Epiphany about truck prices in general

[Captain Dirty Beard]

Tariffs don't effect made in USA

except many parts in your truck are foreign made

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[Larrymoe]

except many parts in your truck are foreign made

Probably over half of them.

 

[amschind]

It doesn’t cost $15k to make a Rolex Submariner but people will pay the price.

Notice how McDonalds reintroduced VALUE meals as sales were down.

My point from the earlier posts is that you can see how much room any given company has to reduce prices by looking at their margins. A company with large margins (relative to what it needs to fund R&D and capex et c) can reduce those to better compete for price conscious consumers. My limited reading suggested that McDonald's and several of the other fast food chains are using unsustainable value menus as loss leaders, but I haven't really delved into that enough to be sure. You do raise the very important point that consumers generally do not do the math, and may respond irrationally to prices which are incorrectly perceived as lower or higher.

Automakers have actually raised prices over the past 18 months, in line with the rising FFR. The sticker price increases have been relatively small, and more than compensated by "incentives", but trucks sold with 0% interest rates are far cheaper than trucks which cost $4000 less sticker with a 2-4% interest rate. If you want evidence that consumers do not adequately consider interest rates in the total cost of cars, look back over this thread. In 4 pages of complaining about car prices being too high, this is the first post that mentions rising interest rates.

The tie in with your post is that McDonald's offering a few money losing items to get consumers into stores (and buying stuff with positive margins) really isn't much different from Ford offering "generous incentives" to lock folks into 6 year, 4% loans. My point is that while these behaviors are a bit deceitful (it's like your kid telling you they didn't steal any cookies when they have crumbs smeared all over them....the lie is so flimsy that it almost doesn't count), the bigger issue is that the proceeds from price increases are all flowing out of the automakers to pay for other stuff. I want us to start asking "what is that other stuff that is so expensive?".

C-suite salaries are too high, but as I've put forward, the top folks with eye-popping salaries aren't making enough to justify even 1% of the price increases. It's an important question, it affects far more than just the auto industry, and therefore it is worth asking.

 

[Samson16]

The truck has far more materials going into it (metal, glass, plastic) Makes since it costs more...
I am always surprised by how inexpensive trucks are compared to a little car like a 911.

My little ‘24 911 GT3 RS only weighs 3,329lbs with the Weissach Package, but it still ran close to $300k with the custom Rapid Red paint scheme.
It’s crazy out there!

 

[dochawk]

Either way, the fact that a corvette can be had for less than the price of a midrange 1/2 ton pickup truck is amazing to me.

The bottom of the line corvette starts at $69,995 these days.

 

[Tone]

I think you can't figure it out. LOL VRFlubber

 

[Samson16]

The bottom of the line corvette starts at $69,995 these days.

That’s before the dealer markup

 

[amschind]

I wonder how much of Ford's lower profit margins is because of their failed foray into the electric realm with the Lightning and Mach E? Those things are incredibly expensive to produce and they can't give the damn things away. There's places around here advertising $30-45k of those and they're still not moving.

Those billions didn't just arise from nowhere. The EV push is hitting a predictable brick wall, but the automakers had to play the game because they cannot bite the hand that feeds.

I will add another point: the worst example of gouging, to my mind, isn't up front cost but the lack of repairability. I lay a lot of that at the feet of pollution controls, but most is just crummy "one time use" engineering. I think that if we really want to blame someone for that, we have to look in the mirror. If consumers stopped buying vehicles that were tough to work on, companies would either make more repairable vehicles OR they would die and then new companies would take their places. Every single dollar is a vote.

 

[National Superbike]

Those billions didn't just arise from nowhere. The EV push is hitting a predictable brick wall, but the automakers had to play the game because they cannot bite the hand that feeds.

I will add another point: the worst example of gouging, to my mind, isn't up front cost but the lack of repairability. I lay a lot of that at the feet of pollution controls, but most is just crummy "one time use" engineering. I think that if we really want to blame someone for that, we have to look in the mirror. If consumers stopped buying vehicles that were tough to work on, companies would either make more repairable vehicles OR they would die and then new companies would take their places. Every single dollar is a vote.

Yeah, this is a huge problem for sustainability. Look at a car like the Jaguar XJ. Easy a 100K car when it was new 10 yrs ago. Now they are worth 12K and will never be worth more than that due to the insane cost of repairability. I looked at one with 56,000 miles on it that had just had $16K in repair work done and they were selling it for 12.5K. The only place you can get it worked on for anything that involves the ECU, trans or emissions is a dealer at 300/hr. If the gov't wants people to lower their carbon footprint, making them crush cars that are just too expensive to fix is idiotic. And, our trucks will obviously be in that category at some point long before they are really worn out.
I think the only way out of this is to mandate warranty terms like they do with emissions equipment.

