It’s been a weird time to buy a new car for the last three years and, in some ways, the used car market has been worse. When you’re buying an expensive new car you’re at least getting a new car, but the used car values have been utter nonsense. If you were selling, however, it was a great time to be in the market. Even though values have normalized a bit, there’s a good reason why you might want to wait a few weeks, probably a month, to trade-in a car.
While we’re talking about used cars it might be a good time to look at rental/government fleet sales and overall used car values. While it takes a while for rental cars and leases to leak into the used car market, the future will be here sooner than you think.
It’s been a rough couple of years for VinFast and the current CEO is getting moved so the company’s founder can try his hand at running the company for a while. And, finally, robotaxi firm Cruise sets a price for not disclosing that one of their robotaxis dragged a woman 20 feet. It’s lower than you’d guess. Happy Monday, y’all.
The ‘Spring Bounce’ Is Coming
Imagine a rational alternative universe that exists in a complete vacuum. In that universe, cars wear out primarily based on how they’re used, and they’re replaced when necessary, which means that car sales are evenly distributed throughout the year. Obviously, that’s not the universe we live in, so there are all sorts of reasons why car sales go up and down throughout the year.
One of the big drivers of car purchases in the first half of the year is the IRS, via tax returns, leading to what’s called the “spring bounce.” This spring bounce has historically been good for a 10-15% increase in car sales over the usual monthly average, according to Cox Automotive. While the 2020 “bounce” was cut short by the pandemic, the following years have seen strong bounces.
This demand for cars means that dealers are more anxious to have supply. For new cars, that inventory comes from car manufacturers. For used cars, that inventory comes from wholesale auctions and trade-ins. So, if you’re in the market for a new car and have a trade-in, there’s a good reason to hold onto that until at least February when dealers are looking to increase their fleet of used cars, as The Detroit Free Press reports:
These first few months of 2024 are when Americans are filing their taxes and receiving refunds, so car dealers want the biggest inventory and the most choices available, said Jonathan Smoke, senior vice president and chief economic adviser for Cox Automotive.
[…]
While used cars have a history of losing value each year, except during the COVID-19 pandemic, that law of depreciation is suspended for the six to 10 weeks that make up the heart of tax refund season, he said. “When we look at our forecast for 2024, we’re expecting that same phenomenon to occur,” he said.
Another reason why this might work in your favor, as the report points out, is that new car inventories are rising, and the spring is often when model year changes occur, so you might be able to use your trade-in to negotiate a higher rate on a lower-price 2023 model. The piece also has some additional guidance for car buyers so check it out.
Used Car Values Down About 21% Since 2021 Peak
As mentioned, 2023 had a big “Spring Bounce” and an equally big come-down. The Manheim Used Vehicle Value Index (MUVVI), which looks at wholesale used-vehicle prices, saw a decrease of 7.0% year-over-year last month and an equally impressive drop of almost 21% compared to December 2021, when everything went cuckoo bananas.
While everything was down this year off of the crazy highs, the losses weren’t evenly distributed according to Cox Automotive:
Compared to December 2022, luxury, pickups, and SUVs lost less than the industry, down 6.9%, 6.5%, and 6.1%, respectively. Compact cars continued as the worst performer year over year, down 11.7%, followed by midsize cars, losing 8.1%; and vans, down 7.9%. Compared to last month, luxury lost 0.4%, SUVs were down 0.3%, and midsize cars declined just 0.1%. Pickups and vans declined by 0.8%, and compact cars lost 0.6%, all worse than the industry’s 0.5% loss.
What’s interesting here is that, of course, people need affordable compact cars but, clearly, people still want crossovers. As an interesting aside, I have what I call the “Subaru Forester Value Index (SFVI)” which is what Carvana will offer me for my Subaru. In October, I could get as much as $14,500 for my own sale, but now it’s down to below $10,000.
One of the persistent issues in the used car market has been inventory, given that the pandemic robbed the market of millions of cars that should have otherwise been built and the knock-on effects of leasing going down and rental car fleets contracting. Cox also has some details on fleet sales and, hey, last year was pretty good.
An analysis of Bobit’s data by Cox Automotive revealed that there was a 21.7% increase in sales to large fleets (excluding dealer and manufacturer fleets) in December, with 230,484 units sold. Sales to rental fleets increased by 71.8%, reaching 110,198 units, and government fleets increased by 5.7% compared to December 2022. However, commercial fleets decreased by 13.9% year over year.
Eventually, that’ll filter down to consumers as rental fleets tend to hold onto cars for about a year or so.
