The market still hasn't budged in used car pricing though. JD power's report from last week only showed a 2% decline in prices. Wonder if/when prices will actually be affected by this.
Used car supplies are lower now only because like everything else auto auctions have for the moment mostly come to a halt. The supply of used cars awaiting auction is swelling from rental companies wanting to dump inventory and cars coming off lease. Once the auto auctions return to normal expect a significant drop in the price of used cars.
>The supply of used cars awaiting auction is swelling from rental companies wanting to dump inventory and cars coming off lease
Though some dealership are increasing their attempted shenanigans to keep those lease returns from coming back for as long as possible [1].
Some of the annual new car sales projections coming out in the past day or two are daunting, so it'll be interesting to see how it pans out. There's been a few estimates that the previously forecast 17M units for 2020 (with an ASP of ~$38,000) may be more like 7.7M units for 2020, which is a $350B industry revenue shortfall.
Supposedly the value has plummeted but the asking price has not - the result, no sales. The seller(s) aren't willing to take the loss to move inventory & are trying to wait out what they hope is a temporary dip.
Kind of like the recent oil prices, once people finally ran out of places to store the good the price will have to fall.
Not really. Percent off MSRP does not translate across models, across brands, or even across years for the same model and brand. (MSRP-to-real-prices inflates year to year.)
So you can't compare some percentage off other than the exact same vehicle sold in the exact same year. But you could already compare the exact sale price of two identical year/model vehicles.
MSRP is a reference point. So is invoice. You shouldn't ignore either, but one is not a better reference point than the other. Maybe 20 years ago when you had to pay a publisher to get the invoice price, but now that invoice prices are freely available on the Internet, manufacturers have raised invoice prices faster than MSRP and closed the gap between invoice and MSRP. Dealer margin on new car sales now comes from backend rebates and volume incentives that aren't public. The only way to truly discover the bottom line retail price on a car is to present yourself as a serious buyer and get quotes from multiple dealers.
The good rule to live by is you should always be able to negotiate at least 10% off a new car. If one dealer isn't willing to negotiate, go to a different one. Helped loads of people negotiate prices for their new car and 10% is always achievable. The only brand where you can't is KIA - they just flat out don't negotiate, KIA UK sets prices and that's what you pay. The dealership might throw servicing or some accessories to sweeten the deal but there's nothing they can do about the price.
The only rule I know of is supply and demand. If there’s sufficient demand for a product, the seller has no reason to offer anything off. The proof will be that you won’t be able to find a seller willing to sell it.
Before the corona virus stuff, there were certain car models that you didn’t really negotiate much over, such as TRD 4Runners and Tacomas.
Tesla also doesn’t offer 10% off or haggle if I recall. I’m sure they would if they needed to move product, but I don’t know anyone who got any discounts for a Tesla.
The only good way to negotiate is to find a similar car at another dealer and work back and forth. Without another dealer willing to sell you a car for a better price, you have no leverage.
Adding to this, expand the search radius for a dealer by a couple hundred miles/kms. Check their online inventory to find the vehicle that you want, ideally by looking at the window sticker to compare inventory (website data is generally not reliable).
Many car dealers have APIs that will show the digital window sticker by passing a VIN number -- these are usually embedded on their websites and can be easily found.
Then, negotiate over the phone, reducing prices by 1-2k across each dealer with similar inventory to get a great price, below invoice.
I bought a 4Runner in 2007 for $22,500. The sticker on it said $32,000. Took 2 weeks of negotiation, and high gas prices at the time really helped ($5/gallon).
I would be surprised if someone was able to find one under $40k nowadays (maybe after COVID). You typically have to order them and wait a couple months to get it if you prefer any certain colors or trims.
> The market still hasn't budged in used car pricing though.
Last thing people want to do now is buying (or worse, financing) a new multi-ten-thousand dollar car. Unless your car is falling apart or you desperately need money you should absolutely keep your car, which is why there are not enough sellers to force a price downturn for used cars.
For new cars the situation is similar but different - a new car doesn't lose much value until it has been sold. When a car company / dealership can afford to ride out for half a year until the consumer side stabilizes, why should they discount or even take a loss?
Doubt used will be impacted at all, if much. People are always looking for good deals on used cars, and most sellers dont immediately need to get rid of them, they can wait for a year or half a year and wont really depreciate that much.
If you're a person with an old truck you'd like to get rid of, yea maybe you can wait 2 years to sell it. If you're a BMW dealership that got 120 cars back from lease this month, and you're going to get 120 more next month, and next month, and next month...
The article was written in 2017... And it's predictions were pretty much completely wrong.
It's crashed this month, but the used car market has been inflated for a while now. I'm in the market for a new (used) car, and haven't really seen any good prices honestly. Should I just wait longer?
On the other hand, in recessions a lot of demand can shift from new to used. That might partially counteract the fact that used supply is less flexible than new.
Why would used cars drop in price? Since no one is buying new cars there's no supply of used cars. Lower supply means increased prices but demand is probably down as well so almost no change.
Leases come due. Cars hit the used market. You also have rental companies dumping cars onto the market since business has collapsed. Hertz might be going into bankruptcy. Repo's are another thing to consider along with private sales when people can't afford them or need to raise money.
There is a big supply of used cars coming. Rental agencies are offloading cars because they have storage issues with nobody renting their vehicles. However, lots of the car auctions are closed so that could prevent the prices from coming down.
They're actually about to reduce used vehicle supply to artificially inflate market conditions above where they're going to sink to. The corporate gangsters in Detroit are working on Cash For Clunkers part 2 (which will harm the poorest vehicle buyers the most over the span of years as supply is reduced, just as it did last time).
When I bought my current used car, in cash, the dealer offered it on financing for 0% or 0.9% or something very low — no impact on the selling price. It wouldn't have been a terrible decision to take the super low interest loan and put the purchase money into my investment portfolio instead (just another form of leverage). I paid cash anyway, because I went in intending to, but characterizing all financing as extremely desperate is misguided.
