SUVs parked on cargo ships reveal scope of U.S. auto market glut
bloomberg.com
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We did not pay the surcharge.
It's an outdated system that should have been dead a decade ago, but not yet.
Longer than that, I would say. I have not bought a single car where the dealer added any value to the process at all. And I've been buying cars for three decades now.
I realized in my US stay of many years that a lot of economy is rent-seeking like everywhere. Dealers primarily exist as ICE cars needed maintenance and legacy reasons. However it is a pity that they cannot be disrupted. I have not had experience with platforms like Carvana but i avoid used cars from people because i have had bad experiences before.
She ended up with a competitor. That dealer had a mandatory "package" they applied to every car on their lot (window tint, door edge protector, etc.) which was grossly overpriced.
Something I haven't seen the numbers on but I suspect is true, is that they make more profit on the financing rebate than they do on the sale of the vehicle. The pressure to finance with them is so high that some dealers will refuse to accept cash offers. Or they will add on $2500 as an "external finance fee" when a buyer already has financing arranged.
A car depreciates. One should never buy a depreciating asset on a loan. A car should be treated like a consumable - buy it with existing cash.
The only thing that one should buy on a loan is an appreciating, or income generating asset.
Based on the median U.S. income, it could take literally years expecting no additional discretionary income to come up with that kind of cash, or even longer if individuals are trying to keep cash reserves to situations like one we're currently experiencing. In practice. owning a car as an asset it generally considered a positive versus alternatives like leasing, which results in the accumulation of no vehicle equity over time.
There's not really a great solution here. Cars are capital assets--they're complicated to build yet already somewhat commoditized in their pricing. They can also last for much longer than most other consumables assuming reasonable use. With regular maintenance, I don't think it's unreasonable to assume well over 10 years of use from most modern vehicles, with most automotive loans having a shorter period. I'm not sure I can think of another commonly-used product that closely matches those conditions...
Your money does not know or care what it is spent on. If you take out a loan to purchase a car, and then use the money you didn’t spend on the car to purchase investments it is no different to spending the cash on the car and the loan on the investments.
If you have enough money to buy a car AND investments (and you need a car) you’re better off spending that money on a car and saving on the credit cost of the loan.
What this rule actually says is “it’s better to have money and invest it in things that appreciate rather than not have money or spend your money on things that depreciate”.
Well duh!
Basically, the car manufacturer doesn't want to own the car and the dealer doesn't want to own the car; so the bank owns the car on short-term loans that incentivize the dealer to sell as soon as possible.
The industry term for that is "floorplan loan."
The blanket statement that horses have high safety ratings makes me smile :-)
It seems that in the late 19th century in the U.S., the annual death rate from horses was approximately 5 per 100,000 inhabitants. That surprised me, as it's ~1/3rd the current U.S. road traffic fatality rate, and as horses were used for more than just transport.
I couldn't find any figures, but obviously the distance travelled per capita has exploded, so it's likely that horse riding is at least several orders of magnitude more dangerous than driving.
2. Upselling higher end models and trims (add-ons are where the money is)
3. Signing up people for high-interest long term loans they shouldn't take on (negotiating monthly payment instead of purchase price)
Don't hate salespeople. Hate the fact that certain companies insist on employing armies of minimally-trained, low-skill, low-dollar lackeys running around who offer little benefit to anyone, especially high-information buyers, which you seem to be (which, keep in mind, not everyone will be).
FWIW I love good salespeople but also hate "being sold" in the way OP describes.
In that line of work, I'd say that there are 3 in 10 that drop by the office who are worth many times their commission - it's amazing to be able to describe your needs, and hear which of their products match those specifications plus considerations of requirements I hadn't realized, how their other customers are using the devices, know which are stocked/standard and when you've generated a parametric part number that's never been written before. But some of them are not really much more useful than the parametric catalog, and a couple of them just need to give up the engineering sales and switch to a car dealership or multi-level marketing scam.
But it's someone with intimate knowledge of the industry, of the other customers, and works closely with the customer and even educates the customer.
Not. A. Single. One.
