By Mish Shedlock of MishTalk

The good news is cars last longer, assuming you take care of them. But eventually, maintenance gets expensive.

Average Age of Cars Keeps Rising

The Wall Street Journal reports Americans’ Cars Keep Getting Older—and Creakier

There have never been as many on the road—around 290 million light vehicles—and they have never been so old. One reason for that is good news: They are better made. Getting the odometer past 100,000 miles has gone from being noteworthy to normal. Thirty years ago the average passenger car was about 8.4 years old and today that is 13.6 years.

Less good: Pinched by inflation, higher interest rates and supply-chain woes, Americans just haven’t been buying as many new vehicles lately. The four-year rolling average of annualized sales is about 15.5 million, according to the Bureau of Economic Analysis. On the eve of the Covid-19 pandemic it was 17.7 million.

In late May, shares of tire chain Monro plunged 12% when it said that adjusted same-store sales had dropped sharply during its 2024 fiscal year. Management explained that the poor results were “primarily driven by a strained low-to-middle income consumer that traded down to tires at opening price points” amid a glut of cheap, off-brand imports. Customer spending on services like brakes and shocks fell even more.

Then in September shares of Genuine Parts, owner of Napa auto-supply stores, crashed by more than a fifth—their biggest-ever one-day drop in decades on the stock market—following disappointing third-quarter results. Sales to commercial buyers were decent, but those to retail customers fell significantly. Chief Executive William Stengel told investors that this was “driven by continued cautious end consumer who’s deferring certain service and maintenance-related purchases.”

And just weeks ago Valvoline, which provides quick, affordable oil changes, sounded a cautious tone, helping to send its shares down by nearly 9%. One might have expected more business to come its way when consumers are cost-conscious, but the knock-on effect of weak sales elsewhere hit them too. CEO Lori Flees later wrote in an email that “we are seeing some of those providers (such as tire service centers) promote discounted oil changes to drive traffic, as consumers are deferring or trading down those providers’ core service.”

There is evidence from dollar stores and food companies of penny-pinching by lower-income households too, but choosing a no-name tire is different than switching to store-brand mac and cheese—it could be penny wise, pound foolish. For example, one national discount tire chain offers an “Entry” level tire, with no brand name specified, that would fit a Ford Explorer for $149.99. Its warranty is good for just 40,000 miles. A Goodyear tire fitting the same vehicle costs $254 but has a warranty for 60,000 miles, plus other quality and safety advantages.

How Will Trump Address This?

Taxing imports from Mexico could add 25 percent to car parts and even more on tires from Asia. The same applies to underwear, motorcycles, and toys.

Cheap tires are no bargain. But they are better than tires with no tread at all.

Regardless, the car you are driving will eventually go. At some point maintenance and repairs cost much more than a car is worth.

A Lose-Lose Proposition

In response to my article Trump’s Proposed Tariffs Are a Tax on Consumers, Primarily the Poor I received sever reader comments that are worth discussing.

One of my readers commented: “So it’s OK for other countries to put tariffs on us, but not ok for us to put tariffs on them? Got it.”

For starters I never proposed I agreed with tariffs other countries place on the US. So right off the bat it’s a silly comment.

Moreover, the logic translates to “But mom, Susie did it too.”
To which my mom would reply: “If Susie jumped off a bridge, would you do it too?”

The fact is, China’s export subsidies are a direct benefit to US consumers at the expense of Chinese consumers.

Chinese taxpayers are subsidizing US consumers and we complain. Trump and Biden effectively say “I insist we pay more.”

Should Anyone Care Whether Underwear Is Produced in the US or China?

On November 22, I asked Should Anyone Care Whether Underwear Is Produced in the US or China?

This ridiculous-looking question gets to the heart of tariff discussions.

Trump makes no distinction between strategic items and underwear. To him, exports are good and imports are bad.

Meanwhile ….

China Halts Rare Exports Used by US Technology Companies and the Military

On December 3, I commented China Halts Rare Exports Used by US Technology Companies and the Military

This is China’s advance salvo at Trump tariffs. It comes one day after the Biden administration expanded curbs on the sale of advanced American technology to China.

The US is not focused on the the real trade war that looms. We are too busy focused on underwear and tires.

Might I suggest we address strategic items instead of underwear?

 

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