Dealer Markups

[Veloist]

It’s the worst case scenario right now…a hot brand new car coming out in what is pretty much a seller’s market.

Car dealers can thank companies like Vroom, CarMax, and Carvana for taking in cars way more than they are worth…putting more money into consumers’ pockets and as a result being okay with the higher new car prices. There’s actually a long list of reasons why people are spending. It’s intriguing and amazing to see. Lots of people relocating which is boosting car sales. Those people who move to new locations don’t realize there’s a global car shortage but they have no choice so they just take what’s on the lot…OR find the exact car they want in a dealer that is asking well above MSRP. Big ripple effect.

+1 on the best dealer profits most dealers have ever seen. I think the last time it was this crazy was cars for clunkers in 2010. I’ve never seen numbers like this and never imagined it. Last year I was pushing Foresters and Outbacks for $2k under invoice. This sellers market which really took off late March and April, has helped me afford the down payment for a house almost a year early.

[trippinbillies40]

Definitely all true.

But I think there's going to be some severe long term economic repercussions for how much customers are paying for vehicles right now, both new and used. There's going to be a record amount of people in massive negative equity situations in the next few years which will slow the market down considerably. Stores sticking to MSRP and foregoing ADM's will have a better shot using equity mining tools like TUA. But yeah, I think 3-5 years after the chip shortage clears, we'll see a dip in new vehicles sales under 16 mil.

[Dadhawk]

Originally Posted by Veloist

Lots of people relocating which is boosting car sales. Those people who move to new locations don’t realize there’s a global car shortage but they have no choice so they just take what’s on the lot…OR find the exact car they want in a dealer that is asking well above MSRP. Big ripple effect.

Not sure I understand the correlation between moving and buying a car. Folks do realize they can drive (or even ship) there current car to a new location, right?

The only time I see these two might go together is if you are relocating internationally.

[Pete]

Originally Posted by Dadhawk

Not sure I understand the correlation between moving and buying a car. Folks do realize they can drive (or even ship) there current car to a new location, right?

The only time I see these two might go together is if you are relocating internationally.

From what I have read, a substantial portion of the moving happening now is people moving out of the big city centers to the suburbs or even further out to rural areas to get away from the crush of people during covid.

A lot of these folks might have lived without a car and just used Uber, or had a pretty terrible car they used very infrequently and now want to upgrade since they have to drive every day.

I could see this driving some sales right now.

I was extremely fortunate to close on my house in the burbs in December 2019, and now my house has gained 20% in value since then.

[Veloist]

Originally Posted by Dadhawk

Not sure I understand the correlation between moving and buying a car. Folks do realize they can drive (or even ship) there current car to a new location, right?

The only time I see these two might go together is if you are relocating internationally.

That makes sense. I’m from the San Francisco Bay Area.
There are a lot of people who are moving from big cities (New York) where they never needed a car.

My biggest customer base are people who lived in San Francisco and who are moving out to one of the suburbs. These people never needed a car and now they do. Or people moving into an apartment with a parking space for the first time.

Must be a city thing but majority of my sales are people in this situation.

[stilesg57]

Originally Posted by Pete

From what I have read, a substantial portion of the moving happening now is people moving out of the big city centers to the suburbs or even further out to rural areas to get away from the crush of people during covid.

A lot of these folks might have lived without a car and just used Uber, or had a pretty terrible car they used very infrequently and now want to upgrade since they have to drive every day.

I could see this driving some sales right now.

This describes my situation exactly. I sold my E46 ZHP years ago when I moved into the city; now I’m in the ‘burbs and need a car again soon.