Automotive inflation - Will the whole thing go bust?

[Eunos_Cosmo]

I know we have a thread for overpriced used cars. This is not that. This is about the economics of the new car industry and where it's headed. I thought about making this thread after watching SG's video on the topic:



Not sure if any of you have noticed...but the whole industry is totally nuts right now. Empty dealer lots, sky high markups, the complete disappearance of cheaper cars from the market. Even deliberately cheap cars are being priced into the stratosphere by dealers at the moment...I give you the $50,000 Ford Maverick:

In 2015, which wasn't all that long ago, you could get a base model Nissan Frontier for $17,000. While theoretically the Maverick starts not much higher than this, those base model actually-at-msrp cars simply do not exist. It would be a miracle if you could get a Maverick for under $32k.

The average transaction price for a new car in the US in 2022 was a staggering $48,000. That works out to around $800-$1000 a month assuming fairly typical prevailing interest rates and down payment. Now that figure is obviously dragged higher by the sheer amount of high end vehicles sold and I can't find a median sale price, but it should be a flashing signal that things are seriously out of whack. The median household income in the United States is right around $70,000 which, after taxes your take home pay would be around $4,000/mo. Meaning that to buy the average priced new car, the median household (household! most households in the US have more than one car!) is expending nearly 25% of it's income on a depreciating asset! This is basically 2.5x what is commonly recommended for financial planning. So it's pretty damn likely a significant amount of new car buyers are stretching themselves financially to just get normal, ordinary cars...

If you work it the other direction, the median household in the US should be spending about $25,000 or less on a new car, which is basically half of what reality is indicating.

Add to this - I wonder how many auto loans out there are subprime? I wonder how many are adjustable rate? How many are both? Evidence points to a lot. If we have an extended downturn and people lose their jobs while their loan interest rate goes up (if it's subprime and adjustable rate, it's also likely 72mo or more and they probably have paid effectively zero principle) on their car that they overpaid for while simultaneously its depreciation is accelerating, while also pandemic era loan repayment accommodation programs start to end, there is going to be an armageddon of repos and I think it could honestly bring the entire auto industry to it's knees. The new car market is primed for a massive implosion just as the mortgage market was in 2006, and it's almost uncanny how similar the scenario is. The fuse may already be lit.

TransUnion, which tracks more than 81 million auto loans in the U.S., said Tuesday the percentage of loans that are at least 60 days delinquent hit 1.65% in the third quarter, the highest rate for 60-day delinquencies in more than a decade

Keep in mind that, currently, unemployment remains low. Low unemployment and the highest rate of 60-day delinquencies in a decade. Yikes. This tells me that many buyers are already at or over their financial limit while they are employed!

Tl;dr: ****'s expensive. Probably more expensive than is sustainable.

 

[Joey D]

If vehicle prices weren't bad enough, you then have dealerships putting asinine "market adjustments" on anything and everything. My dad wants to get a Ford Transit van and even those had a $7,000 market adjustment on them. It's like, come on, it's a white cargo van. They told him he could order one and get it at MSRP, but the wait could be upwards of 18 months.

Even used vehicles are way over-inflated. My 4Runner was $40k with 50k miles on it. It was that much when it was new.

Something is going to have to change, and I think the first thing you'll see is stiff penalties from manufacturers towards dealers that over-inflate the price. I think you'll also, eventually, see big manufacturers like GM and Ford start to move away from the dealer model because that alone will lop several thousand off the top of a vehicle, plus logistically it'll work out better. Why have a middle man when you can just sell directly to the consumer and take all the profits instead of sharing them?

 

[FerrariF1GT]

The supply chains are still pretty 🤬ed up (tightening supply and raising costs) and manufacturers can get away with raising prices as long as buyers keep flocking to them because they can keep making larger profits that way. The cycle will continue until customers (and there will need to be A LOT of customers) decide enough is enough.

Barring an economic catastrophe, I can’t see the cycle breaking because there always seems like there’s a push to sell all the latest, biggest toys from the big three (and all the other major makes to a lesser extent), and the backlogs for Bronco, Maverick, Lightning, Hummer, Rivian, Cybertruck etc. orders demonstrate this.

 

[Eunos_Cosmo]

If vehicle prices weren't bad enough, you then have dealerships putting asinine "market adjustments" on anything and everything. My dad wants to get a Ford Transit van and even those had a $7,000 market adjustment on them. It's like, come on, it's a white cargo van. They told him he could order one and get it at MSRP, but the wait could be upwards of 18 months.