I encourage every entrepeneur to read this, because you'll see them time-and-time again. Most of the tactics are used to "get what you want", as they say, but also making the other side convinved they "won". Where they presumably come back and do it again to you. It relies on cheap psychological tactics. As a business-owner, 100% of the salesmen I dealt with used these same tactics. Identifying the tactic and calling it out usually neutralizes the tactic with the salesmen.
But as an arbitrary example, anchoring numbers. They'll show you an insanely expensive first solution. And then later lead you to a merely overpriced-solution. But the second ones seems "cheap" because they are judging it from perspective of the first price solution.
Car sales people are a special case, they're protected by tons of regulations, so you have to deal with one.
Not. A. Single. One.
But you don't have to play the game by their rules. After all you are the one with the money, you can just take it elsewhere. If you are buying a new car it's not as if they are selling some rare commodity that only they have.
When they start bullshitting tell them to cut it out or you will leave; and make sure you carry out the threat if they keep trying to pull the wool over your eyes.
And make sure that you actually know what you want and what it is worth to you so that you don't get distracted by shiny irrelevancies.
Because not everyone is willing/able to negotiate and even if this tactic only works on 10% of people that buy a car, that's still a nice commission for the sales guy.
On the non-discretionary front, various food items are reportedly in short-supply. Nothing is further from the truth. But with 80% of the restaurants down (a rumored 40% says they're closed for good), many distributors are out of business. Milk, beef, poultry should be seeing huge deflationary price moves. But by faking the shortages, the producers keep prices artificially high or even higher than pre-pandemic.
For more info on how this turns out, please research the fall of the Roman Empire.
The supply chain is bifurcated between industrial supply (e.g. restaurants) and personal use (e.g. grocery).
Industrial consumption has flatlined, nobody's going out.
Personal consumption is through the roof -- which is where the shortages are coming from.
Manufacturing cannot switch over fast enough, which is what is causing this glut.
Obviously not everyone can do this, but it seems like people are adapting at least!
It's a bit weird to say the least, getting your groceries with your Big Mac.
To address concerns related to dealership sales department closures and social distancing, Cadillac is offering virtual tours of its products via Cadillac Live and promoting its “Shop. Click. Drive.” online shopping, purchase and delivery program.
Wasn't this the very thing the automakers were against when Tesla came up with it?
Tesla does not have an independent franchise/dealership model, and all of their local presence is corporate owned. This is what all the automakers have been against, as there are a rats nest of local/state laws that require legacy automakers to not compete with/cut out their dealerships with direct-to-consumer sales, but Tesla has avoided that impediment by resisting having to adopt the sales framework the legacy manufacturers can't legally get out of.
That said, manufacturers would love to be able to adopt Tesla's model; dealers are the ones that hate it as it's an existential threat. Manufacturers are only against Tesla's model to the extent that they're not legally allowed to adopt it, so consider it an unfair advantage.
Where would they get the money? From cutting out the middleman, from increasing sales by offering an alternative to the terrible dealership experience (spending 1-2 hours buying a car is not ok) and from gaining the flexibility to offer alternative business models (i.e. subscription models).
Dealerships are the past. They may very well be the deadweight that will cause incumbent OEMs to sink rather than swim.
The legacy manufacturers could absolutely copy this approach and would love to do so.
Traditional car dealerships need someplace to store all the new and used cars which quickly gets into hundreds of cars sitting around. Showrooms on the other hand can get away with representative samples which requires vastly less space. That means they can afford locations with vastly higher costs per square foot.
This discussion is about American auto dealerships.
They would want to cut out the middlemen car dealerships.
Both Ford and GM have substantially lower WACC than Tesla. The figures are public.
That doesn't means they have to like the dealer model, but there are real advantages to it.
For years, I was aware of the cracks about "stealerships" and I didn't pay much attention, because I figured you get what you pay for and hadn't found a good independent mechanic. But I happened to see a help wanted ad for dealer advisors that mentioned commissions, about the same time as I had paid for an expensive repair on an out-of-warranty vehicle after dragging my feet quite a bit.
Maybe this is naive, but I genuinely did not know about the conflict of interest, and I expected the half of the dealer that sold (used) luxury vehicles to be no more predatory than the half that sells regular cars. On purchase, I figured, meh, I can afford the repairs, but I didn't count on paying for ones I didn't need and having ones I did ignored.
