“Strong numbers” for what?
Total revenue and profit?
Or gross margin per unit?
Very different things when volumes are down.
The “lack of inventory” is artificial. From lower volumes of Dealers accepting lease returns, repos, etc. That will all change.
Also another challenge is getting the funding done from banks for the used cars sold.
The dealers are not able to process titles and get the sales funded due to DMV closure. Most small banks will fund up to 3 vehicles without the title work being done and with DMV closed now even if the car can be sold the bank cannot fund it.
This is just what I am seeing happening to some small dealers in my circle.
What do you think about this?
Interesting…I’ve been monitoring some of the less favorable used luxury cars (Genesis, Volvo wagons and sedans, certain BMW etc), the price seems to go down quite steeply recently.
Exactly, your Malibu, Kia Sedans, 5 series will plummet in value. Toyota, Honda, Tesla will hold their value.
If you are able to hold out, used car prices are going to fall because the demand isn’t there. There are millions of unemployed people today that had jobs 3 weeks ago. There are even more people who are now working remote who might have needed a new/newer car if they would be commuting, but now can hold off that purchase.
Used car prices may only fall so much as dealers will attempt to float the prices artificially to pre-market crash levels so they won’t take as much of a pounding.
Ultimately, there’s a good chance many dealers will be forced to sell at or below what they gave for their inventory unless they got really good auction deals or they bent someone over on trade.
Used car prices are going down especially now that there are talks about bringing cash for klunkers back.
“Strong numbers” means volume. Some who are open are doing more volume than pre-pandemic. The primary reason you see statistics that sales are down 60% is due to the fact that most dealers are still closed by state mandate. It’s obviously pre-mature to be saying what will happen with the used car market, but for now it is steadily increasing from what it was a few weeks ago.
As far as lease returns, that will be interesting. I believe that OEMs will have to incentivize dealers with extremely low market based buyouts, and I think most dealers (at least on the highline side) will try and keep prices stable at current levels and hold the difference as gross. It’ll be interesting.
I just don’t buy it. I think a tsunami is coming so all of these peaks and valleys are just a mix of manipulation, patchwork access to dealerships state by state, and manufacturers incenting leasers to extend. The other shoe will most assuredly drop. I don’t say that with any happiness just to be clear, but this is like in 2008 when the rating companies were pretending all the junk mortgages were A+…you really have to take this type of data with a grain of salt.
Exactly. I find the “industry” guys predicting rising prices going up (both new and used) as ridiculous as those who think new cars will sell for 50% off.
Of course there will be nice deals to be had. Cash will be king. Those who keep their jobs, good credit and cash will be able to get nice deals, that is how downturns and recessions work. Manufacturers won’t keep producing cars for a loss, but they will certainly give dealers more incentives to move product. I agree the dealers won’t give cars away, unless they absolutely have to, but the manufacturers can help with MF discounts and incentives which should create a lot of nice deals in more models than typical.
Used cars might be even worse.
There is a big variable I think many are underestimating and that is the CARES Act unemployment benefits. It is 600 bucks per week on top of state benefits (between $235 and $742). Someone who was making 15 bucks an hour and got layed off is now taking home significantly more money (in many places 50% more) without any commuting expenses plus the stimulus check, plus tax refund season. But this government stimulus will end at some point. When it does, things aren’t going to look as rosy.
The fact that you just said this statement proves that you know nothing about the automotive industry or how it functions.
Yes, please enlighten me. I’m sure you have a far better grasp of economics than I do, being a car salesman and all.
Please go ahead and convince me consumers with cash on hand during an economic crisis is not an advantage.
I think if the finance side of the house decides to get serious with their loaning standards, you could see a move to more cash from buyers who wouldn’t qualify. There’s certainly no dealer upside to doing a cash deal today that comes to mind for me based on how the money is made currently.
Score a 40 on the wonderlic and hold the title as the youngest used car manager in the history of Lithia (and likely the nation) but what do I know I’m just a retarded car salesman 
Lending doesn’t come to a complete standstill during a recession, and we won’t take cash over our main source of profit. Even if someone’s credit is destroyed, there are always going to be subprime lenders that will buy deep.
And since you think you’re so superior to me because you don’t work in the industry, wanna compare pay stubs?
I can’t imagine the venn diagram of people with poor credit that can’t qualify for a car loan and people with enough liquid cash on hand to purchase a car cash has a significant amount of overlap.
I don’t really imagine its solely a poor credit issue. Imagine if they actually qualified people by debt to income, required some portion of liquidity…say 3 months of car payments saved in the event you lost a job…etc. Maybe there will be a % down requirement etc.
Wonderlic? LOL Are you going to post your 40 yard dash time next?
Trust me, I’m not concerned about comparing my paystub with a used car salesman, congratulations for being a big fish in a small pond.
Every poster here knows the Finance department loves screwing consumers on marked up interest rates. The cash is king statement is in reference to people who are holding up well in this economic environment and find great deals in a distressed market.
Well, if you can’t qualify for that reason, you likely can’t pay cash for the car either.
Cash can make you gross too, you convince Mr dumb dumb customer he needs to put $10000 down to get that Kia Rio lease to $299/mo for 48mo and you just bought yourself a boat! 
. I’ll argue that having cash doesn’t make you smart.