Even used vehicles are way over-inflated. My 4Runner was $40k with 50k miles on it. It was that much when it was new.

Something is going to have to change, and I think the first thing you'll see is stiff penalties from manufacturers towards dealers that over-inflate the price. I think you'll also, eventually, see big manufacturers like GM and Ford start to move away from the dealer model because that alone will lop several thousand off the top of a vehicle, plus logistically it'll work out better. Why have a middle man when you can just sell directly to the consumer and take all the profits instead of sharing them?

Dealers still have some leverage due to service centers. I don't think the auto manufacturers want to lay out the cash to build dedicated service shops so they still need the dealer network for that - I could foresee dealers fighting back against irrelevance by offering service only to their own sales customers. But I do think that, where legal, we'll start to see more legacy OEMs start to do direct sales.

The big problem is that people want money more than they want anything else - I've said this before. Automotive CEOs want money more than they want to be good automotive CEOs. This is somewhat intuitive but unfortunate. So to acquire more money they'll identify the avenues to get the best compensation packages. To get those lucrative compensation packages, they need to make the company look really good on paper - either by increasing market share, or profit margins, or whatever else. So they do whatever is necessary to achieve that, from outright flouting regulations to create a profitable niche, to basically the entire industry hive minding itself into building exclusively "SUVs" because they have higher margins...because of regulatory loopholes*. Prices gotta go up, margins gotta go up. Prices have to outrun inflation for them to achieve their goals.



*

Although the “light duty” classification once made some sense, it clearly no longer does. The majority of Americans drive light duty vehicles. These “light duty” vehicles are typically the most popular cars sold year in, year out. To highlight the absurdity, the actual definition no longer distinguishes between different vehicles, but only between different trims. Certain popular models like the Honda CR-V and Toyota RAV4 don’t squarely fit in one category or another, depending on whether the specific trim in question has two-wheel drive or four wheel drive and other optional packages.
But the rule has tremendous implications for fuel economy standards car companies must hit. Currently, automakers must hit a fleet-wide target for cars of 181 grams of CO2 emitted per mile, but 261 for light trucks, a 36 percent difference. By 2026, cars must average out to 132 grams of CO2 per mile compared with 187 for light trucks, a 34 percent difference. Under Biden’s rules, car companies will continue to be able to pollute more with the vehicles they sell the most of.

 

[ROAD_DOGG33J]

Let's not get ridiculous. I present to you the Chevy Spark:

/s

 

[Veinz]

I'm just glad I went with a 4Runner a few years back, the used prices are insane. It's very tempting to sell but there is no point when the dealerships are pretty much empty around here.

 

[ROAD_DOGG33J]

The average transaction price for a new car in the US in 2022 was a staggering $48,000. That works out to around $800-$1000 a month assuming fairly typical prevailing interest rates and down payment. Now that figure is obviously dragged higher by the sheer amount of high end vehicles sold and I can't find a median sale price, but it should be a flashing signal that things are seriously out of whack. The median household income in the United States is right around $70,000 which, after taxes your take home pay would be around $4,000/mo. Meaning that to buy the average priced new car, the median household (household! most households in the US have more than one car!) is expending nearly 25% of it's income on a depreciating asset! This is basically 2.5x what is commonly recommended for financial planning. So it's pretty damn likely a significant amount of new car buyers are stretching themselves financially to just get normal, ordinary cars...

If you work it the other direction, the median household in the US should be spending about $25,000 or less on a new car, which is basically half of what reality is indicating.

Add to this - I wonder how many auto loans out there are subprime? I wonder how many are adjustable rate? How many are both? Evidence points to a lot. If we have an extended downturn and people lose their jobs while their loan interest rate goes up (if it's subprime and adjustable rate, it's also likely 72mo or more and they probably have paid effectively zero principle) on their car that they overpaid for while simultaneously its depreciation is accelerating, while also pandemic era loan repayment accommodation programs start to end, there is going to be an armageddon of repos and I think it could honestly bring the entire auto industry to it's knees. The new car market is primed for a massive implosion just as the mortgage market was in 2006, and it's almost uncanny how similar the scenario is. The fuse may already be lit.

