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My brother in law works at a pretty big dealership in the area. He said the markets so stupid right now that they’re buying new cars from wholesalers and holding them for 30 days so they can sell them as used. Somehow this has been incredibly profitable for them. I don’t really understand how but it apparently works out that the customer gets a hefty discount on an essentially new car without the manufacturer warranties and the volume is big enough to where the dealership is hitting record numbers.
None of it makes sense.
How are they making money though? How can you buy a car at the price of a new one and sell it at the price of a used one and be profitable?
I think it’s something like they but the car for $20k from the factory, it sells for $35k new, but instead they let it sit and sell it as used for $25k. I think they get some sort of refund or something from the manufacturer if the new car doesn’t sell within x days or something like that.
The way it was explained to me in they’re making almost nothing on each sale, but they’re the only place in the area that can get decent cars in right now so enough people are coming in and doing this where it makes sense to keep it up.
That sounds wildly illegal and fraudulent.
Sounds like it should be wildly illegal, but we all know it isn’t.
Covid really messed up the used car market (no new supply for an while) and the used car prices are only beginning to look remotely normal. I bought a new car off the lot because the used car was 98% of the price, 2 years old. I can imagine that a lot of people are very underwater with repairs and such.
In Germany, new middle-range cars are just too expensive. So what happens is that companies get tax rebates if they give cars to employees instead of taxed salary, and these cars are sold a bit later on the used car market. This now covers around half of the market for more expensive cars, which covers maybe half of their running costs, and is nothing else than a government subsidy for the car industry - without that, they simply would sell less, and at a lower price. But there is never enough money for decent public transport or safe cycle paths.
Completely insane. It’s like listening to an indebted crack or cocaine addict rationalizing why he needs to spend all his money on the drug.
Also, Cash for Clunkers eliminated a ton of the “so cheap it’s dangerous” cars that existed before.
I think that was 15-20 years ago though?
I remember seeing the posts on jalopnik and elsewhere of the great cars that were being crushed. RIP.
It tended to hit a lot of perfectly functional cars that were only a few years old. The collectors market from around 2003 to 2008 has been pinched ever since.
The collectors market from around 2003 to 2008 has been pinched ever since.
Good. Hoarders should be under treatment, not encouraged.
The everything market is imploding.
I remember hearing a prediction about this a couple of years ago. Don’t remember where.
They argued that the used car lenders were now doing the same thing housing lenders were doing in the 00s; And they would have their own version of the 2008 collapse. Seems it’s starting.
This is also considered a general warning sign of a recession
The most interesting angle on this is how it’s basically a variant of what happened in 2008 with Mortgages, smaller, but this time around it’s compounded by lots and lots of not officially admitted cost-of-living Inflation that’s not being matched by salary-Inflation.
A crash in this specific underregulated castle of cards of the Finance Industry by itself might actually be more of a hickup than a full-blown Economic Crash, but shit like this together with the collapse of the AI bubble and all of it overcharged by the current insane Trade Policy of the Trump Administration, has the possibility of being something on the scale of the Dot Net Crash AND the 2008 Crash combined.
“Interesting times”, in the meaning of the expression from the Chinese curse.
It’s about time. Houses next, please.
If the housing market crashes, unfortunately, it won’t be good for anyone good. Last time it crashed in 2008 it led to a historic high loss of, I want to say, 20%, which is a ton, but if you couldn’t afford a down payment before, that kind of drop won’t change that, plus, last time, lenders to individuals were reticent to lend because of the ensuing economic downturn. In the end, it just meant that private equity and other investors bought up a shitload more of the housing market and it became even more consolidated.
It isn’t as optimistic as that. If I understood it right, it’s just a couple used car private equities that did some shady banking in order to not have to use their own money to pay for the cars they were selling, then going bankrupt because the customers couldn’t keep up with the over inflated monthly payments.
So the only people that were screwed were the customers. The “companies” that declared bankruptcy were likely just shells playing with other people’s money. Used car prices are unaffected.
They’re already doing that around here. A new build housing estate that’s barely been up three months already has homes for sale for about £50k more than they were new.
Would you rather buy a condo or used Mercedes?
How many miles on that condo?
2 1/2 ft, it’s foundation needs to be replaced
Is that city or highway?
