ADM fatigue may have finally occurred.

[maverkickbroncosport]

Perhaps the current purchase climate is changing seasons.

https://www.thedrive.com/news/44964...rtages-rage-and-high-prices-scare-buyers-away

I have talked to many people who are sitting on the sidelines of this market. That being said some people are still making out okay because there are some midsize dealers that do not mark up vehicles but you're not going to get them for dealer invoice like you could have in the past. The trade off is if you have a trade you can make out okay as long as you can avoid the dealer markup and find something along the lines of what you are looking for. That being said, this market will correct itself once the used car market crashes back to earth and supply chains are somewhat back to normal. For most people waiting it out is the best bet if they can.

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[Platinum2]

Gotta have it.

Gotta have it NOW!!!

There are a lot of these folks on this forum....

 

[pxpaulx]

ADMs aren't going anywhere. Because dealers are selling fewer vehicles they must, MUST get a better price for them (or cut costs elsewhere).

Lower income folks truly can't pay the marksups and are being forced into "deals" like the used 2017 Rav4 for 23.9K I passed today (didn't see the odo, but even if it was very low it wouldn't be worth it).

I bought 2013 CX-5 about 18 months ago for 15k with 80,000 miles and 1 owner clean history. A similar vehicle would easily fetch 19, 20k+ today.

I'll give you a crazier concrete example! Purchased my wife's 2018 fiat 500 lounge with 4,500 miles in October 2020 for a few bucks under $12K after TTL. I flew to Washington state and drove it back to MN for that deal...a couple of similar ones in MN were $14,500+ttl at the time. Side note, there were a bunch of these available across the US at the time - almost exact same specs, trim, even color - must have been some dealer fleet inventory or something. I also missed a second one the same dealer had that they dropped the price by $1k to $9,990 because I waited until Monday to call and it sold the day the price dropped.

Anyway, long story short Carvana paid me $19,920 for it a month ago. For a 2018 Fiat 500 with 13K on the odometer. The growth of the online/large retail vehicle buyers is definitely having an impact on the overall market as well.

 

[pxpaulx]

I'd have to disagree with you about that 4 to 7k statement. I've owned 2 hybrids that I bought new. I bought my fully loaded 2008 Prius in the middle of fast rising gas prices, and I had to wait for it, but I paid about $27k or maybe $1500 more than a comparably built Accord, and about the same as a Camry. I paid MSRP on that one because of demand.

My 2017 Prius had an MSRP of just over $32k, and I juggled that down to $26.5k because gas was cheap, and hybrids were easy to find. That $32k list was very much inline with any accessorized Camry or Accord on the lots.

It is hard to compare outside of model-to-model hybrid costs. I would say that the prius is an upscale economy car, more in line with something like a honda fit than an accord or camry. To me, you're sort of proving the point that they cost more if you paid the same for a prius as one of those other models (I know there are several prius models at this point, but my argument still stands).

How much were the equivalent accord/camry hybrids compared to their gas engine counterparts? That is the fair comparison. The answer for pretty much every vehicle to date that has a gas and hybrid/electric option, is that the latter costs more on the sticker. The Maverick is the first vehicle to flip that script, which is pretty awesome to see!

 

[JASmith]

Did you not read the article you linked? Your own source says sales numbers didn't decrease at all. Sales numbers are up.

Sales numbers are not up from 2019, but profits are higher than they have ever been as an average pre-pandemic.

This isn't rocket science, there are less vehicles being produced, so less vehicles are being sold. However, the vehicles that are produced don't have to really even be "sold" by the dealership... in other words they don't have to be in the business of salesman anymore.

The VALUE that dealerships were providing to justify their huge overhead costs added to the vehicle is that they were doing lots of local advertising in TV and radio and inflatable waving arms and gorillas with hot dog events with a swarm of sharks hovering at the entrance ready to pounce on customers and hope that out of every fifty feet kicking the tires that they could actually sell to one of those customers with a lot of effort, and all the while paying insurance and what not for those vehicles to sit on the lot for months.

Now they aren't offering anything of value at least when people are placing orders that IMO they should be able to just do themselves directly to Ford online, and the vehicles that land on their lots are gone within days, or the same day if they have no markup, requiring no real expenditure on their part to find a willing buyer, and the dealership owner needs far fewer salesman chasing customers on the phone and so forth since the customers are so motivated swarming at their doors like a zombie infestation.

tl;dr: Dealerships had high volume but also high overhead while selling often as much as $10K off on some trucks after haggling pre-pandemic, but now even though they have low volume they also have VERY low overhead costs and so even selling at MSRP are making a fortune.

 

[Angry Hippo]

Sales numbers are not up from 2019, but profits are higher than they have ever been as an average pre-pandemic.

This isn't rocket science, there are less vehicles being produced, so less vehicles are being sold. However, the vehicles that are produced don't have to really even be "sold" by the dealership... in other words they don't have to be in the business of salesman anymore.

