What is more, when you see all those cars that are going to be 'totalled' by the insurance company because they were under water in the southern part of the US or on the east coast, those cars used to be sold for pennies on the dollar in "salvage sales" in which salvage dealers would recover parts and/or do enough repairs to resell them with a salvage title. The bidding for those cars is much more intense given the demand by rental car companies for stock, any stock, to boost their fleets.
Well, the thing about flood-cars is they can look and drive fine but really merit being called totalled - having been submerged makes corrosion inevitable in a much quicker time frame. All of the electrical parts will go bad in X time frame.
Maybe these can be kept going long enough to bring value to companies but it seems like you'll have a lot more car renters on the side of the road than normal.
"Water can ruin electronics, lubricants, and mechanical systems. It may take months or years, but corrosion can find its way to the car's vital electronics, including airbag controllers."
https://www.consumerreports.org/buying-a-car/beware-the-floo...
Every car from a dealership these days comes with a CarFax and these have become mostly useless as a buying tool ever since they became a car sales tool. However, they do often give you some insight into where a car has been via registration and title changes.
I keep a record of recent hurricanes and where reports of flooding happened. If I'm looking at a car, the first thing I want to look at is the CarFax to see if it's ever been out of state so that I can cross-reference it to my hurricane/flooding list. If there is any indication that the car might have been in the same state at the time that a flood happened, it's an immediate hard pass. Doesn't matter if there's no visible evidence of being a flood car, doesn't matter if the title is green. Some outfits are very good at cleaning up flood cars to look close enough to normal that the average joe can't tell the difference. All flood cars are supposed to get a salvage title but a lot of them slip through the cracks. It doesn't take a lot of searching to find anecdotes from burned buyers online.
I have passed on several cars that looked like great deals but came from flood zones and possibly passed through the hands of a few unscrupulous auctions, mechanics, and dealers on their way to my region.
For the reliable cars like Honda Civics and in-demand ones the 1st year depreciation wasn't actually all that much compared to buying it new with a good dealer discount, urban legends notwithstanding.
Looking at cars now I’m seeing 2109 LX’s with 30K mikes selling for $26-28K it’s crazy.
The ACC is a bit spiky. Could use some easing. But with everything on it’s not too bad in rush hour traffic when I don’t feel like taking the motorcycle out. Feet on the floor and it takes care of everything.
They focus on and serve a few niche markets, so some models are always in tight supply and rarely have incentives.
I'm due for an upgrade, but if my choice is between a full price $40K new sedan or a 3 year old one for $38K (instead of the $26K I'd expect to pay a few years ago), then I'm more than content to just keep my ten year old Acura, knowing I'll need to spend $500/yr on repairs as it starts showing its age.
Is there any real difference besides the fact that you can order it online and that it appears much more expensive?
For example instead of selling a car, selling a license to use the car to the first owner and then deactivating features or throttling performance if/when they resell the car.
Ford does something similar but is easily defeated by changing the stereo. The APIM tracks your driving habits locations and ecu vars which is captured and uploaded to Ford when you take the car in for service (don’t know how this works in their newer 2019+ cars since they are also connected 24/7 like GM)
https://www.autolist.com/honda-odyssey/honda-odyssey-generat...
It is not that bad as of 5 years ago. You can email various dealerships and ask them to contact you if they are willing to sell at $x. If you are more desperate, you can ask them to email you their best offer. I was in and out in about 2 hours, just filled out forms based on what was discussed in the email and browsed on my phone in the meantime.
You can even see the inventory online at the car brands' websites. Although that may have changed in the last 18 months due to extreme imbalance in supply and demand.
Could be a good business idea if this doesn't exist in the US
I have only bought 2 cars in my life, the same way, so my data set is not extensive. But I did get the idea from reading about it on forums, so I presume others are getting it done the same way.
Actually, Costco has a program where the total out the door car price is set and non negotiable and I would assume the dealer would not want to screw you as that could cause you to report them to Costco and then Costco to sever ties with them.
