British insurance companies are in a little trouble, Honda is in a little more trouble, Evergrande is in a lot of trouble, and Saudi Arabia wants to be the solution to all our troubles. Trouble…
Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.
Brit Agency Tells Insurers To Stop Screwing Customers
It’s a weird time to be a car insurance company. First, there’s inflation, which makes the cost of most things go up. Second, cars are more complicated and expensive, and parts that used to be cheap, like headlights, now cost thousands of dollars to replace. Third, and most importantly, it was some actuary’s job somewhere to guess what a car would be worth in the future, and those assumptions were probably based on a typical depreciation curve. The last few years have been extremely atypical, with residual values through the roof. The cost of replacing a car now is way higher than it was in the past.
What’s an insurance company to do?
According to the Financial Conduct Authority (I love the way the Brits name things), which is the British version of the Fair Trade Commission, some companies are just undervaluing cars. Here’s the publication’s release on the topic:
The Financial Conduct Authority (FCA) has seen evidence that some consumers who have had their cars written off after an accident are being offered by their insurance providers a price lower than the vehicle’s fair market value.
In some cases, claims staff are only increasing that offer to the fair market price when a consumer complains.
Offering a price lower than fair market value is not allowed under FCA rules. The FCA is acting against those firms that it has found breaking its rules.
The insurance industry is an extremely competitive world and so there’s a lot of pressure to keep costs down in order to not lose customers, but this sucks. If you crash your car right now you’re not in a great position to replace it without losing a decent amount of money, which is the whole point of having insurance.
Everyone Had A Great Month Except Honda
It’s great to be a Japanese or Korean automaker in the United States, unless you’re Acura or Honda. It sucks to be Acura or Honda. Let’s look at the year-over-year sales numbers from November:
- Hyundai: +43%
- Kia: +25%
- Mazda: +30%
- Subaru: +52%
- Toyota: +10%
- Lexus: -4%
- Honda: -5%
- Acura: -14%
Ouchie, bro. Some of this is due to capacity and supply chain and all that, but I don’t think that’s all that’s going on here. Honda has no real attractive options for either hybrids or EVs. Their cars are fine, but there’s no sizzle there.
Also, according to a study reported by Green Car Reports, Honda owners (and to some extent Lexus/Toyota buyers) are flocking to Tesla:
The top five Model Y conquests are the Lexus RX (from Toyota’s luxury brand), Honda CR-V, Toyota RAV4, Honda Odyssey, and Honda Accord. The top five Tesla Model 3 conquests are the Honda Civic, Honda Accord, Toyota Camry, Toyota RAV4, and Honda CR-V, the study said.
Owners of both brands have long been considered to have the most brand loyalty. But a lack of EV offerings is starting to hurt these brands in measurable ways, these results suggest.
It’s not everything, but it’s something.
What Happens If No One Buys Your Cars?
Worse than what’s happening to Honda is what’s happening to extremely random carmaker Evergrande, created by a company that was once China’s biggest property developer.
Here’s how our modern market works, generally: you can make a market, which Tesla did with the Roadster and Model S; you can be a fast-follower, which is what Toyota did when it made the Prius after watching Honda attempt the same with the Insight; or you can be too late. Someone probably lost their shirt by being the last company to produce a bunch of fidget spinners.
The Chinese car market is weird because the central government and the various subdivisions of China all pushed massive incentives to create electric cars. This ended up jumpstarting a lot of successful companies like BYD (to learn more about this I recommend Levi Tillemann’s “The Great Race”), but someone always shows up to the party when the keg is kicked and that someone appears to be Evergrande.
Here’s what Hong Kong-based financial news source Asia Financial had to report on the company:
China Evergrande New Energy Vehicle Group said in September it had started producing its Hengchi 5 model at a plant in the northern city of Tianjin and in late October said it had delivered its first 100 cars.
However, the company has paused production as there are not enough new orders for the electric sport-utility vehicle, according to two sources who declined to be named because they were not authorized to speak to the media.
Yeah, that’s not great. But don’t worry, it gets worse:
Once China’s top-selling property developer, Evergrande has been at the centre of a deepening debt crisis that has seen multiple developers default on offshore debt obligations over the past year, leaving many negotiating restructuring.
