[CoachKandSportsguy]

Originally Posted by Lil GTO

Ok I have a great deal for all of you that want new domestic made vehicles. . . .and you have a little time . . . and wait the 6-10 weeks . . .

That's great if you have time, and don't need car transportation for any kind of income or food shopping. . . . however, retired people account for about 20% of the population. . so the remaining 80% probably need vehicular transportation for one of the just two items above. Waiting 6-10 weeks is not a viable option for that scenario.

However, to be fair to the dealerships, they have fewer and fewer used cars to sell for several reasons:

Carvana is bleeding shareholder cash to overpay for trade ins, and sell them, driving up the price of used cars and removing them from dealership lots. Yes, i was short CVNA from near their all time high, and covered recently for a nice profit. Looking to go short again at a higher price prior ti earnings or in response to a good earnings call which can't keep going.

Rental car agencies did not purchase as many new fleet cars due to the reduction in business travel, so there are less used fleet cars available.

With the price of used cars significantly higher, leased cars are getting purchased by the leasee at the end of the lease, and there are fewer lease returned used cars available.

Finally, with the work from home for the significant IT and corporate wage slaves, there is a huge drop in car usage, and the resulting mileage aging, so the initial car purchase turnover has extended the time to need a new car from purchase, and so new car trade ins for another new car has slowed down as well.

from a new car point of view, the port of LA had a rule that empty containers could not be stacked more than two high, which caused a reduction in container throughput as the empty containers were not returning to the far east as quickly as in the past. . . that changed last week as that cause was identified as one of the current throughput issues of pre assembed car parts. But then there are trucking issues created by Amazon. Amazon creating warehouses and requiring local delivery fleets, draws employees from the long haul trucking pool. Why?, trucking types who want to sleep at home every night for regular sex instead of on the road have a more appealing work option for about the same amount or slightly less money in warehouses or local delivery fleets.

Put that all into the macro economic blender, used cars have a higher margin at dealerships than new cars. With fewer used cars are available and are being sold at dealerships, along with fewer new cars as well, requires a higher margin at sales time to pay for the fixed dealership costs. . fewer unit sales to cover fixed costs always requires more margin, (prove me wrong - find me any physical sales business that doesn't have this issue which is not a niche industry)

So to be fair to dealerships, trying not to go out of business or declare bankruptcy, there are very real reasons for increased margins for survival, and they are trying to survive in very trying times. . . so sure, calling it ripping you off makes it easy to accept, but i suspect that there will be a small wave of car bankruptcies in the near future as a result of severe pre-pandemic behavioral cycles which have been truly disrupted and require several years to return to normal, or some other financial event related to cars sometime next year.

As i typed in the penglobal thread, best conclusion is to keep your car in good working order, and try to avoid any accident, as you won't have an easy time getting a replacement vehicle quickly and cheaply. Avoiding accidents is tough, but that means driving a bit more defensively. . . or using your golf cart more, but the same goes for golf carts around the country.

finance guy

[retiredguy123]

Car dealers are notorious for charging different prices to different buyers for the same vehicle. In normal times, this difference can be as much as $4,000 for an average vehicle, depending on the knowledge and resourcefulness of the buyer. In the current market, I suspect that car dealers are very happy to take advantage of uninformed buyers, to expand the price difference from $4,000 to an even more inequitable price difference. I think it is shameful that car manufacturers have not developed a fair pricing system for their product, like almost every other product retailer.

[CoachKandSportsguy]

Originally Posted by retiredguy123

Car dealers are notorious for charging different prices to different buyers for the same vehicle. In normal times, this difference can be as much as $4,000 for an average vehicle, depending on the knowledge and resourcefulness of the buyer. In the current market, I suspect that car dealers are very happy to take advantage of uninformed buyers, to expand the price difference from $4,000 to an even more inequitable price difference. I think it is shameful that car manufacturers have not developed a fair pricing system for their product, like almost every other product retailer.

So you have a firmly held belief that won't change, regardless of the facts presented in the case above? correct? ie, pandemic, disruptions, etc supply and demand differences, shouldn't change the end user pricing during model years, even if the dealership will go bankrupt?

And you want a nationalized or commodity pricing system, which equalizes all the different options, so that you don't have to shop around, although many are willing to shiop around for commodity items where the price different in percentages are huge, but the absolute savings is small, or non existent if transportation costs are taken into account?

