[chassis]

Local BMW dealer yesterday said car sales are slow. And in the showroom they have an M8 Comp with a "sold" sticker on it. Must be that unit volume is down, but average price is up! The salesman that sold the M8, sold my wife and I our X3. Good for him.

[David70]

Originally Posted by surge98

A salesman at one of my local dealerships recently told me that they had been authorized to make unusually generous offers on trade-ins and used purchases just because their inventory was at the lowest level he could ever remember.

Originally Posted by chassis

Local BMW dealer yesterday said car sales are slow. And in the showroom they have an M8 Comp with a "sold" sticker on it. Must be that unit volume is down, but average price is up! The salesman that sold the M8, sold my wife and I our X3. Good for him.

Trying to think of a place to get less reliable sales information than a guy trying to sell you something and can't.

[chassis]

From Econoday's commentary on the US CPI released this morning:

"Prices of used vehicle surged 5.4 percent in August, more than compensating for a flat reading for new vehicles and, alone, representing more than 40 percent of the core's increase."

The used vehicle market doesn't seem to be headed towards collapse.

[chassis]

Here is the latest Manheim chart.

[Higgs Boson]

https://f90.bimmerpost.com/forums/sh...0&postcount=71

[chassis]

Originally Posted by Higgs Boson

https://f90.bimmerpost.com/forums/sh...0&postcount=71

@Higgs Boson Thanks. What is your take on the situation as you see it today?

[Higgs Boson]

Originally Posted by chassis

@Higgs Boson Thanks. What is your take on the situation as you see it today?

In the short term I do not forsee a change in rising prices of preowned vehicles, at least not until supply meets demand.

In the long term everything will return to normal and I do not think there will be any crashing, unless you consider elevated pricing returning to normal pricing a crash, which of course it isn't.

A person has to be careful what they believe when they read or see things in the news. The media outlets copy each other's stories and when a person reads three articles that agree they consider it reinforcement rather than really just the same article they read three times, which is really just one idea over and again.

What I am saying is, no one writing an article knows when/if something is going to happen. But drama sells and if it takes telling people the sky is falling to sell ads then that's what they will do, everyone wants to be first and everyone wants to be right, but it's all guessing, sometimes the guess is right and sometimes this miss gets swept away by tomorrow's drama.

So to have long threads speculating about what will happen or what is happening is a bit of a waste, IMO, when it's all guessing, I think we would all be better served in life to observe what's in front of us and act on that, stay present. If you like more risk, sure, make bets on the future. If you are risk averse, just report on the past.

Making decisions based on unemployment rates or other macro metrics seems like a way to simply put your life on hold. Who cares if unemployment is 1% or 20%? I don't. Am I unemployed? That's what I want to know.

So if you want to buy a car, buy it today. Work hard, buy now. You only live once, carpe diem, you can't take it with you, begin with the end in mind, work backwards so you can take the steps needed to do or get what you want in this life, don't worry about the rest.

If the price is higher today than it was yesterday and you want the car today, pay today's price. Tomorrow it could be higher. And yes, you're going to lose lots of money on your car purchases unless you buy one of a handful of cars that are either really boring or you aren't allowed to drive.

Sorry for this post.

[Alfisti]

The market SHOULD be collapsing due to catastrophic unemployment. Now, before you all get upset, I realise most of the job losses are at entry level. However, this SHOULD be catastrophic, those consumers SHOULD be spending next to nothing which SHOULD see companies shed professional, well paid staff as sales drop like a stone.

In an unaltered market this would happen, and effectively happened in 2008/9 where you can see from the graphs above, we saw a huge downturn.

All I can think of is the huge amount of stimulus money out there that is propping things up and stopping the circle fulfilling itself.

[Higgs Boson]

Originally Posted by Alfisti

The market SHOULD be collapsing due to catastrophic unemployment. Now, before you all get upset, I realise most of the job losses are at entry level. However, this SHOULD be catastrophic, those consumers SHOULD be spending next to nothing which SHOULD see companies shed professional, well paid staff as sales drop like a stone.

In an unaltered market this would happen, and effectively happened in 2008/9 where you can see from the graphs above, we saw a huge downturn.

