Does anyone know what's going on with auto makers

[rb]

Just wondering if anyone has a fix on what's going on with auto makers.

 

These companies are trading at mid single digits PEs in a crazy bull market. Yes, I know that their capex well exceeds their depreciation so the real PEs are somewhat higher. But still, we're talking mid single digits here. Am I missing something here? Or is this possibly the most undervalued sector right now?

[Gregmal]

Just wondering if anyone has a fix on what's going on with auto makers.

 

These companies are trading at mid single digits PEs in a crazy bull market. Yes, I know that their capex well exceeds their depreciation so the real PEs are somewhat higher. But still, we're talking mid single digits here. Am I missing something here? Or is this possibly the most undervalued sector right now?

 

Ford = Dumpsterfire

FCAU=Jesus just died

GM= Barra and the board are still convinced they've done a great job

TM=Tariffs

 

In all seriousness, I agree they are undervalued. That said, automakers just naturally seem to have terrible capital allocators running them(the exception being Machionne). I'm convinced Buffett's next whale will be an automaker.

[John Hjorth]

Just to shed some light on what rb is talking about, here is a recent analysis of automakers:

 

The Nordnet Blog - Thorleif Jackson [July 17^th 2018]: Who is the winner in the auto industry?.

 

And Mr. Jacksons personal preferences:

 

The Nordnet Blog - Thorleif Jackson [July 17^th 2018]: My favorite stocks in the auto industry.

 

[One day, I'll perhaps elaborate a bit about Mr. Jackson and about what he's doing.]

[Nell-e]

I stay away from autos because of a couple questions:

 

1) How much better are conditions going to get after years of record sales and the stimulus from tax cuts?

 

2) With household debt at record levels, how much more discretionary spend does the consumer have left?

 

Maybe other people agree with me or perhaps they avoid the autos for another reason.

[compounding]

It's cheap because it's a cyclical sector that's capital intensive, high in fixed costs, super competitive, has a history of terrible capital allocation and a history of not earning their cost of capital over an economic cycle.  They are not in control of the distribution of their own product and basically can't do anything to change that. They have mission critical suppliers that sometimes have pricing power over them. They have a partly unionized labor force and employees that get pissed off if they don't get large pension payments or if the largest owner also owns a football team that spends money to acquire a world star.

 

The most profitable market has been at around what is supposed to be the limit for what is sustainable in terms of volume, for a few years now. The largest growth market is a country with a history of not always respecting the tenents of capitalism.  Being global enterprises with production and sales all over the world, they are also sensitive to political action, which most of time is aimed creating a local advantage for the nations incumbents, but in the end might make everyone in the ecosystem worse off.

 

Oh, and it's about to get disrupted by flying electric robotaxis.

 

PS. The tone is a bit satirical but the points are mostly true

 

PPS. I still like some of them as investments

[Guest ajc]

 

FCA took their biggest hit recently on the day of Marchionne's death and of new CEO Manley guiding down a little from their previously extraordinary financial targets.

The other days when the stock has dropped a lot have been days when economic news on tariffs, China, NAFTA, Italy, and emerging markets, has been prominent.

 

What's funny is that FCA's business is pretty much all North America and then Europe. Latin America and their components business are also worth mentioning, but the reality is what matters for them now are the NAFTA negotiations, the US-EU ones, and if the spin-off of Magneti Marelli (for about 6B or 7B euros) continues to go through and happens in the next few months.

Also, as it gets cheaper it invites bids from others because of all the Jeep, RAM, Maserati, etc, sales and brand value.

At current prices, FCA will have a market cap of only 15B euros after the Magneti Marelli spin-off.

That's conservatively for over 100B euros in sales, net industrial cash in excess of 3B euros, and close to the best adjusted EBIT margins of the Detroit Three.

 

As far as cyclicality goes, that's clearly the question.

Bears will say this expansion is becoming the longest ever, there are tariff fears, auto's are a crappy business, and so on. All understandable points, but perhaps superficial.

My thinking is that SAAR is stable, used car values aren't dropping like crazy (see Daniel Ruiz on Twitter for his insights), home building is still rising after the GFC and has a way to go, recessions usually don't happen until about 2 years after heavy truck sales have peaked which hasn't yet happened, NAFTA and the EU look like they'll get trade deals done somewhat soon, and the upcoming spin-off isn't facing any obstacles.

 

I think in the next year or two you might see some of those conditions deteriorate in which case it'd be good to get far more cautious, but right now my view is FCA is on the very cheap side and fundamental conditions are largely in their favor.