What I did is start at the Costco price and email a bunch of dealers and let them know I am interested if anyone wants to beat that price.
Of course, this may have changed due to recent circumstances.
Or… just by a Tesla. I hate that I am a fanboy, but I am. Great sales process, great car.
Several dealers seemed to know the type of customer they were dealing with, and for the most part, played things straight.
A month or two later when I was reviewing my account on the credit company's site, I discovered some sort of financing charge for $1500. I have no idea how they managed to slip it in - maybe I could have got it removed if I complained. But at that point, the sale was made and the creditor would blame the dealer, the dealer would blame the creditor, and it wasn't worth the fight.
They just cannot be trusted - it's inherent in their business model and how the various teams (sales, financing, etc) all earn their commissions.
I'm sure I did "agree to it"... on page 18, paragraph 3, subsection 4 - right there in the 6pt font where it states I understand I'm liable for applicable dealer-financing surcharges, etc. which can be applied at some later date.
I don't understand - I've crossed state lines in the US in a car and never had to inform anyone.
Same if you take the car for service to a shop in New Jersey; if the shop participates with CarFax then the record will include 'oil change and tire rotation @ (shop name), NJ w/ 3,300 miles' or something roughly along those lines.
Cars made in the last 2 decades by most manufacturers tend to be very reliable, even well past the 200k miles mark.
As for maintenance, just find a trustworthy Indy mechanic and never go back to a dealer again. Compared to family that always leases a new car, there really isn't much difference in repair downtime. New cars tend to have a lot of bugs to work out that have already been addressed in a well used car.
It's interesting how people talk about "depreciation" of an item that pretty much never, if ever, increases in value.
For example for a few years Chevrolet Silverados were made with "cat eye" headlights. Those trucks hold their value far more than chevys with rectangle headlights, all other variables being equal.
It is a very useful concept.
For example, let's say the new car is $50,000. I wait until it's $42,000 or whatever, buy it, keep it for 2-3 years, and sell it for say $37,000. I've done that 4 times now. I don't understand the business model of Car Max, to be honest. There seems to be a lot of people who believe used cars are good deals, I guess.
Also, if you can’t deal with the “pain” of buying a new car every few years you must find a lot of things really painful.
Most people sell their new cars due to an expiring warranty period. Second most people sell their new cars due to the needs of a growing family. The third most people sell their new cars due to a changed financial situation. The fourth most people sell their new cars because they want even newer cars.
'Build quality dissatisfaction and reliability' is the fifth most common reason to sell a new car; or rather, to introduce a single-owner car to the used car market.
I had a JD Power infographic from ~2013 that listed the reasons, but am having trouble finding it.
Unless things have changed since 2013 signifigantly, most used cars that just exitted the factory warranty -- and sometimes factory maintenance umbrella -- have a lot of life left in them.
Aside from that, a car that is a few years older has a significant price advantage on parts -- a feature that is attractive to capable DIYers and mechanics.
And further aside from that -- if you're in the market for a used luxury brand car (Lexus/Infiniti/BMW/Audi/Mercedes/Porsche/ETC) , buying used allows one to side-step the dealer imposed major dealer-markup fees.
Example : the E92 M3 MSRP from from 2009 was about 70,900~ USD. The dealership markup in North Hollywood was 30.5k. In 2010 that same car was worth ~67,000 USD on the used market.
Many of these cars had less than 20,000 miles at the time of sale; buying a card with mileage that low is worth a 35,000 dollar discount to many people.
Anecdotally: bought a 2004 bmw from the original owner with 123k miles in 6 years. 7 years later. 185k miles, original clutch. (I'm also a mostly highway miles driver, but this also includes track days)
Most people leasing cars do it for fashion reasons, so they are normally getting rid of the car to upgrade to the next shiny thing, not due to problems.
Buying cars sucks and is entirely why Carvana and Carmax exist.
That said, not looking forward to having to rent a car and dealing with mold or more frequent breakdowns on the side of the road!