All I can think of is the huge amount of stimulus money out there that is propping things up and stopping the circle fulfilling itself.

I will never get all upset over a meaningless armchair quarterback internet discussion on a BMW car forum. No one here is an expert or to be seriously listened to and we are all just looking for someone to reinforce their opinion. You're entitled to your ideas. No problem.

With that said, this is nothing like 2009 where a fraud bubble burst in the housing market that led to massive lender pullback preventing people from "affording" a house or car.

What you are seeing here, which is what I am saying, is that all the things that "should" be happening that aren't is because the sky isn't falling and the situation isn't as dire as it is portrayed. Even at the entry level, the jobs haven't disappeared. The jobs are still there, if they aren't back to work today, they will be, and everyone knows it. This is simply a self imposed pause for a group of people until the curve was flattened, which I'm thinking it is at this point.

Don't think of it as an empty refrigerator. Think of it more as an Intermittent Fasting. There's still food in the fridge, we just aren't eating it today.

[c1pher]

Originally Posted by Higgs Boson

I will never get all upset over a meaningless armchair quarterback internet discussion on a BMW car forum. No one here is an expert or to be seriously listened to and we are all just looking for someone to reinforce their opinion. You're entitled to your ideas. No problem.

With that said, this is nothing like 2009 where a fraud bubble burst in the housing market that led to massive lender pullback preventing people from "affording" a house or car.

What you are seeing here, which is what I am saying, is that all the things that "should" be happening that aren't is because the sky isn't falling and the situation isn't as dire as it is portrayed. Even at the entry level, the jobs haven't disappeared. The jobs are still there, if they aren't back to work today, they will be, and everyone knows it. This is simply a self imposed pause for a group of people until the curve was flattened, which I'm thinking it is at this point.

Don't think of it as an empty refrigerator. Think of it more as an Intermittent Fasting. There's still food in the fridge, we just aren't eating it today.

I mentioned this before, just look on LinkedIn and they have a post updated weekly of hundreds of companies hiring. Some have over 100k openings. And we know that just a sample posting, many many more companies have jobs to fill. The problem is people are looking for their perfect job or feel a job is beneath them and with unemployment and stimulus money coming in, why do they need a job?

[Higgs Boson]

Originally Posted by c1pher

I mentioned this before, just look on LinkedIn and they have a post updated weekly of hundreds of companies hiring. Some have over 100k openings. And we know that just a sample posting, many many more companies have jobs to fill. The problem is people are looking for their perfect job or feel a job is beneath them and with unemployment and stimulus money coming in, why do they need a job?

I agree, the stimulus money is an incentive to keep people out of work, just like welfare.

But the govt is paying people to stay home to flatten the curve, I am not the one who decides when it's flat so I'll just keep my day job.

[chassis]

Folks, the stimulus checks + $600 federal unemployment compensation (both now in the past) totaled less than $1T, closer to $500b. Using 160m as a total workforce, on average each worker received around $3,000. Painting with a broad brush.

@higgs boson and Alfisti is this what you are saying is keeping used vehicle prices as high as they are today?

[Alfisti]

I'm saying the USA broke all kinds of records for people claiming unemployment a few months ago, blew allrecords cean out the water. It makes ZERO sense that there is no knock on effect unless something is propping up the economy.

You're very smart people in here but i sense you're letting your ideology get int he way of your smarts, clearly, with that many people unemployed, there should be a huge knock on effect of lost jobs among professionals and there for a lack of demand for cinsumer goods.

[Higgs Boson]

Originally Posted by chassis

@higgs boson is this what you are saying is keeping used vehicle prices as high as they are today?

No.

Originally Posted by Alfisti

I'm saying the USA broke all kinds of records for people claiming unemployment a few months ago, blew allrecords cean out the water. It makes ZERO sense that there is no knock on effect unless something is propping up the economy.

You're very smart people in here but i sense you're letting your ideology get int he way of your smarts, clearly, with that many people unemployed, there should be a huge knock on effect of lost jobs among professionals and there for a lack of demand for cinsumer goods.

Again, supply and demand is the answer. Demand is higher than supply, that's all there is to it. Luxury vehicles sales are up way over last year and they aren't being purchased by anyone getting a $600 check.

