Was This Finally “Peak Insanity” in Used Vehicle Prices? And all other crystal ball questions

Submitted my 2021 Model 3 SR+ to Vroom. Have tacked on over 3k miles since the last time I got a quote from Vroom ($44k at the time), and today they offered $45k. So seems Vroom is still paying good money for Model 3’s.

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More data: my 2019 Honda Pilot EX-L AWD with 23k miles at the time in October was quoted $33k by Vroom…today the same car with 26.5k miles was quoted $35k by Vroom.

Decided to sell my used 2018 Unlimited Sport S with 23k miles for 38k to Carvana. Is this too low? Kelly blue book has a similar price but when reading this forum it looks like i could of gotten a better price.

the big “if” in this click-bait article is that the pandemic is over. it’s not. the chinese are shutting again. parts of our economy are shut de facto with everyone calling out sick. this won’t end for a long long time.

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I agree with you…not a great article just thought I’d share.
Cheerd

No one here can tell you if it’s too low. You should get quotes from all the car buying sites and then decide who to sell to.

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That’s good
I sold a 2020 unlimited Willy’s with 20k
Beginning of covid for 38k
A few months before covid the offer was 30k

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They aren’t calling it the “new normal” for no reason. Once things change drastically they rarely go back to the way it was before.

Inflation also won’t help the situation to normalize things.

How many people since 9/11 did anything on a plane? Still have to take your shoes off, get groped and xrayed at security and pay fees added to your ticket.

Sans a financial crash, that were due for, pricing is not going to just drop anytime soon. And a crash along with issues with a pandemic could be a very very bad situation for the auto market, and every market for the most part. Besides big pharma, Amazon/walmarts , and our useless leadership(left and right). They have and pass out the golden tickets accordingly on who gets to succeed.

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I see two somewhat divergent outcomes.

  1. Peak insanity has to end at some point. An arms race is usually unsustainable. So if, say, two out of 4 player exit the game, then the remaining two don’t have to try as hard. However,

  2. Elevated prices, both new and especially used, will remain for some time after peak insanity has passed. That’s because 2021-ending leases past their last extensions will need to be replaced. All 2022-ending leases will need to be replaced. All older cars that have been nursed since March 2020 to firstly avoid going into dealerships and then to get through the insanity that have finally died or become uneconomical to fix… those will all need to be replaced. Everyone who’s been waiting on the sidelines who finally says F*** it will become a paying customer again.

So there’s the demand side (higher than normal) meeting continued supply constraints in 2022 and possibly beyond. Everyone who’s taken Econ 101 knows what happens when demand > supply.

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The question is how much of peak insanity is due to supply vs. demand and how much is due to other irrational behavior.

People are paying new car prices for used cars even when new cars are available. In my car search a month+ ago I was able to get to MSRP or pretty close on many sedans (@Jrouleau426 where is your dealership on Camry pricing? Are you close to MSRP?) Yet Carvana and CarMax are selling late model sedans for MSRP plus higher interest rates.

If buyers continue to be willing to pay about the same for a used vehicle versus an equivalent new vehicle peak insanity will take much longer to subside.

Americans are lazy! What Carmax offers the average non-educated consumer is the ability to see multiple brands, options, colors, etc without putting in time or research.

The instant gratification for most consumers is worth the extra price tag because they are being told it’s a great deal.

How many of these consumers go into the dealership and agree to the 10+% APR vs going to their credit unit and getting a sub 3.0% rate.

I think we are far from peak insanity. Why would dealers change their new way of doing business? They can make more money by moving less units. It’s a win win for everyone.

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Something to consider here, you can take lessons from the broader US market to see behind the scenes of cause/effect in the car market.
So let’s go ahead and look at Jerome Powell’s last few Fed speeches…

Ah even he admits the Federal Reserve can’t pinpoint the exact cause of inflation. He has consistently said there are multiple factors at play here. Confounding effects of Covid, supply chain, fiscal policy, and inflation. They are all tied together, nothing singular to blame besides “Covid.” The macroeconomics of the auto industry seems to point to AT LEAST a 1 year gap until things can return to normal but here we are with Covid 4.0 and I suspect that timeline is going to get bumped back a bit. Even if new car inventory is able to balance, there is still a HUGE population of people who cannot afford a new car and will still flock to the used car market; prolonging the price spike. I’m not sure how anyone in this thread can confidently say things will even be different 3 months from now. We’re in this for the long haul now

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Because once lots glut out there will be people like our Brokers who will make a killing moving volume over $$$$ profit. But not now.

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I can finally do msrp after months at 1500 over msrp. Only reason I’m getting that is bc some other dealers are doing the same. Competition is good. Walk ins still pay 3k over msrp approximately.

I’m hoping we get back to the point where dealers are competing at 8%+ under msrp but were a long way from there and the inventory to support it.

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You mean under Msrp?

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No b/c that would be weakness.

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getting close

Honestly I expect in 9 months for Carmax to buy them.

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I don’t think it’s meant to make money or be something they’ll sell. It’s meant to compete with CarMax only in that it will add inventory to local dealers and move cars across a wider network.

Either way - I am ready to sell if they want to make some overpriced offers to get market share.

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That’s why I expect it to be ‘sold’, they won’t hire the right people, sales will suck, it will be running at a loss and Carmax will buy. Carmax at the beginning was a big suck as well, but they stuck to their model and weeded out people who didn’t fit. I don’t see GM doing that.