Last Christmas, I conducted an automobile/mobility experiment. In the interest of highlighting the plight of that delicious holiday fowl, I went cold turkey. I parked my car in the garage and committed to only use public transportation. These were the rules of the experiment – Monday to Friday in the commute to and from work, in addition to any business of social meetings from 6 am to 8 pm, I was only allowed to use publicly available transport. For Mexico City, that includes the following: metro, buses, bike shares, electric scooters, and public rideshares like Uber/Didi/Cabify. I was unable to mooch off friends or colleagues.
Let me explain the results with reference to the greatest show on television that explains all the mysteries of life – Seinfeld. Allow me to set the scene. Kramer uses briefs because his "boys need a house" until he discovers that he has a low sperm count. He then switches to boxers but finds that there is "nothing holding" him "in place" and he is "flipping and flopping". In the next scene, Kramer walks back into Jerry's apartment, and this is the exchange:
JERRY: Well it looks like you've adjusted to the boxers.
KRAMER: Wells, I wouldn't go as far as that.
JERRY: You went back to the Jockeys?
KRAMER: Wrong again. JERRY: Oh, no.
JERRY: Don't you see what's going' on here??? .. No boxers, no Jockeys...
JERRY: The only thing between him and us is a thin layer of gabardine...
JERRY: Kramer, say it isn't so.
KRAMER: Oh, it be so. I'm out there, Jerry, an' I'm lllovin' every minute of it!!! JERRY: Don't you need a little... help?
KRAMER: Surprisingly, no. I'm freee, I'm unfettered... I'm like a naked innocent boy rrroamin' the countryside!!
That is how I felt during those three weeks. Free and unfettered. There was no need to worry about psychotic drivers cutting into my lane, no need to stress about parking, and most importantly, I could focus on important business of the day – such as improving my Tetris score.
There is no love in owning a car – there is love in driving a car. Car ownership opens your life to a world of complications – pushy car salespeople, rapid devaluation, hidden fees, and costs, insurance, taxes, gasoline, maintenance, repairs, fines, and parking. In a world where there is a plethora of renting and sharing options, who in their right mind would you want to buy? I am not saying that you avoid all these complications when you rent or share. You only pay for the time you use the car and not when it is gathering dust in the garage. If, however, you are hell-bent on owning a car ( here are SIX reasons why now may the best time ever to buy a second-hand car).
Reason 1: Simple Supply and Demand
I am not a huge fan of economics. I learned very little from my three years of university economics. The only thing I do recall is the concept of supply and demand. If there is more supply than demand, then prices go down.
Demand - Softer than a Sumo Wrestlers Glutes after a midnight binge of Häagen-Dazs
1) Shared mobility services such as Uber and Lyft are a body-blow to the demand for cars. As shared mobility services grow, their impact on other modes of transportation will have important ramifications for consumers, automakers, and policymakers. You can expect a major automaker to go tits up in the next decade. Young and old alike are reconsidering the wisdom of buying cars. Prudent families are buying one SUV to cart around the kids while dad "ubers" to and from work. Millennials and generations Zs do not want to be tied down by car ownership and are starting to recognize cars as liabilities as opposed to assets. People are beginning to understand the total cost of car ownership. When one factors in finance, maintenance, insurance, parking, fines, taxes, fuel, it may work out cheaper to ride-hail.
2) Financial uncertainty creates consumer paralysis. People that are facing a wall of worry will not execute major purchases. Top of the list of major purchases are houses, cars, and the augmentation/reduction of human body parts (plastic surgery). COVID 19 has created a financial paralysis that we have not seen since the Great Depression of the 1930s. According to data from tradineconomics.com (https://bit.ly/3h6bqim), new car sales in January and February 2020 were 34 million units. In March, April and May total sales fell off a cliff and were strapped to a respirator in the ICU. In March 11.4 million units were sold, 8.6 million in April, and 12.2 million in May. These numbers are uglier than a swamp donkey after a brawl with an inbred junkyard dog. Used cars are not being spared the misery. With almost everyone sitting at home and tens of millions of people losing their jobs, used automobile sales in the USA were reportedly down 64% in the last week of April.
Supply – it is Raining Cars, Hallelujah
COVID is causing havoc in the car rental market. With business and leisure travel severely lower, car rental companies are starting to trim down the size of their fleets. The Hertz bankruptcy, which is not entirely on account of COVID, could cause a flood of second-hand carts on the market which could push prices down. Cash constrained car owners are also likely to run fire-sales in a desperate attempt to raise money which could open some nice discounts on the higher end of the market. In summary,
Reason 2: It is Not New
Buying a new car is the worst financial decision you can make. Something happens to the chemical balances of the human brain when it enters a new car dealership. The combination of shining chrome, the smell of fresh leather, free coffee, and the offer of doughnuts immediately results in the evaporation of common sense and good judgment. If the potential buyer is a male, and if you throw in a combination of female cleavage and lingerie, the speed of this evaporation is almost instantaneous.