What’s Up With Vinfast’s CEO Swap?
The introduction of the VinFast brand into the United States has been, uh, not so good. The initial cars were a little pricey, came from an unknown Vietnamese company, and launched with numerous problems. To make matters worse, the company debuted its first car around the time the Inflation Reduction Act knocked as much as $7,500 off of competitor vehicles.
During this time, the company’s CEO has been Le Thi Thu Thuy. That ain’t the case anymore as the company has announced a “leadership transition” that’s seen her move into a new role as Chairwoman of the Board of Directors and current Board Chair and Founder Pham Nhat Vuong moving into the CEO role:
Madame Thuy commented: “I am proud of VinFast’s many achievements to date. We have developed one of the most extensive EV portfolios in record time and successfully entered the global automotive market. With our deep automotive manufacturing roots, a growing distribution network, and the support of a talented team, VinFast is now well equipped to accelerate its global expansion. I strongly believe that VinFast will continue to thrive as it benefits from Mr. Pham’s leadership and business acumen, and I am looking forward to working with him and the rest of the management team in my new role to guide and support VinFast’s continued growth.”
Chair of the Board of Directors isn’t a bad gig, of course.
Cruise Offers $75K And More Data To Settle The Person-Dragging Incident Disclosure Issue
GM’s robotaxi company Cruise is in a rough spot, stemming from an incident where a pedestrian was struck by another vehicle and then struck by a Cruise robotaxi. The incident wasn’t the robotaxi’s fault, but the autonomous Cruise Chevy Bolt then proceeded to perform a maneuver to get out of the street, which meant it ended up dragging that person 20 feet and critically injuring them.
According to regulators, Cruise withheld the bit about the dragging, which resulted in the company losing its self-driving license and having its founder/CEO and other executive leadership resign.
In a filing related to the case, Cruise essentially acknowledges that it screwed up:
Cruise acknowledges that the actions of its representatives in the aftermath of the Incident have raised concerns about whether Cruise provided accurate, complete, and timely information to the Commission. Cruise has retained an outside law firm to investigate Cruise’s interactions with regulators, including the Commission, in the aftermath of the Incident
It also makes a proposal for how it should settle the issue, offering changes to how it reports information, and also setting a price for what it thinks the fine should be:
Cruise will make a payment of $75,000 to the State General Fund within ten (10) days of the Commission’s approval of the Offer of Settlement without modification.
That seems pretty low to me!
What I’m Listening To During TMD Construction:
The classic “Quality Control” from Jurassic 5. My team dream works without Spielbergs or spill words
The Big Question
Us $75,000 too little, too much, or just right for the Cruise issue? Note, this number is merely to settle the statutory issue and isn’t related to any possible lawsuit from the victim against Cruise.
VinFast sounds like it should be a wine diet. My mom’s been on one of those for decades.
In isolation $75k seems very low. Considering that a bunch of people got fired over the incident, maybe the regulators felt like there had already been meaningful consequences? I’m not sure I agree, given the likely size of the golden parachutes paid out, but that’s the only real justification I can come up with.
Regulators didn’t come up with this amount. This is what Cruise is offering. Most of these regulations mostly rely on companies to voluntarily comply. So Cruise offers $75k and promises to pay for an investigation and the state probably takes it because trying to get them to pay a more substantial fine and make real changes could cost the state more than they get.
I’m not in the ai industry but my company had a regulatory screw up last year. The fine was $2000, the plan to fix it was 2.6 million dollars.
Fines aren’t everything and you can bet Cruise will be sued by someone after this for much more.
$75k for just the fine seems ok maybe, I don’t know, whoever said they should be allowed to test on live streets without a driver present may have some blame in that.
Say what you will about Tesla but at least their self driving beta tests have “drivers” behind the wheel, or in the next seat over, maybe in the back seat….within the cabin of the vehicle, probably.
The fine isn’t for the incident, but for failure to properly report the incident. And they’re hiring a firm to investigate why they failed to report everything (and I’m sure they’ve already had internal teams ensure that the investigation will lead to someone who already resigned).
Ah, yep of course it was the guy who just quits fault, he totally wrote the software that couldn’t determine it was dragging a warm human body along with itself.
No, that’s a totally separate issue that’s going to be chalked up as not knowing any better (despite it being an issue they could have programmed for, it is a relative rarity, so they’ll call it an “edge case” and promise to program it in). This will be a finding that someone who quit, whether the CEO or someone else, had access to the reports on the incident and removed relevant details and information before they were submitted.
