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Used car market gets even more bizarre

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Re: Used car market gets even more bizarre

#161

Post by sokoloff »

csteubs wrote: post #83
lastofthemojito wrote: post #21

Earlier quoted context omitted.

The narrative earlier in the pandemic was that the reduction in driving was brutal for mechanics as it meant a reduction in need for auto maintenance and repair. Fewer of us are staying at home these days, but it looks like we're still not quite back to pre-pandemic levels of driving[0]. I'd imagine it's probably a bit of a mixed bag for mechanics, depending on what sort of vehicles they specialize in, where they're…

Might be anecdotal but on top of that, I've noticed that many car owners who previously only had services performed by a shop began doing their own maintenance. A friend who works as a service manager at CarMax had similar observations in conversations with some customers, including one DIY-er who forgot to torque their oil drain bolt correctly, lost the oil, and is now the recipient of a refurbished engine. I had on…

Jumping from only light maintenance to changing a rear main seal is quite the leap!

Re: Used car market gets even more bizarre

#162

Post by nostrademons »

OldHand2018 wrote: post #38

One of the other oddities of this market is that prices for "normal" cars have increased at a higher rate than prices for "upmarket" cars. There is now some pricing overlap that never used to be there.

Interesting that we had the same effect for housing (at least in the Bay Area) during and immediately after the pandemic. Hot zip codes like San Francisco, Palo Alto, Menlo Park, Mountain View, Portola Valley, Woodside, etc. actually fell. Second-tier suburbs like the mid-peninsula, Sunnyvale, Fremont, Berkeley, Oakland, El Cerrito, etc. exploded.

I suspect that it's a function of shortages. When there are not enough goods to go around at the high end, some fraction of those buyers get displaced to the next tier down. They keep their high-end incomes and ability to pay, though, and bid against each other so that the next tier of goods becomes almost as expensive.

Re: Used car market gets even more bizarre

#163

Post by sokoloff »

SilasX wrote: post #137
jiveturkey wrote: post #72

Earlier quoted context omitted.

Why are dealer market adjustments ridiculous? We live and breathe market forces. No one ever, ever, complains about market adjustments in their favor.

It’s the opposite: Normal market: “this product costs $2.60.” ‘Wasn’t it like, $2.10 a week ago?’ “Yes it was.” Cars: “This car is $26k. Oh, also you have to pay a $2k market adjustment, because man things are just crazy.” That is, in normal markets, you just raise the price , you don’t need to refer to an explicit “market adjustment”, especially not as a random addon.

On a used car, they do as you describe. On a new car, the sticker generally starts with something like “manufacturer’s suggested base price” then various options, then local adjustments. You can’t just claim that the manufacturer’s suggested base price is $2K higher than it actually is.

Re: Used car market gets even more bizarre

#164

Post by bityard »

neogodless wrote: post #108

All I can offer is an anecdote. I have a 2015 Mazda 3 (top trim level, with 34,000 miles on it.) Purchased 4.5 years ago with 8k on it for just under $20k. Well over a year ago, I started checking KBB.com values to either trade it in or sell it. Back then, trade was close to $12k, and private party was a bit over $13k. I've checked several times since then, and the price has basically grown and grown. As of today, it…

If you live in the rust belt, I'd advise to sell it within a couple years. I had two Mazdas they both died of rusted-out frames while the engines and interiors were still perfectly fine.

If you're in a dry climate, it'll last a very long time as long as you keep up on maintenance.

Re: Used car market gets even more bizarre

#166

Post by zizee »

hyperman1 wrote: post #136
noduerme wrote: post #129

Earlier quoted context omitted.

I still won't even buy a car with GPS. Seems I'm in a vanishing minority. It won't pass, because people born after 1990 have spent their adult lives in a world with surveillance machines in their pockets at all times. Their cars are just big phones. By 2040 you probably won't even be allowed to drive your own vehicle.