I don't have any brilliant solutions to bring about the Roddenbury-style economy, but it is infuriating to look at a scale problem you describe and trace the major causes back to the money. Are the cars going to vanish if the debts aren't paid for a year? Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape! And here we are, watching people sell off rental car fleets because assets will be seized unless the money changes hands in the right way.
No, but the retirees who depend on the income from bonds packaged from those debts will be screwed. Also, cars might not vanish but they do depreciate regardless of whether money exists. That's still a cost incurred by the rental company even though no money changes hands when it happens.
Ultimately the car companies were overleveraged and were forced to exit before their "positions" in cars became profitable. There's nothing short of the state propping you up that can solve that.
Even the Soviet Union had money and had to deal with economical realities. One of the reasons they collapsed was because of increasing grain production deficits causing an imbalance of trade. You can't legislate your way out of the market because the market's invisible hand will always show eventually, even if you can stave it off via state control of everything.
I'm not necessarily saying that I think money is a bug. It might be a feature. But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior. If everyone chose to keep doing the same physical actions they're doing today except we stopped swapping money, nothing observable in reality would change; people would die at the same rate, food would be stored at the same rate, etc.
"The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it. The grocer could theoretically choose to continue to man the store 12 hours per day, and then the doctor could theoretically choose to treat the grocer when he gets sick, and the truck driver could theoretically choose to ship the medication from the plant to the hospital, and the floor worker could theoretically choose to...
In the end, aren't all the money and ledgers are just a way to simplify the ridiculously complex trades required to make modern society work? We don't want to have to exchange sacks of rice and live chickens when we see the doctor and he doesn't want to have to get those chickens converted into barley or whatever it is the medical supply company owner wants this week.
If you remove this signal, you don't just remove a threat of stagnation. You also remove efficiency signals to curtail under-valued work. Just as easily, the participants could do other absurd things instead. The grocer could keep performing shelf-stocking actions while the shelves and back storage area are empty. The doctor could decide they prefer to drive around in an empty delivery truck, while the truck driver decides to sit in the clinic and talk to patients about the weather. Etc.
I'd argue that the typical diffuse ownership structures you find in most consumer-facing businesses today has the same effect, if not as absolute. The people who see the economic signals and they people with on-the-ground knowledge are split up: a sort of business logic hemispherectomy.
“Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money. So we must make money worse as a commodity if we wish to make it better as a medium of exchange." — Silvio Gesell, “The Natural Economic Order”
This describes inflation, in so many words. That's why central banks targeting a low level inflation is an excellent idea - it makes people spend money, rather than save. Spending can include investment to stave off inflation's effects - which, in turn, makes for increases in productivity over all.
Nobody has found a better way, though they often try.
> "The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it.
That's an immutable fact of human nature. Even cradle to grave propaganda doesn't change it. It's much better to swim with that current than against it.
This I agree with.
> That's an immutable fact of human nature. Even cradle to grave propaganda doesn't change it.
This I disagree with. Past societies saw far more social cohesion at points than our modern one. Especially on certain smaller scales, people were more willing to assist one another in the act of remaining alive without being compensated financially.
For instance- many people now think it would be unreasonable to help a friend move without some form of reward (money, food, etc.) This sort of value exchange for reward would be considered disrespectful in many past cultures and even some present cultures. Unwillingness to work without immediate reward not an immutable fact of human nature.
> Unwillingness to work without immediate reward not an immutable fact of human nature.
Yeah, it is, as no society has managed to make that work as an organizing principle. Even the Israeli kibbutzen have failed. Altruism rarely extends beyond family and close friends, and even then, it isn't reliable.
Of course, if you're too cheap over too long a period, people may stop doing favors for you.
I’ve never thought about it this way before, and it’s a pretty profound quote.
For example, we still don't know if the workers who build the pyramids were slaves or freemen. Kind of a big deal for that society.
One of the hard problems here is what to specialize in and to what extent. This is a hard problem to solve even in a static economy, and even harder if circumstances keep changing...