$600 extra for unemployed people isn't going to cause the auto industry (and real estate industry) to set records. I would bet my paycheck there is NO causation.

Even if the extra check WAS the cause, it would insinuate that demand is UP for cars, but it's pretty flat. The supply is LOW for new cars (production delays) which means people are turning to used cars instead, which as part of the cycle, means there are less used cars available. As the cycle continues with fewer fresh (new) vehicles entering the market, prices keep going up.

As new inventory levels rise back up so too will supply and demand return to normal curves/levels.

[Alfisti]

You're not listening, like at all, to what I am saying.

[chassis]

Originally Posted by Alfisti

You're not listening, like at all, to what I am saying.

Alfisti You are saying that the US broke all kinds of records for people claiming unemployment. Did I get that right? I agree with you, without equivocation.

Let me ask you again, do you think that $500b in stimulus checks + enhanced unemployment insurance payments are the cause of increased used vehicle prices? Please answer: yes or no.

[Alfisti]

Increase? No. But they should have dropped.

What I think is happening is the stimulus is enabling folks to at least hang onto what they have, people are not selling cars and houses and are buying enough goods in general to keep professionals employed int heir marketing, advertising, accounting, management etc roles that traditionally get culled once demand drops.

The upward pricing is likely a result of new car production cuts.

[RMachuca3d]

here is some nice data to go with this discussion:

https://www.experian.com/content/dam...safm-final.pdf

[chassis]

Originally Posted by RMachuca3d

here is some nice data to go with this discussion:

https://www.experian.com/content/dam...safm-final.pdf

RMachuca3d Wow that's a great slide deck, thanks. Lots to chew on, lots of insights.

One point is the Michigan leasing phenomenon, it seems real. I have relatives in Michigan and there is a strong leasing culture there. I prefer to pay cash in full and to operate the vehicle to 200k miles, so I don't fit the program there.

[autoart]

I'll throw in my .02 cents. There are a few reasons I see as to why used car prices are high:
Unemployment money: I have heard of quite a few people putting $1200- $2400 as down payment. The same amount that people got from the government. A lot of people did not even need the extra money, so it was like a bonus. An extra $300-600 every week on top of unemployment for what 4 months. Thats $4,800-9,600 for each person. What if you and your spouse where unemployed? double it.
Now that money is suposeto to to rent, morgage etc. but if your not paying your your rent and morgage etc. extra money!!
Low intrest rates: alot of car com. have them, more car for less money. People are refi. their home loans and pulling money out or just saving the money from the low rates.
Covid 19: People don't want to use Uber/Lyft anymore. They dont want to use public transportation. They would rather have their own car now.
Low supply:With a lot of parts made in China and others new cars/ trucks are out of stock. you go to the dealer for a new car/truck and theirs only a few left. The dealer will want top dollar for them. When the new are gone, then they sell used. Which raises the price on used cars/trucks.
Looking back it seems people miscalculated the goverment injection, lower supply, higher demand.
I also thought the supply would be the same and the demand would fall off the clif. I also thought people would be selling what ever they could stay-a-float. I just think its going to happen much latter now. Maybe 2nd quarter of 2021. Thank you

looking back it seems

[dís_f30]

Depends on the type and brand. High ends have a high depreciation rate and used ones aren't selling well because people want the next new model and not a used one. Underwriters are also throwing a huge wrench into things by not financing anything over 5 yrs. old.

[TheDudeMan]

Originally Posted by _g_cypher_

Depends on the type and brand. High ends have a high depreciation rate and used ones aren't selling well because people want the next new model and not a used one. Underwriters are also throwing a huge wrench into things by not financing anything over 5 yrs. old.

This.

Annnd. You have to remember that there is pent up demand from all of the uncertainty back in March which scared dealers from buying inventory at auction to remarket. I took advantage of this and sold my Used car for what I could have gotten two years ago and leased a BMW at an employee rate. By that, I mean Honda Accord money.

If their will be a collapse, it will be in the new car market. Used cars are always seen as a better value in uncertain times, unless you are certain your getting a better deal on new(usually only happens in the compact market).