You just wait...
 

...and as the saying goes, you'll be rewarded. This article is consistent with all the public and internal Toyota data I've seen. Wait 4-6 months and high end stuff will become available at Camry prices, especially CPO repos from subprime borrowers (looking at you, Lexus).

https://www.msn.com/en-us/money/comp...m4q?li=BBnbfcN

Oh no, there goes the 2nd gen 86, Supra and GR band.

Those are new models still in the pipe.

I was thinking residuals for 86 v.1.0 and Supra will take a hit.

Why wait months? Wait 10 years and they'll be SUPER cheap. Damn, I should be a fortune teller.

Bloomberg needs you, but you might need to drop another 20 before appearing on camera.

So my question is if all the "high-end stuff" is going for Camry money, who'd be dumb enough to buy a Camry in this climate? Dumb people that's who! I mean that's a free upgrade if you can just hold out a few more months!

Even if you can get into a newer MY for dirt cheap, the complicated part is getting out of your old car for anywhere near decent money. Used car prices are going to plummet too.

That said, if I can get into a 2018MY PP for roughly what I'm paying now on my '13 i'd take it.

I have to sit through a two hour meeting on the state of the industry twice a week.




Some FACTS:


There is not a single new car being made right now.
Most companies have not made any for 3 to 6 weeks.
It will be anywhere from 2 to 8 weeks before most are making cars again.
This means someplace between 8 and 12 MILLION less new cars built this year.
The whole industry is at a zero cash flow level.
When production does ramp up again it will be slow and restricted to high demand/volume models to restore cash flow.
Several of the smaller parts suppliers will not survive this which will hamper the start ups even more.
Many of the manufactures should be tooling over to the 2021 models within the next 60 days.
They are trying to decide if they will return to making 2020 models or go straight into the 2021s.
R&D is on hold with every single manufacturer so no new models are being worked on (see cash flow above).
Low volume cars are most certainly DONE for this year and probably for at least two more. IF they come back at all.
The glut of used cars that is already building will hammer another nail into the coffin of the new ones.




I know that there will be a bunch of armchair experts working at McDonalds that will dispute this information but at this point in time there is about an 85% probability you can kiss the Twins (in any form) goodbye forever.


Forget everything you think you know about the auto industry because NONE of it applies anymore and it will NEVER go back to pre Covid status. We are all living through the end of an automotive era as we know it.


Sincerely,
Tcoat
Senior Manager
Tier One automotive parts supplier
30 years in the business

Oddly enough, none of this surprises me, and would matches pretty much what I would have written down if asked, even though I know zero about auto manufacturing from an insider's prospective.

I'm surprised they haven't already made the call to retool to 2021. Seems like they could do that now. I suppose it could be a supply chain thing (we got parts we need to use).

The only thing I could think of that might save the Twins is the fact it is the only product off that particular factory, but that seems flimsy even to me.

Imo what will exacerbate the problem in our country will be the slow, drawn out reopening in some large states. Flattening the curve is one thing. Destroying an economy for percieved political gain is pure evil.

So you're saying I'll have to buy my facelift used?

Or soon!

Supporting evidence?

Please let's not turn this into another political debate with both sides spewing bullshit to try and discredit the other. Leave that to the Covid threads.


The auto industry is already destroyed as we know it for the last twenty years or so. When it returns things will be different. The politics behind it are irrelevant.

You're not???

There is no hard evidence for anything. It's all politicized at this point. Models were inaccurate and were touted by media to create fear, boost ratings and sell advertising. One side underplayed it for obvious reasons and the other side overplayed it to make the other side look bad. It's a mess of opportunism created by the deaths of thousands

https://media.giphy.com/media/YPIrsRqqO7oB2/giphy.gif


FUCK another thread I can go into and read all the political crap!

How about header design?

That I can deal with!

Back on topic, yesterday a Florida friend in the car biz said that Carvana and CarMax dealers there are full of recent model year inventory and are no longer buying anything. That's an indicator that used prices are starting their correction mentioned in the first post in what's normally one of the hottest new and used regions of the U.S.

Not surprising given the economic data getting worse by the day, and we've a ways to go.

There will still be a segment of the population that will still insist on buying new no matter what happens to used prices. It will certainly knock many makes and models values way down. It will probably not impact the "performance" and sports car market much though since there are no fleets of them being unloaded in bulk. Be a great time to buy if you are looking for a white base trim Camry, Focus or Malibu though.

I might have to dust off my auction pass to attend a manufacturer's specialty auction like Lexus later this year. Not that I'd buy but more for market research and Lexus auction hospitality with their impressive catered lunches.

Industry will rebound and adapt. Different doesn't necessarily mean bad.

The "rebound" will be in a direction that may not be "bad" for some but totally suck for others. There is no real way of predicting how the bounce will happen but it will probably be like trying to dribble a brick.

I was a machinist for 35 years. I watched at least a few companies go from booming to defunct. Glad to be a spectator now, rather than a participant. Older I get, the less I know lol

The problem this time is it is all automotive worldwide. The downturn in 2008 was rough on the industry and it was a minor blip compared to this.

In case noone believes you...

4-week average of initial unemployment claims per week. Just the US, but it's a good indicator for how much demand for new cars will plummet.

That graph paints a picture that is likely worse than the reality.

The mortgage and financial market collapse of 2008 that hit industries like the auto industry hard were systemic problems.

