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How the Automotive Industry Bleeds Wealth from Communities · Mechonomist Podcast

• 0:05
  SPEAKER_00: This is a number two today.
• 0:07
  SPEAKER_00: But anyway, this is just a quick one.
• 0:10
  SPEAKER_00: So consider this.
• 0:12
  SPEAKER_00: You buy a middle class family, buys two new cars, $40,000 and $50,000, $90,000 in five years.
• 0:25
  SPEAKER_00: those cars will have depreciated from $90,000 to be worth about $45,000.
• 0:31
  SPEAKER_00: So the automotive industry has bled $45,000 of wealth out of your communities in five years.
• 0:41
  SPEAKER_00: Now,
• 0:42
  SPEAKER_00: on top of that,
• 0:42
  SPEAKER_00: it's financed for seven years at 5% interest,
• 0:46
  SPEAKER_00: which is another $15,000 to $20,000 that it has bled out of
• 0:54
  SPEAKER_00: your communities,
• 0:55
  SPEAKER_00: sorry,
• 0:55
  SPEAKER_00: that's my baby,
• 0:57
  SPEAKER_00: was another $15,000 to $20,000 that it has bled out of your communities in that
• 1:02
  SPEAKER_00: amount of time.
• 1:04
  SPEAKER_00: Now consider my vehicles.
• 1:06
  SPEAKER_00: I have a 2000 Nissan Frontier four-wheel drive and a 1985 Toyota 4Runner.
• 1:10
  SPEAKER_00: The 4Runner is worth, I paid $3,900 for it.
• 1:13
  SPEAKER_00: It's worth $16,000 because it's a classic vehicle.
• 1:23
  SPEAKER_00: It's only going to appreciate in value over time.
• 1:26
  SPEAKER_00: The Nissan Frontier is a pickup truck.
• 1:31
  SPEAKER_00: It's likely to appreciate in value over time.
• 1:34
  SPEAKER_00: I paid $5,000 for it.
• 1:36
  SPEAKER_00: It's a utilitarian vehicle.
• 1:38
  SPEAKER_00: It can tow.
• 1:39
  SPEAKER_00: It can haul.
• 1:40
  SPEAKER_00: It can get off-road because it's four-wheel drive.
• 1:43
  SPEAKER_00: It's very easy to work on, a very simple vehicle that's easy to work on.
• 1:49
  SPEAKER_00: And it will also probably appreciate in price over time.
• 1:52
  SPEAKER_00: So by buying these inexpensive used cars and fixing them up, I've added wealth to my community.
• 2:01
  SPEAKER_00: Never buy a brand new car and really don't buy cars 2018 or newer because anybody
• 2:08
  SPEAKER_00: in the industry will tell you that those new cars are junk.
• 2:12
  SPEAKER_00: New cars are not very well made.
• 2:15
  SPEAKER_00: They're, they're built to be obsolete within seven to 10 years.
• 2:20
  SPEAKER_00: And you know,
• 2:21
  SPEAKER_00: that person,
• 2:22
  SPEAKER_00: that family that bought two new cars in 2018 at 40 and $50,000 a piece,
• 2:29
  SPEAKER_00: those vehicles are only going to last as long as the financing goes on that vehicle,
• 2:33
  SPEAKER_00: which is seven to 10 years.
• 2:35
  SPEAKER_00: So you're talking about a vehicle that's going to drain, you know,
• 2:41
  SPEAKER_00: $90,000 worth of wealth out of the community over the course of about 10 years.
• 2:47
  SPEAKER_00: And this is how the automotive industry builds, bleeds wealth out of communities.
• 2:50
  SPEAKER_00: The way to defeat it,
• 2:52
  SPEAKER_00: learn to work on cars,
• 2:53
  SPEAKER_00: learn about cars,
• 2:55
  SPEAKER_00: find somebody,
• 2:56
  SPEAKER_00: you know,
• 2:56
  SPEAKER_00: who you trust that can work on your cars,
• 2:58
  SPEAKER_00: buy inexpensive used cars and in good shape,
• 3:03
  SPEAKER_00: maintain them,
• 3:03
  SPEAKER_00: fix them up.
• 3:04
  SPEAKER_00: And especially buy vehicles that are, will appreciate like trucks or classic vehicles.
• 3:11
  SPEAKER_00: Anyway, we'll talk to y'all later.
• 3:12
  SPEAKER_00: Peace, y'all.