There are conflicts of interest everywhere in this process, as you might imagine.
One reason I didn't realize this is because I used to drive a pretty mundane vehicle under warranty, so they never recommended anything grossly unnecessary.
Basically all of those things died with the rise of the internet, because you then have direct access to the manufacturer via their website and could order parts and have them shipped to you. It would also be a lot easier to find a local mechanic if the manufacturers would publish the service documentation for their vehicles on their websites, which they don't do primarily to placate the dealerships who don't want the competition.
It's almost surprising that you can't buy cars on Amazon yet. You can buy cars on eBay, although presumably not direct from the manufacturer as a result of the nonsense dealership laws.
(which is some sort of regulatory problem probably, the point is that it is the status quo for there to be a dealership oligopoly in many areas)
The manufacturer might like to claim the entire savings, but there are two reasons that typically wouldn't happen.
First, then the manufacturer's margins are higher, which changes the calculation of how much margin to sacrifice to increase sales volume. If before the manufacturer was making $2000/car and the dealer was making $2000/car then the manufacturer lowering the price by $1500/car to double their sales isn't profitable; double $500 isn't more than $2000. If the manufacturer is now making $4000/car by cutting out the dealership, lowering the price by $1500/car to double their sales is worth it; double $2500 is more than $4000.
And then second, because the competing manufacturers would have the same incentives under the same circumstances. If they lower their prices by $1500 to double their sales, that's coming at your expense if you don't do the same.
According to this [1], new car dealerships have a profit margin of 1-2% while auto manufacturers have a profit margin of ~10%. Anecdotally, some dealerships have no profit on vehicles, and rely on services contracts to drive profit.
I interpret this to mean that there is significantly more competition between dealerships than auto-manufacturers. If a consumer wants a specific brand, they can choose between dealers and often will travel long distances to get the best price. When a dealer buys a brand, there is a single supplier with global monopoly.
I think the disproportionate share of profit already going to manufacturers also undermines your argument on the trade-off between sales volume and splitting of profit.
Consider every dealership horror story you've ever heard. Both from customers -and- floor employees.
In both cases, having all dealerships across the country owned by the MFG means there's larger pools of workers to unionize, and a greater risk for a class action.
A phrase the older Chinese folks use a lot in my building is "the older generation" or "the younger generation". As in, "the younger generation likes buying things online", or "the older generation prefers making a phone call".
It's made me think more generally about generational differences and how they affect buying patterns, and patterns of doing business generally. I realized, for example, that I really can't stand dealing with contractors (e.g. HVAC) in the older generation who refuse to use Google Calendar or email, and insist on doing everything over the phone, and face-to-face.
I think this "human face of the company" is a good example of a generational difference at play. I categorically do not want to interact with anyone at a dealership. I get product information from word-of-mouth/friends, YouTube, and other sources. Provided a company put some money into creating a customer experience that offered the same level of customization you'd get from a dealership experience (color, trim level, etc) I would be the first person to make a $20-30K purchase online. Not least of which because I'd be confident they'd have built a system not to fuck up my order vs. however it would get input by the person at the dealership who inevitably needs to enter it into the OEM's system to order it.
More and more it feels like I'd rather just rip the humans out and deal more directly with a company's back-office systems (e.g. for placing a car order), than have to play a giant game of telephone explaining something, only to have a human screw it up when entering it. It also annoys me when I call customer service and they remind me 20 times that I should use the website. Of course I should use the goddamned website. I wouldn't be calling customer service if I didn't try that first. This is probably something that won't change until people now in their 20s/30s are in positions to make these decisions in companies, at which time there will be some new trend the "oldsters" don't get. So it goes.
It forces companies to have many more local points of contact as they otherwise would, which improves customer service. For example, with my HP laptop, I ordered it and all accessories locally and in my language, can have it serviced within a few days at any of 3 locations in our country, have someone that I can argue with in my language when they inevitably try to claim the warranty was void somehow etc.
If HP had chosen a direct distribution model, I would've had to order it online, send it halfway across the continent for service and have absolutely nobody to talk to in my language to in case of non-standard issues. We saw that exact with Apple some 10 years back, when it was impossible to get an iPhone from our country, because it didn't seem worth it to Apple, while Samsung and everyone else gladly threw phones at our distributors and watched the money pile up.