This pandemic will come and go. Individuals and companies will eat into their savings then business should largely return. People who were cut will get rehired back like a reverse scenario of seasonal employment. Some businesses that are operating without reserves and within tight margins might file bankruptcy or depend on the government for stimulus, loans or bailouts, but I just can’t imagine the same type of long term market drop, distrust and loss of faith in the economy, and restructuring that we saw during the last recession.

Also, I’m wondering if unemployment claims equals unemployed people because someone can file for unemployment and be denied, they can file for it when getting a large cut in hours, but still are employed, and people can file for it when furloughed, but technically they still have a job to return to when things end.

https://www.google.com/amp/s/qz.com/...e-useless/amp/

https://www.google.com/amp/s/www.cnb...-pandemic.html

:slap: hey, we keep that to ourselves.

;)

So the guy that totally overinflates the possible death rate disregards the economic impact. Your politics shine through in everything.


I can not speak to other industries but for automotive this is not just going to "come and go". It isn't a matter of just eating into savings but a complete and total lack of cash flow. When the industry does start up again it will be with largely slashed work forces. Those that do get to come back are facing 20% and even 30% wage cuts for the next several years. The impact of this will be far reaching and completely change the industry.

The death total was based on projections from scientists if people failed to take action. People took action. You can call it overinflation, but that would have been our reality. We prevented it.

You’re making a false comparison is what I’m saying. You’re using one metric to gauge the economy. I’m suggesting the 2008 recession, or we could talk about the depression, were based on deep seeded systemic problems in the financial structure. Someone could make an argument that there is subprime lending in the auto industry, high student loan debt and a more stable, but nevertheless, housing bubble that could cause investors to gain a loss in confidence in the midst of this pandemic, and those things could be problematic, but I think the situation is far less dire, and the end of the pandemic is a light at the end of the tunnel for investors.

The Dow gained 800 yesterday or something. We will see, but again, I believe the situations are false comparisons.

Investors and stock market are NOT the auto industry.

To be fair, I used the metric as a visual representation of how this is different than the 2008 recession, not Tcoat. Perhaps I illustrated his point ineffectually, but I trust his observations and conclusions over armchair generalizations by someone who is not in the automotive production industry.

No your illustration of the point is accurate. The point isn't whether all those people are receiving full benefits or returning to work soon but the simple fact that NOTHING beyond essentials is being made.
The impact goes well beyond the obvious.


The 2008 recession permanently closed hundreds of smaller parts suppliers. This shifted the power base in the industry from the car companies to the remaining parts suppliers. The car companies could no longer run rough shod over the parts companies since they could not just go next door and get the same thing. One of the results of the situation was the common contract clause that parts ordered were paid for if delivered or not. As I have said too many times now the only way the car companies could get out of those were if there was a disaster that prevented them making cars. That would have little impact on the overall industry if one plant burned to the ground and they could not build a certain model or two. The impact when it is all plants in the world is beyond imagination. The trickle down from this extends to the parts manufacturers, the people that make the components for those parts, the people that refine the materials to make the parts for the parts and the people that mine the minerals that start it all. It is not just the assembly plants involved here.


Now, on this whole "it will just eat into profits" thought process. Profits are not what makes a company run. Cash flow is. There is NO cash flow in the whole industry right now. None. Nada. Zip. This will kill places no matter what their end of year profit is or would have been. In order to stop the cash bleed there will be massive cuts in those areas that do not create flow. Areas such as R&D, new product launch, low volume/profit products are going to be shelved indefinably. Even when things start up again these areas are going to remain on that shelf since THEN they will be looking at profit.


I wish I could share much of what is discussed by the very high level industry leaders on our calls but I simply can't. I will just say that what is going to happen has never occurred before and it will be deep and long term. All this is not going to just go away when things return to "normal" even if the stock market soars and other industries hardly get touched.

I get that it was your graph, but he drew the same conclusion.

The short term changes in cash flow should be managed with stimulus, loans and savings. Obviously, there are less people and dealerships buying cars right now, but that shouldn't persist because people will return to work. There could be a sling-shot effect with a dip in purchases then a boost/surge in purchases. It all depends on how everything goes.

I think the big difference between 2008 is that there were massive number of home foreclosures that wiped out people's savings, uprooted them from their homes, altered the market, resulted in long term job loses, etc. Those foreclosures killed the cash flow of the banks, which fundamentally changed their ability to lend and bla bla bla. The long term purchasing power of the market was deeply impacted. I just disagree that the 2008 recession was "a little blip compared to this".

Don't assume everyone is just going to return to work. This has more or less crashed my industry. Many have already filed for bankruptcy. We are established enough to survive but it is changing our company in a way that will last for a long time.

The 2008 recession was a boom for us.

You don't get it at all do you? I am talking that to the AUTO INDUSTRY 2008 was a blip. We were more than happy to keep making cars then there were just few costumers.
It isn't a matter of sales returning. The damage is already done. Even if everybody runs out and buys a new car as soon as they can there will be none to buy. In the mean time the cash is just pissing out on the ground as the companies try and scrabble to stop it.

Cash for clunkers probably won't help this time around.

I'll bet anyone that the Tesla comes out of this faster than the big 3. More flexible infrastructure and greater ability to adapt.

I'm sure it will have long term ramifications for many people and industries. I just think it is too soon to suggest the situation is worse than the 2008 recession. It definitely could be.

It is a boom for many people right now.

I suppose the industry could have sustained such a huge impact in sales that the disruption is more permanent, but the thought was that if sales dropped from 17 million to 11 million then rebounded temporarily to 23 million (in an ideal situation) then recovery would be swift. Even if supply couldn't meet demand, then new car prices would go up, as well as, used car prices. We will have to see how it goes.