Posted on 05/16/2021 7:33:11 AM PDT by blam
B of A: “Transitory” Inflation And Supply Chain Imbalances Are Hitting Autos Hardest
The auto industry is already stuck between a rock and a hard place, as dealers struggle to get production up to speed despite an ongoing semiconductor chip shortage that has hamstrung production for some of the world’s biggest manufacturers.
At the same time, the U.S. is letting the inflation genie quietly begin to slip out of the bottle. As rising prices take hold amidst supply chain imbalances, focus has turned to automobiles. With new car inventory crunched due to production constraints, used car prices have skyrocketed, as we have noted recently.
Now, a new note from B of A called “Want to buy a car, good luck” lays out exactly what type of crunch the industry is in – most recently exemplified in the inability for consumers to even rent cars, let alone purchase one. Detailing “lean inventories” and “price pressures”, the note first explains that autos are so far the biggest standout for the country’s inventory to sales ratio.”
The note also takes a grim tone on when things could return to some semblance of normalcy: “This is a function of both demand and supply: the stimulus and reopening-fueled burst in demand was not matched by a comparable gain in supply. Instead, production has been hampered due to COVID-related supply chain issues and labor shortages,” it reads. It also says that “transitory” can feel like a long time and that the U.S. economy is still “many months” from feeling more balanced.
Speaking about the supply/demand dynamic of goods causing price spikes, the bank writes: “This highlights the nature of this cycle and the rotation towards goods spending. When producers and companies were first faced with the pandemic, they prepared for a period of weak demand by reducing production and trying to work off inventories. But they were quickly surprised by a dramatic rise in demand for goods, particularly durable goods such as autos, household appliances and electronics. The share of consumer dollars spent on goods has soared to 35.1% as of March 2021, the highest in over 15 years.”
(snip)
In other words: take it from B of A or from us, on both inflation and supply chain imbalances, but it looks almost certain that things are going to get worse before they get better.
(snip)
Well, the good news is we won’t have to put up with the crappy products from China we all complained about.
“Transitory inflation”? Well, in the long run, the Crash of 1929 was transitory too.
And yet, dealerships will find some way to explain why trade-in values remain so low.
https://www.youtube.com/watch?v=HtY1gcgy5N4
If you don't know who Sandy Munro is do your due diligence.
Chinese EV's (think way cheaper) coming our way. IMHO that will fubar MI, OH & IN.
I doubt team Xi-O'Biden will do anything to stop it.
Gird your loins, even if we insource Chips.
“...as dealers struggle to get production up to speed...”
Most Dealers don’t assemble vehicles...
The next question to be answered is 'how accurate is the Bureau of Labor Statistics', or
is this a true number (?), or is the rate minimized so as to not notify the public of a crisis ?
IMO, trust absolutely nothing coming out of Biden’s Marxist dictatorship.
TRANSITORY - This is for sure an attempt to minimize. Unless policies change drastically, this ain’t gonna be transitory.
It looks like deliberate economic destruction to me.
“The next question to be answered is ‘how accurate is the Bureau of Labor Statistics’, or
is this a true number (?), or is the rate minimized so as to not notify the public of a crisis ?”
Congress has indexed a lot of substantial payments to the inflation rate. The stated intent was so that social benefits, like social security, and others, would not become irrelevant. However, this assumed that government was frugal and kept inflation under control. They have not. Thus they have been fudging the numbers since the beginning. If they didn’t do that, then they would have created economic positive feedback. Inflation goes up, driving up payments, further driving up inflation, further driving up payments, until the economy collapses.
On top of this, the government has been writing itself infinite loans at zero interest. But at some point the interest must rise. Economists predict that when interest rates get to a very reasonable four percent, then every dollar collected in taxes must go to servicing government debt.
If this sounds like we’re bent over in the receiving position, it’s because we are.
I don’t know the answer, but you raise the biggest problem we have right now.
May people do not trust anything they are told by government or the media anymore for good reason. It is very difficult to have an honest conversation or dialogue about something when one side or the other does not trust the basic “facts.”
The media was reflexively against Trump on everything with little thought to the underlying facts or even an honest assessment of the effectiveness of the policy. Biden went into office and began blanket EO’s to overturn the Trump policies with no thought as to the effect of the reversal or an honest assessment of the benefit of the action. It was “Trump” and therefore it was bad.
Trump’s policies were good and many of them were effectively making life better for Americans. There are only two possible conclusions - they deliberately want to crash the country or they are so blinded by hatred of Trump that they want to erase him.
Perhaps it is both, but I tend to believe it is more the hatred than deliberate. The left loves power above all and I think they now realize they are going to lose significant power next November.
“And yet, dealerships will find some way to explain why trade-in values remain so low.”
And yet, the Ford dealer just offered to buy back my 2019 Ford Fiesta ST for $600 less than I paid for it. The previous offer was $3500 less.
Critical mass.
At this point, you should ALREADY have your precious metals IN HAND.
(And, guns and ammo)
Inflation only means that the next “Stimulus” Checks will be bigger and the Sheep will thank the Xiden Regime for their generosity and Vote accordingly.
America, the Land of the Free and the Home of the Brave will end up a distant Memory for all us Old Timers.
I think the crude , but accurate term is :
BOHICA !
B of A doesn’t supply loans to buy sheets of plywood-—YET.
2 people have inquired about buying my 1976 Chevy truck or my 1979 Buick station wagon in the past 2 months.
NEITHER is for sale.
I ordered rolls of template material and glue I need to run my business and they sent a roll and 2 glue but said the rest must go on back order “because the factories can’t get workers to produce the stuff”. Weeks later it still hasn’t come. If I run out business stops totally.
Neither is my 1993 Ford Ranger with 257,000 miles on it.
Dealerships are the nastiest con-artists out there.
They’ll go 50% under Kelly Blue book on the first offer.
If you are trying to buy a car get ready to pay a good $3-5k above MSRP for SUV’s/Trucks. I’ve been shopping at no less than 6 dealerships and they are all way up there.
If you have a free and clear car in good condition, you are sitting on a gold mine.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.