The VALUE that dealerships were providing to justify their huge overhead costs added to the vehicle is that they were doing lots of local advertising in TV and radio and inflatable waving arms and gorillas with hot dog events with a swarm of sharks hovering at the entrance ready to pounce on customers and hope that out of every fifty feet kicking the tires that they could actually sell to one of those customers with a lot of effort, and all the while paying insurance and what not for those vehicles to sit on the lot for months.

Now they aren't offering anything of value at least when people are placing orders that IMO they should be able to just do themselves directly to Ford online, and the vehicles that land on their lots are gone within days, or the same day if they have no markup, requiring no real expenditure on their part to find a willing buyer, and the dealership owner needs far fewer salesman chasing customers on the phone and so forth since the customers are so motivated swarming at their doors like a zombie infestation.

tl;dr: Dealerships had high volume but also high overhead while selling often as much as $10K off on some trucks after haggling pre-pandemic, but now even though they have low volume they also have VERY low overhead costs and so even selling at MSRP are making a fortune.

So which is it? Are dealers selling more vehicles or less? You linked an article that says the number of sales are up and on-lot inventory is down. I'm willing to take that at face value.

Your reply here kind of sounds like you agree with my original premise (sales volume is down so dealers are trying to make each sale more profitable).

The article you linked would seem to refute that premise... and I thought that was the whole reason it was posted in the first place.

So label me confused.

 

[JASmith]

So which is it? Are dealers selling more vehicles or less?

Are you being intentionally obtuse? You can't be oblivious to the fact that production is far below prepandemic levels, and that even if it took longer and more effort to sell, those vehicles that were being produced were not being sent off to the crushers en masse and were all being sold.

Are you employed at a car dealership by chance?

Your reply here kind of sounds like you agree with my original premise (sales volume is down so dealers are trying to make each sale more profitable).

Your premise is utter nonsense, and I've already explained why. Sales volume can be down and profits can and ARE much higher even at MSRP because:
1) Dealership onwers are spending virtually NOTHING compared to before to move vehicles
2) No one paid MSRP pre-pandemic, as it was understood that left far too much profit in the dealers hands. The vehicle I'm driving now was about $9K off MSRP even back in 2009 after taxes and fees, since that's how we negotiated. While it was never as bad with Japanese vehicles, domestics always had hugely inflated MSRPs to make the consumer feel like they got a good deal.

So even if they were to sell at MSRP, they would be making a fortune. You're not confused, you're just entrenched in pushing this idea that dealers are hurting and so are somehow forced to raise prices to stay in business, its not the same thing.

Here's another article about how car sales tanked in 2020, yet profits were at records, only to be eclipsed again in 2021: https://www.roadandtrack.com/news/a...lerships-had-their-most-profitable-year-ever/

On average, dealership profits rose nearly 50 percent in 2020—despite sales volume dropping by 15 percent.

So you can stop the pretense that you don't get it.

 

[NeedForSteve]

I don't believe my local dealer is adding them to customer orders, but I know they're adding them to lot vehicles. If it's disclosed to me AT TIME OF ORDER that it will cost extra, I'd be much more apt to pay it; that way i'll have time to save up some extra. If they try and slap it on once the vehicle arrives I will definitely walk away. Business is business, but be up-front about it.

 

[tonyinsd]

I maintain my prediction that ADMs aren't going anywhere soon. Desirable vehicles will continue to sell near or above MSRP for some time to come. I think we will get out of these markups but won't actually see a decrease in price. We will only see an increase in the MSRP so the dealer's pricing seem less egregious.

People have often paid above MSRP for high end cars. Now, that has come to other vehicles because of the shortage of them.

I don't see that going anywhere. If you're a dealer, after seeing how this, you're going to order exactly the number of cars you think you can move quickly. Why offer big discounts when you don't have to?

 

[Angry Hippo]

Are you being intentionally obtuse? You can't be oblivious to the fact that production is far below prepandemic levels, and that even if it took longer and more effort to sell, those vehicles that were being produced were not being sent off to the crushers en masse and were all being sold.

Are you employed at a car dealership by chance?

Your premise is utter nonsense, and I've already explained why. Sales volume can be down and profits can and ARE much higher even at MSRP because:
1) Dealership onwers are spending virtually NOTHING compared to before to move vehicles
2) No one paid MSRP pre-pandemic, as it was understood that left far too much profit in the dealers hands. The vehicle I'm driving now was about $9K off MSRP even back in 2009 after taxes and fees, since that's how we negotiated. While it was never as bad with Japanese vehicles, domestics always had hugely inflated MSRPs to make the consumer feel like they got a good deal.

So even if they were to sell at MSRP, they would be making a fortune. You're not confused, you're just entrenched in pushing this idea that dealers are hurting and so are somehow forced to raise prices to stay in business, its not the same thing.