The group had touted the EV unit as key to its transformation plans, with chairman Hui Ka Yan vowing to shift the group’s primary business within 10 years from real estate to the automobile venture, and to make 1 million vehicles a year by 2025.
Triple ouchie, bro.
Saudi Arabia Is Part Of The Future Of Green Energy According To Saudi Arabia
As a journalist it’s always fun to report on Saudi Arabia because, well, they sometimes kill journalists. Saudi Arabia, for better or worse (just kidding, for worse) is a petrostate. About 46% of their GDPÂ comes from oil and oil extraction. They can see the writing on the wall, of course, and they’re trying to see if they can find any other thing that they can do to reduce their own dependence on oil exports.
So, here’s a press release from the Future Minerals Forum, outlining how His Excellency Khalid Al-Mudaifer, Vice-Minister for Mining Affairs, Ministry of Industry and Mineral Resources, Kingdom of Saudi Arabia views all this:
“Decarbonization – the net-zero transition – cannot happen without minerals and metals: a lot of minerals and metals. We need to scale up discoveries and we need to scale up production.”
And…
The Kingdom stabilized aluminum markets by building an industrial city that focuses on extracting and producing final products for the world. And working with well-known electric vehicle manufacturers such as Lucid Motors and automotive sector suppliers such as EV Metals to build an integrated electric vehicle manufacturing complex.
And…
HE the Vice-Minister renewed invitations for delegates to attend the powerhouse second edition of the Future Minerals Forum, championing the future of mining, attracting massive investment, and building solid partnerships in Saudi Arabia and throughout the mining super region that stretches from Africa to Western and Central Asia.
I don’t start shit but I can tell you how it ends.
What he’s asking for is investment so they can remove the minerals from African countries that are happy to trade them for cash, and process them using their cheap petrochemicals, thus creating a new dependency for the world. It’s better than relying on China, right? Right?
The Flush
Have you ever had a car written off? Did you get a fair value?
In 2012 I had a 2005 Subaru Outback rear ended by an off duty cop rubbernecking a fellow LEO who had pulled over someone else on the highway. It was super fun. Totally driveable. Got to work that morning, home that night. Drove it myself into the body shop. It was supposed to get fixed originally, but the more damage the body shop peeled off, the more damage was revealed and the price tag got to the point that my insurance wouldnt keep going. However, the body shop told my adjuster that the Outback was in really good shape (other than the, you know, damage…) and I got almost everything I paid out of the car. AmFam for the win.
Even before the market, what’s worse than went sideways? trans-dimensionally shifted? anyway, even then I had to tell the insurance company represented by an animated lizard I’d rather give my money to a lawyer to pry appropriate value out of them than just gift it to them. Maybe it’s new behavior in the UK, but I thought it was SOP here to lowball insurance payouts. Even if it’s not totaled they try to steer you to a repair shop that will give a lowball repair estimate in the hopes you’ll take the check instead of actually forcing them to cover the real repair costs.
I half way rolled my 96 Integra, I was spinning on more than one axis so it never went on the roof and just went left side down then tires down again. The adjuster thought it could be repaired on the phone while the car was still on a lift until I said “look at the left rear suspension mounting points, it tripped over a rock while I was going sideways.” Then it was totaled. His first offer was so low I told him I’d get more wholesaling it for parts and popular engine without being insured. Then the second offer got my rather pay a lawyer response.
There are websites that rate insurance companies based on what they pay out instead of just the premium they charge. It’s a worthwhile consideration, comparing what you’re buying as well as what your paying for it.
1970s, Bergen County NJ. A place to not annoy the powers that were. Ford police car (with well expired inspection sticker) slipped out of park into reverse (not an uncommon event at the time), did a backward u-turn across 4 lanes and demolished the nose of my Corvair. When the very gold braided police captain arrived, I started to point out the expired inspection, he suggested I hadn’t seen that, noting “you drive the boulevard every day, don’t you” [hint hint]. County wrote me a very lowball check, and made it clear nothing was to be gained by complaining about it.
It’s really encouraging to know the police have raised their moral standards considerably since then.