The "standoff" description seems to assume a static economy. If circumstances change, maybe we as a society need a grocer for only 4 hours a day but could use an extra half-shift truck driver. But how to discover that?
I do know that several things going on currently will make it more impossible to discover: increased financialization of commodities, outsourcing, destruction of culture via removal of differentiating markers, etc. If any society is going to discover the half-shift truck driver economy, they're going to be one that is almost entirely self-sustaining and committed to perpetuation of itself, not one that is leveraged up to the eyeballs, suffers from a total lack of manufacturing expertise within its component citizens, and relies on cheap foreign labor to make everything.
>not necessarily saying that I think money is a bug. It might be a feature.
Yup, looks to me like the problem is not the existence of money, rather its nonexistence.
Financial problems don't actually occur when there is no lack of money.
I agree that retirees are wholly dependent on others to work for them and therefore I recognize their right to save for retirement. However, if your investment/savings turn out to be worthless then that is on you. It's better to signal these failures as soon as possible so that people are aware of the risk.
Think about it this way. You acquire "healthcare coupons" during your working age and then all the businesses accepting "healthcare coupons" have shut down. The coupons are worthless. Yet when you replace "healthcare coupons" with money, people insist that even if there aren't enough workers to work in healthcare, that money must maintain its value and they should even be owed more than they saved even though there is nobody to provide those services. This is why inflation is a necessary evil. It tells you what's really going on in the world. People will present inflation as theft but the truth is that your money is losing its value because it should be losing its value.
Just because e.g. gold is free of inflation doesn't mean that there will be healthcare services waiting at the start of your retirement to accept that gold. It's just pure speculation.
They sold their fleets because other people (the buyers) wanted them more, in the short term. Now they want to buy because they want a fleet again. It's a time horizon problem, or perhaps an uncertainty problem - how were they supposed to know how long the pandemic would last? Or perhaps a premature optimization problem because the business was predicated on a pandemic not happening. But I don't see it as a money problem, any more than a tcp/ip problem.
I think quacked's point was that sometimes it's not a very good signaling system. Neither is TCP/IP in some cases, and sometimes neither are cytokines (to use a biology example). These are all evolved systems, to some degree; maybe they're the best we can hope for, but we should still keep an eye out for "version 2.0".
It is insane to me that we all have to shrug and admit that "well, we can't fix X problem because the money's not there" over and over again, when we have all of the labor hours and intellectual capital to do whatever we want as a collective species organism. With the right coordination, we could make every city look like a Miyazaki lake town. Or Disneyland. Or an exact copy of ancient Rome. We could scan every person alive every year and see whether or not they've got cancer. We could clean every river and every lake. We could send everyone a Nintendo Switch. That whole "bullshit jobs" memo gets circulated on HN all the time; how much of us could do actually cool shit if we didn't have to worry about paying for other people to help maintain society for us? I don't know, but it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz, a car rental company, can rent out cars. (And I'm not blaming them for it- they're deadlocked in the same standoff everyone else is.)
One of my research interests is trying to make a contribution to what you call version 2.0, through better measures of subjective wellbeing.
More like worried about bankruptcy and going out of business.
Another commentator downthread mentions the fragility vs efficiency tradeoff, and that's certainly something encouraged by financializing the economy. By making it possible to easily switch between stocks and flows (capital/income in this case pay in full / pay debt) and encouraging whatever makes firms look good in the short term, the financial system helps cause this kind of thing.
We get towers built higher but not necessarily safer.
Which is great, when things fit the model (the stocks or bonds involved pay retirees longer, make people wealthier, etc), but also allow people to build much higher castles of cards than they previously could have before something toppled them over.
Panics, crashes, defaulting on debt, etc. have been around as long (and probably longer) than we have historical records, but wow does the modern system take the cake for scale!
https://www.youtube.com/watch?v=xkQn56Dtslk
If you're a rental company, looking at ~$0 income for the next year, and the need to pay for, maintain, and garage their car fleets, then you're top priority is to shore up the balance sheet and keep your corp afloat. What the car buyer's market will be in 18mo is a more distant concern.
