March 10, 2017 in Daily Bulletin
Morgan Stanley wrote about second hand cars:
- After falling for years there has recently been an increase in deaths from traffic accidents as there are more people using their phones on the road.
- This is likely to accelerate the release of new safety features in cars such as automatic lane alerts and auto-braking, which noticeably reduce accident rates.
- Such snazzy features typically add less than 1% to the price of a car so they could very quickly become the industry standard.
- The used car market is worth about $7 trillion and prices would probably crash as safety conscious consumers gravitate away from cars without common protection features.
- Driving a car without those features could begin to incur insurance penalties, further making such vehicles unattractive.
- Whereas before used cars might drop 20% in price, an industry wide shift on standard features could see them fall by up to 50%.
- This will have knock-on impacts on industries built to serve the second-hand car market such as loan financing and vehicle servicing.
- On the bright side there’ll be less death.
Read more on Morgan Stanley.