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Can VW Overtake Toyota and GM To Become #1?

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  • steverstever YooperlandPosts: 40,417
    edited October 2012
    Looks like they have the platform for it now, although the concept at the NY auto show was wagony. (Inside Line)

    image

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  • robr2robr2 BostonPosts: 7,794
    The All Track was shown at NY - I don't know why. The 7 seat crossover is what really sells in America and that's what's expected from VW.
  • steverstever YooperlandPosts: 40,417
    "Volkswagen is destined for its best sales year since 1973," said Krebs.

    Volkswagen said in a statement that over 25 percent of its U.S. dealerships were affected by Hurricane Sandy."

    U.S. Auto Sales Relatively Healthy, Despite Hurricane Sandy's Toll (Inside Line)

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  • steverstever YooperlandPosts: 40,417
    "The Volkswagen brand had its best year since 1973, selling 438,133 vehicles, including more than 117,000 Passat cars built in Chattanooga, Tenn., and 170,424 Jettas.

    Audi brand sales totaled 139,310 vehicles, a 68 percent increase since 2009. Bentley and Bugatti also reported higher sales."

    VW Group posts record U.S. sales in 2012 (Detroit News)

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  • steverstever YooperlandPosts: 40,417
    edited April 2013
    "Volkswagen joins a growing roster of foreign and United States automakers that are struggling in Europe, where car sales dropped 10 percent during the first quarter, including double-digit decreases in France, Germany and Spain.

    Most automakers are banking on surging sales in the United States to offset some of these losses.

    And VW’s chairman, Martin Winterkorn, cautioned that the company expected little improvement any time soon in Europe."

    Even VW Now Feels the Weight of Europe’s Economic Troubles (NY Times)

    What a difference a quarter makes.

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  • gagricegagrice San DiegoPosts: 28,964
    Only reason sales are good in the US is creative subprime auto loans. Average auto loan in the USA is $486 per month on 84 month loan. That is unsustainable. Look for another crash when the foreclosed cars start coming in.
  • fintailfintail Posts: 33,683
    edited April 2013
    The average auto loan is 84 months? Huh? Where did that come from? I haven't seen any credible economic analysis equating subprime car loans to the mortgage disaster,either. There's no manipulated bubble for new car pricing, and cars can be repossessed a lot easier than houses. Even if it does sputter, this can't and won't cause a crash. And I'll wager it won't even sputter. People will put off a lot to keep their car. Worst thing it will do is maybe delay future sales as terms are longer (but more like 65 months rather than 84)

    A big reason sales are up is because they were low for many quarters, and the fleet is getting old and worn.
  • gagricegagrice San DiegoPosts: 28,964
    GM is offering loans on new cars over the MSRP to cover the trade-in. While out on the road I heard this financial guy Dave Ramsey, and that was his statement of 84 month loans and $486 payments.

    Welcome to the start of the next subprime crisis: Subprime auto loans.

    The Auto Subprime Bubble
    Banks have once again cast a greedy eye to the lower middle class - who are already leveraged up to their collective eyeballs. This demographic, call it the "easy prey class," is being targeted for auto loans at usurious prices, in most cases north of 20%.

    Reuters recently reported the all-too-familiar story of a school bus driver in Alabama who fell into precisely this trap.

    Jeffrey Nelson, of Jasper, AL, had one car repossessed, along with serious medical bills. His credit history was checkered indeed.

    Yet, he was able to put up his Mossberg shotgun, worth about $700, along with $300 in cash, to come up with the $1,000 down payment that Maloy Chrysler Dodge Jeep said was needed to get him behind the wheel.

    The car was not flashy - it was Japanese and had four wheels. According to Reuters, Nelson took out a $10,294 loan to buy a 2007 Suzuki Grand Vitara.

    But that $10,294 loan carried a sky-high interest rate, at 21.9%. The true cost was over $12,500.


    http://www.marketoracle.co.uk/Article40186.html
  • gagricegagrice San DiegoPosts: 28,964
    How the Next Subprime Bubble is Forming

    A riskier loan means a higher yield for speculators, so they're loading up on the riskiest tranches. In most cases, after demand works itself out and drives yields south of 2%, two-year subprime auto ABSs yield 1%.

    That looks very attractive compared with 0.5% on prime auto loan ABSs and 0.3% on two-year Treasuries.

    Investors can't get enough of these subprime ABSs, so the market for them has grown.

    And grown...

    And grown...

    From 2011 through today, close to $36 billion worth of these securities have been sold on the market. Just this week, a few Wall Street banks announced a subprime auto loan securities deal worth $1.6 billion.