That would mean that the fixed and variable costs of a dealership be standardized so that the markup for a standard profit margin for tax purposes are identical? that is the utility model for rates and profit?

there are higher percentage difference in the grocery store, than potentially the 4,000 cost difference, but that is ok because the price is small and you don't spend much every time at the grocery store, but a car purchase every 7-8 years shouldn't have variability?

finance guy

[retiredguy123]

Originally Posted by CoachKandSportsguy

So you have a firmly held belief that won't change, regardless of the facts presented in the case above? correct? ie, pandemic, disruptions, etc supply and demand differences, shouldn't change the end user pricing during model years, even if the dealership will go bankrupt?

And you want a nationalized or commodity pricing system, which equalizes all the different options, so that you don't have to shop around, although many are willing to shiop around for commodity items where the price different in percentages are huge, but the absolute savings is small, or non existent if transportation costs are taken into account?

That would mean that the fixed and variable costs of a dealership be standardized so that the markup for a standard profit margin for tax purposes are identical? that is the utility model for rates and profit?

there are higher percentage difference in the grocery store, than potentially the 4,000 cost difference, but that is ok because the price is small and you don't spend much every time at the grocery store, but a car purchase every 7-8 years shouldn't have variability?

finance guy

My only point is that, when you go into most retail stores, customers expect to see a price that everyone pays. Americans tend to like and accept that pricing system. They don't want to argue with the Best Buy salesperson about the price for a television or the Publix cashier about the price of tomatoes. The advertised price is the price. I think that a similar pricing system for vehicles would be well received, if it were implemented fairly by the car manufacturers. If the current vehicle market has a shortage, why haven't the manufacturers adjusted the MSRP to account for it? They know how many fewer cars they are making. I suspect the reason is that they want the dealers to be better able to take advantage of customers who have no way to determine a fair price in a difficult market. Many people think that car dealers are dishonest, and they often feel intimidated and cheated by them.

[LateBoomer]

supply and demand of course. Price-gouging is another thing. And that's what's happening.

[Mortal1]

So all the blah, blah, blah, blah and it's just supply and demand. don't like the price then don't buy. can't afford it...well that sucks, but is part of life in this society.

It ain't about making "the individual" happy, but in giving them a chance to seek and work and hopefully find joy. that's it. pretty darned cool.

[frose]

Wow!!!!!!

[Luggage]

Don't forget the golden California rule of Union drivers for trucks coming out of the ports

[Luggage]

Forces anyone to buy a new car, there are about 13 million used cars right now. And yes I've noticed carvana is actually higher than dealers on used cars right now. By about 2 to 3,000 but that's still a lot better than paying $10,000 over list price for an average sedan. Thank you very much I'll stick with my 5 year old cars with 25,000 miles on them. And the glass is half full since I can get more from my used car if I do a trade in

[DaleDivine]

Glad I'm not in the market for another car for at least a couple of years...

[noslices1]

I purchased a new car in June and paid $3000 over sticker price. However, my trade-in was $9000 more than it was valued last year at this time.

[flyboyl39]

The reason why there is no standardized pricing is do to franchise law. The auto dealers in the 50’s and 60’s formed trade groups to protect them from the very large and powerful manufacturers,GM, FORD and CHRYSLER. These trade groups were successful in passing very strong laws that give the dealers autonomy from the OEM’s. These laws were needed because as the OEM ‘s grew they would no longer need the dealer ( Henry Ford couldn’t afford to make the car and also sell it , he needed the independent dealer ) so now with public money from the markets the OEM’ could crush the dealers.That is why automobile purchases are one of the last truly negotiated sales transactions left, because the dealer can price the vehicle the way they want to.

[LateBoomer]

if a dealership is engaging in deceptive practices - like advertising one price, but presenting you with a much higher price when go to the dealership - it is actually the definition of price-gouging and is illegal

[flyboyl39]

Originally Posted by LateBoomer

if a dealership is engaging in deceptive practices - like advertising one price, but presenting you with a much higher price when go to the dealership - it is actually the definition of price-gouging and is illegal

That is absolutely true, which is why Monroney stickers were required by law in the 1950’s to give the consumers an idea of the value of the particular car. Those have been revised through the years to provide more and more info
( like MPG) to further help the consumer.

The fact that it is a negotiated sale does not give the dealer the right to engage in deceptive advertising practices.

[justjim]

Car prices and house prices are just “crazy”. If you really don’t need either, (like most Villagers) just have a little patience and these crazy times will soon pass. Fore!