Noddaz said:Hell, we are probably being gamed by ALL big business at this point. But that would be fostering a conspiracy theory at this point. And that just couldn't happen, could it?
Ha, ha, what citizen? Monopolies conspiring with each other to make as much money as possible? Corporate power becoming uncontrollable? That's only happened twice in American history! You're not paid to think!
I leased a Pacifica pre pandemic. It was worth 5000-10000 more than the residual when time came to turn it in. We wanted a new Pacifica and had the employee discount. So the dealer bought our lease out a month or so early. I got some of the value out as a down-payment on the new leased Pacifica.
Well the other shocking surprise was the factory rebate on Pacifica's, blanking on the number but $12k sounds right. So the dealer is shocked by all this and even the sales manager came over to chat about how incredible the deal was. This was their first allocated Pacifica in about 10 months. Based on his calling around, he implied he was sure it was a real rebate or a typo. So here was his statement that could explain current profit reports.
Gas was super cheap from 2020 to late 2021. So demand for top end SUVs and Trucks was huge. Scarcity meant dealers were able to make sales at MSRP or more. Low profit margin cars were just not in demand and sold ok but without as much buyer satisfaction. So consumer bias drove the automakers to make the most profitable vehicles their production priority. Plus any commercial contracts usually had simplified profit margins.
Add in greatly reduced facilities and local shipping costs. Huge profits are easy to see as the outcome.
So why the huge incentive on yhe Pacifica...the sale mngr implied it was federal MPG rules related. They needed people to buy some darn Pacifica's to balance the v8 Rams and grand Cherokee.
Is there a possibility that car manufacturers are expecting an upcoming recession and it might be to their benefit to keep inventories low? Or would that just be a dealer problem since they must accept a given number of cars per month?
The WiP time of automobiles makes it tricky to manage economy shifts. Inventory allows flexibility. More likely they will start to eliminate manufacturing plant shifts, yes that affects inventory but the impression I have from the auto industry employees around me is that shortages of materials and suppliers issues are driving the inventory still. Also, a hidden issue I have heard about is that there has been a lot of non-production or white collar turnover.
The shift to EVs means the heads of engine internals engineering groups are probably open to job offers. Plus why work grueling hours in the auto industry when you can bounce out to another industry that is looking to automate more and needs techincal project management expertise.
White castle was trying out those robotic hamburger makers pre pandemic. They might see the pandemic related labor issues as a reason to move beyond prototypes. So who do you hire when you are shifting to such technical assembly line type production. How do you design for repairability and maintainability? I think the auto industry has the skill set they need.
In reply to NOHOME :
There is no benefit to the manufacturer to keep supplies low. They are a supplier with a guaranteed buyer. They are guaranteed a buyer for every one they can produce, what's the benefit to not producing as many as they can?
In reply to Steve_Jones :
That is what I am trying to figure out. I ask because I do not believe the "shortage" is a real thing but rather a method of extracting maximum $$$ from the consumer. Call me a hopeless cynic but I believe that most consumer industry has crossed the line from symbiotic to parasitic.
EXACTLY!!! This started a long time ago with commercial free cable TV. No one remembers.
NOHOME said:In reply to Steve_Jones :
That is what I am trying to figure out. I ask because I do not believe the "shortage" is a real thing but rather a method of extracting maximum $$$ from the consumer. Call me a hopeless cynic but I believe that most consumer industry has crossed the line from symbiotic to parasitic.
A shortage for maximum profit would make sense IF the manufacturer was making more $$ because of the shortage. I really have no idea how else to point out that while the DEALERS are benefiting by higher prices the MANUFACTURERS are not. I have no idea about other industries, but since this was asked about the auto industry specifically, I can say, again, the manufacturers are selling every vehicle they can produce so they would benefit by making more. The Manufacturer does not make any extra money when the dealer sells above MSRP.
I stumbled upon these 2 vids, which if you believe what he says, indicates the used car bubble has already burst, and that manufacturers are so sick of dealer price-gouging that more will follow Tesla & Ford into going direct-to-consumer for EVs.