I have not had a car totaled but there is a good chance my recently crashed-into one will be. Runs and drives as well as it did pre-accident but some rather labor-intensive subframe bushings were damaged, plus the $2k in body damage on a car theoretically worth 7.5k. And it needs serious engine work (which prior to the accident I was planning on doing over the winter). I hope it isn’t totaled because it will be hard to find something with the same options and almost every common failure item has been replaced but if it does I will either fix it myself or spend a LOT of time looking for a nicer example with the same options. I share Mercedes’ love of Touaregs and this has air and the rear locker, which is hard to find in a decent example.
Considering this exists https://collisionsafetyconsultants.us/ and is doing rather well, I’d say it’s quite common for US drivers to not be offered fair value after their vehicle is totaled.
Shelter Insurance totalled my ’97 Ranger with moon miles. They accepted my receipts for all the work I’d just done to it (it was ready to go another 200k) and ended up giving me $3000 for it, of which they kept $1k for deductible and buy-back. I’ll end up breaking even on replacing it, aside from the elbow grease. They didn’t do me any favors, but they were fair.
I got rear-ended in my TDI Sportwagen right in the middle of the whole Dieselgate buyout. If I am remembering correctly it was in the time that the buy-backs and penalties has been agreed to but before the actual amounts had been announced. It was definitely a gray area whether my totaled vehicle was going to be eligible and causing all sorts of stress for me. Additionally, it was in the period where the federal government had banned the sale of the vehicles completely so as the insurance company was trying to find comps they could only come up with a few from sketchy ads from sketchy dealers that should not have had anything listed in the first place. Also add to the mix that my vehicle was relatively new with very low mileage and so would have been eligible for the very highest level of buy-back.
It took a little bit of work, (but honestly less than I expected), to get the insurance company to accept the buy-back valuation once VW posted the actual numbers. I think I ended up getting my check from them about 5 months after the accident. I also ended up getting the penalty money from VW so at the end of it all I ended up pocketing about $3k more than I paid for the car in the first place.
Both of our cars were totaled during Harvey, along with 90% of the rest of the cars in Houston. Progressive was very very very slow to respond due to the overwhelming demand but after a couple of months we finally got checks for both cars and both were very reasonable. In fact the check for my wife’s Crosstrek was just $40 shy of what we’d paid for it a year earlier. She took that check straight to the same Subaru dealer, same salesman, and bought another Crosstrek in the exact same color.
2013 Fiat 500c, purchased for $6,800 in April ’19 with 40K miles on it. Rear-ended by a commercial box truck while in line for a left turn, which folded my back wheels like taco shells, in November ’20 (66K miles). Took first offer from the other insurance company, which was recompense for towing, three weeks in a compact rental while i car shopped on-line and at various dealers around the state, and a $7,600 check.
“shows up to the party when the keg is tapped” That is the start of the party. An emptied keg is kicked, cashed or keyed.
Damn. You’re right. It’s been so long since I’ve been invited to a party.
I still feel bad for a friend of mine whom had his 2004 Ranger totaled. He had purchased it for around $6,000 a few years back. It was not a good buy – one of the dealer quickie specials where they buffed out the paint and plopped it on the lot with one of those “discount” special stickers – a nice “10-footer”. Anyway, my friend fell in love with the truck and had the torn seats redone to factory spec. Then new running boards. Then he had me detail the hell out of it after fixing the lower-body rust (and discovering gallons of bondo). After that the transmission went. He replaced it of course. A few months and more engine issues later his mechanic said the heads had been replaced at some point, were of poor quality, and needed to be replaced again. Then there were sensor issues, then exhaust, then he replaced the door jamb rubber, etc., etc. Within a year he had close to $20,000 in this truck, but justified it all with the “it’s a new truck now” and “they don’t build trucks like this anymore”. While kinda – sorta true at the time, those statements didn’t prepare him for getting backed into hard enough to crinkle the frame. The person at fault was a local deadbeat, driving a beat-up F-150 without insurance and possibly under the influence of something (meth… most likely meth). I think his own insurance company offered him $3K, and after he showed them all of the receipts of the work done, they upped to it to $4K. He used that as a down payment on a Prius Prime of all things and seems quite happy these days.
Ooof. And a 2004 Ranger is right up my alley as well these days.
They are getting harder to come by – I had a black 5-speed ’98 Step-side that I sold way too cheap a few years ago.
The first act of Biden on his first day of office way to kill the Keystone pipeline from Canada, blocking oil from an ethical ally and guaranteeing US dependence on Saudi oil.