Selling your only operating assets just because they're not operating at the moment seems pretty short sighted.
Creditors may have forced their hand a degree, but to me it feels like a factory selling their machinery because demand is down this year.
If you're going to sell all your cars as a rental company, might as well liquidate your whole company and close up shop.
Over-indebted companies is a very Anglo (US/UK) and Japanese thing. There are plenty of companies in continental Europe (Germany, Italy, France) who operate with much less debt than their US counterparts. A good example is Aldi. They have no debt on their balance sheet anywhere, not even for inventory. By the standards of American business culture, that is 100% absurd.
I'm really not sure who's right. It's optimization vs survival.
Firstly, Aldi is a private company (actually two entirely separate private companies, ALDI Nord and ALDI Süd, who share the brand name). So AFAIK they do not publish annual financial reports like a public company would be required to do. So how do you know there's no debt on their balance sheet?
Companies House filings for ALDI Süd's UK subsidiary, ALDI Stores Limited, do show debts and interest expenses so it's certainly not correct to say they "have no debt on their balance sheet anywhere"[1]
Sure the pandemic messed them up, but that was really a once in a generation at most event. If thats what it took to sink your businessz I wouldn't call it very fragile.
I also think they and their creditors made poor decisions.
Selling your only operating assets in order to balance the books is a suicidal move no matter the industry. It's selling off your only way of making money. It's like a software engineer selling their workstation when times are tough.
I'm honestly curious to find out whether most of us will even still be driving cars powered by fossil fuels by the time the next pandemic hits - as tech goes, it's only been around for a few generations. People will find other transit solutions if cars themselves get phased out. Or maybe we'll still have 'cars' with something dramatically different going on under the hood that car owners of today would barely recognize.
Dying now and cashing out is better than burning money for a few years and cashing out for less then.
They paid down their debt on the cars, but they have lots of other financial obligations and operating costs that will be ongoing if they continue to operate, and they now have a hugely diminished capacity to make revenue.
Resiliency against interruptions costs a lot of money: warehouses to store parts, logistics to rotate these parts, paying suppliers for these parts earlier than the parts are needed, waiting until you have enough cash to buy stuff outright...
The core point is: governments, businesses and individuals have historically always had these costs - but at least the Western world has been enjoying a couple decades without major interruptions like war on the home territory, oil crises or the looming threat of the Cold War getting hot (and causing interruptions as a result), which means everyone got incredibly complacent. After all, when there are no interruptions to expect in the near term, why spend cash in the near term to guard against them?
And so, when Corona hit, everyone got hit.
> Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape!
The existing buildings may not go crumbling, but planned/under-construction buildings are getting put on hold when the banks' income stream vanishes and as a result of that, in turn, the workers can't work, ... <insert recursive ripple effects here>.
In a theoretical closed-loop 3-person model, the farmer grows, the doctor treats, and the builder builds. The farmer can feed the other two, the doctor can treat the other two, and the builder can build for the other two, and in a micro-community they don't really need to pay each other. As we increase the number of people participating, the likelihood that each person would choose to work without being paid drops. That's why we see such degradation in economically affected areas; everyone could just work all day cleaning up, patching up buildings, etc. but they don't, because no one's paying them to do so.
I am not naive enough to believe that any amount of propaganda or state control could fix the money problem, but I am frustrated to be willing to participate in such a theoretical economy with no outlet for it besides helping people in whatever free time I have.
Following pieces of paper down to their very letter will make people abandon perfectly fine businesses. A lot of profitable businesses would have to shut down if they had to pay extortionate interest rates.
Positive interest rates simply reward short term thinking. Let's imagine a hypothetical scenario where interest rates are 5% (don't confuse this with the federal funds rate) across the board but it's only the rental car companies that have been hit by covid. A bean counter would see that shutting down the rental car company and using the capital for something else would be a better idea than to keep the rental car company. Next year everyone wants rental cars and the returns increase above 5%.