I don't think this is entirely the fault of the manufacturers/dealers. A dealer search shows up quite a few Mavericks for $22,900.

Let's see what's making up that $48,000 average.

The 25 Bestselling Cars, Trucks, and SUVs of 2022

Supply issues continue to plague the industry, but these are the models that managed to reach the most buyers in 2022.

www.caranddriver.com

The Average Price of a New Car Is Creeping Toward $50,000

Inventory remains low, and there's an increase in expensive electric car and luxury vehicle sales.

money.com

Number 1, 2 and 3 are pickup trucks. Toyota RAV 4 is behind at 300,000 sales with a further 90,000 unit drop with the Camry in 4th place. So are people stretching themselves financially to buy normal, ordinary cars? I don't think so. They're buying Teslas, pickups and SUVs - of course with the latest electronic gadgets.

The 3 issues I see are:
-the supply chain issue
-EV technology is still expensive and being moved more in luxury/semi-luxury cars; the push for EV cars
-people buying more car than they should

-The supply chain issue will take time.
-I would prefer that manufacturers offered a decent gas option, moving towards all hybrid and then EVs.
-As for the people:

 

[GranTurNismo]

Firstly, a part of the reason why there is an ever-growing dearth of "cheap" vehicles on the market is simply because inexpensive vehicles are bad economics. It's for the same reasons why there's a lack of new-construction "starter" homes (whether single-family detached homes or apartments) in the United States. There's simply more money to be made by producing fewer but more expensive vehicles than hundreds of thousands of cheaper ones per year. It should come as no shocker that non-luxury brands like Honda, Mazda and Volvo have been moving upmarket, and already upmarket brands want to move even further upmarket. A main reason why inexpensive cars are "bad economics" is because there's just not any money to be made from them. After all of the environmental and safety constraints, plus technology "bare minimums" nowadays like an infotainment touch screen, rear-view camera, blind spot monitoring, and alloy rims instead of hubcaps, it's just not profitable to produce a sub 20k car, or even a car in the 20k range these days. And, as @Tornado's recent thread about NHTSA incentivizing larger cars over smaller ones mentions, it is very likely that this "cheap car" category may become totally extinct in the not-so-distant future.

Though, it would be a mistake to neglect changes in consumer tastes in this entire dilemma. A chunk, but not all of the blame can be placed on inflation, supply shortages, and greedy dealerships. The CUV/SUV boom, brought on almost entirely by consumers, is undoubtedly a factor. Even if automakers can produce CUVs at the exact same price as cars, they will always be more expensive than regular cars. Why? The added (both real and perceived) utility, safety, ground clearance, and versatility, will automatically translate to a price increase of at least a few thousand, since they offer attributes which traditional cars cannot. Also, AWD seems to be a must-have for most CUV/SUV buyers, while this is not the case for cars, and that also adds up. Despite SUVs being more expensive than cars (the new CRV starts at over 10k more than a Civic now), this has not translated to buyers opting for cars instead. And as we know, the opposite has happened. Sales of literally any sedans and subcompact economy cars like the Spark or Rio or Mirage have been slumping, as sales for not just SUVs, but luxury vehicles, EVs, and pickup trucks are rising.

This leads to my next point, that consumers today are simply more willing to expend a greater proportion of their income on new cars. As @Eunos_Cosmo mentioned, the price of a new car today has rapidly outpaced personal income. Due to an ever-increasing variety of EVs, big brawny brutes like the Raptor, GMC Hummer, TRD Tundra/4Runner/Sequoia, etc, luxury cars, and even sports cars, breakthroughs in technology like longer EV ranges and autonomous features, combined with the fact that younger Americans tend to be more frivolous with their money and are saving less (even I, as both a young American and left winger won't deny this), it really should be no surprise that this is the case. Along with that, it seems as if more consumers are willing to make a risky auto purchase and potentially face defaulting on their loans down the line. Furthermore, buyers willing to spend what a "cheap car" costs (i.e. $15k to 25k) are more content buying a used car. The lease on my 2019 Veloster just ended, and the dealership claimed they could sell the car for the same new purchase price of $23k in 2019. Some of the higher demand models like Civics and Corollas of the same age are selling for more than the purchase price new three years ago. And for more expensive vehicles, especially SUVs and pickups, forget about it.