The second the new set of tires come squeaking off the shining showroom floor and hits the asphalt, that new automobile loses between twenty and thirty percent of its value. Slow whited people who believe that a new car is an investment are deluded. Buying a new car is worse than buying stocks the day before a stock market crash. The stock market may lose 20-30 percent in one day, but there is every possibility that these losses will be recovered and over the medium term you may even make money. Buying a new car is like buying Enron stock at $100 twenty years ago.
Reason 3: Cheap is no Longer Nasty
When I was growing up back in the 80s, certain car brands were uglier than my hairy aunt amvis after a heavy night of boozing and bingo with the girls. Buying a Hyundai, Kia, or Skoda would almost guarantee that you would spend more time on the side of the road with your finger out than you would inside the car breathing in noxious fumes. These days, the combination of brutal global competition between automakers and the fact that global consumers are more connected than the Manson Family means you can count the number of unreliable car brands on one hand. This means that finding a good solid unit at half the price of a new one, that will not leave you stranded on the side of the road and vulnerable to pedophiles and politicians are relatively low.
Reason 4: Lower Insurance Premiums
The selling of insurance is the biggest scam since snake oil during the California gold rush. The product is awesome but the way it is sold is the capital of Dodge. There are good reasons for this. No one likes to buy insurance. It is not an impulse buy. No one is filled with joy and satisfaction when the policy on their car needs to be renewed. We don’t want insurance but we know that we need it. It is prudent to transfer specific risks to a third party, but prudent does not sell. Insurance companies know their product is unsexy. They, therefore, need to inject it full of collagen and silicone and dress it up in an underwire bra and leather mini skirt. The job of selling insurance is as attractive as sitting in a toll booth in the middle of a dark tunnel surrounded by incontinent bats. To sweeten the deal, insurance companies need to incentivize these salespeople. I have friends who sell insurance. They spend half their time traveling to exotic locations to attend insurance "conventions". All expenses are paid by the insurance companies. We are talking about three to four trips a year to ski in the Swiss Alps, desert camps in Dubai, island hopping in the Mediterranean on private yachts, and private game reserves in the Serengeti.
There are two legal ways to reduce your insurance premiums. One is to increase the deductible and the other is to reduce the insured amount. The downside of increasing the deduction is that you take the first loss. If your car is worth $20,000 and you weasel in a $5,000 deduction, the first $5,000 of loss or damage is for your account. The great beauty of second-hand cars is that they have already been depreciated so your insurable amount is reduced. This means lower premiums and fewer skiing tips for your insurance broker.
Reason 5: Saving the Planet
Consumers are starting to pay attention to the environmental footprint of the articles they buy. In Mexico City, mounting pollution in the early 1990s leads to a curious decision from the government. They decided to give the Beetle taxi cabs their first official facelift. All cabs were required to be painted green. This would lead people to believe they were more environmentally friendly. They even went so far as to call the cabs "Ecological Taxis" even though Mexican built Beetles were still carbureted. They did not have catalytic converters until 1991, and fuel injection was introduced two years later. Despite the "eco" paint jobs, the VW's were the same cars that had always been contributing to Mexico City's ever-growing pollution problems. The fact that a product looks green or says that it's green is no longer enough.
Today's discerning consumer can see through clever tactics and demand more. Nowadays, retailers cannot just say they have a goal, they need to show the consumer that they are acting upon it. How would you rank the automakers in terms of their environmental responsibility? When it comes to environmental responsibility, there are three kinds of companies – those that give a damn about climate action, those that don't give a damn, and those that work actively against it.
The research from InfluenceMap revealed that since 2015, Fiat Chrysler, Ford, Daimler, BMW, Toyota, and General Motors have been among the strongest opponents of regulations to help countries meet the 1.5C warming limit in the Paris agreement. In the four years since then, lobbying from the car industry in the US and Europe has attempted to block, delay and frustrate initiatives to regulate and reduce emissions from the transport sector – which is responsible for 15% of the world’s greenhouse gas emissions – and slow the move to electric vehicles, the report says (https://bit.ly/2XJQQN6).
If you absolutely need to have a car, and you are concerned about the environment, you are doing the world a disservice buying a new car and supporting these dirty buggers. The building and disposal of a vehicle have a significant, negative environmental impact. If you buy a used car, then it'll be a vehicle that has already passed through the manufacturing process. So, buying a used car is a green option.
Reason 6: Peace of Mind Motoring
Buying a new car is stressful. Not only do you know you are being screwed with all the hidden charges, commissions and fees, but at the very moment you drive your pride and joy off the lot, you are faced with a new wall of worry linked to the protection and preservation of your unit. What happens if someone keys your door or opens their door against yours, or you spill your newly acquired Starbucks Chocolate Crunch Frappuccino all over the passenger seat, or even worse your date throws up on the dashboard. Second hand or preloved cars help to tone down this anxiety and allows you to truly enjoy the unbridled pleasure of sharing the road with thousands of cold-blooded psychopaths that all want to drive in your lane!
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