Hi guys,
With fuel prices now at $2 a litre from a looming war between Ukraine and Russia, which may keep those prices high for a longer period of time. Do you guys think car prices may start to come down, as PT seems now more cost effective and attitude to catching the virus is a less sensitive issue.
Thanks :)
Sure but demand may decrease.
It may, but will it?
I do think that it might because it seemed like people had a lot of money to spend after being locked down (and not able to spend) for so long. Now that things are getting back to normal, people will be out spending and won't have as much spare cash. But the issue of supply is still there.
True. But as inflation rises it erodes people's savings. And as interest rates slowly rise it also further deters people spending.
@postform: That would make people more likely to buy used than new or hold onto their cars longer (reducing supply of used car). What we need is new car supply to be corrected, people to start buying/selling more news cars then used cars will come down.
Unless people are buying cars out of necessity.
Esp they can only afford home far from established PT network.
Theres people paying money with over 12 months waiting list for new cars.. so that means less used cars.
Sad days huh. Pricing today's money to get a car 12 months ago :/
@postform: The car won't be "old" in terms of use, wear-and-tear, etc. It will be brand new.
By default, any subsequent models will be similarly delayed.
I'm reluctant to believe that people are paying full price at the time of order; maybe a deposit?
There's no incentive to reduce fuel prices nor car prices. Demand isn't going down anytime soon. So unlikely.
That's true but generally in economics. As prices go up, demand goes down. It's the supply and demand curve. And because fuel cost are related to cars, it'll change demand/spending behaviour among people. Especially considering WFH has meant lots don't have to drive anymore either.
But you are right.. it may have no impact on demand too. But I just think with everything rising in costs, wouldn't it slowly start to chip away at the demand (Supply is never going to catch up)
Inelastic demand curves also exist in Economics.
Sure but they generally apply to necessities. And car in a sense is a necessity and also a luxury. I think lower demand can occur as once you buy one car you don't surely need another. And with family requiring less travel (WFH) and saving costs (Rising cost of living for most house holds) I could see how a family goes from 2 car household to 1? But I also could be wrong here.
You'll be stuck paying 10k for a 25 year old car with 300km and no rego on it for a while.
300km seems short for a 25 year old car.
Owner was one little old lady, drove it to the shops once a year to buy 4,000 cans of cat food.
Or is Robert DeVito in Matilda winding back odometer
My car just crossed 47k and 11 years old. I'd barely be over 100k at 25 years at this rate (and it's not due to COVID either, if anything I'm driving it more now (still not much) since I'm at home more often vs PT to work 5 days out of 7.
At different points in its life its been a necessity for work/child care or a closer to a luxury, but mostly the first. Every time I consider selling it and dropping to a one car family some work requirement or child activity pops up where a second vehicle is just damn convenient. Could we survive? Yes, but when you own the car and it's in good condition the costs of keeping it are pretty low.
Car prices won't come down until the chips required for many of the vehicle's operations become available in greater numbers.
It's been suggested this will take a couple more years and is unrelated to the ever rising price of fuels.
In my opinion.. Supply will never catch up. Simply because demand is super charged by low interest rates, higher salaries, WFH so less things to do and people want to spend online. Geopolitics and COVID affecting supply chains. And on-top of this all now fuel prices rocking up which is increasing the price of shipping containers. This then will make companies select which markets to serve that have bigger markets (i.e. not Australia)
At the upper end, yes. People be looking to trade down to either something smaller, something hybrid/PHEV or to a pure EV.
I would expect small cars, hybrids and EV to start climbing in price as demand for more fuel efficient vehicles rises.
Buy your hybrids or EVs now, as in 12 months they could be worth more than what you paid for them. (Like the drugged out idiots selling their $42k RAV4 for $58k)
EV / Hybrids are way too expensive to be honest. Calculating the ROI savings you get from buying a normal modern ICE car, doesn't justify it. You can't even say "environmental factors" either as the electricity comes from fossil fuels. (100% renewables never will happen until we see more capacity in bat tech to stabilise grid - look at whats happening to UK and Germany who went too quickly into renewables, without having plans for when lets say you have less wind that year or more cloudy weather that period of time)
Hybrids can be bought for only $2,000-3,000 more than the ICE equivalent, which is a price you'd get back at resale.
Unless you're talking some of the new hybrids to the market from manufacturers dabbling in that field.
Unless you're talking some of the new hybrids to the market from manufacturers dabbling in that field.
Subaru / Mazda hybrids that has basically a capacitor.
