Market Conditions Commentary
 
Student debt, Uber, and Mud
by Robert Hollenshead
Jun 28 2015 7:00PM

I’ve been pondering something subliminally for a long time and I am coming to some conclusions that are thought-provoking for people in our business.  Young people are not as interested or obsessed with buying or owning cars like past generations, us.  They don’t really care about cars like we did.  Life was over if you waited one day beyond the sixteenth birthday to get your license and simply not possible to continue on if you didn’t have a chubby ride.  Why many of us actually re-enlisted in the Marines in order to get the extra doe to buy an Austin Healy 3000 Mark II or a GTO.  Have you heard or seen that happen lately? 

 

I live in Delray Beach Florida where there are more Lambo’s, Rolls, Ferraris, and generally whacky cars than anyplace I’ve ever seen and that includes Monte Carlo and La Jolla, OK, not Dubai.  But there are more Bentleys in a row on Atlantic Ave in an evening than you see in Washington DC in two months.  Some generalizations here, but they do fit.   When you watch to see who is looking at what and look at the demographic it is not young people that are flabbergasted by wild cars.  Its older people, north of forty, that rubber neck a fat car.  It’s not app using young people. 

 

Now for my official, unofficial conclusion;  Student debt, and Uber have changed their attention, buying patterns, attainable wants, and possibilities by a giant divisor.  They proclaim not to like grapes because they can’t reach them.  The burden of student debt for the average person is totally normal at this point and  it is a monster.  It cuts a big chunk of what used to be the potentially emotional buyers out of the market.  That combined with Uber, which  is an undeniable spectacular substitute for a personal ride, that is a fact that isn’t going away.  It more or less eliminates the need for a car especially for the age group that live on apps. 

 

Every time I get a chance to ask people in the younger age group what’s up with the car thing it’s the same answer.  They really are not into cars.  I also survey every Uber, taxi, and limo driver I can.  Same response.  Who uses Uber?  Primarily younger people.   How’s business in the taxi and limo world, “it sucks, Uber is killing us”.

 

Well when I am looking at our merch on the block and look at the action, compare it to what used to be, it simply ain’t the same.  It’s been an incremental change over the years, but it is undeniable heartbreaking as it is.  The red hot desirable screaming fat sports cars and the triple fat anything else, simply does not have the action it used to, period, on the floor and on simulcast.  No crowds, no emotion, just mud.  Oh, it sells.  But not with the action that a real rip roaring auction can generate that used to get your juggler veins banging.  Just ain’t there. 

 

Where does that leave us today and tomorrow in the car business?  Conclusion on top of the conclusion; Student debt is an institution that a lot of people make a fortune on, so it ain’t going away.  Uber is the next Facebook that will be delivering you your groceries soon.   There is not a minimal doubt that it  is going to grow for a long time and become a part of the way we move around.    It will relegate us all to stay home or go out and come back incognito.  The car that was the extension of your personality (to put it nicely) is a thing that is going to the sunset.  I don’t know how to get excited about selling mud but I think that’s the way I see this evolving.    


4 Readers' Comments

1
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3 years ago
Interesting thoughts and makes perfect sense when you think about it! Today's college bound kids unless very gifted academically or have a rocket arm or well to do fiances face a hugh debt burden with really no guarantee of anything upon completion. The problem is what is the solution for this growing concern to get an education for the masses without mortgaging there first 10 years of employment at least and allowing them to have $ for a decent car.
I'm sure Washington is right on top of it!!