I bought a Macbook with Applecare. I had a problem with it and brought it to an Apple store. My data was backed up to the cloud so I had no issue surrendering it. I walked out with a brand new-in-box Macbook in less than an hour.
Waiting a few days for it to be serviced seems like it would be a much worse experience...
The point was, that Apple didn't care about our country as there are only 2M or so of us and so we couldn't even get any apple products for many years, while every other manufacturer that used the distributor model was already here.
The point about repairs maybe doesn't apply to Apple (I don't know how they do things around here), but my OnePlus phone, for example, which is sold directly by OnePlus would have to get shipped off to by repaired, possibly at my expense, and I'd have to wait weeks to get it back. Same (to some extent) with anything I buy from Amazon - they're not present in the country so they don't have to abide by the warranty and repair laws as strictly.
The current law creates local dealership monopolies, and the dealerships provide terrible service, and rip everyone off as a result. If you don’t like it, you have to drive dozens of miles to go to a competitor (and car purchases invariably involve multiple trips).
Cities want the sales tax revenue, so they give the dealerships huge tax breaks to attract them.
The whole system should be scrapped.
I seem to remember tax based on the purchase location when I bought a car a few years ago in California.
>There’s no advantage, in terms of sales tax, on where you go to buy a car. An Orange County resident who buys a car in Santa Monica will stay pay the Orange County sales tax rate. The sales tax rate is charged based on where the car will be registered.
I suspect that the Car and Driver article was poorly researched and factually incorrect.
[1] https://www.latimes.com/local/california/la-me-aa2-snapshot-...
It's a method of spreading the wealth. The model increases the number of people employed and businesses involved, both directly and indirectly, exponentially.
Instead of a sales tax, let that person spend that money on other products and services. And to raise revenue, use a progressive tax such as income.
However, as bad as that experience was, it was faaaaaaaar better than any dealership interaction I've every had. I would never go back, even though I disliked the Tesla experience.
Even if Tesla wasn't an electric car, I'd be tempted to use them just to avoid the dealership experience.
Seems to me that if the process cannot be streamlined by an app, that the process is wrong. Growing pains for this industry, I get it. But it shouldn't really be any harder than what an 'app' can provide. Give me a few model options, click 'Buy'.
Just as high touch enterprise sales is here to stay, so is a human in the loop for auto purchases. You are not the average consumer if you’re here. Your average consumer will not tolerate rough edges of an app when spending $37k.
But that's the process problem. If you go to the website and click "buy" and the car shows up in perfect condition exactly to your specifications then there is nothing to need a human to interact with. And if they can get it to the point where that's what happens 99.99% of the time, having to send out a human representative the other 0.01% of the time is cost effective.
It means a new concentrated powerful special interest in their local area can outbid them, in their diffuse helplessness, in influencing politics.
If another electric vehicle player tried to get in the game today, I'm sure Tesla join the lobby against them using the same argument.
I think it's pretty unfair to be "sure" of this. Can you name other instances where Tesla has played regulatory capture games?
No. It wasn't regulatory capture. It was about competition.
The same thing happened in the United States with movie theaters, television production, alcohol distribution, etc...
There's a reason that bars aren't owned by breweries anymore. There's a reason that movie theaters aren't owned by the production companies anymore.
"Reglatory capture" is a fun HN buzzword, but if you study history, you know why things are done.
It was an antitrust lawsuit by the government in 1938 that brought this about, not legislation.
There's "mild hybrid" junk coming out, but that's a transition technology to skip over. Historically, things like that don't last long. Ships with both sails and steam engines. Metal-plated wooden hulled warships. The B-36 Peacemaker, with six props and two jet engines. (The all-jet bomber, the B-47, came out the next year.) Diesel locomotives with mechanical transmissions, like a truck. Acoustic coupler modems. Compact fluorescent bulbs.
They first hit the market in the '80s, and I remember my parents installing them in the mid '90s.
As a product, they got a good 20-30 years of life before LED bulbs got good enough to replace them.
20 to 30 years of terrible light aesthetics and here's hoping you never dropped or broke one since, oops, there's toxic waste (mercury) in your house.