But yeah, screw dealerships. Car dealerships are the equivalents of private healthcare companies or TicketMaster. They're a mafia-like middleman whose primary function is to profit at the expense of wholly the consumer surplus. They don't actually contribute anything meaningful to the buyer or enhance the product any further. Theoretically, there's no reason why car companies couldn't sell directly to the consumer, have their own networks of repair shops, and hire staff who can answer consumer questions and facilitate test drives/paperwork/financing, but ancient- and let's face it, arbitrary and capricious- state franchise laws effectively prohibit this, due to somehow being "anti-competitive" (yet actual monopolies and trusts are free to go unchecked go figure). Car dealerships networks, like any other big business, have been generous contributors to politicians and of course, they all but ensure politicians won't pass laws to threaten their very existence. In the past, dealerships had the more useful function of providing information to prospective buyers, but now that we can research and compare any new car at our fingertips, this has become obsolete. In summary, consumers have all to lose and almost nothing to gain from the current privatized dealership model, and with the extreme markups as of late, it has never been more evident. I'm fine with car dealerships existing (even know I have a serious grievance with their business model), but the fact that manufactures are literally banned from selling cars to directly to consumer without exception, is completely egregious.

 

[Shaun]

Not sure if any of you have noticed...but the whole industry is totally nuts right now. Empty dealer lots, sky high markups, the complete disappearance of cheaper cars from the market.

Yep exactly the same here mate.

An observation from a totally personal perspective this week.

I had our car (a do it all wagon, single car family) in for a service and it's due for replacement as we normally change every five years so I had a couple of hours to spare while it was getting done.

Due to life circumstances the main car on our shopping list will be a people mover that will be taken straight from the dealer to be modified for wheelchair access for my wife due to her MS.

There are only a few options available that can be modified and it's going to be a Kia Carnival. Head over to the Kia dealership only to be told it's a minimum 6-9 month wait, asked the dude what the drive away price will be and it's pretty much what it advertised on Kia's web page so that's something. On the wait list we go though he did say if something comes up quicker he will call, no doubt with a mark up though.

Now I don't particularly want to drive a Carnival everywhere and we will probably need two cars now so I thought maybe a little treat for myself would be in order so I've been looking at some small zippy cars to go to work and back in and just for a bit of fun if I'm going somewhere without my wife.

I have narrowed it down to pretty much a Hyundai i20N so I check out the dealer only to be told we aren't even taking orders on them but we do have this demo with 4,000 km on it available right now.

Ah yeah no, it's done 4000 km on the redline and you want $10k more than the Hyundai web page has them advertised for, **** off.

Looks like we are waiting on the Carnival and will keep our current car for my use

 

[Eunos_Cosmo]

Yep exactly the same here mate.

An observation from a totally personal perspective this week.

I had our car (a do it all wagon, single car family) in for a service and it's due for replacement as we normally change every five years so I had a couple of hours to spare while it was getting done.

Due to life circumstances the main car on our shopping list will be a people mover that will be taken straight from the dealer to be modified for wheelchair access for my wife due to her MS.

There are only a few options available that can be modified and it's going to be a Kia Carnival. Head over to the Kia dealership only to be told it's a minimum 6-9 month wait, asked the dude what the drive away price will be and it's pretty much what it advertised on Kia's web page so that's something. On the wait list we go though he did say if something comes up quicker he will call, no doubt with a mark up though.

Now I don't particularly want to drive a Carnival everywhere and we will probably need two cars now so I thought maybe a little treat for myself would be in order so I've been looking at some small zippy cars to go to work and back in and just for a bit of fun if I'm going somewhere without my wife.

I have narrowed it down to pretty much a Hyundai i20N so I check out the dealer only to be told we aren't even taking orders on them but we do have this demo with 4,000 km on it available right now.

Ah yeah no, it's done 4000 km on the redline and you want $10k more than the Hyundai web page has them advertised for, **** off.

Looks like we are waiting on the Carnival and will keep our current car for my use

My local Honda dealership had a pre-owned '21 Civic Touring (with more than 10k miles on it!) for the low low price of....$38,950. And that's US dollars!

 

[ROAD_DOGG33J]

Unfortunately, I think those are California dollars. I'm not seeing the same prices here, but maybe things are different when you actually get to the dealership.

