The state of the car market - Oct '22

[Donalex]

https://www.tampabay.com/news/busin...ices-finally-begin-creep-down-inflated-highs/

 

[Ziggy]

It feels like things are getting a little better near me. I have a vehicle on order with a Ford dealership. They advertise “never above MSRP on new cars” so I would expect them to be a popular dealership compared to ones with markups. I get their weekly marketing emails and they’ve creeped up to 130 new 22s on the lot and now breaking down how many of each top model available. Two weeks ago it was 115 vehicles. A month before 90. 75 the month before that. Mostly large, gas guzzler vehicles though. Of course production issues are a disaster with the vehicle I have on order with Ford.

I’m hopeful things will be better in 2023.

 

[Kbl911]

Sooo many dealerships are going to maintain these inflated prices long after it's necessitated by market conditions. Making record profits while moving fewer units has worked out too well for too many of them.

Up like a rocket/down like a feather, as it's said.

 

[Houston.RZ34]

Up like a rocket/down like a feather, as it's said.

Nah, the banks are getting burned bad on all these dumbass 10%+ APR loans with terms 72 mos+ and LTVs over 100% - they are trying to stop the bleeding by jacking up interest rates and setting the bar higher.

Can't sell cars if hardly anyone qualifies for them lol - dealers are gonna be so happy to see someone that actually qualifies......I'm sure they will be open to negotiating.

The "magic number" used to be 620 but after 2008 it became 680....I'm starting to hear it's going to be 720 after this mess is over.

Dealerships are gonna feel it real soon, we'll be having a much different discussion in October 2023.

 

[Kbl911]

Nah, the banks are getting burned bad on all these dumbass 10%+ APR loans with terms 72 mos+ and LTVs over 100% - they are trying to stop the bleeding by jacking up interest rates and setting the bar higher.

Can't sell cars if hardly anyone qualifies for them lol - dealers are gonna be so happy to see someone that actually qualifies......I'm sure they will be open to negotiating.

The "magic number" used to be 620 but after 2008 it became 680....I'm starting to hear it's going to be 720 after this mess is over.

Dealerships are gonna feel it real soon, we'll be having a much different discussion in October 2023.

Oh, they'll find a way. I don't think that the 30%+ price inflation is going to suddenly disappear, I suspect it'll be slower, even as inventory concerns abate. It'll take consumer refusal to pay inflated prices for it to truly stabilize. That or there will have to be a contingent of dealerships who refuse to play the game, banking on the volume and goodwill it will generate to not openly fleece clients on prices. That would create organic market pressure for the greedy establishments to come down more rapidly.

Then again, a flood of new inventory combined with a corresponding flood of pre-owned inventory from the auction houses combined with an increase in interest rates could be the perfect storm for the party to abruptly end.

 

[Houston.RZ34]

Then again, a flood of new inventory combined with a corresponding flood of pre-owned inventory from the auction houses combined with an increase in interest rates could be the perfect storm for the party to abruptly end.

This.

 

[NecioVato]

But the other part of the equation is the manufacturer isn't in 'cahoots' with the dealer - they have ZERO F's to give if you want their inventory - someone/dealer will take it and thus look to sell for a lower price to sell for volume. Just like as a consumer they have ZERO F's to give that the dealer is marking up the price with ADM. Simply put - greed will win - and in this case, as inventory and auction houses for used cars keep going up - it's going to squeeze them - plain and simple. Not to say that ALL cars will be coming down - some dealers will be trying to make as much money as possible but I feel the ADM or the 'added packages' will wind up being limited.

The other part like someone said is that banks are also involved. If a car is worth $40k - but the dealer has a $20k markup - then the value doesn't really change - bc that value I would imagine is based on the MSRP - hence why if you total a proto spec Z or a new CTR that you way overpaid for - the insurance company doesn't go - 'oh yeah, even though MSRP of this is $40 - we'll give you $60k bc supply and demand'. Correct me if I'm wrong - but the only reason why banks are doing LTV's of 120% etc was bc ADM was on ALL cars during the pandemic and why lose money to other banks willing to take on that risk.

 

[Kbl911]

We'll get through this. Greed does typically win but maybe - just maybe - consumers won't take the L on this one.

 

[Donalex]

Banks consider anything above 90% MSRP as unsecured debt. So, if you already have high credit card debt and/or you're maxed out - good luck.

 

[ceric]

The Mazda dealer I frequent just sent me an email to tell me that every Mazda on their lot is priced at MSRP... Come quickly.