False.
That diluted bitumen would have gone straight onto ships in Texas for export. No dilbit for you, American Gulf Coast refiners! California would have obtained that oil through other means since it’d be silly to ship dilbit from Alberta to Texas and onto ships through the Panama Canal to California. https://www.oilsandsmagazine.com/market-insights/american-appetite-canadian-crude-usage-us-refineries
First, tar sands barely qualify as “oil”. Second, there’s no reason to pipe this through thousands of miles of pristine wilderness. We are not required to help Canada export oil to overseas markets.
For the US, kicking a dependency doesn’t mean shopping for a different dealer. It means taking measurable steps to eliminate the dependency.
Our own supply is more than enough for now, and for the transition to cleaner transportation.
We’re on the cusp of being a net exporter already, having been a net exporter recently. We can attain and maintain net exporter status going forward with the policies already enacted.
WE are definitely NOT dependent on Saudi oil. The world markets are dependent on that supply being in the system until enough nations kick their dependency on petroleum energy. But WE are not even slightly dependent on Saudi oil. The world economy is, and shall remain so for now regardless of the what Canada does with their tar sands. There’s an important distinction.
How to tell someone you watch a lot of Fox News without telling someone you watch a lot of Fox News. Never, EVER, let facts get in your way buddy.
Had a 92 Audi 100CS totaled, but not from an accident. Left it at the Audi dealer while out of town for a week and they left the sunroof open – we had a huge t-storm and it filled the interior floors with water – which is where Audi in all their engineering wisdom put the computers. Insurance treated it like a flood car and totaled it. I came out fine tho, their offer was more than fair and we went and bought a Lexus.
I would think more than a few of us drive cars unordinary cars. It’s worth checking to make sure your insurance company doesn’t consider your Mustang SVO as simply a 25 year-old Ford. It’s been a long time, but I’ve had those fights in the past.
EDIT BUTTON
The last paragraph in that Honda story doesn’t make sense to me. Tesla is poaching owners from other brands, including Honda and Toyota? The numbers don’t make sense.
A Honda CR-V is $31,470 – $45.370
A Toyota RAV-4 is $28,950 – $44,490
Meanwhile the Tesla Model Y starts at $86,990, or almost twice as much as the top-end CR-V or RAV4, and tops out at $91,990.
I can’t see how anyone looking at the CR-V or RAV-4 would buy a Model Y instead.
Your point is valid, however the Y starts at $65990 (in the US).
Yeah, sorry. I forgot to mention all prices are in Canadian dollars. :p
In addition, Tesla sales are below target, so I have a hard time believing Honda buyers are flocking to Tesla in any meaningful number.
Financing for 7 years / Zero down:
a $430 payment on a brand-new Honda Insight at $31,500 financed
– or –
a $955 payment on a Tesla Model Y and no fuel cost at $70,000 financed
It’s going to take a LONG time to make up that $300/month even if the first year of charging is free on the Tesla.
Nobody is jumping on the Tesla train from Honda. It’s going to Hyundai (and Kia).
Add up the tax advantages (possibly quite significant depending on the state), reduced running cost and bling factor and they might be a little closer than you’d expect.
Shopped the Honda/Toyota/Mazda/Subaru market this summer for one purchase, while also looking at the EV market for a separate one.
Toyota dealers were happy to sell me the promise of a sticker price + market adjustment RAV-4 hybrid, as long as I was willing to wait about a year for it to arrive. Thanks, but no thanks.
Honda dealers were willing to put me in line to look at something, but the only things they had to offer were underequipped compared to everything else, with a much higher price. Nothing was available for less than $45K. Another pass.
Mazda dealer had some paper promises of cars that were in transit at some point, but literally had no cars on the lot that weren’t already sold. The only cars parked on their lot were owned by people there shopping. It was bizarre. They estimated they’d have something in 6 weeks, but wanted $ to get a place in line. Tough to commit to something you can’t see or touch.
Subaru could confirm cars were in route though still 6+ weeks out, and tell us exactly how they were equipped and how they were priced. Equipped better than the other somewhat available cars, with a firm price, and as a known quantity, it was a safe and more economical choice and the purchase we made.
