Do you think there will eventually be a glut of cars, and if so, when?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Once there is enough capacity, big manufacturers will always be chasing for the next sales crown. Dealers on the other hand are making more money than ever currently so they won’t want a glut of cars in stock. I’m guessing eventually manufacturers will win out and start incentivizing dealers to take in unwanted inventory like before.

I’m not convinced the markups have made up for the loss of volume.

You can stick your head in the sand and believe whatever you want or do some research and look at the facts. The biggest dealer groups in the US are publicly traded companies and release their financial info to the public. They have made record profit since COVID started.

But multiple things are not in their control - the car manufacturers and other dealerships. Once one or both start lowering prices to move cars, the markup dealers can stay high if they want, but they will start losing sales.

[Anonymous]

Anonymous wrote:NP. What about the used car market? We prefer to buy a car that is a few years old, not new. We have a 13 year old vehicle that we'd like to replace rather than pour money into, but have been holding off the last year due to how tight the used market is.

It seems like once supply chain gets addressed, a lot of people who have been waiting on new cars will get them, and we'll see more 2018/2019 vehicles on the market, right?

I have been getting impatient and started talking to dealers about a few cars. The pricing is actually fine (we're looking at 3-4 yr old wagons and hatchbacks with less than 40k miles and above base model, and finding things in the 19k-24k range, which is our sweet spot). The issue is that inventory is so limited. We have a handful of models we're interested in and if we decide to buy now, we will really have to hunt for what we want. I'm hoping for an influx of slightly aged cars in the next 6 months or so just to make the process easier.

I’m in the same boat. We found the car we want, it’s 6 years old w/ 40k miles for 19k. I think it’s a little high and will try to get down a grand but at this point, we’re ready to take it cause low miles.

I have noticed a few of the used cars I was watching have had price drops.

[Anonymous]

As someone who lives in the Detroit area and follows the market closely, the answer is no. A glut of cars is not going to happen in the foreseeable future. It used to be all about market share. Now, they don't care. Profitability is king. Nobody is going to build thousands of cars, then have sales to sell them. And as someone at one of the big automakers told me, "they are only interested in the top 20% of buyers". Forget entry level vehicles.

[Anonymous]

Anonymous wrote:As someone who lives in the Detroit area and follows the market closely, the answer is no. A glut of cars is not going to happen in the foreseeable future. It used to be all about market share. Now, they don't care. Profitability is king. Nobody is going to build thousands of cars, then have sales to sell them. And as someone at one of the big automakers told me, "they are only interested in the top 20% of buyers". Forget entry level vehicles.

I’m not sure what living in Detroit has to do with anything. Supply of cars WILL eventually increase.

[Anonymous]

Not any time soon. I sold my old car (expensive repairs) and bought a new one last summer; best decision ever. I mean I should have done it a year prior when all the covid discounts were available but I was too stupid for that.

[Anonymous]

Anonymous wrote:

Negotiate for less popular (i.e., less in-demand) vehicles

PP, any recommendations? Sounds like you know cars. np here. New under 30K, ideally under 26K. A sedan. Can be low-frills

I bought a Toyota Corolla LE last summer for $24k (including everything) in California.

[Anonymous]

Anonymous wrote:As someone who lives in the Detroit area and follows the market closely, the answer is no. A glut of cars is not going to happen in the foreseeable future. It used to be all about market share. Now, they don't care. Profitability is king. Nobody is going to build thousands of cars, then have sales to sell them. And as someone at one of the big automakers told me, "they are only interested in the top 20% of buyers". Forget entry level vehicles.

That’s because they need buyers who can afford to repair them or who can buy a new one in a couple years.
-grew up walking distance to Henry Ford’s boyhood home and the Glasshouse, and still maintain a home in that neighborhood (like that means I’m an expert - ha)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No. Manufacturers will attempt to balance supply and demand, not try to produce more supply than there is demand, which is what your questions says you're hoping for. Manufacturers don't always get it right, under and over-estimating demand for some vehicles, and that's where your opportunity is today and tomorrow. Negotiate for less popular (i.e., less in-demand) vehicles, not the current fads-du jour which everyone is clamoring for.

I mean, there were a glut of cars for decades. How can you be so sure it’s “never again”? I’ve never paid MSRP or anything close, and I’ve bought many many new cars.

Never again because things are more profitable to dealers and manufacturers. Carmakers have to move cars in a market of oversupply by offering incentives, rebates, holdback, price supports etc. to dealers and customers. This cuts into profits which are at historic highs for dealers.

More profitable for dealers and manufacturers. Hmmm?

At the moment car dealers are moving less vehicles and dealerships have plenty of empty spaces. I'm surprised that you think the current market is more profitable for them.

It’s not what I think. It’s an empirical fact for most dealerships. Most are marking up vehicles to the tune of $3000 to $5000 above MSRP. In 2019, the average profit on a new car was about $1900 after taking into account dealer add-ons and F&I products (extended warranty, TruCoat, “paint sealer”). It’s now more than $5000.

https://www.autonews.com/dealers/nada-forecasts-record-2022-profits-car-dealers

That doesn’t mean the market will sustain them doing this. It only takes one or two dealers to stop doing it and those will get all the business. Then the others will follow. Once supply rebounds, watch it happen.

They move in unison. There are not outliers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No. Manufacturers will attempt to balance supply and demand, not try to produce more supply than there is demand, which is what your questions says you're hoping for. Manufacturers don't always get it right, under and over-estimating demand for some vehicles, and that's where your opportunity is today and tomorrow. Negotiate for less popular (i.e., less in-demand) vehicles, not the current fads-du jour which everyone is clamoring for.

I mean, there were a glut of cars for decades. How can you be so sure it’s “never again”? I’ve never paid MSRP or anything close, and I’ve bought many many new cars.

Never again because things are more profitable to dealers and manufacturers. Carmakers have to move cars in a market of oversupply by offering incentives, rebates, holdback, price supports etc. to dealers and customers. This cuts into profits which are at historic highs for dealers.

More profitable for dealers and manufacturers. Hmmm?

At the moment car dealers are moving less vehicles and dealerships have plenty of empty spaces. I'm surprised that you think the current market is more profitable for them.

It’s not what I think. It’s an empirical fact for most dealerships. Most are marking up vehicles to the tune of $3000 to $5000 above MSRP. In 2019, the average profit on a new car was about $1900 after taking into account dealer add-ons and F&I products (extended warranty, TruCoat, “paint sealer”). It’s now more than $5000.

https://www.autonews.com/dealers/nada-forecasts-record-2022-profits-car-dealers

That doesn’t mean the market will sustain them doing this. It only takes one or two dealers to stop doing it and those will get all the business. Then the others will follow. Once supply rebounds, watch it happen.

They move in unison. There are not outliers.

Completely false. There is always someone willing to undercut the next guy. When supply rebounds, so will that. Most experts seem to be saying sometime in 2023.