The point is that we make decisions in the present yet most of the money is going to be earned in the future. What we need is patience and patience means low interest rates, as close to zero as possible and maybe negative if we want 0% inflation.
Keep in mind this isn't really a serious problem. Cars still exist, and can even still be rented, they just smell a bit. That's it. Smelly cars. First world problems!
I'm in this situation and it's getting strange if your car is leased. Carvana and the like were offering me thousands more than the buyout amount. Like $5,000 at one point.
But now the automakers and their banks are shutting off 3rd party purchases, meaning the only parties that can buy the car off the lease are you and the dealer. And the dealer has no car on-hand to replace the one you plan to sell back, or if they do they want thousands over MSRP because that's what the market is bearing. So it's a wash.
One consensus is that Carvana/Vroom/Shift are buying cars at a loss to try and capture market share. Carmax has more of a track record so they might be getting a better shake like your experience. It could also be you calling personally that unlocked the lien, where the other companies don't work that way.
Some manufacturers like Volvo aren't letting you out of the lease early unless you're leasing another Volvo.
They absolutely are. Where I live, these companies are (and have been before COVID) paying well above market rates for newer used cars from private sellers. On the flip side, all of your typical auto sales rags and sites that used to have listings from private sellers and used car dealerships are now mainly carvana listings.
When you read the fine print, the residual value only applies to the owner. The bank can charge whatever it wants to everyone else, or deny the purchase altogether.
It got so bad that one of the engineers on his own dime stocked his desk with resistors and other small parts.
Madness.
Part of the problem stemmed from rating employees on how successful they were at JIT inventory. You get what you rank for, not what makes sense.
It doesn't make a lot of sense, and sadly there is no equivalent of "recovering court costs" from the people who exploited the law to shut you down.
The lead times are absolutely horrific though. And I do worry that fast PC parts (specifically GPUs) may be this price for a while.
Rough estimates of course, but only 15% utilization (30%*50%) would radically change daily rental prices. Doubt it’s the only reason, but wouldn’t be surprised if it’s factor
Usually you sit in a busy room. They call everyone one at a time - because there's a constant stream of people dropping off cars and picking up cars. For the most part, I'd say a car never sat more than an hour between being dropped off, getting cleaned, and being handed off to a new renter.
That has held true every. single. time. I've rented a car. And that goes back as long as I can remember, to when my parents rented cars 20 years ago lol.
In the short run, a lot of leverage makes sense, it helps you get a leg up, but if there's a Black Swan, then you're out.
It's a tricky thing because when a business fundamentally depends on those factors and it's hard to differentiate otherwise, well, it's just not fun. You're playing with fate instead of 'going things better'.
I wish they would innovate harder and make things more streamlined and easier. Renting a car is still a bit of a pain, the Car2Go model was nice, but they left my county sadly.
Its probable to me that no steady state exists - that in between each black swan event, given sufficient spacing, the companies that most highly leverage their financials/JIT pipeline will out compete the ones that behave more "rationally" in the interstitial period. The higher coefficient on the exponent just wins (growth maximizing into an empty market) even if it kills every company that does it.
Imagine if all those grains stayed on their fields, it would trigger both parasites to develop where those fields are, corrupting entire valleys for years, while not either being able to feed the people they were aimed for. Which is the food equivalent of your car example.
If anything, the Covid proved to me that the world is much less oiled and tuned for some constant economic circuits than I feared. It is in fact quite reliable, if we don’t mention the debt we’ve put our children in.
Unfortunately, I didn't find out about it until too late. Which is unfortunate; that could have been the perfect opportunity to create a baked potato delivery startup. I would have called it "Tuber".
It's insane!
The crunch has abated some, though, and it was only for a short period of time you could get offers like that, but still!
> smart people have vaccinated themselves and they start traveling again. And those people want to rent cars.
Note that this is a very American thing though, because international travel is still banned, which means that Americans are forced to travel domestically, and when Americans go on a holiday, they rent a car, because you rent a car, because you have to have a car, and the idea of not renting a car when on holiday is completely alien to Americans. Normally, most of them would go abroad, and rent cars there, while the domestic car rental market would target non-American tourists, who rent cars less, so there's an even bigger demand for rental cars now than it would be if tourist patterns were back to normal.