 

 

 

 

Disclosure: I own FCA stock.

 

 

 

[JRM]

In my unprofessional opinion investors have been calling for peak auto  since 2014 and expect a repeat of 2008.  Any hint of recession and the auto stocks get hammered.

[Cardboard]

I agree, it is all about pricing in the next 3 recessions!

 

Take a look at what happened to copper stocks, oil stocks and all kinds of commodities yesterday. Of course, these also get affected by the strong USD.

 

Actually, maybe that the latter could also be added to the reasons to be worried about U.S. based auto stocks or a strong currency which hurts overseas sales/profits once translated.

 

Cardboard

[SharperDingaan]

 

FCA took their biggest hit recently on the day of Marchionne's death and of new CEO Manley guiding down a little from their previously extraordinary financial targets.

The other days when the stock has dropped a lot have been days when economic news on tariffs, China, NAFTA, Italy, and emerging markets, has been prominent.

 

What's funny is that FCA's business is pretty much all North America and then Europe. Latin America and their components business are also worth mentioning, but the reality is what matters for them now are the NAFTA negotiations, the US-EU ones, and if the spin-off of Magneti Marelli (for about 6B or 7B euros) continues to go through and happens in the next few months.

Also, as it gets cheaper it invites bids from others because of all the Jeep, RAM, Maserati, etc, sales and brand value.

At current prices, FCA will have a market cap of only 15B euros after the Magneti Marelli spin-off.

That's conservatively for over 100B euros in sales, net industrial cash in excess of 3B euros, and close to the best adjusted EBIT margins of the Detroit Three.

 

As far as cyclicality goes, that's clearly the question.

Bears will say this expansion is becoming the longest ever, there are tariff fears, auto's are a crappy business, and so on. All understandable points, but perhaps superficial.

My thinking is that SAAR is stable, used car values aren't dropping like crazy (see Daniel Ruiz on Twitter for his insights), home building is still rising after the GFC and has a way to go, recessions usually don't happen until about 2 years after heavy truck sales have peaked which hasn't yet happened, NAFTA and the EU look like they'll get trade deals done somewhat soon, and the upcoming spin-off isn't facing any obstacles.

 

I think in the next year or two you might see some of those conditions deteriorate in which case it'd be good to get far more cautious, but right now my view is FCA is on the very cheap side and fundamental conditions are largely in their favor.

 

Disclosure: I own FCA stock.

 

You might want to approach this a little differently ...

 

Most would expect that the NA auto-business isn't going away. There may be more robots & less people, fewer & bigger factories, changes in how autos are owned (sharing, etc), and changes in the supply chain; but the base business is pretty robust. People still have to get around, and cars wear out; economies are climbing out of the GR and interest rates are rising in part - to avoid triggering inflation. There's not much real underlying risk.

 

Ultimately trade tarriffs are temporary, & it is too everyones benefit to remove them. However, whatever we might think of Trump few would expect rational behaviour; so expect tarriffs to get a lot worse - and share prices to decline accordingly. Most would expect that US attempts to change the regime in Iran are also unlikely to go smoothly. There is little reason to invest in NA auto unless it is for dividend yield.

 

Ultimately the wild card is Trumps politics.

Remove him and tarriffs can be rapidly unwound; improving FFO and share valuations all round.

And in the contest of money versus politics, which side usually wins?

Eventually the roulette wheel WILL come up on the opposing colour.

 

So sit tight, and simply let Trump do your work for you.

Every time he doubles down on US auto, another 25bp of dividend yield to you  ;)

 

SD

 

 

 

[Guest ajc]

 

 

FCA took their biggest hit recently on the day of Marchionne's death and of new CEO Manley guiding down a little from their previously extraordinary financial targets.

The other days when the stock has dropped a lot have been days when economic news on tariffs, China, NAFTA, Italy, and emerging markets, has been prominent.

 

What's funny is that FCA's business is pretty much all North America and then Europe. Latin America and their components business are also worth mentioning, but the reality is what matters for them now are the NAFTA negotiations, the US-EU ones, and if the spin-off of Magneti Marelli (for about 6B or 7B euros) continues to go through and happens in the next few months.

Also, as it gets cheaper it invites bids from others because of all the Jeep, RAM, Maserati, etc, sales and brand value.

At current prices, FCA will have a market cap of only 15B euros after the Magneti Marelli spin-off.

