Current New Vehicle Market

[IamRacerX]

Its crazy for sure. I was attempting to get a new Wrangler Unlimited High Altitude for my wife back in Oct. The best deal I could find on an in stock unit in the entire Eastern US was $2500 over MSRP. The other thing was the MSRP went up about $4k from earlier in the year too. I finally decided we dont need it that badly to pay these prices.
On the bright side I was offered more for my 2+ year old Audi RS5 than I paid new to trade it in, not that I want to. Plus our 7 year old minivan with 100K is worth 18k on trade.... 21k retail... we paid 33k in '14. Its nuts!!!

 

[Weather Man]

You wonder how many people are waiting on the sidelines hoping inventory will recover and prices drop back down.

I have noticed that Ford has restarted F-150 TV advertising and some local dealers have restarted radio ads. Maybe we are seeing some light at the end of the tunnel.

 

[Ramairgt1]

Must be an area thing because dealerships around here dont have those markups on the Bronco Sport, Mach E, Mach 1, or F-150.

There are also many Ford dealers out there selling customer ordered vehicles under invoice, including the Bronco.

 

[Klaus]

PS here is used auto prices and total new sales volumes in the US.

Here is new car sales. The grey areas are economic recessions. Car dealers thought things were permanent in the 2000s when ~17m cars/year were sold in the US for several years straight. People were taking out HELOCs and buying cars which can last only so long.

Then 2008 happened and annual sales were off by +60%. It took 10 years to get back to the sales volume of the mid 2000s. The parallels now are similar. Instead of HELOCs people have been spending their stimmy checks. The money will run out. It always does. When it happens it will take a similar amount of time to recover to the annual sales volumes that we are experiencing now.

Here is used car pricing. We have seen 10 years of inflation in a single year. LMFAO at anyone that thinks that this lasts.

 

[SSSSSSSSSSSSVT]

My used cars price is never going down.

 

[CompOrange04GT]

My used cars price is never going down.

I screwed with a salesman yesterday threw him a number on trade …

He came back with a number 5k under. I said no.. all of a sudden.. he can match my number.

Too bad I don’t want another vehicle with these prices…

 

[CobraBob]

Sorry Nick, none,
Just so we are clear, I am talking new cars, not some of the stuff you see on BaT or BJ I find ADM an offensive business practice. I do understand that it is a free market and a unit is worth exactly what someone is willing to pay. When the manufacturer sets a the MRSP, that should be the fair market value. Dealers that are charging beyond MRSP will lose a customer for life .

I'm 100% with you. If consumers willingly pay these outrageous ADMs, that will guarantee overcharging could become common. It could also effectively put new cars out of the reach of many/most Americans. I won't cave to it. No way. Actually, I'm very happy that two months ago I paid MSRP on my 2022 Genesis GV70. Loaded vehicle. Awesome warranty. Every feature I could want. Awesome quality. And I only put an average of 5000 miles a year on it. I will have no need to get another vehicle any time soon. So dealers can add any silly ADM they want to their new inventory. I won't be a "new" customer.

 

[CobraBob]

Must be an area thing because dealerships around here dont have those markups on the Bronco Sport, Mach E, Mach 1, or F-150.

There are also many Ford dealers out there selling customer ordered vehicles under invoice, including the Bronco.

I believe you are probably right. Not all dealers are raping customers, despite the availability issues. I know one area dealer that has a diminished availability on their lot of new vehicles, they do not charge ADMs, BUT their focus is on used cars where they're making more money. Their lot used to be 75% new and 25% used (the ones that didn't go to auction). Now, it's maybe 20% new and 80% used. They're quite busy.

 

[GTSpartan]

Regression toward the mean. What we are seeing here is 100% guaranteed to follow this phenomenon at some point.

Sooner or later it'll even out. Likely driven by the exact opposite economic environment we are in now. At least for the domestic OEMs, their historical track record around pricing discipline is pretty bad. The first sign of a significant economic downturn and they'll be throwing cash on the hoods. It only takes one manufacturer to start the race towards the bottom. Will they grossly overproduce like in the past, not likely, but supply vs. demand will be much more in balance.

When will this happen? That's more difficult to predict obviously.

 

[Klaus]

Come up with whatever timeline you'd like to, then let's put some money on it.

My spidey sense has been activated. What is the wager?

 

[13COBRA]

My spidey sense has been activated. What is the wager?

That vehicle prices will go back down to where they were a year ago, and in what timeframe.

 

[Klaus]

That vehicle prices will go back down to where they were a year ago, and in what timeframe.

Interested. I will be back with my terms.

 

[Russo]

wife and i just bought a 21 durango rt, paid $100 over invoice. the dealer had to trade to get it too.. 0% interest for 72.. they gave me $2k more on trade than another dealer and my car went straight to auction (2015 Santa Fe Limited Ultimate with 125k miles)..

 

[13COBRA]

wife and i just bought a 21 durango rt, paid $100 over invoice. the dealer had to trade to get it too.. 0% interest for 72.. they gave me $2k more on trade than another dealer and my car went straight to auction (2015 Santa Fe Limited Ultimate with 125k miles)..

What was the VIN on your Santa Fe? Just curious, I'd like to throw out a number on what I would give for it and see what they gave.

