Jump to content

Extreme oversupply of new autos


SmallCap
 Share

Recommended Posts

Just read this article on the long term storage of unsold cars going on around the world. Does anyone have any insight into the situation or any numbers to go along with this anecdotal evidence?

 

Something surprised me and I question that this number is true is where they state that there are more working cars then there are people in the world. gave a number of 10Bil and I just have a hard time accepting that number.

 

does anyone have any numbers to put this into historical perspective?

 

and if it's such an anomaly then how do we benefit by it?

 

http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die?utm_content=buffer66ba8&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

Link to comment
Share on other sites

This is part of the reason why we've stayed away from automakers, yet every value manager I see is loading up on them.  Automobiles are commodities and their price will ultimately be decided by supply and demand.  Not too mention the tight unions that undermine their profitability, and the price of the underlying materials needed to produce them.  Cheers!

Link to comment
Share on other sites

hmm commodities, not sure if i agree, supply and demand hmm isn't that true for everything

 

hy

 

This is part of the reason why we've stayed away from automakers, yet every value manager I see is loading up on them.  Automobiles are commodities and their price will ultimately be decided by supply and demand.  Not too mention the tight unions that undermine their profitability, and the price of the underlying materials needed to produce them.  Cheers!

Link to comment
Share on other sites

i think you need to look at average age of cars on the road in a lot of developed countries. That number is much higher then average right? And luxury brands are not a commodity product. Still not in love withh those car company's.

Link to comment
Share on other sites

This is part of the reason why we've stayed away from automakers, yet every value manager I see is loading up on them.  Automobiles are commodities and their price will ultimately be decided by supply and demand.  Not too mention the tight unions that undermine their profitability, and the price of the underlying materials needed to produce them.  Cheers!

 

I agree, it's why I'm too afraid to touch GM. Fiat I like due to Ferrari and Marchionne, the rest of their ops are not exciting one way or the other in my mind.

Link to comment
Share on other sites

This is part of the reason why we've stayed away from automakers, yet every value manager I see is loading up on them.  Automobiles are commodities and their price will ultimately be decided by supply and demand.  Not too mention the tight unions that undermine their profitability, and the price of the underlying materials needed to produce them.  Cheers!

 

Agree.  Hate that business.

Link to comment
Share on other sites

This is part of the reason why we've stayed away from automakers, yet every value manager I see is loading up on them.  Automobiles are commodities and their price will ultimately be decided by supply and demand.  Not too mention the tight unions that undermine their profitability, and the price of the underlying materials needed to produce them.  Cheers!

 

Agree.  Hate that business.

Do you feel the same way about niche branded cars such as Ferrari, or does the fact that it is part of the Fiat family kill the idea for you?

Link to comment
Share on other sites

This is part of the reason why we've stayed away from automakers, yet every value manager I see is loading up on them.  Automobiles are commodities and their price will ultimately be decided by supply and demand.  Not too mention the tight unions that undermine their profitability, and the price of the underlying materials needed to produce them.  Cheers!

 

Agree.  Hate that business.

Do you feel the same way about niche branded cars such as Ferrari, or does the fact that it is part of the Fiat family kill the idea for you?

 

No, I think niche branded cars behave less like commodities, because regardless of demand, there will always be a supply issue.  There is much more elasticity in pricing and margins.  But if the business becomes part of a larger company, with more commoditized products, it's pricing power becomes irrelevant, since it is so much smaller than the overall company. 

 

Right now, we can see this clearly with smartphones...the Apple brand is being diluted by more commoditized products they are bringing out...margins are shrinking, pricing less elastic for Apple products.  Cell phones are now very much like cars or computers.  So Ferrari on it's own is a great business, but that doesn't make Fiat into Ferrari.  Cheers!   

Link to comment
Share on other sites

Right now, we can see this clearly with smartphones...the Apple brand is being diluted by more commoditized products they are bringing out...margins are shrinking, pricing less elastic for Apple products.  Cell phones are now very much like cars or computers.  So Ferrari on it's own is a great business, but that doesn't make Fiat into Ferrari.  Cheers!

 

Yet I would have loved being in AAPL stock when Steve Jobs was turning it around!

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...