7 Trends in Car Markets



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Today’s automobile market is filled with all sorts of anomalies: Delays in getting semiconductors, supply chain snafus impacting mechanical parts,1 shortage of new cars leading to rising prices2 for used cars. These headlines sometimes obscure more interesting trends in the auto market that are bubbling below the surface.

I was reminded of this while reading an informative NYT column by Peter Coy: “Why It’s Easier Than Ever to Buy a Used Car.” Coy reminds us that George Akerlof (who won an economics Nobel in 2001) “correctly diagnosed the problem as one of asymmetric information: Sellers knew more than buyers. Fearing being ripped off, buyers would bid low.” But things soon began to change for the better, as state laws prohibited odometer rollbacks and required the reporting of all accidents. Lemon Laws helped, as did Carfax, which began in 1984, was also a game-changer.

Here is a little pre-holiday food for thought from a self-proclaimed car guy, a few of the underlying trends, roughly in the order of their current market size:

1. Car Buying: The days of the new car salesman pretending to speak to their manager as they negotiate prices are thankfully coming to an end. One of the great innovations of Tesla was simply posting their prices online and allowing people to make their purchases without dealing with a salesperson.


We also see this showing up in companies like Carvana and CarMax with their “No-Haggle” sales policies or via online purchases from dealerships with direct delivery to home. Saturn may have failed as a brand, but they were decades ahead of the curve with no-haggle pricing. The asymmetrical information imbalance has shifted in the direction of the consumer (at least its become much fairer). Dealerships better adapt fast or die.

Car purchasing has been changed by the pandemic for the better and it is likely permanent; expect car buying in the future to look nothing like the past.

2. Used Car Market: Modern cars are incredibly well-equipped, filled with safety features that used to be expensive options. They have become astonishingly reliable, cheap to maintain, well equipped for use in a modern household.

The same is true for cars that are 3 to 7 years old. Used car buyers are no longer playing roulette with potential lemons, but instead, are purchasing solid vehicles that enjoy extended lifespans. Better still, this is after that giant new car depreciation has already occurred. One of my favorite purchases is to identify a pricey well-maintained car coming off of a 36-month lease and purchasing it for half or less of MSRP. This works especially well with luxury brands like BMW and Porsche.

The used car market will eventually mean-revert in price as the supply chain snafus become untangled. The current shortfall of new cars should resolve over the next 12 months, but this means there will still be an inventory shortage of used cars over the ensuing 24 to 48 months. With so many people discovering the advantages of purchasing gently used cars, mean reversion might be somewhat shallower than expected.

3. Electric Vehicles: (EVs) are simply a superior drivetrain versus internal combustion engines (ICE) – what they lack in exhaust note they make up for in many ways: They are not only cleaner, but faster, smoother, more reliable, and cheaper to maintain.

Whatever range anxiety you might have should be soon disappearing: Lucid‘s new cars have 500+ mile range; Tesla Model S and Mercedes EQS are over 400; new tech promises a 750-mile range.

The world is moving rapidly to electric-powered cars. By 2030, I expect more than half of all new cars sold will be electric; of the other half, many will be hybrid. This is the future.

4. Driving Enthusiasts: The possibility of something going away really makes people suddenly appreciate it.3 Perhaps it’s been the lockdown or just a little bit of availability bias but I cannot help but notice the huge upswing in enthusiasm for automobiles among surprisingly young drivers. This stands inapposite to the fewer driver’s licenses we see among youth and the rise of Uber and (eventually) self-driving cars.

So many videos and YouTube channels — Top Gear/Grand Tour to Doug Demuro to Harry’s Garage — reveal an intense automobile culture worldwide. Meet and greets like Cars & Coffee have sprung up all over.

Automobiles do not represent the freedom to the young today as they did to my generation (epitomized in Springsteen’s Born to Run) but they do resonate with this generation on many levels.

5. Auction Sites: I have been a fan of sites like Bring A Trailer or Cars & Bids for years, but only started making auction purchases/sales during lockdowns. If I could not go eyeball a car or take one for a test drive, auctions were the next best thing. I’ve bought and sold several cars for what I thought were fair prices, and I have enjoyed the experience. There are some risks here, and I do have some useful advice (0perhaps a future blog post or column).

I expect these sites will maintain much of their traffic and especially their hard-core audiences even after the market normalizes.

6. Collectibles: Let’s break the collectible car universe into a few specific groups:

A) The car kid, who fell in love with some magical car when they were younger – Corvette or Camaro, Ferrari, Lamborghini, or Aston Martin – eventually reaching a stage in life where they can purchase that unrequited nostalgic love.

B) The DIYers, who are comfortable with a wrench and OEM diagnostic tool who will either rebuild or repair or even do a complete frame-off restoration on that special car they have dreamed of for so long;

C) Enthusiasts of means, who are comfortable buying and driving automobiles from a different era for the sheer pleasure of it. If this generates a return on investment, hey that’s great, but that is not their focus;

D) The pure speculators, who look at automobiles the way they would look at real estate or Bitcoin or art or any other item that can be purchased today and resold at a higher price at some date in the future;

What will be interesting to see is how these buyers shift over time as the automotive world changes — as manual transmissions go away and the internal combustion engine comes to the end of its lifespan. Forecasts range from the collectible car market collapsing to exploding in price and everything in between.

7. Self-Driving: of all the aspects of automobiles I suspect this is the one that’s most overhyped. Yes, eventually it’s coming: There will be a day when the steering wheels and pedals disappear, and you will sit in your orb to be transported by your own personal robotic vehicle. Maybe it even turns into a drone and flies you to your destination.

I suspect this era will involve greater volumes of traffic moving about more quickly, but the joy of driving will be lost on all but a handful of old-timers keeping their vehicles in working order, sticking to the back roads where possible.


Me? I just like to drive…




1. I’ve been trying to order a set of eight injectors for an Audi V8, they should cost ~$75 each, but I am currently being quoted nearly $400 per. This turns a 40,000 mile servicing that should cost $1200 with $600 parts into a debacle where the parts alone are $3200. Fortunately, I have 12,000 miles before its required, so I can postpone this, but not everyone is so fortunate.

2. Indeed, highly inflated used car prices are a key component of the record high CPI inflation.

3. I suspect this may be already happening with movie theaters…




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