Will the used car market cool off?

The current market is nuts for sure. For example, we have a dealer here with a pretty good inventory of used cars. They have a few Dodge Durangos on the lot.

2014 V6 with 52,000 miles. Listed at $29,997.
2018 V6 with 28,000 miles. Listed at $32,300.
2019 V6 with 36,000 miles. Listed at $40,000.
2018 R/T with 28,000 miles. Listed at $46,500.

They have one Grand Caravan. 2016 with 83,000 miles. Listed at $15,000

All of those prices just some ridiculously high, compared to what KBB is showing as the current trade-in values.

Inventory of new cars around here is slim to none, unless you want a Hyundai. Somehow the Hyundai dealer always has new inventory. The Ford and GM dealers are down to very little, if any, new inventory. Toyota and Subaru are slim, Honda has a lot of inventory of the outgoing Civic.

I think this is going to be the case for the remainder of the year. The chip shortage is now starting to really impact the consumer electronics industry (computers, smartphones, etc.) That is now two major industries clamoring for chips. My thinking is this is going to be the new normal until at least Q1-Q2 of 2022, and then automakers will continue to constrain inventory just to keep transaction prices up on new cars. Used prices will very slowly come down as people trade in vehicles when the new car inventory picks up a little. It is a really tough market to "game".

If you can manage it, and have the chance to, strike while the iron is hot. The thing is, if you sell it for more than you paid that is technically a capital gain and the IRS expects it to be reported and capital gains taxes to be paid. Will people do that? Probably not, but it is something to keep in mind.
 
ryster said:
The current market is nuts for sure. For example, we have a dealer here with a pretty good inventory of used cars. They have a few Dodge Durangos on the lot.

2014 V6 with 52,000 miles. Listed at $29,997.
2018 V6 with 28,000 miles. Listed at $32,300.
2019 V6 with 36,000 miles. Listed at $40,000.
2018 R/T with 28,000 miles. Listed at $46,500.

They have one Grand Caravan. 2016 with 83,000 miles. Listed at $15,000

All of those prices just some ridiculously high, compared to what KBB is showing as the current trade-in values.

Inventory of new cars around here is slim to none, unless you want a Hyundai. Somehow the Hyundai dealer always has new inventory. The Ford and GM dealers are down to very little, if any, new inventory. Toyota and Subaru are slim, Honda has a lot of inventory of the outgoing Civic.

I think this is going to be the case for the remainder of the year. The chip shortage is now starting to really impact the consumer electronics industry (computers, smartphones, etc.) That is now two major industries clamoring for chips. My thinking is this is going to be the new normal until at least Q1-Q2 of 2022, and then automakers will continue to constrain inventory just to keep transaction prices up on new cars. Used prices will very slowly come down as people trade in vehicles when the new car inventory picks up a little. It is a really tough market to "game".

If you can manage it, and have the chance to, strike while the iron is hot. The thing is, if you sell it for more than you paid that is technically a capital gain and the IRS expects it to be reported and capital gains taxes to be paid. Will people do that? Probably not, but it is something to keep in mind.
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We picked up our VW Atlas for under MSRP (late may).

Those prices are insane.
 
Rmay635703 said:
the market is hot due to pent up inflation combined with a supply shortage
Further the US has exported more used and junk cars in 2020 than ever before.

until the cash blows out (it’s still being printed) you won’t see inflation stop.

That said there is talk of a big car bubble popping which will demolish prices for 3-6 months but good luck timing that.
The fundamentals are even more exaggerated than 1978 in peak stagflation which might just roll and roll until Uncle Sam changes direction

Auto makers have discovered that they make more profit constraining supply so this might continue after the “crash”
Click to expand...
With millions of units sitting in open lots (not completed due to chip shortage)-exposed to the elements and possible hail damage, and production lines needing to operate at a certain number per day, for economy of scale, I would disagree. The new car/used car market will correct itself. There are many of us that would like to upgraded our three year old ride but refuse to pay MSRP (or close to it)-even if our trade in is worth more right now.

You could get $10,000.00 to $15,000 off a new pickup truck before this whole thing started, my trade will not be worth $10,000.00 less when everything settles down.
 
BLND1 said:
We picked up our VW Atlas for under MSRP (late may).

Those prices are insane.
Click to expand...

My local VW dealer only has 39 new vehicles in inventory. 4 Atlas, 3 Atlas Cross, 13 Tiguans. They do have 7 ID4s which is kind of interesting (one would think an EV uses more "chips" than a standard car.)

They are advertising $750 off of MSRP on Tiguans and Atlas models. VW also has 0% for 60mo on 2021 Tiguans...guess they want to try and move what is left of the 2021s since the 2022s are refreshed.
 
CKN said:
With millions of units sitting in open lots (not completed due to chip shortage)-exposed to the elements and possible hail damage, and production lines needing to operate at a certain number per day, for economy of scale, I would disagree. The new car/used car market will correct itself. There are many of us that would like to upgraded our three year old ride but refuse to pay MSRP (or close to it)-even if our trade in is worth more right now.