CF bulbs are just the worst technological diversion I have seen taken in my lifetime and I feel bad for everyone that had to interact with them.
If cost is no object and you want to optimize fro avoiding fossil fuel use it is not the best, but for most of us who do need to consider cost, it's very hard to beat mild hybrids.
They are famous for essentially sharing much of their design with a bus, even the seats and fittings. One of the trains in rotation still has original Leyland panels.
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.
[1] https://www.usatoday.com/story/money/2020/04/16/coronavirus-...
Kind of like the recent oil prices, once people finally ran out of places to store the good the price will have to fall.
They told me they had to lay off around half their staff due to Covid.
The deals are out there you just have to look for them.
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?
Claims he has never purchased a new car in his entire life of being a mechanic of 50+ years.
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...
https://www.barrons.com/articles/get-ready-for-mega-cash-for...
Now, are ships full of Toyotas and VWs also unable to unload?
1: https://usa.nissannews.com/en-US/releases/release-103b1d052f...
2: https://usa.nissannews.com/en-US/releases/release-11f3e4512e...
Their niche was performance(even their budget cars had very good power compared to competitors), they should have left the boring appliances to Toyota and Honda.
Unfortunately, in the USA, you can't get to work (or even purchase groceries) without a vehicle with the exception of a few places.
https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System#Ec...
It was agonisingly painful to hear stories of freshly restored classic cars getting destroyed because of that, while countless others in much worse condition remained on the roads.
The emissions levels of cars from the 70s and 80s are just off-the-charts, compared to modern cars.
I'm sure dealers will want manufacturers to share the burden with rebates. Financing incentives seem risky given the chance that jobs are not especially stable these days.
Does anyone remember what happened during the 08 recession? I imagine this is a more abrupt dropoff, and presumably will be a more abrupt sales pickup as well. How would that lead to a different result here?
It depends in which manner they need to liquidate, if they can hold the inventory it often makes sense to do so instead of losing the 20-30% of market value liquidating it (you just do the calc of depreciation per day versus selling right now).
You can't really liquidate new cars, because there's regulations around selling new cars that prevents folks like Vroom, Carvana, Shift from taking on that inventory but those are the only folks who could really afford to do so with their respective funding from external sources.
Financing incentives are risky, but you account for that with increased income verification and other items - the deferral of payments for 90-180 days is getting more and more common.
This situation seems different from the 08 recession, as lots of folks _should_ get their job back once things are opened & we get back to a new normal so if you treat the risk as such you're hoping that 90-180 days is enough of a time period to have people be able to afford the loan they've gotten.
The real looming issue is you have ~4M or so vehicles coming off-lease later this year, so you will have an incredible influx of used vehicles to an already saturated market leading to great deals for consumers but not ideal times for most folks.
The harder part of selling online for dealers is that their money maker is in the hard-selling of ancillaries (Warranties, the "paint protector" and so forth) plus the F&I office (financing and insurance) but if you can't hard sell customers anymore then the majority of your profit center is gone so it's having a material impact on the dealers.
Happy to expand more or answer further questions as I work in the auto space.
Right now, year or two old used cars are selling for more than they are worth - so if you are looking in that price range, a new car may be a better deal.
If looking for used, I've bought all the ones I didn't regret off private party sales from Facebook or Craigslist. Just lurk daily for about a month and get a feel for what the ones that sell are priced at, and know that the ones that don't sell are probably priced a little high. When you spot a good vehicle at a good price, move! Try to get in to see within 24 hours. If it's at a good price, it will sell quickly. If you want to buy it, get it taken to a dealership for an pre-purchase inspection (Usually $100-$200). If you had a mechanic you trust, he might do it for free. If it's good enough buy it.
If looking for new, then the first step is to find the online forum where the power owners of that make and model hang out, and find the forum thread or spreadsheet where they post how much they paid. This is incredibly powerful, and is the key to your success. It will often surprise you how low dealers can eventually go. Pick a price low from the list, but not the absolute bottom as your plan.
Next step is to contact by email many dealers around, tell the vehicle you are asking for, say you are shopping around, and request an out the door price. If you shop say eight dealers, you will be amazed at how much these prices may vary (like 10% of the value of the vehicle). If you see what you are looking for, go for it, and walk out if they change the price later.