The delay on new vehicles is what drove up used car prices
New car wait times don't show signs of reducing until next year at the earliest, so don't expect a drop in used prices until then
It'll never drop until demand lowers to more historical normals. Companies don't just start a new factory for a small blip in demand, as the CapEx to start a new factory and ROI won't be justified. Instead they'll raise their prices for now until demand normalises. And thats where I've been thinking with inflation starting to pick up and prices of everything is increasing, demand will start to reduce as households have less money to spend. i.e. Travel opening up, higher interest rates coming, fuel prices picking up a lot, increasing prices of everything (Look at JB Hi Fi saying today they have to sharply increase prices of their white goods) and lastly fuel prices cycling into everything we buy. On top of this as salaries increase, companies will look to pass on these cost to the customer (Look at amazon prime, look at disney+ - i would assume more services will start increasing prices) (I've also notice recently that insurance is starting to increase too)
Yet as fuel prices go up, demand will drive new hybrids and EV's, further lengthening the wait time. People will then be forced to get an ICE car to get it sooner, and just justify the cheaper purchase price and immediate delivery over the fuel saving of the new car.
New factories aren't being built, or need to be built, however the semiconductor shortage needs to be fixed in order for the factories to deliver 100% capacity each month, something that isn't happening now which is causing the delays.
Interest rates will take time to slow purchasing, though people are still scared about travel so that will take some time as well before their spending habits change
Semiconductor factories are being built but they will complete in 2024/2025 assuming no delays. And those factors aren't cheap.. TSMC said they would spend $US 44 billion.. intel saying $US 20 Billion. With all timelines pointing to 2024/2025. The only way to temporarily fix semiconductor shortage is to start using older fabrications (15 nm or 20 nm chips) which are slower but better than no features. Or something I've noticing is newer cars are coming with no new features (possibly due to chip shortages)
The other solution which you touched on is lower demand by increasing rates.
Or something I've noticing is newer cars are coming with no new features (possibly due to chip shortages)
Or reduce production, which is what Toyota did/does
@spackbace: Or reduce demand haha. Ye let's see how this plays out huh.
If there is a reduced output of production - can see mass lay offs coming around the corner.
Nah. People have screwed themselves over. Prices ain't going to come back down.
Best way to describe it is how inflation is a measure of price increase year on year, even if we go back to 2% inflation the 5% inflation has already lifted prices.
Things are going to get a lot more crazier before it goes back to normal. People have no idea about vaccines / masks and that is backed up by information from a lot of scientists, imagine people getting supply chain plus other issues. Imagine central banks raising interest rates due to rise in oil prices which nobody has any control over. That is like getting punished for the bad kid punching someone in the playground.
Why are people suddenly so worried about inflation?
Because the majority of people have experienced several years of wage stagnation.
(practicing surprised reaction for when it unexpectedly becomes a crypto/wage slave sub-thread)
Stagnation only affects people that have one source of income.
It's a common saying that people shouldn't put all their š„ in one š§ŗ. Investors normally don't go all-in on one asset or one asset class.
It would be good risk management for workers to not rely solely on one's day job. š out. Get a side gig. š to šØ something, flip something. Use ones š or š§ to make šµ outside of the 9 to 5 š cage.
Well here I am getting ready to read the response to my comment, time to take an impractically large swig from this oversized coffee mug, slurp slurp slurp, oh boy my mouth is full of tea, now time to read the commen-
PFFFFFFFFFFFFFFFFFFFFFF
falls off chair, is thoroughly surprised
Will it come down with higher fuel costs?
No, most manufactures you need to wait like 6months plus for brand new model.
generally folk will use alternatives and leave the car in the driveway.
I hope fuel prices results in small car makers returning to the Aussie market. Maybe Daihatsu can return after being pushed out by the Hyundai Accent/ Excel in early 2000's , since Hyundai stopped selling small cars in Australia last year.
a 2010 honda civic selling fro around 11k is that a bad price?
Has it sold for that figure?
The seller can ask for any price; it is what it sells for that is important.
This is the thing people forgetā¦ ābut it was listed on ā¦.. for $random.ripoffā isnāt an indicator of what money actually ended up crossing palms. A lot of people are just listing their cars for stupid prices in the hope that there is an idiot out there.
News Limited is particularly guilty of this.
Not every 300 series LC GX is worth $150,000, nor is your VN SS $50k
Bought a 2012 Civic last month for $9k for one of my kids. Higher kms but fully serviced and in great nick. Prices are definitely up but not outrageous from my experience but probably depends how much looking you want to do.
hatch prices seem the worst, people wanting 7-8k for a car that cost 17,000 in 2012
One of my family members sold a Mazda 2 neo from 2015 with over 120,000km for 9k.
Great time to sell if you don't need to buy that's for sure!
@Soluble: all down to taking advantage of the rising market… especially if selling a smaller, lighter , more economic (with a good reliability reputation) options.
With inflated prices for vehicles the focus will be to smaller, more economic options. Cars requiring 98 plus RON will most likely suffer as well as several fire sales once interest rates go up, the tide goes out and several people don't have any swim wear on!
Youāre joking, right?
ICE cars are effectively finished. We will keep getting whatever leftovers they can be bothered shipping here and folk will line up for them - and argue endlessly about how their piece of automotive leftovers is better than anotherās piece of automotive leftovers. And theyāll keep prices as high as possible.
Fuelled by the lowest quality, cheapest, dirtiest fuel that the refineries can dish out - protected by our fuel standards legislation.
And they need to tax the living c@@p out of it.
