The “luxury” car sector seems super inflated right now, demand is through the roof, and covid obviously caused supply issues. Just this month I met two people that have payed $30k+ over msrp for g wagons, another who paid $10k over msrp for an escalade. Paying msrp seems like the norm right now for luxury cars or at least luxury suv’s. I got 2% off a gle 63 and was happy because other dealers laughed at me for even asking.
I am starting to wonder how long this is going to last, and does it make sense for manufacturers to keep supply low to keep creating this demand. I don’t pay too much attention to the car market, so maybe I am over thinking it. But every 3 years I have 3 leases that expire in the family all within a couple months of each other, and this year it’s been quite a pain to find replacements for these vehicles.
Until people start dropping 6 figures on vacations again and 500-1000 on a meal eating out. Cars, golf and “alternative asset” collectables seem to where the rich Using their spending cash. So I’d say until the end of summer when the world starts to open again.
What are you basing your hypothesis on? The fact that you couldn’t get a deal on the GLE AMG?
I think you’re off base—there are always high end hot cars that seldom need deep discounts to move. Escalades are always expensive, same for G Wagens. Nice, high end AMGs same deal—yes dealers have to give away less desirable C43s, but they don’t have to do that for the nicer ones.
Escalade is brand new and there are always geniuses willing to overpay to be the first on the block. Happens all the time.
But sales of cars above $80k are up by like 60% or something due to covid supply issues and affluent buyers being a little stir crazy with nowhere to go.
my is on the fritz. I doubt it will be over soon, which is why people are paying bump stickers
Like anything, ask yourself how much of it is a want or a need, and what’s the most comparable substitute (up and down, not just in the segment) leasing for.
I think people feel flush, they are willing to flex to get exactly what they want. I’m not wired that way.
Covid and part supply issues give manufacturers cover to layoff or cut hours. Trunk money is in many ways a jobs program, and if they can cut back and raise ASP, their costs go down.
As always, the dealer is stuck in the middle. They can charge what the market will pay, but they can only sell what they have in inventory or available for allocation.
I don’t expect many manufacturers announcing new factories / big expansions, hopefully it’s just an adjustment in product mix.
I do think if the manufacturers could build and sell every one that would be profitable (eg Palisade), they would not slow down just to protect the bump stickers. There would be inventory parked at the port.
I would say SUVs that cost more than $100k.
Full disclosure - None of my neighbors drive a G wagon.
You got to pay to play. What is its starting MSRP? More than $100k?
Manufacturers are not purposely keeping supply low. They have suppliers who also have suppliers. A friend of a friend works in the auto industry. Covid has greatly affected production.
Do you think manufacturers would rather sell more cars or less?
It’s not always as simple as that. Restaurants and bars can make more by letting more people in, but instead create manufactured lines to up demand and help their branding.
Mercedes is already talking about not worrying as much about total sales and just focusing on the higher end markets.
If you can reduce your overhead, selling less cars won’t necessarily give you less profits.
Not always true. I just pointed out how manufacturers are suffering due to Covid.
I do not know where you dine, but I am sure my local restaurant does not operate that way. Here in MA, we are back at full capacity since last week (I believe). Tables still have to be 6 feet apart and diners still have to wear masks to enter the premises.
Agree with @Jrouleau426
Market in general is on fire. Look at it this way; in 2020 in the middle of “pandemic”, consumer discretionary sector was the second best sector after technology…again, not consumer staples such as gas, electricity…food hahah but consumer discretionary which is spending on non-essentials.
Now…why is that? Biggest contributor is PPP1 and PPP2, provider relief fund and etc.
Business owners are getting “free money”. And where do they spend it? Usually on stupid Sh*t like paying 30k over sticker for a vehicle.
You can even see the effects of pumping money into economy in real estate, houses are routinely selling for over sticker, of course that benefits from the lower treasury yields as well. Pumping money creates inflation…ppl are more likely to spend money “won” than money “earned”
However…party might be over soon since the Biden boom is going to be more and less a Biden BOOM!
Looking forward to see this comment in landfill
And who will suffer? I’m sure you know the answer based on your response…
Same people that will be blamed for overpaying and taking more mortgage out then they should for their house. For taking the 84 month car loan, maxing out their ccs to pay for a $400 cart of groceries…
Well, the entire question is based on a false premise. Car sales are down not up. Luxury car sales are down not up.
Once again, BMW held strong as the most popular luxury automaker in America with 278,732 sales for the year. The X3 led BMW’s charge with 59,941 units sold, but the manufacturer still ended the year down 17.5 percent. German rival Mercedes-Benz didn’t experience quite as bad a decline at 13 percent, but a total of 274,916 sales wasn’t enough to beat BMW. SUVs also rule the roost at Mercedes, with the GLC-Class taking top honors at 52,626 units sold. It must be noted that total Mercedes sales do not include the Sprinter, which is often sold as a commercial work vehicle.
However, Mercedes wasn’t second to BMW. That honor actually goes to Lexus, which barely passed Merc at 275,041 sales. That’s a difference of just 125, and Lexus also had a better year than both German companies percentage-wise, showing a drop of 7.7 percent. Credit goes to the Lexus RX which managed to clock 101,059 sales for the year, nearly as much as the best-selling models from Mercedes and BMW combined.
What about other brands? Total sales drop off sharply, with Audi ranking fourth at 186,620 sales and Cadillac at 129,495 to make the top-five. Volvo had 110,129 sales, followed by Lincoln at 105,410, Infiniti with 79,502, and Porsche rounding out the list at 57,924 sales. Of all the companies, Volvo has the distinction of being the only luxury brand to post a year-over-year gain, specifically 1.8 percent.Tesla doesn’t report US sales, and our list excludes niche manufacturers such as Rolls-Royce or Lamborghini.
my 
is on the fritz. I doubt it will be over soon, which is why people are paying bump stickers
Agree with