That's conservatively for over 100B euros in sales, net industrial cash in excess of 3B euros, and close to the best adjusted EBIT margins of the Detroit Three.

 

As far as cyclicality goes, that's clearly the question.

Bears will say this expansion is becoming the longest ever, there are tariff fears, auto's are a crappy business, and so on. All understandable points, but perhaps superficial.

My thinking is that SAAR is stable, used car values aren't dropping like crazy (see Daniel Ruiz on Twitter for his insights), home building is still rising after the GFC and has a way to go, recessions usually don't happen until about 2 years after heavy truck sales have peaked which hasn't yet happened, NAFTA and the EU look like they'll get trade deals done somewhat soon, and the upcoming spin-off isn't facing any obstacles.

 

I think in the next year or two you might see some of those conditions deteriorate in which case it'd be good to get far more cautious, but right now my view is FCA is on the very cheap side and fundamental conditions are largely in their favor.

 

 

 

 

Disclosure: I own FCA stock.

 

 

 

Just to go a little further on FCA and the points above.

 

As a percentage of their adjusted EBIT from most to least, NAFTA makes up 75%, Europe and the Middle East around 11%, their components businesses (Magneti Marelli, etc) makes up just over 7%, Maserati is 5%, and Latin America sits somwhere above 4% (https://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2018/april/FCA_2018_FIRST_QUARTER_RESULTS.pdf).

 

Break that all down, and you see that close to 95% of Fiat Chrysler's adjusted EBIT is based on what happens in North America and Europe.

The question then is what are the recession risks for the US and somewhat less, the recession risks for Europe, since they're still in the recovery stage that the US got to more quickly (is my 2 cents).

 

https://fat-pitch.blogspot.com/2018/08/august-macro-update-recession-risk.html#more

 

The link above is, as far as I can tell, the most comprehensive and sensible analysis of the entire US economy with its most important moving parts.

Based on that research, it looks like the US is at least 12 months, if not 24, away from any obvious major recession risk.

Of course, that doesn't mean extraordinary shit can't happen, but if you take the time to look over the data, I think you'll probably agree the economy is growing relatively well and all the important sectors are currently on a strong footing while not running too hot.

Either way, I see a big enough margin of safety there.

 

Beyond that, as Peter Lynch said, used car prices matter a lot. Daniel Ruiz (https://twitter.com/DRuizG80) does the best work I know of in covering used car prices, manufacturing input costs, and the issue of gas prices, in a critical but balanced way. I'd urge you to follow the insights on his feed for what's possibly the most informed perspective on the sector.

 

Finally, I'd add that trouble in a few of the bigger emerging markets might actually benefit FCA.

After all, as those countries slowed down and imported fewer materials, the cost of commodities used to make vehicles would fall on the global market as would the price of gas, since there would be less worldwide demand.

For Fiat Chrysler anyway and its massive NAFTA/EMEA exposure, I think a solid US economy and weakness in some emerging markets could be quite a big positive.

 

I'll finish by saying I plan to start selling down my stake in the next few months, once the Magneti Marelli spin happens. I've held FCA on and off for the past few years and done well, but the intention was always to get out after Marchionne retired.

I've decided to give it a little more time since he was still going to be there had he not passed on, and the US and EU markets seem fine with the spin-off just around the corner.

 

Whatever happens though, I'll be be out in 6 to 9 months time because as with the bears on this thread I'm also not the biggest fan of the auto sector's cyclicality, cost structure, etc.

It's just that I think a Lynch-like approach can be worthwhile if executed intelligently, and I'm dumb enough to figure I've probably got what it takes to pull that off.

 

 

 

[Pondside47]

It's cheap because it's a cyclical sector that's capital intensive, high in fixed costs, super competitive, has a history of terrible capital allocation and a history of not earning their cost of capital over an economic cycle.  They are not in control of the distribution of their own product and basically can't do anything to change that. They have mission critical suppliers that sometimes have pricing power over them. They have a partly unionized labor force and employees that get pissed off if they don't get large pension payments or if the largest owner also owns a football team that spends money to acquire a world star.

 

The most profitable market has been at around what is supposed to be the limit for what is sustainable in terms of volume, for a few years now. The largest growth market is a country with a history of not always respecting the tenents of capitalism.  Being global enterprises with production and sales all over the world, they are also sensitive to political action, which most of time is aimed creating a local advantage for the nations incumbents, but in the end might make everyone in the ecosystem worse off.