In reply to Steve_Jones :
I will put forth that I consider the dealer and the automaker to be the same entity. I don't drive a Toyota/local dealer. I drive a Toyota. The buck ends there. The two are the same entity with the same goal of separating as much $$$ from the consumer as possible, no matter what way you look at it.
In reply to NOHOME :
So you consider the store you bought your TV at the same entity as the TV maker then right? Best Buy is Samsung, Samsung is Best Buy? Same thing.
You can only be gamed if you are playing the game.
I wouldn't buy a new car in this market. I wouldn't buy a used car in this market. Eventually, the pendulum will swing the other way. Pile up the cash and when the prices crash, strike. Then who is getting gamed?
In reply to NOHOME :
Don't know what more to post. I live in the metro detroit area. Family works for different automakers and I even have family in UAW administration. They all say the same. Parts (not always chip) shortages due to the pandemic's continuing impact globally is causing most of the production shortage.
I will concede that, yes IF an auto company wanted to make production targets by any means necessary they could try to secure all power folding side mirror motors on the market at a 3000% markup. Plus helicopter in production workers backed by US Marines into Japan, Korea, Israel, or any other country that has a supplier plant and make the parts themselves. Then fill your dealership lot???? Hmmm sounds, not cool to me. 
In reply to Javelin :
Again, we don't have capitalism. I agree with you though the focus on quarterly profit benefits the few and harms many in the long run.
Steve_Jones said:In reply to NOHOME :
So you consider the store you bought your TV at the same entity as the TV maker then right? Best Buy is Samsung, Samsung is Best Buy? Same thing.
If they only sold only the one brand? Yeah.
Begs the question "Why are car dealerships not agnostic?"
This is basic business, supply and demand. Automakers are limited to how many vehicles that can produce, so they are concentrating on producing the most profitable models. Demand far out pacing supply also eliminated the need for rebates and "one at this price" promo's. Also kind of hard for dealers to ask for rebates when they are selling for over MSRP. Basically mainstream brands are closer to luxury brand business models, hence higher profits. It will change when the supply chain returns to normal and they shift back to maximizing market share Vs. per vehicle profit.
Ayn Rand, call your office...
Javelin said:03Panther said:Javelin said:Welcome to Capitalism, which is literally killing the planet for quarterly profits.
So, as a mod, it's ok to make a highly politically polarizing statement, because you know the other mods agree with you. But still claim there is no bias, and get all huffy if someone suggests there is.
I guess it's only when someone has the audacity to not believe exactly like you do, that it's not allowedNo bias there at all...
Because capitalism isn't political, it's an economic system. A democracy is a political system. Your political system might support capitalism as it's chosen economic system, but that doesn't make it political. Capitalism is a worldwide problem, not just the US.
Toyman! said:You can only be gamed if you are playing the game.
I wouldn't buy a new car in this market. I wouldn't buy a used car in this market. Eventually, the pendulum will swing the other way. Pile up the cash and when the prices crash, strike. Then who is getting gamed?
To be fair, there are those out there that may not be able to wait for the pendulum to swing in their favor.
Also, as mentioned above, you can still play the game and come out ahead, if you know the rules ahead of time. The direct sales route is already here for some dealerships. I bought a factory order Jeep this spring that was well below MSRP, simply because the dealer knew it was a guaranteed sale. It was on the lot just long enough for dealer prep and getting the paperwork signed.
In reply to Puddy46 :
Pretty much ALL sales are guaranteed now. They are presold before they get to the dealership.
A car carrier full of cars is generally delivering presold cars with MAYBE 1 on board for inventory
SV reX said:In reply to Puddy46 :
ALL sales are guaranteed now. They are presold before they get to the dealership.
A car carrier full of cars is generally delivering presold cars with MAYBE 1 on board for inventory
I don't disagree. I guess I should have clarified that the factory order price breaks were in play before things went haywire, when lots were full and many places were relying on walk ins. My point was there are mechanisms that still allow the consumer to not lose their shirt, you just have to be more diligent.