When I go on holiday in a European city I wouldn't normally rent a car (unless the holiday involved travel to somewhere outside of the city). But when I go on holiday in an American city then of course you rent a car because it's a hassle to try and get around without one and you're going to miss out on a lot of the "American cultural experience" without a car. (Exceptions: NYC, and perhaps Las Vegas)
So it has a lot more to do with the nature of the destination than the nature of the traveller, I'd say.
"When the tide goes out, you then see who has been swimming naked.".
His articles overlap heavily with top posts on HN. This week he wrote about App Annie.
I really enjoyed the use of "untwist" here. It's a metaphor that helped me visualize everything that was happening really well.
A while back I heard there’s one more piece to the arithmetic: the depreciation expense lowers net income so the rental company is able to proportionally lower taxes this way as well.
there aren't any cars to buy.
A pandemic is not a black swan. Just like Earth quakes are not black swans. There is a Center for Disease Control for fighting pandemics.
We built fragile but efficient (for profit optimization) systems that had a good run. People plan for and about pandemics or at least pretended to, when needed grants.
edit: Black Swans are very very low probable events. Pandemics have been around in human history enough times.
edit2: Here is Taleb on cnbc...pandemic and blackswan.
The pandemic has gone on for far longer than it really needed to due to the politicization of safety measures. Several countries were able to nearly beat back the pandemic rather early, but the US is currently sitting in a third or fourth wave due to asinine behaviors of a few state governments.
Yes, a pandemic itself isn't black swan, but just how badly this was fumbled sure seems like it is (at least I damn well hope the next one isn't so badly managed).
That said, I'm in the US and not well equipped to speak to their responses, having not experienced them first hand.
Maybe it was luck, a sparse population or of course the often repeated ‘everyone always does what they’re told’ (hmmm). Also it started off well but things have become quite fragmented recently (different agencies issuing rules about different things at different times, in different regions, much to the dismay of anyone trying to plan anything). In short, whilst interesting, there’s not really any useful comparison that you can make between the US and Finland in my opinion.
Subjectively after living in both Helsinki and London it feels like Helsinki is even less crowded. I would say that there are fewer people who commute in to commercial areas from outside of the city than in London, and the commercial areas such as offices are generally a lot less dense, newer, and more spread out.
[1] https://www.hel.fi/hel2/tietokeskus/julkaisut/pdf/19_06_14_H... [2] https://www.ons.gov.uk/peoplepopulationandcommunity/populati...
Systems built without taking the Pandemic risk into account are the issue here, Pandemic itself we know it was coming.. we also have movies about them.
Also, what pandemics had multiple vaccines delivered in record time? Ones that worked better than was ever hoped for. Even with that, which was the end goal, society seems unable to move on.
It will be, and that not being obvious is exactly the problem we have today with our policies.
The pandemic is a worldwide phenomenon, to think it could have gone any other way is incredibly naive.
To say the pandemic was extended by politics around safety measures is missing several larger reasons covid became endemic.
e.g. local politics is largely irrelevant when the us never instituted forced quarantine for international travel.
Every attempt at curtailing the spread was rolled back or defeated specifically due to politics at the highest levels of the US Gov't, from not implementing travel bans as appropriate to blocking masking mandates, to state level gov'ts re-opening economies and lifting lockdowns during surges. The current hot-spots in the US are almost perfectly aligned on US political boundaries.
Even now it continues as masking and vaccination continues to be politicized with one side spreading obviously unfounded FUD around the vaccine and inflammatory messaging that masking children is "child abuse".
Trying to blame a global phenomenon on the politics of one country with less than 5% of the world’s population is extremely parochial.
It would have required massive, and likely unsuccessful mobilization to lock down travel (both foreign and domestic) enough to actually control Covid aka New Zealand. Considering the land borders and smuggling problems there alone, I think it would have been ultimately futile.
