Here's When Car Prices Will Drop Like a Stone (1st world problems rant)

Here's When Car Prices Will Drop Like a Stone

Never lolz, maybe when the interest rates go back up and productions kicks in? The past couple of months I have been looking to trade-in/Sell my Mazda cx-9 (we have 2) for something that is better on gas. Started looking at used hybrid and couldn't find something that I really wanted. So I turned to new hybrid SUV's Ford, Toyota, and Kia. I had to visit 3 different lots to test drive the Kia Hybrid  and nothing was local for Ford, and Toyota had nothing. Toyota, Kia and Ford are unable to give me a price and want me to order a car without testing driving it.  Kia finally brokedown and gave me price with a extra fee of $2,760 " market adjustment cost", told me when I order it I can expect to have it in 4-5 months.....

Meh.

I tend towards purchasing 10yo cars. My newest car ever is a 2014 Dodge that we bought a year ago.

We're all set, with my wife and I both driving new-ish cars.  Mine is the older of the two, and happens to be a 2019 Mazda CX-9.  I'll be keeping it, because 27 mpg seems pretty darn good for a vehicle as big as it is.

I find it highly unlikely that price of anything will be dropping in the near term.  The best we can hope for is that availability improves.  The prices will likely be eye-watering.

preach (dudeist priest) said:

Meh.

I tend towards purchasing 10yo cars. My newest car ever is a 2014 Dodge that we bought a year ago.

Yeah, me too, but have you priced those lately?

Floating Doc (Forum Supporter) said:

preach (dudeist priest) said:

Meh.

I tend towards purchasing 10yo cars. My newest car ever is a 2014 Dodge that we bought a year ago.

Yeah, me too, but have you priced those lately?

No, but if I could get out of the wife's AWD Hemi Charger what we owe on it I 110% would. I am not a fan of US cars.

preach (dudeist priest) said:

Meh.

I tend towards purchasing 10yo cars. My newest car ever is a 2014 Dodge that we bought a year ago.

Problem with that is, the $6,000 10 year old used car is selling for $8,500.

I am not an automotive industry expert.  However, I'm hoping to buy a new car (maybe two) at the end of the year, so I'm keeping an eye on the market. I'm hoping that the chip manufacturing ramps up soon to enable me to do that.  I heard somewhere on this board that Ford is cranking out vehicles and sticking them in parking lots all around Detroit without the chips to make them run.  Otherwise, they're ready to go.  A friend of a co-worker works at GM and they said GM uses the same chip to build 4 vehicles.  Chip is in it to drive it off the assembly line and park it, chip is removed and stuck in the next one coming off the line so the next one can be driven off.  Apparently, they do that three times and the chip stays in the fourth vehicle for sale.  So, 25% are sold and 75% are parked for when the chips arrive.

If that info is accurate and extends to other manufacturers, I think there will be a flood of new vehicles at dealers when the chips arrive.  The video above mentions dealers are seeing "record" profits from keeping smaller inventories.  I question that because I think there's usually a fixed cost from the manufacturer on what the dealership can make and profit seems more tied to volume in the old days.  Furthermore, manufacturers want to move cars, regardless of what the dealers want to do.  There have been times in the past that a manufacturer will overload a dealer with cars to get them off the manufacturers books and give the dealer incintive to move them.  If there are that many cars in holding waiting for chips, when the new chips come in, I'm sure the manufacturers will want to get rid of them quickly and get them off the corporate books.  So, I'm hoping we'll see dealers with more cars that they can sell and will be discounting them to get them moved.  Depending on how quickly the cars get delivered, I don't think it'll be a quick situation (like one week a dealer has none and the next they have 100's), but imagine it will still be fairly quick.  Obviously, delivery of that many vehicles will also be a challenge that will affect things.

If the above occurs, the options for buying a vehicle become huge for the consumer.  I agree with the video that used car prices are being driven up because consumers are looking for cars and with a small number of new cars available, they're turning to used.  If there is a glut of new cars, that should take the pressure off the used market. 

Of course, there will still be dealers demanding MSRP or above at first, regardless of inventory, but all it'll take is one or two dealers to start discounting and the others will follow along to compete.  I'm sure will see differences between the beforetimes and the future in how dealers work, but I believe it'll be pretty much the same as before. 

Just my $.02.

TLDR: Manufacturers want to move cars and will dump their inventory on the dealers as soon as the chips are in and incentivize them to move that inventory quickly.

-Rob

In reply to 1988RedT2 :

How do you get 27MPG? I best I have gotten is 24MPG

I'm beginning to wish I'd bit the bullet and bought a used rental car when Hertz/et al were unloading inventory....

In reply to rob_lewis :

Along Southfield Road in Allen Park, MI there is a Roush plant FULL of Broncos.   
 

