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This chaos will over correct at some point…and then vehicles will swing way back in price.
What about luxury watches, home prices, rental prices, gas prices, FOOD prices, anything else that’s being sold right now?
GG, not what this article is about.
they really wont.
Average new car price is $49k. It was 25k in 2006 and has been on a steady upward climb since then.
The American consumer thinks they deserve a 49k car on a 84 month term paying 5% that they cant even afford….. it is idiotic.
James certainly does have a good point about Americans buying more car than they can afford. I watched a CNBC video about a family of three that was struggling to make ends meet on far more than $100k a year. They paid $1500/month on cars, car insurance, and cell phones. Oof.
That said, much of these price increases are temporary and caused by the supply chain. Nobody is going to be spending $100k for a Bronco when there are enough Broncos for everybody who wants them.
“They’ve threatened to withhold deliveries of their most popular offerings, including Ford’s buzz-generating F-150 Lightning pickup, and other forthcoming EV models.” – OHhh yes like that’s going to do anything. How many people will be buying these models anyways?? 12 people? The majority of the people buying cars can’t afford them or don’t even have the charging capacity at home. The “dealership” model is dead anyways. If I wanted to buy a car it would be direct to consumer or off market used.
Quote from Jaron: If I wanted to buy a car it would be direct to consumer or off market used.
Good. And what will you do if the car you buy had major problems immediately after you bought it? Are you honestly prepared to take that risk and assume full responsibility (i.e., pay for yourself) for any problems the car has after you drive away from your point of purchase? If so, bully for you. Many people like to have some recourse.
One of my family members who sells new cars at a large branded-dealership has the right take:
The price is actually set by the used car demand: with cars now appreciating in value at the moment – if dealerships are limited by a mfgr-enforced SRP, you’d have flippers get added to the demand pool who could make money on the arbitrage. Dealers have to set it over what it would get on the private market new, or the imbalance btw supply and demand gets worse.
Let the natural supply-demand curve play-out… will get corrected eventually.