 

[Wolfe]

I've been mourning the industry for about five years already. It's ****ed, and the government dictating that cars must be everything but affordable, practical, or genuinely environmentally sensible in their girth, material use, or construction...doesn't help. It was already not sustainable before 2020, and the conditions since have been accelerating the outcome. No one in charge gets it. What else is new.

 

[Eunos_Cosmo]

I've been mourning the industry for about five years already. It's ****ed, and the government dictating that cars must be everything but affordable, practical, or genuinely environmentally sensible in their girth, material use, or construction...doesn't help. It was already not sustainable before 2020, and the conditions since have been accelerating the outcome. No one in charge gets it. What else is new.

I bet 25 ICE-only Kei cars are more environmentally sound than a single Hummer EV.

 

[WolfpackS2k]

It's not entirely consumers' fault, but they're feeding the beast for sure. I also disagree on the CUV/SUV thing being mostly consumer driven. Once automakers realized they could "game the system" from the Feds they've been ALL IN on promoting and marketing CUVs/SUVs to consumers. So of course your average consumer these days wants one. They've been brainwashed for the last 15+ years into thinking they need one.

Until consumers STOP paying for ridiculous ADM and expensive cars in general, it'll never stop. I have a deposit down for a GR Corolla (put it down back on April 1st) and it's at an MSRP only dealership. If they try to sell it to me for anything above MSRP (or force some BS like LoJack on me), I'm walking. Forget it. Ain't happening.

 

[Eunos_Cosmo]

It's not entirely consumers' fault, but they're feeding the beast for sure. I also disagree on the CUV/SUV thing being mostly consumer driven. Once automakers realized they could "game the system" from the Feds they've been ALL IN on promoting and marketing CUVs/SUVs to consumers. So of course your average consumer these days wants one. They've been brainwashed for the last 15+ years into thinking they need one.

Until consumers STOP paying for ridiculous ADM and expensive cars in general, it'll never stop. I have a deposit down for a GR Corolla (put it down back on April 1st) and it's at an MSRP only dealership. If they try to sell it to me for anything above MSRP (or force some BS like LoJack on me), I'm walking. Forget it. Ain't happening.

I agree. The incentives for manufacturers to sell "light duty" vehicles are compelling enough for me to believe that the industry would market them with a much higher priority than passenger cars...think of all the TV ads featuring people and/or families doing outdoorsy things regardless of how often that actually happens. You need AWD, you NEED a lifted wagon body. Or how the IIHS has steadily been pushing cars to be bigger and heavier for decades now.

(I'm currently purchasing a CR-V hybrid, so I'm not exactly innocent here...)

 

[Eunos_Cosmo]

Bust signals intensifying

Carvana stock collapses amid bankruptcy fears after creditor pact and another $1 price target

As far as I can tell, Carvana has somewhere around 100,000 vehicles in it's inventory. If they are sold via some sort of bankruptcy process to fulfill obligations to creditors, it's going to put serious downward pressure on prices for used cars nationwide, and downward pressure on demand for new cars as well.

 

[TheHun99]

Agreed, it's a stupid situation and lot of it fueled by regulation - as much as I'm a proponent of the European Union, the eurocrats' effed up EuroX norms sent the automotive industry in an amazingly stupid direction...

The whole consumer mindset with the SUVs... if only we could kill that... I'm all for cheap cars. My A3 lease (that was $412/month, we were not financially stretched by that on any level, I'm stupid but not that stupid) was up in March and wanted a WRX. I was stupid (as mentioned before) that I haven't terminated the lease early and grabbed a 2021 WRX while I could have. Instead, I was an idiot for thinking that I can get a base '22 WRX for the base price basically (with CVT, my wife doesn't like manuals) as that's perfectly enough. Small sedan, enough for 4 people and satisfies the boyracer in me. Starting market adjustment: 10k. My answer was FU, let's look at the next best option, an Impreza Sport sedan, my wife likes it. Nope, can't order one anymore, Japan doesn't let us.

You need AWD, you NEED a lifted wagon body.

(I'm currently purchasing a CR-V hybrid, so I'm not exactly innocent here...)

So, we ended up with an almost base Crosstrek. I don't consider it a SUV because a) I have SUVs and I have to live with my decision and b) it's an Impreza hatchback lifted up a little bit. As far as AWD goes, we live in PA, we get snow and we have some terrain where I've seen a lot of FWD cars struggling while I was happily chugging along with quattro Audis for 12 years, not gonna give it up. All-in-all, my lease is now $355 and the insurance is cheaper, as well.