 

Oh, and it's about to get disrupted by flying electric robotaxis.

 

PS. The tone is a bit satirical but the points are mostly true

 

PPS. I still like some of them as investments

 

Paying 100 million for Ronaldo might seem a bit too much but I was watching a Juventus documentary on Netflix the other day, and they pay 40 million for a 20 year old... so Ronaldo might not be that expensive in that context. Also almost everyone on the team drives a Jeep. Ronaldo is like God in China, which they are trying to crack. FCA may be having trouble selling Compass, I see a lot of imported Wranglers on the street of Beijing driven by young rich kids who want to stand out. For people who have a problem with owning Juventus as part of Exor, check out Juventus stock performance in the last 4 years.

[John Hjorth]

... They have a partly unionized labor force and employees that get pissed off if they don't get large pension payments or if the largest owner also owns a football team that spends money to acquire a world star. ...

 

... PS. The tone is a bit satirical but the points are mostly true ...

 

Why even go out of a tangent posting wise - as an investor - about football [ref. the topic title], when Juventus is owned by EXOR, not FCAU? - You have to read Johan's post the right way.

[Guest ajc]

 

 

You might want to approach this a little differently ...

 

Most would expect that the NA auto-business isn't going away. There may be more robots & less people, fewer & bigger factories, changes in how autos are owned (sharing, etc), and changes in the supply chain; but the base business is pretty robust. People still have to get around, and cars wear out; economies are climbing out of the GR and interest rates are rising in part - to avoid triggering inflation. There's not much real underlying risk.

 

Ultimately trade tarriffs are temporary, & it is too everyones benefit to remove them. However, whatever we might think of Trump few would expect rational behaviour; so expect tarriffs to get a lot worse - and share prices to decline accordingly. Most would expect that US attempts to change the regime in Iran are also unlikely to go smoothly. There is little reason to invest in NA auto unless it is for dividend yield.

 

Ultimately the wild card is Trumps politics.

Remove him and tarriffs can be rapidly unwound; improving FFO and share valuations all round.

And in the contest of money versus politics, which side usually wins?

Eventually the roulette wheel WILL come up on the opposing colour.

 

So sit tight, and simply let Trump do your work for you.

Every time he doubles down on US auto, another 25bp of dividend yield to you  ;)

 

SD

 

 

 

 

That scenario's definitely possible, and if it happens I think I might not make much but I'd say the upcoming spin-off and a strong US economy for the next 12 months mean my potential downside isn't crazy (especially at an implied 15B euro market cap, post Magneti Marelli separation).

 

Tariff and trade-wise, my take is the world is waking up to the fact that China is the real Trump target. From recent news, NAFTA talks with Mexico are much further along and once they agree on the auto aspect, my guess is a deal can be signed. At that point, it makes sense for Canada to want the same. The EU too.

 

We'll see how much I'm off by, but my sense is when it sinks in that it's China's rise this administration is mostly seeking to contain, that'll give relief and incentivize others to reach new agreements with the US and embolden everyone to join against China in an attempt to stop their trade gamesmanship.

 

I mean, I don't think it'll ultimately stop China becoming the substantially biggest economy, or get them to change all their predispositions, but the Trump administration's ability to pressure the world's bigger economies into focusing on China and agreeing to the US position is, I think, currently being underestimated by most.

 

Obviously, it'll be time and the markets that tell if I'm on the right track or up the wrong tree. I guess that's how it goes. Meanwhile, I think this new global economic narrative could start manifesting itself sooner than's expected plus the US economy is still doing just fine for FCA and its targets. Is essentially my thinking on it, as of right now anyway.

 

 

 

[Spekulatius]

My favorite would be the German car makers Daimler and BMW.DE. Both trade at around 7x earnings, no debt if you separate out their finance arm and below tangible book. They paying  dividends too - Daimler is around 6 %. Shrug.

An alternative is buying the Exor  conglomerate with holdings in FCAU, Race, CNHI and insurance( former Partner RE) at a ~40% discount.

 

[rb]

Thanks for the replies. I see a lot of you have focused on the North American car makers. But really almost every one trades at a low multiple: Toyota, Honda, Nissan, Daimler, BMW.

 

I also understand that this is a cyclical, but a lot of industries are cyclical and don't trade at 5. Regarding the cycle, if we look at the US vehicle fleet, it's what? 268 million vehicles and a median age of 9. Last year I think US vehicle sales were 17.25 million. That implies a average vehicle replacement age of 15.5 years. That quite a long time. These numbers seem very reasonable to me. So even if the industry is cyclical at 17 million vehicles per year, it doesn't seem like we're in a crazy part of the cycle.