At the same time, I could have had a Model Y for about $66K, with delivery in less than 4 weeks.
You comment is the explanation.
Unfortunately the TL;DR version of your explanation is:
“People are willing to use 4 weeks longer of a wait as a catalyst to get them to go $20,000 over budget on the purchase of a luxury version of an item.”
I’m worried insurance is going to write off my R32 Skyline after hitting a deer. Its not catastrophic damage, hood dented and warped, busted headlight and blinker, maybe a cracked bumper but might just be paint chipping. Nothing mechanical but the parts are hard to find or expensive to replace.
For anything old and unusual you really have to have “Agreed Value” insurance. Hagerty and other classic car insurers and even some ‘non-specialist’ auto insurers offer this kind of coverage. It’s surprising cheap, and Hagerty has in my circle a good reputation for paying up promptly.
A few years ago the driver of a large SUV ran a red light while I was making a protected left turn in my MG Metro. The Metro was not as damaged as one might have expected and indeed I was able to drive it home:
The insurance company, after looking into the availability of parts in the US (I had already warned them the answer was “nope”), was inclined to total it. Fortunately I talked them out of this by agreeing to withdraw my claim entirely, then I got together with a friend who caged it and we ran it in the 24 Hours of Lemons with some other friends. We won an IOE, so I consider this to have been more than fair value.
If you’re just going to race it, could you have let them write you a check, and then bought the car back for salvage value?
I didn’t and still don’t have a trailer large enough to carry a Metro, so keeping it street-legal was a high priority. Getting its title branded would have meant going through a bunch of inspections and paperwork to convince the Department of Licensing that it had been properly repaired before being allowed to plate it again, even though in this case the actual damage was superficial. By withdrawing the claim, the car simply remained licensed without interruption.
Gotcha, good call.
I am not worried about Honda, though, maybe part of the problem(s) are their designs? The Civic and Accord designs are borderline Tapioca.
Honda has long been known for good engineering. I think their customers have always been a little more aware of the engineering choices.
I’m not buying anything CVT (certain hybrids excepted) because in most of them, the transmission itself is a wear item. This is in addition to the sad driving experience. Honda is almost all CVTs now.
I’m avoiding anything GDI until problems with the carbon buildup on the intake side are solved. Honda, like everyone else, is almost all GDI engines now. They probably have this solved as much or more than anyone else, but I think it’s too early to tell.
Americans have been resistant to small displacement engines regardless of engineering prowess because turbocharged engines still have a reputation of being a lot less reliable in the long run. Almost all Hondas have small turbocharged engines of less than 2 liter displacement.
Honda has always had more knowledgeable buyers than the average brand. This has become a disadvantage to them as much as it has been and advantage to them in the past. Losing just that small fraction of their customers, plus those going to Tesla, is more than enough to account for the decline. I’m currently in the market, but Honda is no longer in contention, mostly due to CVTs.
Last year I flipped a Jeep LJ. (deer hit me, the ditch wasn’t nice). All the comps they based my value on were TJ’s. After I explained to them what an LJ was and showed them what the market was to replace it they came up a few grand. Not as much as I wanted, but enough to be satisfied.
Honda is in a bit of a weird position. No one is going to argue that they make bad cars. They make some of the most solid, reliable cars on the road, and my wife dailies one. The problem is that they make cars that are dated on arrival and they aren’t pushing the envelope.
Other than the CTR, what is Honda currently making that’s exciting or unique? Given the fact that the NSX is on the way out, nothing is coming to mind for me. Even their “exciting” cars are dated. No amount of car publication/YouTube fawning over the Civic SI and Integra is going to make them competitive. 30-37 grand for 200 horsepower and a CVT as the auto option is a joke in 2022.
They’ve put big money into developing and advertising the new S line Acuras…but they’re DOA as well. That dated, inefficient V6 can’t hold a candle to the German six cylinders and neither the performance nor driver engagement are there based on what I’ve read. They’re new products that would’ve been competitive in 2016. But if you’re someone who loves driving why on earth would you pick a TLX Type S over, say, and M340i? All I’ve got is reliability. And if all you want is more cylinders Lexus will still happily sell you their amazing V8.
The final complaint I have is the fact that they have no EVs and I don’t think they have any PHEVs either. Even the notoriously conservative Toyota has both, not to mention the exciting cars they’re releasing are…well, exciting.
My question is this…what does Honda have to offer other than reliability and the best appliance cars? Don’t get me wrong, reliability is great. My wife’s CRV has been problem free, and if a normie was to ask me what I’d recommend for an ICE appliance car they’ll never have to think about I wouldn’t hesitate to recommend Honda. But there’s just not enough flavor in their lineup right now, and the approach of continuing to release dated products for their loyalists is going run out of steam eventually.
Their loyal customers are aging at this point as well. Eventually they’re going to have to stop living on their reputation and release some products that appeal to younger folks and people who like a little more seasoning. Basically…they need to take some chances already.
The new Accord hybrid seems to be the car that Honda needs to return to relevance. The reviews have been pretty good (and no rubber band CVT!).
That powertrain will soon find its way into the CR-V and the Ridgeline which are the volume vehicles these days.
The 2022 Accord hybrid uses the third-gen i-MMD hybrid powertrain, which is also used in the Insight, CR-V hybrid, and the Clarity (RIP).
I drive a Clarity and love how punchy the i-MMD is. But it’s not exactly new — Honda’s been using this powertrain since 2017. If this was the way for Honda to return to relevance, it probably would have happened five years ago.
Honda’s CVT uses a steel pushbelt. For a proper rubber-band CVT you really want something more like a DAF Variomatic, or at least I do. That is to say, I drove a Variomatic-equipped car to work today and I really want it to get me home again, too.
https://www.youtube.com/watch?v=2NeyoNdsHTI
I was going to say that Honda’s sales are as elastic as their transmissions, but now I have to correct that to as calcified.
Variomatic or pushbelt, either makes huge parts of the transmission into wear items.
Akio Toyoda is attempting to rectify this same problem at Toyota now. He’s at least caught the enthusiasts’ eyes with the Supra, GR Yaris, and GR Corolla.
For Honda?
Make a RWD coupe / convertible twin pair.
Coupe = Prelude (Has back “seats”)
Roadster = S (No back seats because that’s where the folding hard-top goes.)
I’d argue that from an excitement standpoint, the Integra is very exciting. In manual form, it’s low on HP numerically, but you cant feel it in the seat because of how great the gearbox is. Subjectively, I think it looks awesome (especially with the red interior), and it drives awesome striking a nice balance between stiffness and not jarring. However, I didn’t buy it because my wife wont let me replace my stick with a stick, and the auto option is a CVT. I cant live with a CVT.
It’s been a long time (1997 to be exact), but I had a 1994 Mustang Cobra totaled. The guy I had bought it from had had a laundry list of custom work done to it, including a supercharger, suspension, brakes, etc. upgraded. It was super nice and I bought it for above market value for a ’94 Cobra at the time.
Unfortunately, just commuting to a meeting in downtown Austin, I made an unprotected left turn and didn’t see a truck speeding in the far right lane. I actually hit the truck broadside as I gunned it to get through the intersection as fast as possible. So lots of front-end damage and a twisted front subframe at least. The insurance company (USAA, the BEST!) worked with me to try to find a body shop that would say they could fix it as good as new, but no luck. So they totaled it. I only had the car 6 mos., so I showed them what I paid for it and they gave me a check for that amount minus my deductible. It would have been real easy for them to discount the upgrades and reduce the replacement costs a couple of thousand. I still use USAA to this day and probably will until I drop dead.
“In some cases, claims staff are only increasing that offer to the fair market price when a consumer complains.”
Maybe it shouldn’t be this way, but I’ve always been taught that this is the normal state of affairs. The insurance company’s offer will be intentionally low and you stand a decent chance of getting it improved if you come with facts, comparable sales, etc.
I’ve never had a car totaled, but if I ever do, I certainly won’t be taking the first offer from the insurance company.
An insurance company ripping off it’s customers? **GASP** Say it isn’t so!
I red an article about how Saudi Crown Prince MBS had basically done a coup to replace the previous crown prince. It was a quite a sordid tale, very Game of Thrones.
Just about a year ago, my son totaled a 2017 camry se. Replacements that age were pretty much unobtanium at any price. They gave us check for about 24k. After a few weeks we were able to get a 2022 same model for 32k. I felt like that was a fair payment from insurance.