Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Investors Watch Out For The Auto Industry…

Companies / US Auto's Nov 24, 2015 - 06:08 PM GMT

By: Harry_Dent

Companies If you’re looking into buying your dream car in the next few months – think twice!

At the bottom of the stock crash in early 2009, I bought a dream car – a 2008 Maserati GranTurismo – at 22% off. I got the manufacturing margin and the dealer margin completely taken off. Six months earlier, I would’ve paid a slight premium. Instead, I got a discount.


So hear me out – if you’ve really got your eyes on that Chevy Corvette Stingray or Mercedes-Benz convertible or whatever, wait!

Car sales are going to be demolished when they fall off the demographic cliff in the next year or so.

Two of the most successful investors in the world, Warren Buffett and Steve Soros, have recently made major investments in auto dealerships.

Are they going to live to regret that!

They just bought a sector at its top. Doh!

Little do they know, auto companies are going to crash as bad or worse as housing did.

That’s right – as retail sales have continued to weaken, now the brightest sector is about to go out as well!

Only demographics would’ve told you that… just like they did with Japan’s peak in late 1989, and our own recession in 2007.

Here’s the deal: new cars are the last major durable goods and financed purchase that consumers make.

New car sales peak at age 54. Before that it’s furniture, age 46. Earlier on, it’s home buying – age 37 to 41.

After the kids leave the nest between age 46 when their kids graduate from high school, or 51 for the more affluent whose kids graduate from college, parents no longer have to buy a boring ol’ minivan to cart them to school, soccer practice, ecstasy parties… or whatever it is they’re doing!

Finally, they buy their dream car: a four-door luxury sedan, a high-end sports car – or a really badass pickup truck.

Sure enough, these are the segments that have done so well in recent years as the boomers marched toward age 54 into this year.

And look what happens after:

That car goes right off a cliff!

Right now we’re seeing the peak in the auto sector, after which it will drop off dramatically. To make matters worse, there are a lot of subprime loans that have been made against automobiles in the last several years. Those will just add to all the massive consumer debts that need to deleverage.

Then it’s a vicious cycle.

Those cars will get repossessed and added to excess inventories…

That will lead to more layoffs in sales and production…

And to top it off, in a worsening economy, people won’t buy as many new cars! They’ll wise up and buy a used one.

But the millennials are coming! Yes… but they don’t drive as much as their parents did, and many are still below driving age. Of those that are, only 50% get a driver’s license by 18.

What!?

Having a license was one of the biggest priorities when I was a teenager!

But these kids are different. They’re more likely to telecommute and work from home. They shop more online, hitch a ride with a friend, call an Uber, or ride bikes or whatever. They value experiences over things like I’ve said.

In 1963, 59% of teens age 16-19 had a license. That peaked in 1983 with the height of the baby boom at 71% (no coincidence there).

Since, it’s fallen to 50%!

But I’ll say again – what!?

It’s simply unimaginable to me to not have a driver’s license by the time you’re 19. The 70+ crowd, on the other hand, has gone from 35% in 1983 to 77% today!

One study showed that in 2009, people age 16-34 drove 23% less than in 2001. The Michigan Transportation Institute also found that in 2013, vehicle registrations had declined 8% since the 2008 recession.

So it’s not everyday car purchases that are fueling this car boom. It’s been increasingly dominated by high-end vehicles and their affluent consumers. The most profitable car companies are ones like Porsche, BMW and Mercedes. Ferrari just went public at sky-high valuations.

All of this is about to end as boomers slow their spending and millennials fail to amp theirs up.

If I had a car dealership, I would sell it and buy an RV dealership. Those are the last vehicles that get a boom in the consumer spending lifecycle. But I’d wait until the recession sets in and get a better deal. Ditto if I were a car salesman – switch to an RV dealership, stat!

If you have car stocks, sell them now. And if you’re looking to buy your dream car, wait until at least late 2016 or early 2017.

I timed my present lease to end in late 2016 on purpose.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2015 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules