Yeah.. with any luck I'll be able to capitalize on the timing (finally) also.
Our current house, we bought at the height of the last market --2005--right before the recession--because wife had to have it. Ugh.
Not this time though!
Current New Vehicle Market
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Yeah.. with any luck I'll be able to capitalize on the timing (finally) also.
Our current house, we bought at the height of the last market --2005--right before the recession--because wife had to have it. Ugh.
Not this time though!
Gut feeling mixed with industry information...
I think we'll start seeing the used market on $50k+ vehicles slow down in the next 4 months. It won't drop back to pre-pandemic levels, but it will drop from the highs we've been seeing now.
Next, the new vehicle sales will continue to stumble with supply chain issues. Manufacturers will be forced to increase incentives to order vehicles (Ford is already giving away $1,000) to keep people ordering and sustaining the wait times.
At some point the manufacturers will decide they won't incentivize the customers enough, then customers will slow down the ordering...giving the manufacturers the ability to build stock vehicles.
Customers, will then jolt the market, because now with stock units being built, there won't be astronomical waits. So for a 6-8 month period of the pendulum swinging in that direction, it will bump sales velocity again.
After the initial bump, it will start to normalize back to pre-pandemic ways. Dealers will NEVER stock the cars you saw on lots in Q4 of 2019, ever. Manufacturers and dealers both agree on that.
I'm not sure when you sold...but even in the last 10 years the industry has completely changed, in a good way. There are still slime ball dealers, but nothing like there used to be.
How much of a decrease % wise do you see in terms of inventory when you get back to “Normal?”
How are “volume” dealers gonna maintain being “volume” dealers without substantial inventory available?
People will buy or not buy a vehicle on the simplest thing… you gotta have variety don’t you?
For example, my wife fell in love with her 2020 Explorer ST… but if it wasn’t Red…. She didn’t want it. She had to have that Red.
2004 is when I sold, but that is good to hear. What did it for me is I sold a used vehicle at full prices and they payed me the for a mini deal, which I think was $100 at the time and I was expecting to make 7-800 in commission on it.
I ordered one December 2021, and was told to expect a 2023 delivery year (not model year).
30-40%.
Ford, and other manufacturers, are planning to go to an order system that takes 4-5 weeks start to finish. Kinda like what they do with their parts availability. They want a perfect match for sales volume being produced regularly. Prevents stockpiles of vehicles, prevents them from having to give away huge incentives, lowers costs on dealers for holding inventory.
Volume dealers will utilize the Customer Order Verification Program (Ford) and will still sell volume. It will become MUCH more about choosing who to deal with (customer choosing experience) rather than seeing who has the inventory. This part, I'm actually very excited about. Gives small/medium sized dealers in smaller markets the same potential as larger dealerships in huge metros.
Studies over the last two years indicate that consumers are willing to wait 6-8 weeks, up to 12 weeks for the vehicle they want rather than settling for one on the lot that either has more or less equipment than they ideally want. Yes, there will be plenty of people who need something today, that can't wait. But for 90% of new vehicle purchases, whether it's purchased today or in 6 weeks, it's all the same. There have been tens of thousands of consumers surveyed and over 80% show that they have no problem waiting up to 8 weeks. 12% will wait 12 weeks. I believe it was 6 or 8% that weren't willing to wait longer than a week.
Your example is perfect. I'd all but guarantee if your wife had the opportunity to buy a Blue ST today....or wait 6 weeks to get a red one, she'd wait on the red one.
I mean, that's illegal. I would've sued them.
That's possible too...probably depends on your order specs, how many orders (non-reservation holders) they have ahead of you, etc.
It’ll be interesting to see how this pans out. 30-40% doesn’t seem TOO drastic…
I could see that working…
Is there any chance some manufacturers go rogue and go back to previous building, stocking selling styles?
It would be interesting to see competing versions between manufacturers.
I can see the sales ads now… “Don’t wait 6-8 weeks for a new Truck! Come to Bob’s Dodge factory outlet in nutsack Oklahoma today and pick from our massive inventory!”
I will only say that manufacturers will reward sales momentum and their willingness to let market share disappear to whatever works will be limited.
Wait, so what you’re saying is… they’re gonna do what’s most profitable?
I'm just guessing on the 30-40%.
Currently, Ford is at a 18 day supply....in 2019 they were 245. 40% cut would be about 150 day supply. Ford has already announced they'd like to stay at a 45 day supply. So, with that math (although I find it to be fairly optimistic) it would cut inventory by 80%.
Chance? Sure. Definitely a possibility! Manufacturers have had enough of the Koolaid now though where they are really liking not having to throw huge rebates on vehicles. They'll try to find a happy medium.
Stellantis has been advertising like that in the Midwest. There are 3 or 4 large Stellantis stores that have really picked up market share with that process...but now they're about out of vehicles too.
The most profitable way for manufacturers to operate is to be efficient with their production, to keep stock at a low, and be able to always have fresh inventory to sell. On a smaller scale, dealerships started looking at their inventories this way in the late 2000s, a few years after Dale Pollack created VAuto. The more efficient you are, the more profitable you are. Manufacturers are going to try their hand at it on a larger scale.
Brought the wife shopping this past weekend for a new SUV. Pretty much nothing on the lots to even sit in so there is zero chance she would order something without physically seeing the vehicle first since she has no idea what she wants.
So we decided to look at gently used but the prices are ridiculous. It didn't take us long to get frustrated and just put off for awhile.
So we decided to look at gently used but the prices are ridiculous. It didn't take us long to get frustrated and just put off for awhile.
What size SUV is she looking for? What are the must haves? What's your budget?
When the parts shortages end, eventually, demand will not always sync with production. The mega-dealers with the huge lots will suck the excess production like a sponge. The manufacturers will be unbelievably tempted to cheat their production that way.
Let me know when the strippers get there. Serious buyer. Lmfao
I was a tech at a dealer for a few years and couldn't imagine ever going back to that life or even recommending to anyone to go down that road. When I left they were starting to work Saturdays and my wife wasn't having it. Looking back at it had I stayed I would have missed so many things with my kids it would have made me sick.
4/10's 4 life
That's just dealer specific.
My son was looking at trading his 2017 F150 for a new truck. We priced a mid range XLT and it was $60k. I bought a similar XLT in 2016 for $40k, same truck is $60k. Difference is salaries haven't gone up 50% in 5 years. Somethings gonna give, and when it does, it's going to hurt.
Eh they'll just roll out 8 year loans as the norm as prices rise. People will still buy to make it work monthly payment wise.
6 seems to be the standard with 7 year loans becoming more popular. Only a matter of time before 96 or even 100 gets introduced imo
The big dodge dealerships in norcal have trucks on there lots for sure. In fact inventory is much higher than any other brand in norcal.
You would think the GM would take advantage and ride that line of being just aggressive enough on pricing to turn and burn that inventory. But, maybe the profit numbers are telling him no.
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