbed by the expected rebound in sales the next couple years. The inevitable result is something the car companies haven't had in a long time: Pricing Power. So now we have painted a picture where demand is mushrooming, prices are skyrocketing, and the days of "any warm body qualifies" financing and sub-vented leases are pipe dreams of the past. So what choice does the beleaguered American consumer have? Buy used! Signs of this trend have already begun to appear. Although YTD new cars are off by 41%, used cars are up by 3%. Compounding the imbalance of supply and demand is a shortage of used cars, due in large part to a lack of trade-ins. Future supply is due to further constrict as the number of off-lease cars begins to dwindle. Rental car companies are also extending the useful life of their fleets almost exponentially. By 2012 we can look back on this market as the "good ol' days" when by comparison used cars were bargain priced. What does all of this portend for the dealers? The consumer? Insightful consumers should view the November-December-January time period as a buying opportunity. Historically, the used car market weakens at the end of the calendar year as demand softens and a flurry of trades come in on the new models. I anticipate this year should be no exception, but do not expect prices to approach the depressed levels of last year. Most late-model cars are now worth at least the same and in many cases significantly more than what they sold for last winter. By next spring the used car market will be gathering momentum like a runaway train, and if you haven't bought your ticket your chances for a good buy will be rapidly vanishing. The opportunities for inexpensive auto ownership (little depreciation) will be great, particularly in the luxury segment. Focus should be on cars that will be in shortest supply in the coming years. Generally this would include later model, lower mileage cars of current body styles, ideally with a least one and at most two years of depreciation realized. I'll have more next time... Greg Martin, The Private Client Group, Roswell, Georgia. gregmartin123@bellsouth.net END QUOTE Who knows what will happen to gas prices, and the economy? But I know for sure that I'll enjoy the heck out of my Z and avoid driving a wimpy electric green machine for as long as I possibly can. It may not be politically correct, but A) it's fun and B) now is a good time to do it! What do you think?