Used car prices have dropped, but in late April they started climbing again.  Does not look like cars are getting cheaper.  The YAA guys have some interesting data they present on their videos.  There is a link to video that depicts the graph below (about the 5 minute mark).

YAA

trigun7469 said:

In reply to 1988RedT2 :

How do you get 27MPG? I best I have gotten is 24MPG

I haven't reset the trip meter in 3 or 4 thousand miles.  My current average mpg is 26.9.  That involves a lot of grocery runs and short trips along with a few longer runs on the interstate.  The best I ever saw after filling up and getting on the interstate was around 32 mpg.  Must have had a tailwind.

I do tend to drive a bit easy on the gas, corner a little too fast, and brake only when necessary.  If I'm rolling up to a stop sign and there's nobody in my trunk, I'll lift well before I know I have to stop and coast.  Most other drivers I observe will be in the throttle right up until they're heavy on the brakes.  Fine on the racetrack, not so good for fuel economy.  I keep my tires inflated a few pounds above the pressure indicated on the door sticker, but well below the maximum pressure on the tire sidewall.

Also, my CX-9 is the FWD, not the AWD, and that makes a significant difference.  I specifically selected the 2WD because it is more fuel efficient.

In reply to trigun7469 :

As Honda begins to ramp production back up, they seem to be focusing on hybrids. Most dealers had one or two in stock and we were actually able to take a few test drives. 

We just bought a new Accord Hybrid for MSRP, which I felt was a good deal considering that our trade in brought about six grand more than it would have a year ago. We ordered one that was consigned to the dealer because we couldn't find the color that we wanted, but it arrived in about three weeks...about half the time that we had expected.

My friend ordered a new non-hybrid CRV the same week, and he's still waiting.

Appleseed said:

preach (dudeist priest) said:

Meh.

I tend towards purchasing 10yo cars. My newest car ever is a 2014 Dodge that we bought a year ago.

Problem with that is, the $6,000 10 year old used car is selling for $8,500.

I paid $6500 for a $3500-4500 car last month. 
I had to consider that I tend to keep my cars for a minimum of five years, often more than ten. 

A few thousand more dollars up front to get a low mileage civic isn't going to matter as much extrapolated over several years. 

My parents have a 2020 Honda Passport with about 30k-35k miles. They're trading it in on a 2022 Passport. Only difference is the color. Everything else is identical. 
 

Their cost? $5,000 after trade in. Seriously. They're paying $5k basically for 2 years more warranty, 30k less miles, and all new tires. Oh, and their car is paid off too.

I really want a new car. But I do t commute and I do t care about gas prices.  Rust will get my suburban before age and mileage do. 
 

then I'm back to the marketplace to see what E36 M3 box I can afford for $5k.  My retirement guy told me "you know. You could spend some of this money".  Hush buddy. Hush. 
 

anyways. Prices will drop. 

stroker said:

I'm beginning to wish I'd bit the bullet and bought a used rental car when Hertz/et al were unloading inventory....

I wished I had bought 10. 

stroker said:

I'm beginning to wish I'd bit the bullet and bought a used rental car when Hertz/et al were unloading inventory....

I've seen and driven some of those rental cars.

I'm pretty sure you didn't want to buy one of them.

John Welsh said:

stroker said:

I'm beginning to wish I'd bit the bullet and bought a used rental car when Hertz/et al were unloading inventory....

I wished I had bought 10. 

So do I, gained $5000 trading in my van after a year and a half of ownership. This whole time I've told people cars are a depreciating asset boy was I wrong. 

Edit: I was able to pay MSRP for my new Sienna Minivan. Local dealer lists a market adjustment of 3-5000 but doesn't charge it to actual local buyers.  Ordered the van in January and it arrived mid April. Getting a test drive was difficult, had to show up hours after someone backed out of buying the one that just arrived on the lot. I was still told waiting a few hours to come in for the test drive might be too long. 

BoxheadTim said:

stroker said:

I'm beginning to wish I'd bit the bullet and bought a used rental car when Hertz/et al were unloading inventory....

I've seen and driven some of those rental cars.

I'm pretty sure you didn't want to buy one of them.

Own one (or 10)? No. Buy 10 to resale? Hail yes. 

The madness continues $30,000 2017 Mitsubishi Lancer

Datsun310Guy said:

In reply to rob_lewis :

Along Southfield Road in Allen Park, MI there is a Roush plant FULL of Broncos.   
 

Guessing Roush is doing the roof delamination recall for the Broncos.

Remember a few years ago, if someone said they paid MSRP for a car they would have been hammered into the ground as a sucker?

In reply to Appleseed :

Purchased an F250 at work for MSRP, almost had a heart attack. I remember getting 10-15k off the last few fords at work. 

In reply to Andy Neuman :

During a Chevrolet truck month in 2017 I bought this for sales vehicle.  I need to upgrade and it's an interesting situation.  The plan is a Toyota Taco.