Current vehicle economics and prices - ripping off is a bit harsh

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  #16  
Old 10-25-2021, 07:23 AM
SusanStCatherine SusanStCatherine is offline
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My husband looked at a new Hyundai yesterday. The dealer was asking $14,000 over MSRP - SMH
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Old 10-25-2021, 07:27 AM
Marine1974 Marine1974 is offline
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What is forgotten in what is mentioned in your economic analysis of car sales the 454 billion stimulus money for the car industry. Where did that go ?
This is the problem for the consumer when there is no supply and demand effecting the economics of car sales . Almost a 1/2 a trillion.
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Old 10-25-2021, 07:34 AM
Marine1974 Marine1974 is offline
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There is no supply and demand when the auto industry receives
1/2.a trillion from the tax payers
to not go bankrupt and then turns around and makes less cars and charges premiums on cars sold .
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Old 10-25-2021, 07:39 AM
B-flat B-flat is offline
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This doesn't have anything to do with today's pricing, it's all about timing. In January of this year I went to a small Chrysler dealership in Inverness I found a new leftover 2019 Pacifica with a sticker of $39k, it was above my budget and I let the sales rep know that. He said you won't pay $39k we'll knock $9000 right off the sticker. I also had a Town and Country to trade in and based on price offer from Car Max the day before I knew $6000 was a fair trade in allowance. The dealer offered me $5k I said never mind I'll sell it to Car Max for $6k. As it turns out they met the $6k offer so I drove away from the dealership in a brand new 2019 for $24k. Just as a frame of reference in 2013 I bought the Town and Country that I traded in with16, 000 miles on it for $25k. I tend to doubt I'll ever get another deal like the one I got this year. It was all about timing.
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  #20  
Old 10-25-2021, 07:44 AM
Retiredsteve Retiredsteve is offline
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Quote:
Originally Posted by CoachKandSportsguy View Post
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
I totally agree with you. We have a 2016 Kia with low miles. We are at the time of making the decision to sell or not. Our thought is that with no issues with the car it might be better to look into an extended warrantee when the original one ends (it was 10 years or 100,000 miles).
  #21  
Old 10-25-2021, 07:53 AM
Singerlady Singerlady is offline
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Quote:
Originally Posted by retiredguy123 View Post
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.
How about the differences in a dealership’s local, city, county taxes and overhead costs depending on their location? Food doesn’t cost the same in every Publix grocery store, for example. Just sayin….
  #22  
Old 10-25-2021, 07:57 AM
Rmiller622 Rmiller622 is offline
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They get paid a lot of money to perform. Yet The Delights go out into to crowd begging for tips! This is very unprofessional!
  #23  
Old 10-25-2021, 08:12 AM
Marylee139 Marylee139 is offline
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Smile Trying to buy a car.

Quote:
Originally Posted by CoachKandSportsguy View Post
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
My car was totaled by a golf cart in June. They did not give enough to even replace it with a similar used car. So here I sit and wait! Maybe in 2023?
  #24  
Old 10-25-2021, 08:27 AM
retiredguy123 retiredguy123 is offline
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Quote:
Originally Posted by Singerlady View Post
How about the differences in a dealership’s local, city, county taxes and overhead costs depending on their location? Food doesn’t cost the same in every Publix grocery store, for example. Just sayin….
I understand that different dealerships may need to charge different prices. Although, I think Best Buy's pricing is pretty consistent at every store. The problem is that car dealers use dishonest tactics to get higher prices from uninformed buyers, but they will sell the same car to an smart buyer for a much lower price. Most retailers do not use these tactics.
  #25  
Old 10-25-2021, 08:39 AM
Goinghiway Goinghiway is offline
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Quote:
Originally Posted by retiredguy123 View Post
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.

“Many people think that car dealers are dishonest, and they often feel intimidated and cheated by them”…. The truth hurts, eh?
  #26  
Old 10-25-2021, 08:50 AM
Joe C. Joe C. is offline
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Car dealers depend upon LOYAL CUSTOMERS ..... So when they jack up the price of a car ten thousand dollars over MSRP, they are dissolving their customer base. Do you think that the customer will forget getting porked when times were tough? When and if things get back to "normal", do you think that the "loyal customer" will be that forgiving?
Before jacking up the price of a car, maybe the dealer should give up passing out the free doughnuts and coffee, hot dogs and pop corn. Maybe lay off a few salesmen too. They most likely are on commission, and would probably make more on unemployment.
Also, the "how was our service" surveys that include postage.... they could dump them too (at fifty cents postage for each one).

So all the reasons about the supply shortage and backup at ports just don't cut it for me.
  #27  
Old 10-25-2021, 08:55 AM
Larry P. Larry P. is offline
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Finance Guy; you are missing one huge point. The current low inventory levels of new vehicles are being caused by the global semiconductor shortage. I'm in the automotive supplier industry and all U.S. assembly plants are suffering from this shortage, the only plants running anywhere near normal levels are pick-up truck plants and high end SUV plants that produce the most profitable vehicles. Most plants that produce cars or lower end SUVs and Crossovers have been down most of the year; thus the shortage in new vehicles for sale. It's supply and demand at this point, demand is much higher than supply now and it will probably be that way into well into 2022.
  #28  
Old 10-25-2021, 08:57 AM
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Default New car prices

We just purchased a replacement for our 2013 Sienna. We looked at all brands that manufactured a midsize SUV. Hyundai immediately told us there was a $2995 markup on the MSRP on all of their vehicles. We told them see you later. Lot inventory was low at every dealership we shopped at. We were able to strike a deal for the exact SUV we wanted with Toyota at a fir price. Doing research before shopping we were armed with the knowledge of what a fair deal was. GM is currently releasing trucks to the market that were waiting on chips. COVID is still creating havoc with the supply chain in out of the far east. Toyota cut Southeast Toyota's allotment 40% in September due to a factory in Vietnam being shut down for 2 weeks due to COVID. The facility manufactured wiring harnesses. Another thing to look at when pricing a car is dealer add ons. Many dealers add on a list of 5 or 6 items at a cost of $1995 and up. These items allow the dealer to make money they are low cost but are billed at a premium price. We attempted to delete them from the deal at 2 dealerships they said no, we walked. The biggest ripoff is the $799 documentation fee charged across Florida.
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  #29  
Old 10-25-2021, 09:01 AM
merrymini merrymini is offline
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Default Fixed prices for autos

Quote:
Originally Posted by retiredguy123 View Post
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.
They tried this with the Saturn and it failed. A great many people thought it failed because the product was not good and that the car would have failed anyway. May be time for a good product to try it. It appears to be reasonable but cannot understand why it does not work. By the way, Penney’s tried lowering prices by not having sales, and it failed too.
  #30  
Old 10-25-2021, 09:02 AM
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Don't buy a new car until the shortages are resolved. There are plenty of used cars on the market right now. Yes, the used ones are overpriced, too, but not anywhere near the crazy prices dealerships want.
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