 

Those are just numbers fro the US. I'd look at the numbers for Europe as well, it's just i don't know where to find them. But from memory I think the European fleet is younger the the US one.

[Cigarbutt]

I also understand that this is a cyclical, but a lot of industries are cyclical and don't trade at 5. Regarding the cycle, if we look at the US vehicle fleet, it's what? 268 million vehicles and a median age of 9. Last year I think US vehicle sales were 17.25 million. That implies a average vehicle replacement age of 15.5 years. That quite a long time. These numbers seem very reasonable to me. So even if the industry is cyclical at 17 million vehicles per year, it doesn't seem like we're in a crazy part of the cycle.

 

Those are just numbers fro the US. I'd look at the numbers for Europe as well, it's just i don't know where to find them. But from memory I think the European fleet is younger the the US one.

 

That is an area I'm following and try to incorporate it in the pent-up demand concept that is being described by some.

Last time I checked, in the US, the average age of cars and light trucks is 11,6 years and about 40% of vehicles are 12 years or older.

In Europe, for some reason, the average age of the fleet is much lower.

https://www.energy.gov/eere/vehicles/articles/fact-997-october-2-2017-average-age-cars-and-light-trucks-was-almost-12-years

https://www.eea.europa.eu/data-and-maps/indicators/average-age-of-the-vehicle-fleet/average-age-of-the-vehicle-8

[CorpRaider]

Good points about how crappy the bidness is.  Also, mobility as a service and autonomous could end up in a place where the value is in the software/data and the cars are just plug and play, like what happened with routers.  Obviously that's not on the horizon but the market does see AAPL and GOOG, etc...coming to (probably) take the cookies.  Even if traditionals survive, they r going to have to spend even more capital than they would just churning out Silverados and F150s. 

 

At least it seems like one could make a somewhat convincing case for that view.  There are probably opportunities too, but industry might about to be "disrupted." 

[John Hjorth]

Ref. Cigarbutt's post, perhaps it has to do with regulations about by law mandatory inspections of cars here in EU after four years, then every second year. [Rules may vary by country - this is minimum inspection frequency for an EU country].

 

[Danish] Traffic Agency: Periodical [car] inspection.

 

It is about a focused effort to reduce risk of car accidents caused by cars out of shape with from security perspective dangerous delayed maintenance.

 

If you don't comply with inspection deadlines, you're fined. If the car does not pass inspection, you have to take the car off the road and deliver back license plates, and if you don't do that either, a warrant for the car goes out to the police.

 

- - - o 0 o - - -

 

I have no knowledge about how such things are regulated in Northern America, thus my use of "perhaps" in first sentence.

[Spekulatius]

Ref. Cigarbutt's post, perhaps it has to do with regulations about by law mandatory inspections of cars here in EU after four years, then every second year. [Rules may vary by country - this is minimum inspection frequency for an EU country].

 

[Danish] Traffic Agency: Periodical [car] inspection.

 

There are mandatory vehicle inspections in some states in the US as well. NY and MA have mandatory vehicle inspections and in fact, cars tend to be in a better shape than in CA for example where there are none. I am fairly certain that the average car age is higher when vehicle inspections are absent.

[rb]

Ref. Cigarbutt's post, perhaps it has to do with regulations about by law mandatory inspections of cars here in EU after four years, then every second year. [Rules may vary by country - this is minimum inspection frequency for an EU country].

 

[Danish] Traffic Agency: Periodical [car] inspection.

 

There are mandatory vehicle inspections in some states in the US as well. NY and MA have mandatory vehicle inspections and in fact, cars tend to be in a better shape than in CA for example where there are none. I am fairly certain that the average car age is higher when vehicle inspections are absent.

The fleet age in Europe tends to be younger than America, this has been going on for a while so I think that it's a more of a structural thing rather than a market event. I don't know the reason or what the delta should naturally be.

 

Vehicle inspections probably play a part, but I think it's pretty minor. With some exceptions there are none in North America. But that's not really that much of an issue. Simply vehicles are good enough these days that few would fail them.

 

I think a big part is the fleet composition. That is to say that in Europe you have a lot fewer Toyotas and a lot more Fiats. That's not good for raising the fleet age.

