The Portrait of a Broken Automotive Industry

With record-high car prices, dealer markups, more expensive financing, and inventory shortages the automobile industry is set for dark times. We discuss the problems today, and for future generations of car buyers.

#cars #business #technology

[edwinlomonaco]

As a master certified automotive technician I can attest to the ever increasing complexity of the car. There is also a shift happening in the automotive technician and repair industry. The kind of person who wants to repair cars professionally isn't the same kind of person it used to be. A lot of technicians are getting aged out. Many aren't keeping up with the technologies being implemented. The diagnostic fees are going up. The percentage of erroneous diagnoses is going up. It's getting more and more difficult to diagnose cars to a point where the inevitability of getting it wrong is going up. Situations that I've dealt with like a BMW that had faulty wheel speed sensors which caused the power windows to be inoperable. And so young people aren't interested in working on cars anymore. Most people don't realize that technicians have to buy their own tools. And if you expect to diagnose cars, which becoming more and more what working on cars is, you have to have scantools. Fully compatible scantools are in the 2k to 5k range. And no one scantool does everything the best. So more often than not you have to have multiple scantools in order to cover all makes. So in scantools alone one could spend 10k easily. In my 18 years I've easily spent hundreds of thousands in tools. The relation is that as cars keep getting more and more complicated so do the tools required to work on them. Every manufacturer now has a special set of tools to do timing chains now. This same issue is happening in housing. All apartments are continuously raising the rent. At some point you'll price out all the tenants. And the people that can afford the apartment can afford to buy a house. So why would they rent? All these industries are getting way out of control.

[Bargawd]

Appreciate that Mark showed love to us common folk by ditching the Patagonia for his best Kirkland Signature sweater. A man of the people.

[Garnelo]

As a 20 year old college student, it’s scary how expensive everything is getting. Tuition, housing, healthcare, cars etc, the dream my immigrant parents had when coming here is going farther away from reality, and it’s extremely disappointing

[billwhite]

I'm in my 60s, and I retired a few months before the pandemic. I've been a car enthusiast since before I had my driver's license. My post-retirement plan was to buy a fun, somewhat aspirational car that my wife and I would enjoy while we're still young enough to take road trips. Shopping has proven frustrating for many of the reasons you outlined, so much so that it seems we'll be keeping our 2011 minivan and 2012 hot hatch for the foreseeable future. Dealer behavior has just about killed the last of my automobile enthusiasm.

[groovygannon]

I have worked as a technician for several dealerships. The similarity they share is the constant need to get bigger, sell cars, and always reminding their employees they are losing money. All the time. Yet the owner, who inherited the business from his father, shows off his $3million car he just bought on instagram. They quite often offer no substantial guaranteed wage. One day when you leave due to a commission pay plan that has withered due to economic and supply chain machinations far beyond your control they begin to gripe about how no one wants to work anymore. Also they are losing more money. Then buy 4 more small dealers whose founder died and the kids want to cash out.

[mrpbody]

As a retired engineer, car nut and Jr economist you nailed it. My daughter has no interest in owning a car or getting a drivers license. Cars will be like phones. I could not agree more with this. I was ready to replace our Honda Odyssey with a another one and also get a Subaru BRZ for myself. Trying to buy a couple of new cars this summer was a waste of time so I put a new belt and water pump on the Honda and going to keep it another 5-8 years. I am refurbishing my old Lotus 7 and my Alfa Romeo GTV 6- 3.0 . I am taking the family on some nice trips instead of buying new cars.

[Jothecarplug]

As a ex car salesman, these dealerships and the management working in them are the most slimy and scummy people I’ve met, they look at people as nothing more than a check

[GDFSTi]

You nailed it.
I’ve always been a “car guy”, and finally landed a good job in my early 30s. Can’t afford a house, can’t afford a fun new car, don’t want what they’re calling “economy cars” (expensive junk with complicated components designed to fail and only be supported by the dealer). Guess I’ll keep driving my 22 year old beater with well over 250k miles because it’s paid off and I can keep it running myself.

[Taykorjg]

I’m in Texas. Cars are a way of life by force. If you can’t drive, you can’t get to work or the grocery store. A lot of younger people are advocating public transit more so than whatever car is coming out

[dougrobinson]

My Wife's grandfather and uncle ran a great CDRJ dealership in rural Texas. It was the typical Mom and Pop dealership older viewers might remember from decades ago. The employees were treated like family. When her grandfather died, we were in the limo behind the hearse and went past the dealership. Every single employee who was working stood somberly outside to pay respect to the man who started the business that puts food on their table. It was one of the most touching things I have seen in my life. Fast forward a few years, and that dealership was bought out by a chain of dealerships. Almost all of those dedicated employees got pink slipped and replaced with high pressure sales and finance people. It's just a damn shame.
Personally, I'm driving a 2010 car. Parts are available, and the suspension is endlessly rebuildable and upgradable. Steering is hydraulic and effort builds in the most satisfying way. I got a new loaner when I took it in for the airbag recall. I could not wait to get my car back. The new car was faster, but soulless. I'm going to keep this one until it's either a pile of rust, or illegal to drive.

