I can see this happening. I think that test drives or to look at vehicles would be by appointment and you wouldn’t be dealing with a salesperson, but rather a car expert, well at least someone who really knows about the vehicle.
Then all purchasing functions would happen online and you could pick up your vehicle at the “dealer” when it is ready.
That would keep the masses out of the showrooms.
The dealers who are publicly traded and therefore release their financials would disagree. New car sales account for ~25% of their gross profit on average
Don’t get me wrong, a sucker is born and taken every day but margins on new cars sales are nowhere what they were decades ago with the info being out there for anyone willing to do some research or some social engineering.
That being said, they can fix the books in any way they like to make it look better for the shareholders, I’m sure the business office (where crowns turn to frowns) has some influence in that.
F&I (the business office as you put it) is broken out as a separate segment and reports its own gross profit.
That being said, F&I revenues and profits also partially depend on customers getting new cars. It’s often an upsell, so it can’t live on its own.
There are going to be massive deals this summer. If anything the economic cratering promises to be worse than 2008 when we saw some amazing deals. I bought an MDX in December 2008 for thousands under invoice as dealers were desperate to move product.
New cars are not considered an essential business so most dealers have 1000s of cars sitting in inventory and zero customers. And unlike 2009 there will be no cash for clunkers destroying thousands of old cars. The only positive factor for dealers is that some manufacturers have shut down production lines.
Finally consider that interest rates are near 0% for automakers, and that savings will be passed on to consumers in the form of lower lease factors.
There is absolutely no way I would buy or lease a car now - things are only going to get worse in April as more states enforce quarantine orders.
Acura didn’t close their factories in 2008
If you are talking just new car I’d check your math. The wacky waving arms must have gotten to you.
I’m not disagreeing there will be more inventory, but I doubt it will all be new and all of it will lease well.
Half right. You are seeing 0% financing deals but when you lease the captive buys your car. Low interest or not, the portfolio managers at every captive are not looking to grow their inventory, especially when your risk profile changed so dramatically and so quickly. When your default rate is about to change, and the only question is how wide and deep, your 2020
objective is no longer 2019 +/- 2%
There are basically no sales. US auto market headed for total collapse.
Sales will plummet below 2009. And of course China won’t be there to pick up the slack.
Well if Zero Hedge said it, why apply any critical thinking?
I think you are really underestimating how resilient the auto industry is as a whole. Without a doubt - people will get laid off, some dealers will go under, the manufacturers and suppliers will see (for a time) almost all profits wiped out as well. With that said, the business is run by people that know what they are doing, know what assistance they will get from government grants/loans and whatnot and they know how to survive a crisis. To think otherwise is silly. Trump, for better or for worse, will not let the industry go down the tubes when he is counting on those very states that make cars for a win in November. The South Korean and Japanese plants will be at full capacity sooner rather than later and the German government will not let VAG, MB and BMW struggle as a point of national pride alone.
What we do know is that there will potentially be a shortage of SOME models in the near and mid-term, but they won’t be giving cars away as each sale will likely now need as much profit as possible. To the extent that there is pent up demand this summer, the huge numbers of off-lease and parked new cars at port holding areas, dealer lots and offsite storage areas will satisfy that.
Waiting until next week, next month, next year is always good advice until you pass up a deal you could have had today - especially if you need a car now.
But, aside from that, the play was great…
As an aside, I do agree w/ your post.
Yes, it was “Our American Cousin” IIRC. You know what I mean.
With the exception of the Golf R and the Golf SportWagen, all models saw a downturn in sales.
Anyone who expects models like the Golf R to be subvented need a better fantasy life.
All the way back in October:
Hyundai though, yeesh. Already a mini revolt over Genesis still brewing.
The drop in sales numbers is pretty significant and it happened in just few weeks. Looking forward I think we are in uncharted territory. Bringing an over leveraged global economy to a complete halt was never tried before. hoping for a V shape recovery is just a wishful thinking. I hope I’m wrong but I think we will see destruction in both supply AND demand like we have never seen before. some brands that are slow to adapt and cut costs will disappear completely, while others that are nimble and have strong balance sheets will come out unscathed, just like GM and Chrysler did during the Great Depression.
Several states have been closed for most of March. If you lose roughly a third of the quarter (counts on fingers and toes) the spread is better than I would have expected.
Not in this manner, but we’ve seen 3-4 prequels.
#truth - I think best case looks more like an L with the sharp drop and then 1-3 years to return to where we were (best case). We were overdue for a correction after the longest run-up in history. I don’t think 7-10 years is unreasonable (especially with the forthcoming stagflation - we have to pay for all this somehow, like it or not).
Yeah about that… 
Holy cow, I had to look that up. You are indeed correct.
2009 - auto industry was basically wiped out, bankrupt, absent massive government aid courtesy of Obama. sales tanked massively and didn’t recover for a while. will be the same for 2020.
waiting is not always good advice - the product cycle and discounting cycle is well known. end of model year, end of quarter, etc. always bring best deals. i did not say somebody should pass up a killer deal now. what i said was there will be killer deals coming later this year, so there is no reason to take an “average” or even a “good” deal now because you will certainly do better down the road.
On the other hand Ford knew something getting rid of sedans. At this oil prices and whatever few items they will sell, better be those overpriced suv with larger margins.
Fossil fuel prices will recover in time and possibly exceed all known peaks if a lid isn’t put on this sooner than later.
uh huh. have any extra room in your garage?