mmarshall

Welcome to the Great Automotive Sellers' Market of 2021-2022. In November 2021, average new-vehicle transaction prices reached 46K...up some 13% from November of last year. Here's an interesting video from an ex-dealer who used to be in the business. He argues (perhaps with some merit)? that what we're seeing today is not a fluke, but that this marks wholesale (no pun intended) changes in the industry and marketing, and that, as consumers, we may have to simply change the way we live, the vehicles we demand, and how much we are willing to pay for those vehicles. No matter how high prices go, unless it is an emergency (totaled vehicle, stolen vehicle, etc....), and we must get another vehicle ASAP, we aren't necessarily forced to go out and pay those prices. Many of our vehicle WANTS are not necessarily our vehicle NEEDS.

I know, in my case, I got an Encore GX mostly to have something smaller, easier to drive/manuver/park, and more versatile than my previous large sedan....but still with Buick smoothness and quietness. IMO, it was worth the 31K it stickered for (and I got a discount from that)...but it was definitely NOT worth the average 46K transaction price of today....or even the 36K that the dealership would be asking for that vehicle today, a year later....although I, as a repeat customer, might get at least a little break...dealerships usually like repeat customers.

I'm not a lawyer, but at least some of this video sounds to me suspiciously like collusion among manufacturers to limit supply and charge higher prices. Years ago, that was referred to as Price-Fixing....which became illegal.

Och

iTrader: (3)

You mean higher vehicle prices? In the USA cars were already way too cheap compared to the rest of the world, and still are.

Motorola

Gasoline too.

mmarshall

Well, yes and no. You have to compare apples and oranges. First, many vehicles are sold overseas that, for whatever reason, are simply not available in the U.S. Second, the difference between prices paid here in the U.S. and overseas is often determined by the official exchange-rate between American/Canadian dollars and currencies in other countries (Yen, Euro, Pound, Won, etc....). Third, vehicles built and sold here often have to met different design/construction/safety standards than vehicles sold in, say, India or Pakistan. Fourth, labor and material production-costs for vehicles can vary enormously by country....a subject we often discuss in Car Chat. Fifth, consumer demand for new vehicles often strongly varies by country....in the U.S., we are basically (but not totally) an Instant-Gratification society that is not necessarily true of other places.....a subject that the video gets into, if you watched it.

Gasoline? Maybe. But, even then, some countries still vastly undercut our gas prices......like Venezuela and Saudi Arabia. In Venezuela, though, it is done for political reasons that we probably can't discuss in detail in Car Chat.

RNM GS3

Its not the American way to go small or get less than what we want.

We always want the next big, best, shiny new thing. Mentality of ppl in other countries is not the same nor are the opportunities that’s why we are fortunate to be in USA.

As far as inflation, gas prices etc - the answer is just to make more $$$. These things may pass but other economic issues will happen. Always work on making more and the rest will not be an issue.

Och

iTrader: (3)

With the car prices on the rise, I started seeing a lot of cars from the 90ies on the road. They were almost completely gone here in NYC, but they are making a comeback, and I have no idea where people are getting them. I saw two Cressidas in one day earlier this week, I haven't seen them in years. I started seeing 90ies Tauruses almost daily.

Motorola

Pretty sure two countries with a long history of being oil exporters aren't representative of the rest of the world, unless you want to pretend the mid-70s oil crisis never happened.

RNM GS3

All i see is a bunch of new Sclass and Gwagons plus million Teslas.
I think if anything ppl have way more $$$ than ever to spend on new cars and other luxury goods.

mmarshall

Oh, I agree those two are not necessarily representative of the world oil-buisness as a whole. But also don't forget that we, in the U.S., are no longer dependent on OPEC and their price-fixing like we once were. In fact, for a few years now, we have actually been an oil-exporter ourselves.

Och

iTrader: (3)

The S class and G wagens were always dime a bucket in NYC. These older 90ies cars were completely gone and now they are coming back all over the place, I'm not sure if people are bringing them from storage, other states, or junkyards.

Some people have a lot of $, but many are very much broke.

RNM GS3

JDM imports!? I have seen a bunch lately even tiny JDM pickup.

Och

iTrader: (3)

Nah, the JDM imports coincided with the pandemic timing wise, I've been seeing a lot of these too. I'm talking about old 90ies American and USDM Japanese cars, they are popping out all over the place, many of them surprisingly well kept looking.

Fizzboy7

Some points made in the video, but I believe the market will speak. Supply and demand has always regulated sales. When prices get to a point that most cannot swallow, sales will soften and things will flip. Also, the big cities have the advantage. Higher dealer competition has always kept prices down compared to the outskirts.

Also worth mentioning. When inventories are low, a dealer sells less. Selling less means less profit. So it's not all roses for restricted inventory. I don't think dealers like it as much as people think.

mmarshall

But that overlooks the fact that most people in the rural South and Midwest simply don't make the kind of money that they do in big East and Wes-Coast cities. Dealers in those rural areas cannot charge more than what those rural residents can pay. Also, although this may sound like a stereotype, people in those regions, particularly farmers/ranchers, often buy pickups and keep them and drive them many years, so they aren't likely going to be in the new-vehicle market very often. They also tend to buy America-badged brands, which cuts down on the number of dealerships from Asian or European-badged brands.

Selling fewer vehicles doesn't matter when you are making 5-10K (or more) profit off each one. What you lose in volume you make up for in profit on each sale.

What it might mean, though, is more p***ed-off customers.....and dealerships often depend on repeat-customers to stay in business, although, in large urban areas, there is often an endless supply of customers.

bitkahuna

iTrader: (20)

what sources do you have to backup your constant stereotyping? sure we can say the people in rural Mississippi (or rural ANYWHERE) make less than people in 'big cities' (anywhere), but that's nothing to do with 'south' (a vast area) or midwest.

and i'm sure incomes in a place like Austin Texas are pretty great, but that's not not 'east or west coast'.

plus, while incomes are a factor, there's the flip side, cost of living, including rents, taxes, etc.