Another Canary in The Coal Mine… by Eric Peters

Sales of “fun,” albeit impractical, cars are rolling over. The implications are not particularly cheerful. From Eric Peters on a guest post at theburningplatform:

Another canary in the coal mine has just dropped to the bottom of its cage.

A few weeks back, I wrote about evidence that the bubble-ized new car business – “sales” inflated by the same kinds of financial flim-flam that gave us the housing bubble just about ten years ago – is on the verge of popping.

And may have already popped.

Now comes another indicator.

Sales of Chevy’s Camaro muscle car and its two rivals, the Ford Mustang and the Dodge Challenger, have stalled.

As if they just ran out of gas – all three of them – all at once.

This after several years of double digit increases.

Now, the reverse is happening.

Camaro is down an ominous 15.4 percent for the year to date (January to July) despite the current model benefitting from an update that few, if any people could find fault with. The car looks virtually the same as the previous version – which was hugely popular – but is now several hundred pounds lighter and so it’s both quicker and more fuel efficient than it was before. That kind of thing usually increases sales of a muscle car.

It hasn’t.

Same thing over at Ford and Dodge. Both of their muscle cars have been improved recently and neither has lost any of the attributes that made them successful… until now.

So what’s up?

The better question is, what’s down?

How about the financial ability of the middle class buyer (this is the demographic that buys cars like these) to afford them?

Or – perhaps more to the point – their willingness to buy them?

Interest rates are still low; gas is still cheap.

But such things don’t matter when you can’t afford the car itself. Or begin to fear not being able to afford other, more important things – like the monthly mortgage. Or (more coming) your Obamacare premium.

These are not practical cars. They are muscle cars. Largely useless for anything except having fun.

For two people.

While they have back seats, these are technicalities. A Camaro is nearly as unfit to carry passengers in its backseats as a Corvette (which has no back seats at all). The same is true of Mustang and Challenger, though to a somewhat lesser degree regarding the latter because it is a bigger car than either the Chevy or the Ford.

Still.

They are all of them just about the worst possible choice for a car that has to get you to work in the winter (rear-wheel-drive and high-performance tires and not much ground clearance being the snow-day equivalent of trying to lose weight on a diet of Super Sized McDonald’s meals) or transport the family. And while their gas mileage is quite good for the power/performance they offer – if you can control your urge to use their power/performance (and in that case, why bother?) they are none of them exactly Prius-like.

Insurance is likely another factor. Buy any of these and the mafia will hit you with premiums probably twice what you’d pay for a Camry (which has back seats fit for people).

Get a couple of tickets for using these cars – and if not, why bother? – and that is a certainty.

To continue reading: Another Canary in The Coal Mine…