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Right I'm not debating whether Silicon Valley tech is this or that. I just mean us in here, ClubLexus members, for the most part are in comfortable bubbles. I'm already used to the $4 gas, though I don't like it. But it doesn't affect my life. Some people can't even afford to get to the gas station to buy said $4 gas. I'm not trying to get too far into the economy bc it will get booted. But you for example, you do own a Tesla correct? Many drive very expensive, multiple vehicles on here. The gas bill isn't a problem.
I get it, and I agree. The bubble will pop, but I don't think it will be as bad as other bubbles. Even if it is, the economy will eventually come back, we just have to ride it out
How do you know that guy can't shoulder $4-6 a gallon gas? That could be his banging around truck
Of course it could be but you know what I mean, come on. Lots of poor people drive old inefficient trucks and vans, that don't have the luxury of trading in.
But if inventory is so low, why do they care if I walk in the door? They will sell that car (if it's even there and not "in transit"). And why wouldn't they give me a price over the phone so I can say "I'll take it" and put a deposit down on the spot so the car isn't gone when I get there? It makes no sense other than to flex and show they have the power. It's not good business sense whatsoever.
many dealers believe they have more control over the deal if you come on (generally true). and if they let you put that deposit down on an agreed to price over the phone, they're going to feel pretty bad if someone walks in offering to pay more for the vehicle. it's almost like a bidding war (like real estate) at this point for some cars in some places. i think it was mentioned that some dealers are selling over the phone, but only at MAX price (no negotiation). if i was a dealer right now, i'd do the same.
Originally Posted by Och
So if sales are down 25% overall, but prices are up where dealer and maker profits are up several times, where is the incentive for them to increase the supply and go back to dealing at razor thin profits? These prices are not transitory unless the whole economy collapses.
supply comes from the manufacturer and their profits aren't up, it's the dealers that are selling at greater margins than ever, but the volumes are WAY smaller so that hurts. manufacturers absolutely want to increase supply and are working like mad to do so.
Originally Posted by AJT123
I wouldn’t. I think the vast majority of us in here are in comfortable bubbles. 100%+ increase in fuel prices plus inflation highest in 50 years…. We on here for the most part can weather it, the less fortunate not so much. It’s people in vehicles like this, this picture I snapped, that worry me with $4-6 gas:
I never try to pity anyone but I’d be shocked if the driver of that old truck averages more than 11MPG or so. It’s these people who this is all killing, the expensive gas. While the majority of us on here just roll our eyes at the pump.
Originally Posted by AJT123
Of course it could be but you know what I mean, come on. Lots of poor people drive old inefficient trucks and vans, that don't have the luxury of trading in.
you're exactly right, i get your point. yeah the person in that truck *could* be a gazillionaire, but assuming they're not, and for the millions of others that are not, huge gas and food prices are HURTING. not to mention skyrocketing rents, etc.
and even everyone i know that's doing well is working harder than ever.
many dealers believe they have more control over the deal if you come on (generally true). and if they let you put that deposit down on an agreed to price over the phone, they're going to feel pretty bad if someone walks in offering to pay more for the vehicle. it's almost like a bidding war (like real estate) at this point for some cars in some places. i think it was mentioned that some dealers are selling over the phone, but only at MAX price (no negotiation). if i was a dealer right now, i'd do the same.
It's also because they can't sell all of the finance manager's (generally) worthless add-ons over the phone, and that's where a ton of extra margin is earned...
supply comes from the manufacturer and their profits aren't up, it's the dealers that are selling at greater margins than ever, but the volumes are WAY smaller so that hurts. manufacturers absolutely want to increase supply and are working like mad to do so.
You might be surprised... Manufacturers have been prioritizing higher spec vehicles and trims over lower spec and lower margin vehicles when scheduling builds.
BMW to give just one example reported record net profit in 2021.
and even everyone i know that's doing well is working harder than ever.
I'm not. Just kidding. I haven't worked my butt off this hard in ages. I start my day at work at 7:30am and work 6 days a week. I'm in IT so maybe that's not unusual
You might be surprised... Manufacturers have been prioritizing higher spec vehicles and trims over lower spec and lower margin vehicles when scheduling builds.
makes sense, if you can only build so many, build loaded ones.
BMW to give just one example reported record net profit in 2021.
maybe their supply chain issues weren't as bad as some.
Originally Posted by swajames
It's also because they can't sell all of the finance manager's (generally) worthless add-ons over the phone, and that's where a ton of extra margin is earned...
Thats the issue, dealer profits are not up. I have talked to several dealership GMs and their profits are down because of lack of volume.
I don't think they are being honest with you then. The 25% drop in volume is really not that drastic if you think about it, I was surprised to read its only that little. Not even sure if the chip shortage is as severe as they say it is if they are maintaining 75% of production. In any case, if a dealer was making lets say $5k on a $25k car (they were making much less), and now they are marking up that same car another 5k, their profit doubles, easily covering for the 25% drop in volume and then some.
supply comes from the manufacturer and their profits aren't up, it's the dealers that are selling at greater margins than ever, but the volumes are WAY smaller so that hurts. manufacturers absolutely want to increase supply and are working like mad to do so.
and even everyone i know that's doing well is working harder than ever.