Considering how politically fragmented the country was and still is even before the pandemic, trying it somewhat successfully may also have kicked off a Civil war - not that anyone would have tried that hard.
Vaccination rollouts could definitely have gone smoother, and better programs to manage the rollouts would have also been really nice - but given the situation above, it would only have been a (short) while before Delta or something like it got going anyway and started spreading.
Fewer would have died from COVID probably, but overall deaths may have been similar (more violence during riots? More shooting and civil unrest), and the fear and other issues (socio political strife for instance) would still have happened, just looked different probably. These types of situations are brutally hard.
Overall, I’d give the US a solid ‘C’ grade. Not great, not terrible.
What I hadn't appreciated was that Car Rental companies had constructed a model where they bought new cars, rented them for a couple of years, and then resold them. The car would depreciate of course but as a bulk car buyer they got the cars at a discount on dealer cost because, well they bought more than the average dealer did. So when they depreciated they didn't lose as much value as you and I might experience if we bought a car, held it for two years, and resold it to a dealer (worst case) or another buyer (best case).
So the rental agency simply tracked how much the car would "lose" in value over its working lifetime, plus the cost of needed maintenance (generally relatively low), and offset that with income of renting it out. So the math was something like (making up numbers here) $5,000 of depreciation loss against say 400 rental days at $50/day or $20,000 of rental income. Say $1000 for maintenance during those 2 years and you've got $14,000 of "gross income" into the company, per car to pay employees and operating costs etc.
Now this makes sense and it is a fine business model, but an interesting quirk is that revenue is directly proportional to the number of 'working' cars you have out there bringing in the bucks. More cars, more income. And if you buy the car on credit there is an interest expense sure but you don't use up working capital to bulk up your fleet and boost your income.
As a result, car rental companies were carrying a HUGE amount of debt pre-pandemic which was all in car investments.
Then BOOM, the black swan of a pandemic hit and air travel stopped for all intents and purposes and now rental car companies are sitting on fleets of cars where they have to make the monthly payment on the debt but those cars aren't earning any income. This burns money in a hurry! So they did the only thing they could do, and sold off their fleets for the most part so that they could retire all that debt. Some, like Hertz, were already in Chapter 11 bankruptcy when they did that. Late 2020 was an excellent time to buy a car from one of the rental companies because they were really motivated to get them off their balance sheets.
And this then is the fun part. So the pandemic also put a huge blip in the supply chain. And since every single car company had switched to "just in time" manufacturing where they don't stock parts to make cars, they expect a smooth flow of those parts from the supply chain to feed their assembly lines, had to stop making cars. They had no parts. What is more, the humans in the pipeline like truck drivers, container crane operators, container ship crews, freight forwarding staff, Etc. were quarantining or not working because of the pandemic risk and those are jobs you cannot do "remotely" no matter how much you might want to. So the supply of new cars dried up, and won't untwist until the entire chain is back up and running at capacity again.
So now the pandemic is "less scary" because smart people have vaccinated themselves and they start traveling again. And those people want to rent cars. Which is great for rental car companies, except they cannot rebuild their fleets because there aren't any cars to buy.
And this adds the second fun twist, if you bought a car new in 2019 (as I did), and it is the kind of car rental companies might rent (which mine is), you get letters from the dealer in 2021 offering to buy it back from you for more than you paid for it!
What is more, when you see all those cars that are going to be 'totalled' by the insurance company because they were under water in the southern part of the US or on the east coast, those cars used to be sold for pennies on the dollar in "salvage sales" in which salvage dealers would recover parts and/or do enough repairs to resell them with a salvage title. The bidding for those cars is much more intense given the demand by rental car companies for stock, any stock, to boost their fleets.
It is a remarkable example of a system where the parts are interconnected in non-obvious ways that has a non-intuitive response to shocks to the system. As with most "emergent" systems like this one though, sending a shock through it does two things; it illuminates these previously unseen inter dependencies, and it tends to kill off weak players.