New Car Purchases Down

NEW CAR PURCHASES ARE DOWN

Actually I have no idea if the number of new car purchases is down or not. If I listen to the news from GM, I would think that there is a bigger crisis in the automotive industry than there is in the mortgage lending industry. How many billions have they lost? How do you lose billions of dollars anyway; did they even have them in the first place? Some real estate pundit stated that people are not investing in houses because the value of houses is depreciating. I suppose this is why the sales of new cars is down; it's a depreciating asset. Some say that it loses 25%, give or take, of its value in the first year. There are a few savvy car buyers who will try to stay ahead of the depreciation and upgrade to the latest model every year. The car dealers work with them by buying their vehicles for 50% of their value and then financing the balance into the loan for the new car. . . and don't worry folks; this is perfectly legitimate; car dealers are in a highly regulated industry, which requires full disclosure. So have you noticed that there are more people walking to work rather than giving their money away for such a poor investment. Of course, this has created a bit of a problem. Those thousands of foot commuters have been walking right through the living rooms, bedrooms, and kitchens of those many people who have decided not to purchase houses and are setting up living quarters on the sidewalks. The government has recognized this problem and is expanding highways; a major project is underway on I-95. These new walking lanes will have tolls, but apparently it is cheaper than buying a 5 years and its done heap of metal from the automotive industry. I believe that Clinton's stance on this is that all commuters must pay a toll, while Obama understands that all people can not afford this fee so he has proposed trails for these individuals which would be maintained by volunteers. The Republicans are taking a completely different approach. They are concerned about industry and finding a way for the automotive industry to recover. I believe that McCain, as well as Huckabee, is proposing that the illegal aliens, to whom he will be granting amnesty, do all of the work at a considerably reduced rate of labor, hence keeping the cost down and subsequently the cost of the tolls. This will free up the money for these commuters to move back into the new car industry. Still a major concern exists. Where will people store these autos when the market picks up again? Remember, the significant decline in the purchase of houses will leave people without garages, driveways, lawn-chair reserved street spaces, and in some townhouse communities, firearm protected spaces. Also, not yet addressed is the problem with depreciation. Will the governement provide tax incentives for purchasing a car, will they establish a fund to recover the lost equity, or what creative solution will they use? Maybe the automotive industry is simply doomed. Perhaps the bicycle industry will take off. By investing in this much cheaper form of transportation instead of cars, depreciation would be less of an issue. Additionally, this would free up money to allow the housing industry to recover. Maybe, in this China like environment, the houses, being built out of mud and straw, would go down in cost.

To further discuss these complex economic issues, please contact the economic gurus at Zenith Realty at 410-935-5844.