Eric's Autos: Buying a Car Post-Coronavirus
Which will be a reboot of what happened previously. Mitsubishi moved a lot of inventory in the early 2000s, when it "sold" them for no money down and no interest or payments for a year. The problem is there's no cashflow there -- and what tends to happen when such deals are offered is that people take them and then give back the cars when the deal expires.
Mitsubishi almost slept with the fishes over that one.
This time, it is likely several other brands will sleep with the fishes. Nissan was green around the gills before the coronavirus. Ford and General Motors seemed wobbly, too. Gather ye rosebuds -- and ye cheap deals -- while ye can.
There may be even better deals available on used cars. Or rather, on repossessed cars. There will be millions of these flooding the market in the near future because of the 33 million (and counting) people who've lost their jobs and, with them, the ability to continue making car payments.
Try to imagine the mile-high wave of debt represented by all those financed cars -- the outstanding loan balances that are going to have to be written off or written down, massively.
Each new car repossessed represents a loan -- and monthly payment -- predicated on a new car transaction price. The repossessed car is a depreciated used car. Ordinarily, this deficit might be made up for by higher interest (and, thus, higher payments) on the used car loan. But 33 million unemployed people can't afford that. Besides which, the sheer number of defaults and repossessed cars will be haltingly huge -- a glut of cars that the system cannot absorb, even in good times.
But in catastrophic times?
There is, however, an upside to this catastrophe. If you are lucky enough to have money and no debt -- which afflicts most Americans. Money: the ability to stroke a check or put a stack of bills on the table.
If you are one such, you will enjoy leverage of a magnitude unprecedented in the history of the American car business. Your ability to buy will make you king. Rather, autocrat. A czar -- and not the Nicholas II variety. Think Peter the Great.
You will be in the driver's seat -- and able to write your own ticket.
Eric's new book, "Don't Get Taken for a Ride!" is available now. To find out more about Eric and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.Copyright 2020 Creators Syndicate, Inc.