Fizzboy7

Exactly. As I mentioned in another thread, the Big Three always get greedy and go back to their old ways. What you stated above is exactly how it's played out after past crisis. One only needs to look at history, not too long ago. I hope that pattern takes place again.

Now the underlying question is, can new cars move away from MSRP, while used cars stay elevated? (Possible delayed effect?) That would be having the cake and eating it too for those of us with a used car who want to get into a new car.

AMIRZA786

For the question of used cars, now is the time to sale. There is already indicators pointing to used car prices stabilizing. Sale now, or forever hold your peace

Fizzboy7

That only works if you don't have to get a new car once you sell your current! lol

AMIRZA786

​​​​​​If I sold my 2010 IS350 Sport, I would not only break even from what I bought it for, but it would pay the first two years of my Polestar lease. I just can't do it...

bostonsnow

noooooo. dont do it!!

I would say this is the bottom line:
1) if you have a truly EXTRA car around, eg you have 2 cars for yourself, one person, and so don't really need 2, you could sell one now and it is worthwhile. Or, a family of 2, and you have 3 cars, so one is truly "extra"
2) if you are not in category 1, and your current car is decent, running well, and has longevity.........financially it is well worth just staying put for now and enjoy your current car! at least, that is my analysis and decision personally, for 2022.....

bostonsnow

but as with selling your house if you cannget a good price for it, the question is, once you sell, where will you live? / once you sell, what will you drive?

bostonsnow

doubt it. this is not sustainable for long.
one could get lucky at a snapshot in time though....
but, in the long run, if new cars become more available in volume, so prices level out, then used car prices are going to drop....

AMIRZA786

I meant if you have an extra car, like I do. The only reason I'm not selling my IS350 is I can afford to keep it, and I just can't...

Fizzboy7

I feel you. It's a weird position to be in.
Right now I have $15k equity with my 2020 IS350 lease. If I went forward with a new lease at MSRP, I'd likely be able to pocket $10k if I sold it privately or to Carmax. Tempting.

SW17LS

I have heard people "fake complain" about paying over MSRP, which in reality is bragging.

mmarshall

I've only paid above MSRP once in my life....(as I remember, it was only $140 over list) back in 1984 on a new Mazda, when it was VERY difficult to get a new Japanese-import at or below list, particularly a Toyota or Honda. The Mazda dealership (and salesperson) I was at was very courteous, and seemed a little more honest than the Toyota/Honda stealerships of the time. It was generally against my principles to pay more than list, but this guy was very nice, wanted to sell that new car (it was the feature car in the showroom...a GLC), and the car itself didn't cost that much (less than $8000), and I was anxious to switch from the Detroit lemons I was totally fed up with by then, so I went for it. The Mazda itself was not perfect, and turned out to have a few issues of its own, but I kept it a long time, past 100,000 miles.

JeffKeryk

MSRP is just a number; it has nothing to due with selling price.
The market sets selling price; MSRP can be used for comparison but that's about it.

JeffKeryk

Not sure i follow your logic...
A manufacturer cannot pull parts, like semiconductor chips, outta thin air... They would make more cars if they could. The opposite is happening... Didn't Ford just announce plant cutbacks?
And why would they sell their cars under the market price? That makes zero business sense, right? Not to mention, most car companies manufacture on 7 to 8% margins...

Price is set by demand vs supply.

swajames

You can bet your bottom dollar that we will not return to the way it was pre-pandemic.

Delivering slightly fewer cars much more profitably is a much better business model than delivering more vehicles with low margin.

The industry will find the equilibrium point where dealers get enough inventory to nearly but not quite fulfill demand so that pricing closer to MSRP is maintained.

Invoice pricing on cars will rise so that dealer profit is pushed even more to back end bonus than it is today and be much less visible to the consumer than it is today.

Manufacturers and dealers will incentivize build to order and push ordered product to the customer in less time.

The days of oversupply and the consequential pressure on ASP and margin are, I suspect, rapidly coming to an end.

The industry has had a taste of what the market looks like when supply is tight, and they will continue to ensure slight undersupply relative to demand to push ASP up.

All of this is compatible with driving just enough volume but with stronger margin at the dealer level.

The days of walking in and driving off with a car at a big discount relative to either MSRP or invoice are largely behind us IMO.

SW17LS

I think you will find things go back a lot closer to normal than you think.