Pandemic Logistics Perfidy: Skyrocketing Used Car Prices & Insurance Rates started years before the shortages!

30 November 2021 (14:54-UTC-07 Tango 06) 09 Azar 1400/24 Rabi ‘ath-Thani 1443/26 Ji-Hai (10th month) 4719

I recently got a notice from the car insurance company I use (which is the cheapest I could find) and it stated that my eleven years old used car (I’m the second owner) is now “undervalued” and to meet its new valuation would require an increase to my insurance rate.

I have not been able to afford a new car since 1990, not just because of my income, but because of outrageous insurance rates for new vehicles (Anybody in the U.S. as old as me should remember when industry and government officials promised that making vehicle insurance mandatory would make it cheaper!). The news media wants you to believe that used vehicle prices are skyrocketing because of Pandemic shortages affecting the new vehicle manufacturers, my research shows used car prices started going up years before the Pandemic hit, and insurance rates are more about the switch to artificial intelligence than consumer ‘demand’.

An article published today, by The New Yorker, refers to insurance company Hagerty as reporting that second-hand pickup truck prices have gone up by 50% over the last four years. This is partly because people in the United States can actually make money ‘flipping’ a used pickup truck. Another reason is that old pickup trucks are seen as being easier for the owner to work on, compared to new vehicles which almost require you to take them to an expensive mechanic (some countries, like Germany, made it illegal for you to work on your own vehicle, unless you become a government licensed mechanic with a government inspected shop). This might seem logical for people with limited money who can’t afford to pay a mechanic, but the article makes an ironic point by blaming high-paid computer savvy tech workers for driving the demand for used pickups precisely because they don’t like the new computerized pickups!

This leads to an article by Forbes, which reports that the actual cause of automotive supply problems is not the Pandemic, but a mandated shift towards electric vehicle production! This will affect the economies of the world as the automotive industry is a truly globalized industry and not every link in the supply chain will benefit: “Companies making the wrong things will lose ground to those making the right things. Manufacturing jobs held by some people will go away. Manufacturing and software jobs will open up for others, possibly in the same locations, possibly in neighboring states, possibly in other countries.”

Another article published today reports on a relatively new U.S. insurance company that just acquired another relatively new U.S. insurance company, and how it just reported massive losses. The article doesn’t blame increased accidents involving used cars, but increased spending by the company on artificial intelligence (A-I) and other hi-tech software crap, as well as massive spending on advertising campaigns (marketing).

In the U.S. the car price ‘god’ is known as Kelly Blue Book, just this month they tried to explain why insurance rates are going up, basically insurance companies are now using ‘third-party’ A-I contractors to determine repair/replacement costs and set rates.

(U.S. Labor Shortage: Employers use third-party A-I driven contractors to make hiring decisions, keeps 7-million Americans unemployed!)

Today, Seeking Alpha tried to dissect the performance of an ecommerce used car seller called Shift Technologies, while used vehicle sales were way up, the company also reported a $14-million year-over-year net loss! The company had focused on selling its oldest vehicles for high prices in its first three quarters, but then reduced purchases because Shift expects used car prices to come down in its fourth quarter!

A recent article by Money says not only have used vehicle prices gone up, so have new car prices. The vehicle manufacturers are using the excuse of a so called microchip shortage to focus only on producing vehicles that make big profits.

In the United Kingdom, a recent article somehow connects the rising number of used car purchases to the rising number of accidents, at least that’s what one insurance company is claiming in order to justify jacking-up insurance rates. What the U.K.’s biggest vehicle insurance company claims is that when a used car gets into an accident it is most likely written-off, or what we call in the U.S. being totaled, due to the cost of repairs exceeding the value of the vehicle. Apparently a vehicle write-off is more expensive in the U.K. than in the U.S.? The insurance company also states that they’ve gone ahead and repaired some crashed vehicles, rather than write them off, because it was actually cheaper to do so. However, the Association of British Insurers claims that overall vehicle insurance rates have actually gone down precisely because there are fewer people driving due to Pandemic lockdowns!