Paying 2-3% more and saving a lot of hassle seems much more reasonable.
They take a small commission (usually from the dealer), then contact a bunch of nationwide dealers on your behalf. The prices they get are better than or very close to the best you could personally haggle, and it takes like 2 minutes to make the request.
* Lease mileage seems to be trending downward. * Overall reliability is trending upwards (easy to get 200k+ miles) * This places a lot of 1 to 2 year old vehicles in the "almost new category"
Combine this with certified pre-owned program, you can pretty much get a "new" car for 30% less. This is inflating the price of cars with low miles since they seen as nearly the same as new cars.
If new - the best bet is to call your local dealers and talk to them. I'm aware of many dealers that haven't turned a unit in 3 weeks now, they need the business and likely will be willing to give you a great deal because they need a move inventory.
If used - I would wait until some of the auction houses re-open and try bidding on a car. If that's a little stressful (it can be) then I'd look at Carvana, Vroom and Shift (depending on your geographic region).
From there I'd look at local used car dealers - don't let them game you or try - Carvana/Vroom/Shift all recondition to a Lexus CPO (Certified Pre Owned) standard you just can't legally say that if you don't have the approval from the manufacturer (another weird quirk) - you should be able to find a like for like vehicle between Carvana/Vroom/Shift & a local dealer.
Whoever gives you the best deal take it, but both online and in-person dealers are marking down inventory.
If you can wait a few months, the prices will be lower with all those vehicles come off-lease.
Keep in mind that with Hertz filing for bankruptcy that other rental car companies aren't that far behind, so there could also be a massive influx from those folks needing to liquidate some assets.
The whole process was pretty pleasant, people were pleasant, the car was great, and now I still come over to get it serviced.
In retrospect they were a little too eager to accept my offer which was way below sticker, so I was probably off on their factory price, but I figure I'm fortunate that I can afford to not obsess about a +/- $1k and do better things with my life :)
I know three people who have bought a car through that program and they have nothing but praise for the experience.
If you don't know what you want, or don't know anything about the make and model you're buying, you will be taken advantage of.
It's perfectly fine to walk in to a dealership and look around, touch and squeeze and sit in all their cars to figure out what you like. Take one for a test drive, or five. Don't commit to anything.
Before buying a car, you should ideally have picked out a specific car from a dealer's lot, with the specific make, model, trim, and options you want. Price that specific car on kbb.com or trucar.com so you know the average price range for it. This is the only way of knowing if a specific car's price is "good" or not, because you cannot trust the dealer on this.
I wonder if the government would try something like that again, perhaps limited to domestic manufacturers or cars manufactured domestically. I can’t see the current administration giving incentives across the board.
Meanwhile Subaru, per usual, is offering on the low-end compared to what others are doing. 0% for 63 months. They never budge on financing or offers.
Also in times of high inflation, delaying payments is beneficial.
I wish a service existed that I would pay a lump sum of upfront cash to, and they'd sort out all the loan paperwork, etc.
Obviously if it's a 60 month 0% loan, I want to pay the sticker price minus the return on a 2.5 year fed bond...
Also 0% loans are fantastic for your credit! I take them as much as possible because it’s a free credit score bump.
This sentiment makes some sense during normal times, but we're now back in ZIRP. As of this week, a 2.5 yr treasury bond pays about 0.25%. On $40,000 that's $100 per year. https://www.bankrate.com/rates/interest-rates/treasury.aspx
On a $40,000 vehicle, negotiating a $1,000 reduction in purchase price would dwarf any considerations of "the return" on a treasury bond.
For example, even huge banks do this: https://www.bankofamerica.com/auto-loans/
Smaller places might have a car buyer that does everything for you.
Really, the trick is to get a good price on the vehicle and then convince the dealer that you don't want their dirty, obfuscated, expensive loan.
For instance, the Honda Accord outsells the Chevy Malibu by ten-to-one. Instead of simply selling the Malibu for a lower price, Chevy wheels and deals on the rebates and the financing.
Sounds very different from the UK if true.
Here in the UK, I've got 8-12% off every new car I've ever bought, by haggling hard.
