Auto Incentives Jump To 8% Of Car Value

Zero Hedge 
We showed yesterday the truly dreadful state of this economic recovery had one odd bright (green) spot, US auto production (and sales). While cash-for-clunkers started it, and easy money from the Fed expanded it (via credit for an ever-growing cohort of subprime borrowers), the car companies have now reached back into the bag of old tricks that blew them up before - incentives in May jumped to 8% of market value - or almost $2,500 per vehicle - the highest in over 2 years.

If things are going so well in this 'recovery' why are the car makers forced to squeeze margin for volume... The problem, as BusinessWeek reports, is that increasingly rich incentives aren't moving the needle much on sales.

Via BusinessWeek,

The economy may be having a car sales party, but automakers are spiking the punch. U.S. auto incentives in May jumped to 8 percent of market value—or almost $2,500 per vehicle - marking the highest level in about two years, according to data released Tuesday by Edmunds.com.

Car companies are squeezing margin for volume... During the dark days of the recession when consumer confidence was running on fumes, carmakers were offering about 10 percent of vehicle value to get buyers onto lots.

The problem is that increasingly rich incentives aren’t moving the needle much on sales. The pace of car-buying, while brisk, hasn’t changed much since November when the country was on an annual pace of 15.46 million light-vehicle sales. That figure had trickled down to 15.24 million in May, even as incentive deals have been getting sweeter all the while. Read more >>

New Cars Out of Reach for Many Americans

United States median household income percentage change from 1999 to 2005 by state. (Photo credit: Wikipedia)

Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.

The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to TrueCar.com data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales.

According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year. At the other extreme, Tampa, Fla., was at the bottom of the 25 large cities included in the study, with a median household income of $43,832.

The study looked at a variety of household expenses, such as food and housing, and when it comes to purchasing a new vehicle, it considered more than just the basic purchase price, down payment and monthly note, factoring in such essentials as taxes and insurance. Read more >>

New tool allows deputies to go after car owners who owe taxes

How long before this method is used to collect Federal and State taxes?

Pay up or risk having your car seized and sold at auction—that’s the new warning to drivers who haven’t paid their Mecklenburg County vehicle tax bill. The new tool to raise the collection rate while reducing the excuse rate is two deputy vehicles equipped with cameras and license plate recognition software.

Deputies drive the cars around the county looking for delinquent taxpayers and place a warning sticker on the cars. "It's a very expensive tax on my car,” said driver Christian Hindley. The tax bill is not the favorite notice Hindley gets every year in the mail.  It costs him $400 per year.

"The law is the law, taxes are taxes, you have to pay them,” he said. The problem is thousands don't pay or haven't so far and it is costing Mecklenburg County $9 million over roughly the last two years, according to Mecklenburg County Tax Collector Neal Dixon.

The county would prefer to have that money in its coffers to cover tight budgets. Now, squad cars checking public streets, parking lots and ramps will scan license plates and issue warnings to vehicle owners who are at least five months delinquent on their vehicle tax bill.  Read more >>