    And on and on it goes until the music stops, just like it did in 2008. Just like the toxic mortgage-backed securities of the last decade, these are spreading all over, and spreading fast.

    As with nearly all the I-can't-believe-this-is-legal financial shenanigans, you have the Federal Reserve to thank for it.

    Ever since QE Infinity, when the Fed took interest rates to near zero, investors large and small have been clamoring for something - anything ­- with a yield above, well, zero.


    http://moneymorning.com/2013/04/25/welcome-to-the-next-subprime-bubble/
  • fintailfintail Posts: 33,683
    edited May 2013
    Both of those links seem to do nothing more than parrot the Reuters piece. The key to which is this line from the original piece:

    "A bust in the subprime auto market wouldn't have consequences nearly as devastating for lenders, investors or the broader economy as the housing bust did."

    Ramsay is entertaining, but I wouldn't stake my future in him. The average car loan is not near 84 months. Loans above MSRP are nothing new. High risk high interest financing has existed longer than I have - of course there will be more in it during socio-economic decay that is greater than at any time since I have been around.
  • steverstever YooperlandPosts: 40,417
    There were two posts over in Edmunds Answers the last day or two where people who were underwater on their car loans both had interest rates higher than 21% - one was 29%!

    Too bad usury laws went away.

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  • fintailfintail Posts: 33,683
    Indeed. FIRE cabal people once again getting the laws they paid for. One won't be in the black on such a loan until the end. And if made on a used car, the risk is huge.
  • steverstever YooperlandPosts: 40,417
    edited May 2013
    How else are the high risk/poor credit score people going to be able to afford a car so they can get to work though? (And don't say take the bus - this ain't Seattle).

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  • gagricegagrice San DiegoPosts: 28,964
    In response to both your statements.
    One, usury laws should be in place. If the person is a poor risk don't loan them money. I am tired of picking up the tab when the banks make bad loans.

    Second, the high risk borrowers need to lower their standards on car purchases. This gets back to the usury laws. Buy a $5000 whooper at 12% interest for 3 years and keep your payments under $200 a month. If you cannot afford that at minimum wage better get a bike and a job close to where you live.

    10 year Old GM cars can be great buys.
  • steverstever YooperlandPosts: 40,417
    The 29% guy is trying to pay off a '99 Suburban. It probably was $5,000 before the $5,000 in interest got rolled in.

    Bloomberg is trying to put a different spin on VW's numbers.

    "The Volkswagen Group further strengthened its position in the global markets in the first three months of fiscal year 2013, despite the challenging conditions and intense competition. Including China, deliveries increased by 4.8 percent to 2.3 million vehicles worldwide. The Group's share of the global passenger car market rose year-on-year to 12.6 percent (12.2 percent)."

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  • fintailfintail Posts: 33,683
    Not allow the existence of 29% loans at all, maybe?
  • fintailfintail Posts: 33,683
    If those risky rates were under 20%, there would likely be less problem, yes. The whole bike/job thing isn't really possible for most, especially in a nation where residential development/public transit practices have been bought off by special interests.

    I'd be more concerned with a student loan collapse than car loans.
  • steverstever YooperlandPosts: 40,417
    Every state has their own usury law (and don't ask me how the feds get involved - I think they regulate student loan rates though). South Dakota has no maximum interest rate - that was a scheme to attract banks there, since bank usury rates depend on the law of their home office. (usurylaw.com)

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  • gagricegagrice San DiegoPosts: 28,964
    edited May 2013
    The whole bike/job thing isn't really possible for most, especially in a nation where residential development/public transit practices have been bought off by special interests.

    My sister has lived gone to college and worked in Seattle since the late 1960s. She has never owned a car. Rides her bike everywhere she goes. I would imagine she takes it on the bus as well.

    The student loan issue is big as well. The difference you cannot get rid of a student loan with foreclosure, repossesion or bankruptcy. Dying is the only way to get rid of a student loan provided you are not married and pass it onto a spouse.
  • fintailfintail Posts: 33,683
    Depending on where you live and work, a bike is fine. Not workable for the majority of the population I'd wager, though.

    Student loans also have zero collateral. At least with a car or cardboard house, it can be sold off.
  • steverstever YooperlandPosts: 40,417
    My brother-in-law doesn't drive either. And he's in Seattle.

    Try getting to work in your part of San Diego County. :shades:

    Now go get a job waiting tables in Seattle and try finding affordable housing without a two hour bus ride. Maybe in a VW Bus, shared with a half dozen co-workers.

    (like the way I slipped VW in there? :) )

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  • gagricegagrice San DiegoPosts: 28,964
    Try getting to work in your part of San Diego County.

    As a matter of fact the owner of a snowboard and skateboard factory lives near me. He rides his skate board to the bus then transfers to the trolley and makes it all the way 35 miles to his San Diego Harbor factory every day. Fact is we are spoiled having cars. Last I checked we are still free to live where ever we can afford to live. Get close enough to walk if you don't want a two hour bus ride or a 3000 mile airplane ride that I had every 3 weeks for 25 years. Don't make excuses for people that feel entitled to more than they have.

    If you feel you have to have a car, buy an old VW Bug.
  • steverstever YooperlandPosts: 40,417
    The owner huh? Bet he sets his own hours and just skates in when he feels like it.

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  • fintailfintail Posts: 33,683
    Sadly, race to the bottom wage pressures and inflated every day living costs kind of limit that freedom. Seems quite a few of those entitled people are in the upper ranks and relied on a lot of luck to get there.
  • steverstever YooperlandPosts: 40,417
    edited May 2013
    "Volkswagen, by contrast, saw sales fall 10% to 33,644 units. The company reported a 16% decrease in sales of its most popular model, the Jetta, and a 10% decrease in sales of its second-most popular vehicle, the Passat.

    “While it was a challenging month, particularly in the compact and midsize sedan segments, we remain solidly focused on our long-term growth strategy,” said Jonathan Browning, CEO of Volkswagen Group of America, in a statement."

    Detroit 3 gain market share in April on strength of pickups, crossovers and luxury cars (Detroit Free Press)

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  • gagricegagrice San DiegoPosts: 28,964
    Sadly, race to the bottom wage pressures and inflated every day living costs kind of limit that freedom. Seems quite a few of those entitled people are in the upper ranks and relied on a lot of luck to get there.

    Reality is what it is. Lamenting will not change it. The folks running the show feel they need to flood our country with more cheap laborers and while regulating the jobs out of the country. The Elephants and jackasses agree that making citizens out of anyone that crosses the border is a win win for both of them. The working man on the bottom of the pile is screwed.

    It is only the lucky few that get jobs in the VW auto factory.
  • fintailfintail Posts: 33,683
    You don't need to lecture me about reality, I live it every day. Either way, having an affordable place to live within a reasonable distance from work simply isn't reality for many people - our infrastructure has failed that too. Hell, I can't afford to buy anything but a dinky condo within a reasonable distance from my workplace, and I make ok money.

    I won't disagree about your basic slant regarding those workers. They'll end up taking those high interest high risk loans that keep some GM models moving, and most of them will pay the note, too.
  • gagricegagrice San DiegoPosts: 28,964
    You don't need to lecture me about reality, I live it every day.

    Are you sure? I see more and more people living in tents and their cars. Just announced that we are at the lowest home ownership in 18 years. You can afford a condo. That puts you in a higher bracket than most.

    With the banks borrowing from the Fed at near Zero and lending at very high rates, emphazises this Federal Government is not interested in the American people. Consumer interest should be capped at 5% over prime.
  • fintailfintail Posts: 33,683
    I'm sure, reality might not be what some imagine. I have been able to survive (maybe with less sanity) in arguably the most competitive work environment in modern history, and I generally spend less than I make. If only our esteemed leadership could do likewise.

    Lower home ownership might not be all bad. The very unstable work climate today demands it - I know quite a few people who have moved many states for jobs. Hard to do with a mortgage looming over you, especially if you aren't old enough to have any real equity. It might make for a more flexible workforce, like can be seen in the competition we are supposed to mimic, right? Also more money for other things if the situation is like it is here, and rents are often far lower than the carrying costs of a mortgage.

    I would have been dumb to buy that condo when I moved here, and I still see it as a bad investment.

    Maybe interest other than mortgages should be tax deductible, too. No reason realtors and contractors should receive defacto subsidies.
  • gagricegagrice San DiegoPosts: 28,964
    edited May 2013
    Lower home ownership might not be all bad.

    I agree with you. You can rent in CA far cheaper than owning. I am sure Seattle is the same way. Out here in small town midwest you pay $1100 to $1200 rent on an $80k home. Makes buying a much better option.

    I would have been dumb to buy that condo when I moved here, and I still see it as a bad investment.

    Again I agree with you. I don't think Seattle has felt the pain of CA, AZ, NV or FL homeowners. With our dollars shrinking in value how much longer will the rest of the USA maintain higher prices?

    I wandered through the Toyota, Lexus, Chrysler & Jeep showrooms this morning. They were all dead here in So Indiana. I think the only thing keeping US going is the Fed printing more money.

    PS
    all consumer interest was deductible at one time. Not sure who took it away.
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