Kurt

2
Gerald (gerry) Acquilano
Geneva
NY 14456
3 years ago
Bob:
There is one segment of the market red hot. That segment is the classic car game. There are classic car auctions somewhere every week, and they are well attended by gray haired guys with money who would rather buy a $200,000 classic than a Picasso. I see the nearly over 40's getting into the game as well. Muscle cars appeal to those who loved them in the 60's-70's but could not afford them, and now they could so they'll pay anything to get the adrenalin flowing . again. These high end classics change hands every few years and usually appreciater far better than stocks, art, etc. Whether it will last, we don't know, but these classic cars are very hot now, and I think I'll shift into it an get my feet wet....
Gerry Acquilano

3
Gerald (gerry) Acquilano
Geneva
NY 14456
3 years ago
Bob:
There is one segment of the market red hot. That segment is the classic car game. There are classic car auctions somewhere every week, and they are well attended by gray haired guys with money who would rather buy a $200,000 classic than a Picasso. I see the nearly over 40's getting into the game as well. Muscle cars appeal to those who loved them in the 60's-70's but could not afford them, and now they could so they'll pay anything to get the adrenalin flowing . again. These high end classics change hands every few years and usually appreciater far better than stocks, art, etc. Whether it will last, we don't know, but these classic cars are very hot now, and I think I'll shift into it an get my feet wet....
Gerry Acquilano

4
Kay Smith
Brooklyn
NY 11234
3 years ago
Very thought provoking. I have a contrary point that might be a saving grace. Ten years ago before the recession we were moving car accessories by the boat load, literally. Once the disaster came everything became mud. Years later industries rebounded, industries laid waste and the used car is still something we can’t live without. Accessories and cars to me were very inter-related, and we saw everything get pummeled, I mean the world was on sale, but in the end real values for used cars were measured in the lanes and it was evident what buyers were willing to pay for them; and accessories, to put it right, was never the same.
Then people were trading out of their heavy luxury leases and actually needing to buy; credit froze, credit rating crashed and buying a used car was sometimes an only option. Soon, when the world realized that inventory was low, used cars became a hot commodity again.
Here I am ten years later, accessories long behind me, cars only ahead of me, I've seen some trends come and go. I am that 40 year old; my first Cadillac was twenty years ago, a dumb college dropout, recruited to Wall St. I loved cars then and I love cars now and you're right, cost of living is at its highest, school debts even higher and... eh, Uber, may cut into the value of owning a car, maybe even the need, but not into the desire. Well, I hope not.
I love to tell you that I know a trend of youngsters and some mid-aged as well that own two, three or four cars; and that's a trend I didn't recognize twenty years ago. And yes some of these are classics, which just proves the point that people know where there’s value and the trend is there. We can’t help it, Americans love cars; at my age I’ve seen cars become classics in my own lifetime.
Let’s hope the manufacturers play well into the marketplace and make cars that, plain and simple, people want to buy.
Like anything else, the inherent value of the car must fluctuate based on the relevant supply and demand that’s out there, but as long as it's there it'll trade - and it's there, and it ain't going anywhere yet, and ‘Yeah’ for that because that's what we do, we trade 'em.
America has always had this love affair with cars. Now, I hear Uber all the time, I have a friend that drives Uber; I don't know, maybe this is America's new love affair but so was the smart phone, flat screens, social networking and I’m sure that all of those have had some sort of an impact on the automobile but it’s still here. We are living the future we dreamed of now; the autonomous cars is practically in stores. I'm not sure how having an autonomous convertible sports cars is going to be much fun soon but somehow it'll be that that'll grow on us and proven to be exactly what we want.
I'm excited about the lineup of cars for 2016-2017, we’re touching off on 2020 and the technology is moving so fast and if it's the lust for cars that drives the market or it’s Uber that creates a volatility in values or outright need, so be it, I’m in; you're trading 'em and we're buying 'em. I say for every Uber car on the street Americans should put 4-5 deep in their garages. Gasoline is still the cheapest in these parts, and we still have a passion for horsepower. Twenty years ago a top of the line Benz might’ve set you back $60-70g, today it’s twice that. If in twenty years from now, with all the influences the personal automobile might have, a Camry sells for what a Benz did then, when that trade comes in, I think I’ll be glad that I made the move to cars.

Happy Birthday America
Trade On!