[Mayesyy]

Omg. Thank you so so much for verbalising what I was grappling with emotionally for the past month when car shopping. I couldn't put a finger on why I was feeling like this, many sleepless nights! For the last month I've been wondering why I was hating the process, hating the mundane microwaves on wheels, hating the subscription service, hating the fake smiles and coffee offers, hating paying $3K for audio upgrade knowing I could build one way better for $1k. I hate everything about the current car market and the cost just rubs salt in the wounds. I actually walked away from Audi when trying to trade in my A1 because the experience left such a bad taste in my mouth. I just want to buy an old piece of metal that works but which I actually love. I can fix the sound, someone qualified can fix the engine. I can own and love it forever. I can't thank you enough for validating my feelings.

[pheasant]

20 year old college student who is looking to buy my first car. When FL5 came out I was so excited as a die hard Honda / Toyota fan. I told myself I would have nothing else but that car. Then MSRP dropped. I'm a mechanical engineering major so I told myself 43k is not impossible, I just need to graduate early, find a good job, work for a year or two and I can have my FL5. Then I started to see all the markups. Frankly, they destroyed my dream of owning a brand new Type R. So, I started looking elsewhere. FK8? Value holds strong at 35-40k, with a lot of miles and abuses going into them. GR86? Either pay markup or wait for a whole year and compete with 50 other people on the list to buy it. BRZ? Same story as GR86. GR Corolla? Same story and even rarer than all cars mentioned above. Ok then what about Civic Si / new Integra? New ones are not exciting at all yet still sits around 30k. Old ones are nearly 22k out of the door of dealers, and conditions are not even good. Not worth it I guess. WRX? I hate the new one, and the old ones are still 25-30k (same story goes to old 86/BRZ/FRS), with an engine, at that mileage and abuse level, basically sitting in the car as a time bomb. I was left with NO options at all. What in the world is going on in this market? My family is fairly well off and I don't pay student loans, yet even my family can't really make purchase decisions now just because of the sheer absurdity going on. That enthusiast living inside me is dying. Now I only look at sub 15k old cars because anything beyond that seems to be a ripoff.

[mike]

So happy you talked about this, been sitting here like “how are people paying 40k for a Corolla and don’t care”

[AlanForde-CheyneMS]

I think the late 80's to early 2000s was the sweet spot for automotive engineering and outward style, and reasonable tech of cars with still some simplicity left in the equation

[bassfan]

I love when Mark has a heart to heart with the audience and speaks the truth!

[Henfredemars]

As a software developer I really appreciate you connecting the automotive industry to the mobile market. It hit me like a brick when you made that connection.

[audiovisualautos]

As a 21 y/o college student graduating in the spring with a Econ degree, this video hit home. As someone who is passionate about the auto industry, and as someone who is searching for a career within it, it’s hard not to notice how unstable it’s future looks. Of course there will always be people with money, or people who foolishly finance something outside their means, but undoubtedly it has become much harder to find a new vehicle. I appreciate the amount of thought that went into this video and would like to see more like it!

[rruutt]

As someone in that 18-25 range who has always liked cars and enjoys driving, it's crushing to see where the car industry has been going. Even if I have the money when I get older, I'll never throw it away on a new car. The issue is that you also see 8k rust bucket Miatas all over marketplace these days. I've wanted one for a long time but I think the semi recent hype for them in my age group killed any hope I had in getting one while I still have my college years to mess around.

[KevinBurkeRacing]

I heard a dealership owner explain to me how it's so bad that he "has to wait an extra long time to get his fully loaded f350 truck" the one he buys new every year. Just after he told me there is an ADM on a transit passenger van I needed for my business. I've held out as long as I can and will buy private party now for the rest of my life. That's how gutted and upset I am at "most" dealers

[jessehines]

I’m in the tractor business with a fairly large OEM. As a field service rep I can see most all of these same issues happening in the tractor market. Prices have skyrocketed, and product being on allocation is killing the mom and pop dealers that made our business what it is today. It’s almost as though the OEM’s knew all this was coming, as we were getting pushed before the pandemic to squeeze dealers on their facilities. On my side of the business, it was all about how hard can we squeeze a Dealer to make money on the service side.

I have said for many years now that the government will be legislating the internal combustion engine out of existence, and here we are. As the AG industry tries to go electric, its becoming a train wreck. No one wants to be left in the middle of their field or property with a dead battery and virtually no way to charge it. Let alone the complexity that comes with this tech. There’s wholes teams of people that develop this tech, yet the OEM’s expect one or two people at a Dealer to be capable of repairing it.

This really is a sad state of affairs as we get to watch our passion, and livelihood disappear in real time.