You could get $10,000.00 to $15,000 off a new pickup truck before this whole thing started, my trade will not be worth $10,000.00 less when everything settles down.
Click to expand...

That's the boat I am in. I would like to replace my 6.5 year old Chevy but can't justify paying MSRP on a suitable replacement vehicle (if I can even find one in stock around here.) 0% financing lessens the blow, but the principal is still going to be more than in "normal" times. I will most likely just wait and see what happens, although I have been regularly watching local dealer lots.

A few of the automakers have said that this whole exercise has taught them that they do not need to stock as many vehicles at dealerships moving forward, and plan to reduce overall inventory levels even when things get back to normal. They plan to concentrate on their higher margin products and reduce trim lines all in an effort to increase per unit profit for both them and their dealers.
 
ryster said:
My local VW dealer only has 39 new vehicles in inventory. 4 Atlas, 3 Atlas Cross, 13 Tiguans. They do have 7 ID4s which is kind of interesting (one would think an EV uses more "chips" than a standard car.)

They are advertising $750 off of MSRP on Tiguans and Atlas models. VW also has 0% for 60mo on 2021 Tiguans...guess they want to try and move what is left of the 2021s since the 2022s are refreshed.
Click to expand...

Yes, we were able to get 0% for 60 on ours. Not that it will go 60, but whatever.

Our local dealer didn’t want to deal AT ALL and told me “have a nice day.”

A dealer a little north of us was very willing to deal and super helpful. Best experience I’ve had. It wasn’t the best deal I’ve ever got, but it was good enough.

The dealer said ID.4’s were sold before they even got to the dealership. They only had one (and it was in the showroom). They seemed to have a bunch of Higher trim Atlases and Tiguans in stock. But very few mid level trims or 2.0T options (our preference).
 
ryster said:
That's the boat I am in. I would like to replace my 6.5 year old Chevy but can't justify paying MSRP on a suitable replacement vehicle (if I can even find one in stock around here.) 0% financing lessens the blow, but the principal is still going to be more than in "normal" times. I will most likely just wait and see what happens, although I have been regularly watching local dealer lots.

A few of the automakers have said that this whole exercise has taught them that they do not need to stock as many vehicles at dealerships moving forward, and plan to reduce overall inventory levels even when things get back to normal. They plan to concentrate on their higher margin products and reduce trim lines all in an effort to increase per unit profit for both them and their dealers.
Click to expand...

The flip side is that your trade in will be higher as well - I had friends that actually came out better even when paying MSRP.
 
The insane car market pricing will cool off once people wake up and stop burying themselves into debt to pay for a vehicle. Until then, nope, it won't. No one can predict the future. That's why there is that saying by Ray Dalio: "He who lives by the crystal ball will eat shattered glass."
 
Yeah, the other day I was stuck behind a first gen Pilot with no working brake lights with dealer temporary paper plate. Could have been fake, but I doubt it, as I too have seen a lot of older vehicles in less than dealership condition with paper plates... Lots of out of state cars too.
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No officer, this isn't my car. My cousin let me drive it. I don't even have a license!
 
BLND1 said:
The flip side is that your trade in will be higher as well - I had friends that actually came out better even when paying MSRP.
Click to expand...

True. KBB trade-in value of my car is $3800 higher than what it was 6 months ago. Average rebates and discounts are down about $2K-$3K, so it is all a wash. It is more the idea that you are paying MSRP or close to it after being used to receiving rebates and discounts. At the end of the day, the numbers would work out virtually the same.
 
ryster said:
True. KBB trade-in value of my car is $3800 higher than what it was 6 months ago. Average rebates and discounts are down about $2K-$3K, so it is all a wash. It is more the idea that you are paying MSRP or close to it after being used to receiving rebates and discounts. At the end of the day, the numbers would work out virtually the s
Click to expand...

ryster said:
True. KBB trade-in value of my car is $3800 higher than what it was 6 months ago. Average rebates and discounts are down about $2K-$3K, so it is all a wash. It is more the idea that you are paying MSRP or close to it after being used to receiving rebates and discounts. At the end of the day, the numbers would work out virtually the same.
Click to expand...

In your example yes. With a truck it's $12,000.00 to $15,000.00 more. I paid $43,000.00 for my 2018 Silverado LTZ. You can't even buy an LT for that right now........
 
Tech bubble, housing bubble, car bubble. It will happen. When? That's the trillion dollar question. Everyone who has bought these overpriced used vehicles are going to be severely underwater when it happens. What? I owe $35K on a pickup the credit union now thinks is worth $20k?
 
CKN said:
With millions of units sitting in open lots (not completed due to chip shortage)-exposed to the elements and possible hail damage, and production lines needing to operate at a certain number per day, for economy of scale, I would disagree.
Click to expand...

give 75-80% off an “incomplete “ truck and I will buy it

I don’t need a screen, collision avoidance or technically an ecu to get it running
 
Used car prices have been high for 10 years and I think they'll continue to be high long term.
 
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