Here's another article about how car sales tanked in 2020, yet profits were at records, only to be eclipsed again in 2021: https://www.roadandtrack.com/news/a...lerships-had-their-most-profitable-year-ever/

So you can stop the pretense that you don't get it.

I don't have a dog in this race. I don't have any entrenched ideas. I've clearly demonstrated I'm open to changing my mind based on new information.

I'm just searching for an agreed upon set of facts. It's difficult to do when you link articles that says sales numbers are up but then backtrack and say "well you know sales numbers are actually down if we look back at..." and then link a completely different article to support that examining a different time period.

Personally, I don't truly know if sales are up or down. My gut says they're down due to restrained production capacity. It seems you think they're down, too. It sounds like we agree on that point.

Again, my initial premise was that with lower number of total sales that dealers would need (or insert the word 'choose' if it makes you feel better) to increase average sale price per vehicle. That's exactly what is happening and your links seem to support that.

You seem to think that overhead (advertising/labor/insurance) costs have gone down enough that dealers should be unaffected by a reduced number of vehicles to sell and aren't justified in raising prices.... well, what do you suggest? Regulations for maximum profit margins and artificial price controls to keep vehicle price below market demand? No thank you, comrade.

 

[WesM]

People have often paid above MSRP for high end cars. Now, that has come to other vehicles because of the shortage of them.

I don't see that going anywhere. If you're a dealer, after seeing how this, you're going to order exactly the number of cars you think you can move quickly. Why offer big discounts when you don't have to?

I know for a while dealerships did not really have a choice in how many vehicles were shipped to them. If Ford felt like they needed to move more vehicles, the dealerships had to suck it up and sell them/let them sit on the lot. There were years where dealership lots were packed with vehicles they could barely move after a month or two.

 

[JASmith]

well, what do you suggest? Regulations for maximum profit margins and artificial price controls to keep vehicle price below market demand? No thank you, comrade.

Already suggested it, eliminate dealerships.

True free-market capitalism will not tolerate a middle-man that offers nothing of value and merely increases costs. Direct order sales are the solution, and the only impediment to them are unions, unions setup by comrades, such as the dealership union that spends big time lobby money in government to put up roadblocks to eliminating open competition.

Its 2022, I can get financing in 5 minutes by filling out an automated form online, and you can build vehicles already on the configurator, just need to setup a centralized low-cost call center and/or online chat to follow up on glitches now and then and allow ordering from the site. Tesla seems to have worked this out, Ford should follow suit.

 

[WesM]

Already suggested it, eliminate dealerships.

True free-market capitalism will not tolerate a middle-man that offers nothing of value and merely increases costs. Direct order sales are the solution, and the only impediment to them are unions, unions setup by comrades, such as the dealership union that spends big time lobby money in government to put up roadblocks to eliminating open competition.

Its 2022, I can get financing in 5 minutes by filling out an automated form online, and you can build vehicles already on the configurator, just need to setup a centralized low-cost call center and/or online chat to follow up on glitches now and then and allow ordering from the site. Tesla seems to have worked this out, Ford should follow suit.

So in this hypothetical, what happens when all the dealerships have shut down and you need to get your vehicle repaired? I doubt Ford is all that interested in building out the repair network required to service millions of vehicles. Sure Ford wants to sell direct to consumers (more $$ for them) but I doubt they will do it, just because they don't want to run a national repair/maintenance center.

I have only heard stories of how long it takes to get a Tesla repaired, but its not good.

 

[NJBob]

I just traded in my daughter's '16 Honda Fit for a '21 Jetta (new) because that Fit should replace the "F" with "Sh" in the name. In 15 months of ownership, we had three batteries, a new alternator, a leak, and finally bad injectors. I "ungunked" the injectors and traded it in for $500 more than I paid for it from Carvana. I'll stick with lawnmower engines with Honda.

Wow I has a 2013 Honda CRZ hybrid. Same engine as the Fit. Had 250K on it before I wrecked it. I has to replace the cat at 230K. Except for regular maintenance only repair the car ever needed. I hope my Mav will be as reliable as that

 

[NJBob]

Already suggested it, eliminate dealerships.

True free-market capitalism will not tolerate a middle-man that offers nothing of value and merely increases costs. Direct order sales are the solution, and the only impediment to them are unions, unions setup by comrades, such as the dealership union that spends big time lobby money in government to put up roadblocks to eliminating open competition.

Its 2022, I can get financing in 5 minutes by filling out an automated form online, and you can build vehicles already on the configurator, just need to setup a centralized low-cost call center and/or online chat to follow up on glitches now and then and allow ordering from the site. Tesla seems to have worked this out, Ford should follow suit.

I agree, one reason the U S has the most expensive Healthcare in the world is all the middlemen with their hands out.

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