 

Another thing is that the urban vehicle owner in Europe is richer than the urban vehicle owner in America. This owner will prefer a newer car. Along that there's a big market for EU used cars in EU adjacent countries that easily absorbs the used cars. Overall I wouldn't say it's a defining characteristic but it helps to shave a year off the fleet age.

[Cigarbutt]

Complementary information and potential impact on pent-up demand.

 

The impact of vehicle inspections on safety is relatively controversial.

Two reports with different conclusions:

https://scholarsarchive.byu.edu/cgi/viewcontent.cgi?article=1319&context=fhssconference_studentpub

https://www.globalfueleconomy.org/media/44073/wp4-car-fleet-renewal-schemes.pdf

 

Opinion: fatalities and injuries are bad news but the effect of inspections now and going forward is quite likely to be marginal, given the improvements already achieved and the "quality" of the existing fleet.

 

I would tend to say though that the "spirit" of regulations in Europe is more stringent and the policy goals may not be so much about safety as about pollution control and fuel efficiency. This factor IMO explains a lot of the differential.

 

In the US, the inspection regulations are much less severe and the trend is going in the opposite direction as several states are discontinuing their programs. Also, it seems to me that buyers are taking advantage of fuel efficiency by buying larger vehicles...

 

So, pent-up demand could increase if (big if) the "spirit" of regulations change because bringing vehicle fleet age from 12 to 8 would mean a lot of new cars on the road.

[Jurgis]

Ref. Cigarbutt's post, perhaps it has to do with regulations about by law mandatory inspections of cars here in EU after four years, then every second year. [Rules may vary by country - this is minimum inspection frequency for an EU country].

 

[Danish] Traffic Agency: Periodical [car] inspection.

 

There are mandatory vehicle inspections in some states in the US as well. NY and MA have mandatory vehicle inspections and in fact, cars tend to be in a better shape than in CA for example where there are none. I am fairly certain that the average car age is higher when vehicle inspections are absent.

 

What? Of course there mandatory car inspections in CA for emissions ( https://www.dmv.org/ca-california/smog-check.php )

Maybe you mean mechanical/safety inspections? But mechanical inspections are not as strict in MA as in EU and they don't check much. OTOH emission inspections are presumably stricter in CA (not sure about MA) than in (most?) EU.

[rb]

In Canada and the US every car is built to the California standard. A few years ago in Ontario we gave up emission testing on cars younger than 7 years because basically none would fail the test. Even past that age not many fail. The few ones that do is mainly because the 1st O2 sensor failed because it cooked off at the exhaust manifold. That's a $200 fix. Not really a reason to take a car out of commission.

[Spekulatius]

Ref. Cigarbutt's post, perhaps it has to do with regulations about by law mandatory inspections of cars here in EU after four years, then every second year. [Rules may vary by country - this is minimum inspection frequency for an EU country].

 

[Danish] Traffic Agency: Periodical [car] inspection.

 

There are mandatory vehicle inspections in some states in the US as well. NY and MA have mandatory vehicle inspections and in fact, cars tend to be in a better shape than in CA for example where there are none. I am fairly certain that the average car age is higher when vehicle inspections are absent.

 

What? Of course there mandatory car inspections in CA for emissions ( https://www.dmv.org/ca-california/smog-check.php )

Maybe you mean mechanical/safety inspections? But mechanical inspections are not as strict in MA as in EU and they don't check much. OTOH emission inspections are presumably stricter in CA (not sure about MA) than in (most?) EU.

 

Yes, there are emission tests in CA, but those are easy to pass compared to emission and safety tests in MA and NY. You see a lot of non roadworthy cars in CA  (yes, I am stereotyping, but you can tell that a 20 year old Buick’s driving with 50mph on a highway is probably driven by a Hispanic in CA). I don’t see these cars in NY or MA.

[Travis Wiedower]

I'm surprised to see only one person mention autonomous in this thread. If autonomous driving comes to fruition, I suspect most auto manufacturers will look like Blackberry and Palm Pilot twenty years from now. GM is taking it seriously and Fiat Chrysler / Jaguar were smart to lock up partnerships with Waymo, but autonomy will benefit from network effects. And network effects means only a few winners, and only a few winners means a lot of bankruptcy / consolidation among the auto makers. None of the traditional auto makers are tech companies - it's not in their DNA. A few may be able to make the transition, but if autonomous driving is possible then this industry is on the verge of getting massively disrupted. And if so, a lot of these auto makers will be classic value traps even at these levels because their terminal value in 10-15 years is zero.