“Don’t worry,” they’ll assure the investigators, “our policy is to fully comply with all reporting requirements, and everyone still here has always done just that. Don’t you worry about the empty server rack or the full shredder; those are unrelated.”
Oh yeah the noncompliant person was summarily dismissed. As for the software, that may be tricky to implement, unless they make failure mode to just ‘shut down’ instead of pull over, but that could be worse in some conditions. Though it seems like it already was doing that in some emergency cases.
Yeah. the sound of how this came to be was that they were solving the issue of it just stopping in the case of an accident. They didn’t consider all variables, causing other issues. It’s almost like humans contextualize things in different ways than computers and pull from a pool of generalized experience.
Lol, that’s so weird, like if I saw a person get hit and fall under my car I wouldn’t just hit the gas, although to be fair some humans would probably do exactly that.
Waiting is a convenience I wish I had back in November. My insurance company gave us 1 week to dump our extra car after purchasing new, or they would automatically assign our 17 year old as a full-time driver of the spare car. Yikes!
You have a very bad insurance company. Seriously. I would definitely change carriers over an issue like this.
A licensed driver doesn’t necessarily have permission to drive ANY of the family’s cars. For them to presume that the 17 year old would be the primary, full time driver of my “toy” car, or even my daily driver, just because I own three cars, is unacceptable.
that’s the dumbest thing i’ve ever heard. you need a new insurance company.
What godforsaken horrible insurance company is this?
I wonder if my wife heard them wrong. Oh well.
The company is three years removed from a 30 billion dollar valuation and has 1800 likely well compensated employees. One well equipped Chevy Silverado fine seems a bit low for them trying to hid the whole “we dragged a person and critically injured them” thing. Maybe it’s just me, but knowingly trying to hid your liability in critical injuring a stranger seems criminal. One might consider that obstruction.
Seeing as the dragging victim was literally an obstruction, would that count as obstruction obstruction? They should at least get double secret probation for that.
There was NO OBSTRUCTION. This smells like a witch hunt.
In contradistinction to the recommendation to sell your car later, as demand rises with tax return season, it is actually the time to buy right now, before that demand rises.
One thing leads to another…
Buy now, sell in a month is potentially pretty good advice if you can afford to buy without the trade and hang onto the car a little longer.
$75,000 fine for the failure to report and hiring an outside law firm to investigate their seems in line with what one would expect. I’d prefer to see them pay the state and the state choose the firm (or agency) to investigate and provide oversight, as well as have the investigators determine the appropriate penalties, but this seems like fairly standard fare.
What I still hope to see is a significant lawsuit payout for the injuries, but that’s a whole separate thing. I suspect they’ll settle any lawsuit for a large undisclosed amount and NDA, if they can. A long lawsuit will be bad press and a chance of a massive amount, and they’re going to want to do what they can to avoid setting a precedent that may cost them down the road. I’d much rather see it go to court, get a payout large enough to scare all the autonomous car companies, and then see those companies exercise a much greater level of caution.
And I personally think those penalties should include, at a minimum, external oversight for a multi-year period, as well as individual penalties for the individuals involved in hiding the info.
But $75k is in line with expectations, so it will probably be accepted. Chances are, the appropriate regulations are toothless, so it’s much easier to accept the settlement than to push for further penalties or proper oversight.
J5 always puts a smile on my face. Even thought it came out later, this DJ Format cut with Chali 2na and Akil is a nice pairing.
I saw my first VinFast in the wild yesterday. Meh, just another electric crossover not worth the money.
I saw my first vinfast and first cybertruck recently. I am quickly approaching the point where seeing new EVs on the road won’t even register a mental note anymore.
$75k feels low, but I also acknowledge that I have no clue what other fines look like for not reporting public safety incidents.
In general, I do think those are too low. However there needs to be an incentive for companies to report these. Is that bar super low to make them not care about reporting an incident, or is it super high to make them not want to chance not reporting?
I swear I’ve seen brutal OSHA fines in the hundreds of dollars for workplace deaths, so 75K might be positively generous
As noted by DadBod we have seen fines of hundreds or a few thousand dollars for workplace deaths and you see the effort companies go through to avoid even those pittances. It’s time to make people start paying through the nose when they cover things up. Lower fine amounts have not at all encouraged companies to be transparent and proactive about safety measures.
A wrongful death lawsuit will be multiple millions so rest assured it’s not just the fine. Nothing wrong with raising the fines however.
I always assumed the spring bounce was just a result of people getting their tax refunds.
Edit: Ah, I see that tax refunds are mentioned in there.