Lightning
5 Year Member
Joined: Aug 2018
Posts: 9,098
Likes: 3,211
From: Kentucky
Have to adapt to new thinking, there's a disconnect between Manufacturer's SUGGESTED Retail Price, and MARKET VALUE. And in many areas for desirable vehicles 5-50K markups are now MARKET VALUE. If MSRP is your line in the sand, better have some patience about getting a new vehicle like a truck or SUV.
This is AFTER the orders were placed. The rest get to pay $10,000 if they want to remain on the list. Anyone who cancels loses their good faith down payment.
It's time for the automotive franchise system to go.
Junior Member
Joined: Jun 2017
Posts: 6
Likes: 1
Wondering why dealers can mark up vehicles? Read this "Public Service Announcement" from Reddit/askcarsalesAs we are entering the third year of COVID-19 and almost the second year of historic microchip shortage - here are the facts about the "new normal":
- The automotive market in North America and the world has changed, and it is likely that it will never go back to the "old normal".
- Due to the microchip shortages - there is a worldwide shortage of cars, both new and used. Inventory of new cars is the lowest ever, and it is continuing to drop. For current information - Google "new vehicle days supply".
- The new vehicle shortage triggers an increase in used vehicle demand, and both trigger a new reality in pricing:
- New vehicle incentives are going away. Rebates and dealer cash are down, rates are up, residuals are down.
- Since dealers cannot survive on non-existing volume - some are forced to increase prices to make ends meet and to align their prices with the market. Price increases can take different forms:
- Refusal to negotiate and give up the profit built in MSRP
- Refusal to offer special APR or money factor
- Refusal to accept cash or outside financing
- Market adjustment pricing - dealer mark-up above MSRP
- Dealer add-ons: - surface protection, security systems, pre-installed accessories, etc.
- Other mandatory add-ons, such as maintenance plans, extended service contracts
- Pricing of trades and used cars is high and volatile. Some companies like Carvana and Carmax are overpaying for used cars for their reasons, and it is pointless to attempt to make a dealer to match someone else's offer.
- Lease buyouts are heavily restricted by captive banks. You might not be able to sell your lease to anybody outside your manufacturer dealer network.
- Dealers might be reluctant or simply refuse to sell a car out of their market. Long distance sales are prone to issues, and the way manufacturer incentives are set up - it might cost a dealer more than it is worth to sell car to a customer who is not in their immediate market.
- You might be getting above average value the car you are trading, but you also will be paying more for the car you are getting
- It will be difficult to shop prices online since dealers might not be willing to discuss pricing remotely
5 Year Member
Joined: Aug 2018
Posts: 9,098
Likes: 3,211
From: Kentucky
Over a million sale ready units on average 2012- mid 2017, dropped to 900,000 by the end of 2017, 700,000 by the end of 2018, a slight uptick in January, then falling below 500,000 by the end of 2019, some ups and downs in 2020 but only dropping to 450,000 by December, then everything tanks in 2021, dropping to 39,800 as of November.
While in previous years we could see a reduction of 100,000 vehicles available for sale, this year alone we lost over 400,000 vehicles. That's a 90% loss of available new vehicles in one year.
Last edited by Flamingtaco; Dec 31, 2021 at 12:53 AM.