1) The car as delivered from the factory has a 2% to 5% markup from the dealer. The factory usually sells it at about a 15% gross profit. But some features added on are often done by the dealership and have a larger mark up, meaning it gives the dealership more room to negotiate.
2) If you're trading in a car, the dealership will often present things as a package. It is very difficult to get them to first negotiate a car trade value, and only then move on to selecting a car, negotiating a price, etc. Because of this, they can give the appearance of cutting the price of the car when in reality they just gave you a much lower price for the trade in than they know they can sell it for.
3) Dealerships make a significant amount of their money from financing: if you have a loan for 6%, chances are the dealership, through volume with the bank, are "buying" that money at 3% and pocketing the difference. This means they have further wiggle room on price without sacrificing profit.
4) There are frequently manufacturer incentives, especially toward the end of the model year when new models are set to come out soon. It's not uncommon for manufacturers to want to clear out dealer inventory to make room, and frequently they'll give around $1k to $3k in rebates. Dealerships don't necessarily present this in a straightforward way, and will sell the customer on the idea that they're getting a discount on the car price from the dealer. If you don't happen to know about the rebate and don't negotiate well enough, you might not get the rebate at all.
All of the above mean that dealerships frequently have options to negotiate the appearance of a much better deal than you're actually getting. They're not actually cutting the car price, they're tweaking all of the other parameters that determine their revenue stream.
If you go into a dealership and want no upgrades, have no trade in vehicle, are able to pay for the car without financing from the dealer, and there aren't any other rebates, you won't get much off the sticker price. In fact the sales folks will often treat you like they're doing you a favor just being willing to sell you the car at the sticker price.
Dealers are effectively rent-seeking, and nobody but those profiting from it will mind them disappearing overnight. It won't happen, but one can dream.
It's crazy to see. They are putting them anywhere.
Turnover on vehicles is bananas.
I hope they've also considered the looming panama disease crisis as well https://theconversation.com/the-quest-to-save-the-banana-fro...
https://www.marinetraffic.com/en/ais/embed/zoom:14/centery:3...
I was still seeing a lot of logistics activity... until just recently.
I've owned three cars, all three of which I inherited used and were already ~8 years old when I got them. My current car is nearly 17 years old and drives great!
What in god's name are people doing to their cars that they have to be scrapped so early?
My partner was nearly crying with sadness recently when she had to scrap her 22 year old car!
The sheer number of people help create large car sales volumes. While shared, and while durable this is the rate needed to replace cats which cannot be (or not worth) repaired.
Sure, you can probably go 500-1000 lower if you're willing to spend ungodly amounts of time waiting for a dealership to need that final sale to meet some incentive at the end of the month, but that's luck and not a great use of time.
There's no such thing as a "great" deal on a car. You aren't ever going to buy a new, popular car with popular options/color at a massive discount. Why would that be possible?
And finally, if going 1000$ under invoice on a new car is that important to you, are you really the sort of person that needs to be buying new? Buy used and avoid the instant massive depreciation.
For instance, the Kia Stinger is a good car, but nobody is buying it. At some point, they'll start offering bigger and bigger incentives.
I purchased a brand new car for about $18K off MSRP because it had been accumulating dust on a dealer's lot. I bought it at a rural dealership where there just wasn't a big demand for anything but SUVs and trucks. The same car was retailing for thousands of dollars more in the city where I actually lived.
It's funny how we don't really see the supply of houses piling up the way we do with cars. Granted, the housing market moves slower. But, I bet, even in 6 months, in coastal areas and the bay area, the month supply of housing will still be very low.
Similarly I am not seeing any impact on real estate. I am guessing that will take a few more months.
Nice "at".
It would be interesting to see how many products are affected that sit on container ships. I have not seen any slowness in delivery of mailed items, specifically ebay auctions that were shipped from China
Tesla is an expensive company to run, their finances are often at least a little bit precarious, and he has on the order of tens of billions of dollars riding on there not being a recession right now.
There's no hidden gem of contrarian insight, he's just being selfish.
More like, he really is under a tremendous amount of financial stress, and twitter sometimes tempts him by being a place that will listen, no matter what, good and bad.
That's one of the few things I actually like about twitter. That by the sheer temptation of it, it worms its way past the PR teams and the polished sheen and gives the raw thoughts of people in positions of power.