BTW We have budgeted $2.3 billion AUD - about $100 for every person in OZ to keep the last 2 existing (old and dirty) refineries going. To refine crude for security that we have stored in another countryā¦..
See it for what it is please. The ICE system has given us truly amazing things in the last century, letās be grateful - and move onā¦..
Just manage as best you can until some cheaper EVs turn up and watch for the odd bit of infrastructure to support charging.
Conventional ULP that comes out of a refinery only constitutes 40%-50% of the refinery output product, depending upon the plant, the next largest categories include diesel and avgas. All these categories make up around 80% of the output product and definitely are the bulk reason to refine oil, however you have categories like asphalt/bitumen that can significantly affect the distribution equation if the demand isn't met. Australia
if the ratio of demand to the supply across the output products doesn't remain fairly consistent, then pricing for the overall production of the refinery will balance to meet demand.
Luckily for us we have a neighbour that doesn't have such need for bitumen and import a lot from Singapore, but as refineries in Australia keep closing, our import proportion will increase.
What i'm essentially getting at is that while yes it's good to reduce reliance on conventional fuels, there will be certain points in the future where the primary driver to process these oils is derive the "byproducts". As these ratios of production cannot be significantly changed and are affected more by the origin of crude oil than the refinery itself, I don't foresee a situation in the near future where we can be completely rid of our need to use or process crude oil. We have reduced reliance upon plastics but until we're able to feasibly recycle them, the machine needs feeding new materials.
I agree. The difference is the demand equation. Fuel includes ULP, Diesel, avgas. I left out bunkers because itās not that relevant to the current conversationā¦.
If we go without bitumen for a while itās inconvenient - and if itās really problematic we can use more recycled plastic etc to eke it out. Also donāt forget lubes. They are really important too, but a slow delivery will not cause massive issues.
If we go a few weeks without diesel we start brawling in the supermarket over bog paper - and much worse. And we have rationing for our cars (more minor but very political)
I was thinking in terms of OPs question about pricing - in the bigger picture other issues are at play. Currently motorists are the chump at the end of the supply line and will pay whatever they are told toā¦.and not just at the bowser. Recognising this is the first step in making value decisions for ourselves, families and businesses.
its quite a lot like everything else in life isn't it. it's a lazy tax and they can rely on the "bulk" of the population to be too lazy to switch
If we look at the agility/elasticity of consumer demand, things like changing energy providers, telcos, insurance etc are all very sticky and you need to be pushed to a very high extent on average for the population to move, or even perform initial investigation. Companies on the other hand will move for 0.001% difference :D
The market currently is definitely relying upon the bulk of that ICE gas subsidising the "byproducts" for the rest of the industry. I am not sure what it would look like if there were no use for the ICE components (although due to how entrenched everything is now, that's basically an impossibility).
I am not sure in the near future when the equation is going to inverse. Right now the cost for an EV is far too high for your typical consumer with payback periods being exceptionally long as compared to the lifespan of a typical car, unless you're driving professionally. As EV is pushed more and more I can imagine that the price at the bowser is going to drop, stemming the tide. In addition we can see government policy replenishing their coffers for "road maintenance", introducing road levies to EV which can further skew the equation away from accelerated adoption
@peter05: I think petrol costs will go both ways at different times, may be cheaper for a while, then in say, 20 yrs as they use that hydrocarbon for different things it may become a āboutiqueā cut. Remember kerosine? Was a cheap home heating fuel, now expensive to buy in small quantities.
For crude oil generally, although demand may drop, the material is so adaptable it can be used for lots of things, many of which donāt rely on liberating carbon to the atmosphere. I think a Petroleum Chem Eng would be having an interesting and challenging life.
@saltypete: yeah it's definitely a good point, plenty of applications that may not have already been discovered yet, or have been but aren't financially viable as its being used for predominantly ICE :D
What's š for the ā»ļø is š for the š.
What would a vehicle price have to do with fuel…. Next you would be talking about tyre cost, fan belt cost, wind shield wiper cost.
The price is due to demand…. try reading current factual news
What would a vehicle price have to do with fuelā¦
The price is due to demandā¦
And demand is driven by factors such as fuel costs. With the price of fuel heading up to and over the $2/l mark, people will be looking at trading down into something less fuel hungry (4cyl/Hybrids) or alternative fueled (EV/Hydrogen). The more people that want to change, the less of the more fuel efficient cars there are to go around.
And I can assure you, if fan belts were suddenly $400 each and needed replacing every 4~6 weeks, people would be shopping for cars that don't run fan belts, ergo, fanbelt-less cars would increase in value.
At the moment, the demand has not really gone UP for cars. It's not that more people want them, it is more to do with problems with manufacturing and transport than "demand". In the last 12~24 months, the prices have gone up, not because of "increased demand", but more because of "lack of stock" or "scarcity" of available vehicles. Demand has remained about the same, but available stock has dropped due to significant world events. The chip shortage, covid lockdowns, cost of sea freight have all had a knock on affect to availability.
No. Supply hasn't increase yet.