“People’s attitudes are shifting,” said Philip Reed, senior consumer advice editor at Edmunds.com. “The car is being seen more as a commodity to be used and then returned. Ownership was a big part of the World War II generation — people wanted to own their house and own their car. They were taught that was financially responsible.”
There are reasons certain people might want to lease (the first one being you have extra money to burn). But for the rest of us, the financial consequences are worth re-examining, especially when you have a slew of competing financial priorities like college tuition, retirement or even a nice vacation.
So let’s start with the hard numbers. Mr. Reed looked at three ways you could acquire a four-door Honda Accord EX: buying a new 2014 model, leasing the same 2014 car, or buying a used 2011 Accord with 36,000 miles. (Many people in the New York area are paying about $28,211 for the new car, including tax, title and registration.)
The analysis looked at the cost over six years, since the average person owns a car for that long, and it incorporated typical buying patterns: the new Accord is purchased with a five-year loan, the used car is financed with a four-year loan, and the person who is leasing must take out two consecutive 36-month leases. (The rest of the assumptions are detailed on the accompanying chart.)
West’s debt explosion is real story behind Fed QE dance
The danger with addictions is they tend to become increasingly complusive. That might be one moral of this week’s events. A few days ago, expectations were sky-high that the Federal Reserve was about to reduce its current $85bn monthly bond purchases. But then the Fed blinked, partly because it is worried that markets have already over-reacted to the mere thought of a policy shift. Faced with a choice of curbing the addiction or providing more hits of the QE drug, in other words, it chose the latter.
In many ways this is understandable; the real economic data is still soft. But as investors try to fathom what the Fed will (not) do next, it is worth pondering a timely speech made recently by former UK regulator Lord Turner. As he told Swedish economists last week, and repeated to central bankers and economists in London this week, the real story behind the recent dramatic financial sagas – be that the market dance around QE or the crisis at Lehman Brothers five years ago – is that western economies have become hooked on ever-expanding levels of debt.
Why aren’t young people buying cars?
Possibly the greatest cinematic celebration of cars and youth, American Graffiti, celebrates its 40th anniversary this month.
The story of California teenagers’ lives revolving around their cars rang true once but would seem hopelessly contrived if made today. Nowadays, increasing numbers of teenagers across the developed world don’t even bother getting a driving licence, let alone a car.
Car manufacturers are starting to fret that young people – the car buyers of tomorrow – are falling out of love with their products. Given the ageing populations of developed countries, car companies are desperate to woo as many young buyers as possible, and the thought that the crucial youth market might dry up is giving bosses sleepless nights.
To see how bad things could get, just look at Japan, where the pheno menon was first noted. A stagnant economy for the past 20 years, serious congestion and a youth market focused on products with plugs, not petrol, has led to a collapse in the Japanese car market. It peaked in 1990 at 7.7 million, and then fell steadily to a low of 4.2 million in 2011, before recovering slightly to 5.0 million in 2012 (mainly because of government incentives).
BMW Tests Light-Weight Assembly for Electric Cars
BMW AG is launching production here on Wednesday of its new Project i cars, the first large-scale test of whether building cars out of carbon fiber and plastic instead of steel can overcome the obstacles to adoption of electric vehicles.
The BMW i-Car project—including the $41,350 all-electric i3 city car, the $135,000 i8 plug-in hybrid sports car and more models in the future—aims to become the first high-volume supplier of the ultralight vehicles. Proponents of the idea say electric cars can be more competitive with internal combustion vehicles if car makers use exotic, lightweight materials, such as carbon fiber reinforced plastic, to reduce the weight the batteries have to propel. Plastic materials also would allow for a radically simplified body assembly system.
All car makers are under pressure from regulators around the world to move toward electric vehicles. In California, New York and several other U.S. states, BMW could face constraints on sales of its most popular models, such as the X5 sport utility or 3-series sedans, unless it starts selling zero emission cars and building up clean air credits.
One chart that explains why the US auto industry is booming
Anyone who keeps an eye on the US economy knows that the automotive business is going like gangbusters right now. In September US auto sales jumped to an annualized rate of 16.1 million, the best since December 2007.
How is this possible, given the relatively muted gains that US consumers have seen in their incomes?
Credit.
Take a look at this chart from Deutsche Bank, which shows the breakdown of issuance this year of different types of asset-backed securities (meaning bundled loans that lenders sell off to investors in the secondary market).
The economic collapse seen through aerial photos of abandoned mansions
Michael Light often snaps his photos from a two-seater plane — at a bumpy 70 mph — that he pilots himself at the same time, but you’d never know it from his well-composed aerial shots. From swimming-pooled suburbs in Phoenix to razed hills awaiting their luxury homes in Nevada, Light has been documenting the western U.S.’s unique topography from the air for the past decade.
In his series on Black Mountain, Nevada, Light’s photos put viewers in the plane with him as he glides over 640 acres of dynamite-flattened hilltops, carved through with pristine roads and cul de sacs linking graded house foundations. But there are no houses. No lawns, no pools, no sidewalks. No guard-staffed gates. This is the site of the Ascaya luxury housing development, which has lain dormant since the economic crash of 2008.
“Once they get built, it’s hard to un-build them,” says Light. From the air the sculpted earth reads like a strange code cut into the brown hills.
“the uncluttered son-of-iPad instrumentation”
A fleet of BMW i3s silently lugged foot-weary hacks from hall to hall at the vast Frankfurt motor show, that biennial techfest that celebrates the global dominance of Germany’s car industry. It’s not often that the most important new car at a show also doubles as journalist taxi.
I had my go, impressed by the lack of any intrusive B-post (so easy egress and ingress), the uncluttered son-of-iPad instrumentation, excellent all-round visibility and the usual electric car whisper-quiet whirr and whoosh. The wood trim on ‘my’ car looked a little out of place – can you imagine an iPhone in walnut veneer? – but if there is one car that summed the cutting edge of the global (i.e. German) car industry, 2013, it was the i3.
Why Texas Banned Tesla Motors
In fact, nobody can buy a Tesla car in Texas. The State of Texas has decided that you can’t buy a car from Tesla.
Why? Well, the Texas Automobile Dealers Association lobbied hard against letting Tesla sell cars in Texas, spending $276,750 on Texas political campaigns – about 75% to Republicans, (including $2000 to Rep. Dale, the incumbent in the seat I’m running for.)
Tesla doesn’t use car dealerships. They sell directly to the consumer. No haggling, no upselling, no commission for employees, and uniform prices at every store. You just point to the car, say “I want that,” and you buy it. It makes a lot of sense for Tesla. Customers don’t like car dealers, and car dealers don’t like electric cars, so why would you try to sell an electric car to a customer through a car dealership? It is capitalism – a producer of a good is responding to the incentives of the market.
Seeking a Low End iPhone Channel
Carmakers are desperate for ways to excite young buyers, who are increasingly apathetic about car ownership.
“There are products that are hipper for young people than cars,” said Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen in northern Germany and an industry analyst. “The car companies are still using the old marketing pitch — more horsepower. That doesn’t speak to young people any more.”
Interest in battery-powered cars has faded after disappointing initial sales, but it could pick up again this year with the market introduction of the BMW i3. The vehicle has perhaps the most revolutionary new design by an established carmaker in years, not only because of its electric propulsion system but also because the passenger compartment is made of carbon fiber rather than steel, to save weight and extend the distance the car can travel between charges.
There is also speculation that Continental, a German parts supplier, will announce an alliance with Google next week to further develop self-driving cars. A spokesman for Continental, which will hold a news conference at the auto show on Tuesday, declined to comment.