Auto manufacturers probably want to increase supply, but I assure you that their suppliers aren't. Many material suppliers went from working 3 shifts to working 1-2 shifts, jacked up their prices into the stratosphere, and making more $ than ever while working less. I'm in the construction business, so I am often affected by more or less the same supply lines as automakers, and the cost of many materials has doubled to quadrupled since the pandemic, and almost every month I get letters from suppliers for another 10-15% increases. I am not an economic expert by any means, but I am sure nobody wants to go back to working three shifts to maker a razor thin profit if they are making bank while working 1/3 as much. I am surprised the automakers have no simply increased their prices up to the level where supply and demand balances out, and the dealers are no longer able to get away with these markups.
It's also because they can't sell all of the finance manager's (generally) worthless add-ons over the phone, and that's where a ton of extra margin is earned...
Ok but that's not what I meant by "getting the price over the phone." I meant the dealer says "Price is $X" and then you go into the dealer to complete the deal, and then they can throw you to the wolves in the F&I office. Just like I've done since I bought my 1st new car 23 years ago.
Ok but that's not what I meant by "getting the price over the phone." I meant the dealer says "Price is $X" and then you go into the dealer to complete the deal, and then they can throw you to the wolves in the F&I office. Just like I've done since I bought my 1st new car 23 years ago.
Like you, I've never walked into a dealer "cold calling" if you would, unless it was to test drive. I've always had all the research done ahead of time with all the numbers, including invoice pricing. I've only dealt with their internet sales people, and mainly made all my deals ahead of time through email. But times have changed, inventory is low (at least that's how dealers lots look right now) and people like us no longer have the upper hand. That's why I wouldn't buy a car right now. The only reason I would even try to buy a car would be out of desperation. Thankfully I have my IS350 as spare car should anything happen to our other three
Last edited by AMIRZA786; Apr 18, 2022 at 05:57 AM.
Like you, I've never walked into a dealer "cold calling" if you would, unless it was to test drive. I've always had all the research done ahead of time with all the numbers, including invoice pricing. I've only dealt with their internet sales people, and mainly made all my deals ahead of time through email. But times have changed, inventory is low (at least that's how dealers lots look right now) and people like us no longer have the upper hand. That's why I wouldn't buy a car right now. The only reason I would buy a car is two of them are totaled or become unusable. If something happens to my Polestar or any of my two other cars, they will drive my IS350. No way I'm buying right now for any other reason
That's just it. I'm not looking for the "upper hand"; I'm just looking not to waste days on end just to get pricing. If I have to buy a car, I know that I will be paying MSRP or above. Like I said above, the inventory is so low, the dealers can easily give me a price over the phone and tell me to take it or leave it - and I'd be prepared to do just that. And they can go ahead and sell to the next person.
Which is why I don't think the pandemic will change the auto industry one bit.
The car's not for me, it's for my son. I've identified a few dealers that don't add a market adjustment, so if I have to go with a 2nd or 3rd choice vehicle to buy from a dealer that will just deal with me with a little bit of respect, that's what I'm going to do.
Ok but that's not what I meant by "getting the price over the phone." I meant the dealer says "Price is $X" and then you go into the dealer to complete the deal, and then they can throw you to the wolves in the F&I office. Just like I've done since I bought my 1st new car 23 years ago.
oh I totally get your thinking, I’m just giving some context as to why they won’t accommodate and want you physically there to talk numbers.
Auto manufacturers probably want to increase supply, but I assure you that their suppliers aren't. Many material suppliers went from working 3 shifts to working 1-2 shifts, jacked up their prices into the stratosphere, and making more $ than ever while working less. I'm in the construction business, so I am often affected by more or less the same supply lines as automakers, and the cost of many materials has doubled to quadrupled since the pandemic, and almost every month I get letters from suppliers for another 10-15% increases.
the auto business is very different from construction, unless you're a HUGE builder (DR Horton, Pulte, etc). the auto companies have multi-year, iron clad deals with suppliers that must be renegotiated for changes, the auto suppliers can't just out of the blue hugely raise prices, etc.
the problem for auto suppliers is they in turn usually rely on other suppliers, many of whom simply can't supply what the main supplier needs (covid shut downs, manufacturing lines that were converted to other things because demand dropped off, etc).
auto makers are largely just 'assemblers' of parts made by other companies to the auto makers specifications. but you're going to hear 'vertical integration' more and more as they've realized how vulnerable they are.
Originally Posted by tex2670
Ok but that's not what I meant by "getting the price over the phone." I meant the dealer says "Price is $X" and then you go into the dealer to complete the deal, and then they can throw you to the wolves in the F&I office. Just like I've done since I bought my 1st new car 23 years ago.
that's why i was glad i bought my LC from a dealer 900 mi. away - i COULDN'T sit in the F&I office. of course the sales guy asked me some of same questions over the phone to which i politely said no to all, but it was quick and painless.
of course the sales guy asked me some of same questions over the phone to which i politely said no to all, but it was quick and painless.