 

[7998]

It appears the two drops due to the 2008 recession and 2020 scamdemic are followed by short spikes in sales. But it seems the industry has taken a major hit in sales following this recent spike. Speaking to the economy of scale how do you think this will affect manufacturers ability to procure parts and labor? And do you think the decrease in parts and labor will have a ripple affect in regards to the economy?

Even if manufacturers are making more per unit is a 30% decrease in sales (guessing the % by looking at the chart) a sustainable practice? Factoring in built in costs such as, factories, supply chains, tooling, R&D, etc. Especially to an industry that is based on volume.

Christ what's a new model or platform or engine program cost to develop? Now amortize that cost over a significantly less units. Adding that additional cost to the lesser units I think would only compound the problem. Idk, I guess we'll have to wait and see.

PS here is used auto prices and total new sales volumes in the US.

Here is new car sales. The grey areas are economic recessions. Car dealers thought things were permanent in the 2000s when ~17m cars/year were sold in the US for several years straight. People were taking out HELOCs and buying cars which can last only so long.

Then 2008 happened and annual sales were off by +60%. It took 10 years to get back to the sales volume of the mid 2000s. The parallels now are similar. Instead of HELOCs people have been spending their stimmy checks. The money will run out. It always does. When it happens it will take a similar amount of time to recover to the annual sales volumes that we are experiencing now.

View attachment 1731175

Here is used car pricing. We have seen 10 years of inflation in a single year. LMFAO at anyone that thinks that this lasts.

View attachment 1731181

I'm 100% with you. If consumers willingly pay these outrageous ADMs, that will guarantee overcharging could become common. It could also effectively put new cars out of the reach of many/most Americans. I won't cave to it. No way. Actually, I'm very happy that two months ago I paid MSRP on my 2022 Genesis GV70. Loaded vehicle. Awesome warranty. Every feature I could want. Awesome quality. And I only put an average of 5000 miles a year on it. I will have no need to get another vehicle any time soon. So dealers can add any silly ADM they want to their new inventory. I won't be a "new" customer.

The GV70 is on the short list for the wife's next vehicle. That's a sharp ride.

 

[Klaus]

It appears the two drops due to the 2008 recession and 2020 scamdemic are followed by short spikes in sales. But it seems the industry has taken a major hit in sales following this recent spike.

If you average the 6 month collapse with the 6 month recovery the sales trend has not even been broken.

The big story is not actually covid but the average age of cars on the road. This got extended because of 2008. I am on my phone but IIIRC average age has historically been 7 years but was 12 years going into covid.

So you had 5 years of excess demand intersect with the government paying people to sit at home intersect with most other discretionary spending collapse. People are not going out to eat or on vacation and they need new vehicles = once in lifetime explosion of demand for cars.

All of the narrative in supply chain issues, chips, blah blah blah is noise. It is not a supply story. It is a demand story. Not that supply is not a factor but the predominant factor is demand. And this will degrade. It is econ 101.

 

[black4vcobra]

Insane prices. I'm glad I don't need to buy any vehicles anytime soon.

What we really need to know is if Paula is hot or not...

 

[gimmie11s]

Nope....Pricing will NEVER return to what it was.

The days of manufacturers over producing only to over discount later, are over. They got a taste of the Koolaid and they like it.

lol, no.

Here are a couple very basic reasons ... I wont get too deep because @Klaus has you on the hook at the moment lmao.

--Unions. Car companies may enjoy the current "koolaid" but once the macro supply chain corrects and Co's have the ability to produce at pre-pandemic volumes, unions will not allow parent companies to simply slow production to boost profits--potentially costing union jobs.
--Interest rates. The Fed is positioned to raise rates at least 2x next year, possibly 3. The days of free or extremely cheap money are coming to an end. You can count on that. Obviously this will limit the buying power of the consumer further impacting supply (and demand).

Fed doubles taper rate, eyes three interest rate hikes in 2022 as inflation soars

The Federal Reserve on Wednesday announced plans to accelerate the wind down of its aggressive bond-buying program, opening the door to interest-rate liftoff in the first half of next year as policymakers seek to combat the hottest inflation in four decades.

www.foxbusiness.com

My spidey sense has been activated. What is the wager?

6 figguh has officially fugged up and brought a Garmin to a Rolex fight.

 

[VRYALT3R3D]

Nah.

Financing terms will just keep extending like they have been.

Honda Warns Against ‘Stupid’ Auto Loans Driving U.S. Sales Gains​

A top U.S. executive at Honda Motor Co. said competitors are doing “stupid things” to boost auto sales, including making seven-year-long car loans that harm buyers.

Automakers are increasingly selling vehicles with 84-month loans that reduce monthly payments while making it tougher to repay faster than cars lose value, John Mendel, Honda’s U.S. sales chief, said in an interview. The Tokyo-based company will avoid longer-term loans even as Nissan Motor Co. tries to supplant it as the fifth-biggest automaker in the U.S., he said.

more: Honda Warns Against ‘Stupid’ Auto Loans Driving U.S. Sales Gains

 

[5.0 Hatch]

I'll make a note to revisit this thread a year from now to see how well it aged.