I'm a car nut, I'm yearning for Porsches, Ferraris, (older) BMWs, my posts here are proof for that. I'd even get into EVs with a used i3 (because it would be enough if I'm honest with myself) - but with today's market situation is just stupid, I hope the bubble pops hard and consumers eyes' open and stop this nonsense of "I need bigger and better than my neighbor". After all, I want a 911 in my life and the 996 prices need to stay low and hopefully come down a little.

 

[McLaren]

The used market is still wild, but there's signs it's starting to fall back to pre-pandemic days. Certain cars, esp. those built in the last couple years where supply is the big issue, are still commanding premiums, but overall, I think it's peak has been reached. The exotic world is seeing is a bit as well; values aren't climbing as crazy as they were 2020-2021, they're pretty much leveling off.

I can say from a dealership perspective on new cars, don't expect much change til' 2024 is the timeline I've heard pass around.

 

[GranTurNismo]

Savagegeese’s video on the current state of the auto industry sums it up quite well:



EDIT: oh, wait, that’s literally the same video as in the OP.

 

[WolfpackS2k]

Agreed, it's a stupid situation and lot of it fueled by regulation - as much as I'm a proponent of the European Union, the eurocrats' effed up EuroX norms sent the automotive industry in an amazingly stupid direction...

The whole consumer mindset with the SUVs... if only we could kill that... I'm all for cheap cars. My A3 lease (that was $412/month, we were not financially stretched by that on any level, I'm stupid but not that stupid) was up in March and wanted a WRX. I was stupid (as mentioned before) that I haven't terminated the lease early and grabbed a 2021 WRX while I could have. Instead, I was an idiot for thinking that I can get a base '22 WRX for the base price basically (with CVT, my wife doesn't like manuals) as that's perfectly enough. Small sedan, enough for 4 people and satisfies the boyracer in me. Starting market adjustment: 10k. My answer was FU, let's look at the next best option, an Impreza Sport sedan, my wife likes it. Nope, can't order one anymore, Japan doesn't let us.


So, we ended up with an almost base Crosstrek. I don't consider it a SUV because a) I have SUVs and I have to live with my decision and b) it's an Impreza hatchback lifted up a little bit. As far as AWD goes, we live in PA, we get snow and we have some terrain where I've seen a lot of FWD cars struggling while I was happily chugging along with quattro Audis for 12 years, not gonna give it up. All-in-all, my lease is now $355 and the insurance is cheaper, as well.

I'm a car nut, I'm yearning for Porsches, Ferraris, (older) BMWs, my posts here are proof for that. I'd even get into EVs with a used i3 (because it would be enough if I'm honest with myself) - but with today's market situation is just stupid, I hope the bubble pops hard and consumers eyes' open and stop this nonsense of "I need bigger and better than my neighbor". After all, I want a 911 in my life and the 996 prices need to stay low and hopefully come down a little.

I hope you're alright with that current choice. I don't think I could stand driving around in a gutless CVT equipped Subaru all the time I think I might have kept the A3 instead! lol.

Sadly, and I hate delivering bad news, I really do not see 996s becoming more affordable in the near future. And the reason is a simple one. Analog (relatively) lightweight sports cars are becoming a scarce commodity. Automakers no longer care about building them (and/or the ones that do mostly have given up due to the regulatory hurdles). Supply of these vehicles is never going to increase. The only thing that will change is (sadly) most likely the loss of automotive enthusiasts. There are so many external forces these days working against the youth from becoming interested/impassioned with all things automotive related. And so many of the ones that do like cars are obsessed with numbers and nothing else. It's so sad, and also funny, to see people arguing about one car's merits over another on the basis of a 0-60 time. As if it were ever that simple. Don't care that the vehicle in question is more isolated and heavier than ever and sounds like a vacuum cleaner. Just brag about hitting 60 in sub 3 seconds by pushing one pedal and doing nothing more. The message is being lost.

 

[GranTurNismo]

Savagegeese put out another great video about why consumer confidence in the auto industry is at an all time low:



I'll keep my thoughts curt. If dealerships can't be trusted to price new cars what the manufacturers deem appropriate, they simply shouldn't exist. If it takes abolishing, or at least revising, every state franchise law on the books, then so be it. Desperate times calls for desperate action. Because it's the middle class folks who just want an average, dependable commuter car or family CUV that are getting the most nickel-and-dimed out of anyone in the equation.