All that being said, I still hope that the market softens soon, and everything that I just wrote is moot.
I'm with Toyman - I don't feel like I'm being gamed since I'm not playing. I do feel for those who have to buy something in this market. That would stink. Granted, if something were to happen to my main DD, I would probably just go find another one - Chrysler made a lot of 5th gen minivans, although I might look for a deal on a new Pacifica.
Or... I might just pour a ton of money into my E350 to make it a reliable driver and move my R53 MINI back to my regular insurance.
I'm fortunate in that I'm not poor and have options. Nor do a drive a lot.
I dunno, I bought my 2018 Land Cruiser this past February. I traded in my 2019 Golf R and between the trade $$ and the tax savings I got what I paid for it, 100%. Yes, I paid more for the Land Cruiser than if I'd bought it a year previous but I found a good deal on it because the seller only advertised it on eBay and nobody bought it. So I ended up with a low mileage LC for the same price as ones with 4X the mileage were selling for.
Plus I can depreciate the entire purchase price in 1 year through my business, which refunds me 35% of what I paid for it.
It's still possible to do well in this car market....
jharry3 said:Ayn Rand, call your office...
Javelin said:03Panther said:Javelin said:Welcome to Capitalism, which is literally killing the planet for quarterly profits.
So, as a mod, it's ok to make a highly politically polarizing statement, because you know the other mods agree with you. But still claim there is no bias, and get all huffy if someone suggests there is.
I guess it's only when someone has the audacity to not believe exactly like you do, that it's not allowedNo bias there at all...
Because capitalism isn't political, it's an economic system. A democracy is a political system. Your political system might support capitalism as it's chosen economic system, but that doesn't make it political. Capitalism is a worldwide problem, not just the US.
Sheesh man. First off words matter. Please stop parroting the lies of the news (all channels). We do not have capitalism anywhere. We have embargoes, tarriffs, trade treaties, blockades, licensing, regulation, trade wars, price fixing, attacks on supply chains, currency manipulation, market manipulation, and all sorts of things that are definitely not capitalism. Blaming capitalism for all the financial problems is incorrect and dishonest. It's not a problem because it doesn't exist.
Democracy? Guess what, we don't have that either. The US is currently a dysfunctional Constitutional Republic. Words matter, especially when you claim to want open and honest discussion. There isn't a democracy on this planet currently or a functioning republic.
The worlds problems are much simpler. Some people are lazy, some are liars and some are evil. As long as these types exist and seek and gain power there will be lots of problems. Capitalism and democracy require honesty, hard work and concern for your fellow man to work. That's just not the world as it exists.
The crazy part is I point out something this simple, this obvious, and people snap treating me as if I'm the enemy. I'm just being straight and honest. If that hurts, I'm sorry but you should reevaluate the world around you in its totality.
There is no capitalism, there is no democracy, and free speech and honest discussion are very much endangered.
Automakers and car dealerships do these things because they place profits above any other value. It's simple greed which is a human flaw.
We don't have capitalism, per se--We have crony capitalism, corporatism, and consumerism. I know it's just semantics, but it's something I try to clarify. Other countries with capitalism economies don't have the problems we do, at least not to the extreme we see in America.
I also would like to second what Toyman said. Don't buy a new car. All my life I've been told that buying a new car is one of the worst things you can do with your money. I currently drive a 15-year-old BMW. It's a fantastic car, and didn't cost much. My wife drives a 9-year-old Prius. Also a fantastic car, and super cheap. My dream car is a 10-year-old Porsche 911 (well, my dream car is probably an IROC 911, but I'm trying to be more realistic).
To be honest, if I were to win a million dollars right now, I probably still wouldn't buy a new car. Get something off-lease for much less, still with a warranty and many miles left on it.
My boss has a 2 year old Subaru and every time he takes it into his dealership for an oil change they offer to buy it back from him for more than he currently owes. That's how desperate they are for cars right now. It's a crazy economy we live in.
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