To be honest, not being allowed to drive your own vehicle is probably a good thing. See e.g. https://www.cdc.gov/injury/features/global-road-safety/index... . From the first few paragraphs: Road traffic crashes are a leading cause of death in the United States for people aged 1–54 More than half of those killed are pedestrians, motorcyclists, or cyclists. Drivers risk other people's lives, hence, other people have a…

It does wrestle a lot of control from the individual though. It's not hard to imagine possible abuses of power. Tracking everyone's movements is just the start. What if some government decided to deny service to someone? Or not let certain groups travel to certain places. Imagine opportunities for havoc due to hacking

I'd still like driverless cars, but privacy and freedom of movement rights protections need to be thought about.

Re: Used car market gets even more bizarre

#167

Post by JKCalhoun »

clavalle wrote: post #8
dlmiller wrote: post #2

My car died, needing a new engine, so I was forced to get one in October. I usually only buy used, but prices are so inflated it didn't seem worth the premium. Used 2017-2020 Toyota Rav4's with 30-60k miles were the same price as a new 2021 model, if you could get one. I knew it was bad, but I was shocked of how bad it was. I went to multiple mega dealerships with 500-1000 cars that were all spoken for. Most had 0 ne…

I was in the same boat. I usually avoid buying new but used cars are nearly the same price as new (if you can find a dealer that hasn't done ridiculous 'market adjustments'). So we bought new. We had to buy a car that was just off the delivery truck before the dealership had it inspected. The one we'd looked at two days before was long gone and they expected the one we bought to be sold the next day. My neighbor trad…

> My neighbor traded in his truck for more than he paid for it two years ago.

Sold my 2018 Toyota Tacoma pickup to Carmax for over $32K. I probably paid more than that a few years ago when I bought it new, but I thought it would have depreciated much more than that.

It's nice on the selling end.

Re: Used car market gets even more bizarre

#168

Post by toxik »

Digory wrote: post #89

So the working explanation is that the disappearance of new cars (due to chip shortages) has doubled the price of used cars? How long can that bubble last? Is it the same globally?

In northern Europe, it’s business as usual. Maybe our volumes are so small that the market need for new cars is still met?

Re: Used car market gets even more bizarre

#169

Post by shard »

latortuga wrote: post #139
larrydag wrote: post #4

Here's the flip side of that from auto lenders. They are seeing a huge recovery benefit from repossession of vehicle after chargeoff. Lenders portfolios are seeing a net benefit in chargeoffs which has hardly ever happened in recent history. Even more bizarre. https://www.yahoo.com/now/ally-financial-ally-beats-q3-12451...

Another flip side effect. My dad is a CFO at a car dealership and tells me that the banks are having problems due to the lack of cars as well. A dealership will normally float all their inventory on a big bank note but they basically have no cars on the lot to sell which means the banks underwriting those notes are making no money on interest. Multiply it by thousands of dealerships nationwide and this has big impact…

Could you clarify what this means for a layman? AIUI you are saying that a car dealership will borrow money from the bank to purchase their inventory, but nowadays with no inventory, banks are not getting payments from the dealers for the money they've borrowed. 1. With no inventory, why does the dealer need the money from the bank? 2. If the dealer is still borrowing money from the bank despite having no inventory, don't they still need to pay interest? I think there is something fundamental that I am misunderstanding here.

Re: Used car market gets even more bizarre

#170

Post by fshbbdssbbgdd »

kspacewalk2 wrote: post #13
clavalle wrote: post #8

Earlier quoted context omitted.

I was in the same boat. I usually avoid buying new but used cars are nearly the same price as new (if you can find a dealer that hasn't done ridiculous 'market adjustments'). So we bought new. We had to buy a car that was just off the delivery truck before the dealership had it inspected. The one we'd looked at two days before was long gone and they expected the one we bought to be sold the next day. My neighbor trad…

>Mechanics are about to make a killing. If you're a mechanic and already have plenty of business, I imagine it's a tough call: do you jack up your hourly rates and take advantage of the windfall, at the risk of customer loyalty in the future? This insanity will pass, after all.

One compromise is jacking up rates for new customers only.
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