 

[Joey D]

If it takes abolishing, or at least revising, every state franchise law on the books, then so be it. Desperate times calls for desperate action.

As much as I want this to happen, it won't because the same politicians that would have to make the law are on the payroll of the dealership lobby.

 

[GranTurNismo]

As much as I want this to happen, it won't because the same politicians that would have to make the law are on the payroll of the dealership lobby.

Exactly. They’re too big to fail.

 

[Eunos_Cosmo]

So the tide may be turning. I had approached a Honda dealer in the middle of last year interested in a CRV hybrid. At first I was told there was no markups but I decided I didn't like the previous gen enough to buy one. So I waited until the new one came out and, surprise surprise, the dealer was now charging a $3,000 markup. I told them "I refuse to pay any markup out of principal". A few weeks later I get a message from manager of the dealer asking if I would consider buying from them with no markup, to which I said yes. Well deposit is in. To be honest, I really wanted a PHEV but without the Tax credit for the Tucson (not made in the USA and flat out not available period) and with the Rav4 Prime's priced clear into the $60k range and with the Ford Escape being...well...a Ford Escape the CRV Hybrid at MSRP with an actual build sheet and delivery date seemed like the best path forward. We should be one of the first deliveries. It'll be the first time spending more than $14k on a car...and barely over that considering I'm only paying half.

My experience seems to be increasingly typical. Many of the dealerships that were just empty parking lots last year seem to have a glut of inventory now.

If I'm being totally honest with myself, a used vehicle is probably a better buy at the moment, but I simply don't have the bandwidth for that hassle and the specific car type I want is still unobtanium in the used market. If I wanted a sedan, it would be a different story...but a Hybrid compact SUV? Get outta here.

 

[GranTurNismo]

Maybe the tides are perhaps turning. CNN claims that in December 2022, only 36% of customers paid over MSRP for a new car.

https://www.cnn.com/2023/01/19/business/new-car-prices/index.html

 

[Shaun]

only 36% of customers paid over MSRP for a new car.

Still not the case down here sadly.
Still low stock so if you are lucky and the dealer actually has stocked they are more often than not above retail price.

We bought a new car yesterday and really lucked out that what we wanted was in stock (at one dealer out of about fifty) and we actually got it at retail price.

Even then I feel ripped off, we've bought four new cars in the last twenty years and not once would you consider paying retail. Sadly we couldn't wait this time or that would have been the case to wait it out.

I did see an advertisement on the tv last night where Great Wall Motors were discounting certain models by $1000. As far as I know they are the only manufacturers doing so at the moment.
Hopefully the tide is starting to turn.

 

[Tornado]

Might as well post this here:

Corolla GR and Civic Type R resellers get burned at auction

In a seeming warning to would-be flippers, two hot hatchbacks (Toyota Corolla GR and Honda Civic Type R) are bid for well under the mark-up the buyers paid

www.autoblog.com

LOL idiots. Imagine being so stupid as to try and flip a car after you already got bent over a barrel with it.

 

[WolfpackS2k]

^Not that I try to actively wish bad things on anyone, but I'm really happy to see that. Their actions actively hurt the ability of others to buy fun affordable cars.

Thankfully it looks like I hitched my wagon to a reputable dealership. I was offered a Core GRC in mid-December at MSRP (didn't even include any BS dealership tacked on fees or packages). Politely reminded them I was waiting for a Circuit Edition and thanked them for contacting me. I'm now friends with the guy that was 2nd in line behind me and he bought it, again at full MSRP.

 

[Eunos_Cosmo]

^Not that I try to actively wish bad things on anyone, but I'm really happy to see that. Their actions actively hurt the ability of others to buy fun affordable cars.

Thankfully it looks like I hitched my wagon to a reputable dealership. I was offered a Core GRC in mid-December at MSRP (didn't even include any BS dealership tacked on fees or packages). Politely reminded them I was waiting for a Circuit Edition and thanked them for contacting me. I'm now friends with the guy that was 2nd in line behind me and he bought it, again at full MSRP.

Lucky. I have nothing but the scummiest Toyota dealers near me. Like $16,000 in "accessories" scummy.

 

[GranTurNismo]

Bloomberg - Are you a robot?