 

[dochawk]

I don't know about ford, but GM caps Cadillac dealer service to something like 12 years!

[and it's been more than that since GM has slapped the, "Cadillac" label on anything I'd want . . . for that money, you're entitled to all eight cylinders!]

 

[v8440]

The bottom of the line corvette starts at $69,995 these days.

The truck in question, a 2025 ram 1500 laramie, is exactly in the middle of the 5 trim levels they offer and stickered for just under $71k. Another thing that amazed me-I got my agent to give me an insurance quote on a 2016 z06 corvette. $101 a month. I thought it would be about twice that. It's only like $8 more a month than the truck. Yes, exactly the same (full) coverage with more than the state required minimum, towing added in, etc. I guess being middle aged, married, with no tickets on my record and in a sleepy little town has its benefits...

 

[amschind]

Yeah, this is a huge problem for sustainability. Look at a car like the Jaguar XJ. Easy a 100K car when it was new 10 yrs ago. Now they are worth 12K and will never be worth more than that due to the insane cost of repairability. I looked at one with 56,000 miles on it that had just had $16K in repair work done and they were selling it for 12.5K. The only place you can get it worked on for anything that involves the ECU, trans or emissions is a dealer at 300/hr. If the gov't wants people to lower their carbon footprint, making them crush cars that are just too expensive to fix is idiotic. And, our trucks will obviously be in that category at some point long before they are really worn out.
I think the only way out of this is to mandate warranty terms like they do with emissions equipment.

From the other end, look at pre-emissions tractor pricing. You can sell a pre-2008 tractor TODAY for what you paid for it new. Tier IV emissions tractors will put themselves into limp mode unless a dealer services/replaces emissions components at specified hour marks, typically around 2500. The embodied energy cost of scrapping vehicles is absolutely not considered in emissions calculations, and the worst offenders are BEVs. BEV proponents are happy to tell you about how they have "less than 5% capacity loss at 10 years", but the very second that you mention buying a used one, they suddenly become very concerned with marked declines in battery capacity. From a resale standpoint, the issue expands beyond its actual footprint because only very savvy buyers can actually verify how much battery capacity a vehicle has left. That in turn becomes an arms race because shady car salesmen can and will find ways to spoof those numbers, which will in turn scare away buyers. I believe that we are headed to a market wherein used EV resale values are in exactly the same boat as used Jaguar prices, since 80% of the price value and 100% of the use value of a BEV is tied up in the battery. Anode free batteries are a solution to that, and I think that we will see adoption in response to that, but I think that the recent BEV craze will burn enough consumers that the process will be delayed.

The cynic in me is suspicious that car companies realized long ago that planned obsolescence was no longer enough to keep people from driving vehicles for 500k miles, and have embraced poor engineering in order to force UP repair costs. LiFePO4 BEVs were a godsend for that twisted purpose, as the battery that forms the bulk of the vehicle's value is itself a wear item. Extending that logical process, I am suspicious about how they will cap the lifespan of vehicles which should last 1mm miles.

 

[dochawk]

Another thing that amazed me-I got my agent to give me an insurance quote on a 2016 z06 corvette. $101 a month. I thought it would be about twice that. It's only like $8 more a month than the truck

wow.

After the no accident, good driver, homeowner, etc. discounts, my liability on a '98 F-150, two drivers, is about $200 in Las Vegas! {and yet we've ordered a maverick and will be ordering a F-150 or (unlikely) a Ramcharger).

Thirty years ago, I closed my practice here to get my Ph.D. at Iowa state, and was stunned by the difference in insurance costs (less than a third) for full coverage.

I had 100/300 then, and 300/300 now.

My six vehicles on the classic policy cost, same liability, full coverage with $0 deductible, cost about half of what that one truck does . . .

Anyway, I drove a couple of ZR6 (?) corvettes at the Barret-Jackson auction here last year. Both brand new, no more than a couple of hundred miles. Apparently bought to flip.

It kind of backfired: if they got them at MSRP , the sales price for each exactly covered car, sales tax, registration, and the seller fee. Someone who drove one across the block noticed the wife of the seller getting hysterical about his idiotic idea . . .

[separately, I drove a military humvee, not the commercial one, over that custom built ramp and platform. I was told later that they could hear it creak under the weight! I sure couldn't hear it over the diesel . . .]

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