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It's already happening. Auction houses are down significantly, and you're seeing like 70-80% of MMR value at auctions for vehicles (https://publish.manheim.com/

It's already happening. Auction houses are down significantly, and you're seeing like 70-80% of MMR value at auctions for vehicles (https://publish.manheim.com/en/services/valuation https://publish.manheim.com/en/services/valuation). It depends in which manner they need to liquidate, if they can hold the inventory it often makes sense to do so instead of losing the 20-30% of market value liquidating it (you just do the calc of depreciation per day versus selling right now). You can't really liquidate new cars, because there's regulations around selling new cars that prevents folks like Vroom, Carvana, Shift from taking on that inventory but those are the only folks who could really afford to do so with their respective funding from external sources. Financing incentives are risky, but you account for that with increased income verification and other items - the deferral of payments for 90-180 days is getting more and more common. This situation seems different from the 08 recession, as lots of folks _should_ get their job back once things are opened & we get back to a new normal so if you treat the risk as such you're hoping that 90-180 days is enough of a time period to have people be able to afford the loan they've gotten. The real looming issue is you have ~4M or so vehicles coming off-lease later this year, so you will have an incredible influx of used vehicles to an already saturated market leading to great deals for consumers but not ideal times for most folks. The harder part of selling online for dealers is that their money maker is in the hard-selling of ancillaries (Warranties, the "paint protector" and so forth) plus the F&I office (financing and insurance) but if you can't hard sell customers anymore then the majority of your profit center is gone so it's having a material impact on the dealers. Happy to expand more or answer further questions as I work in the auto space.

nerfhammer 6y ago
what's the best way to buy a car right now?
- brogrammernot 6y ago
  New or used? If new - the best bet is to call your local dealers and talk to them. I'm aware of many dealers that haven't turned a unit in 3 weeks now, they need the business and likely will be willing to give you a great deal because they need a move inventory. If used - I would wait until some of the auction houses re-open and try bidding on a car. If that's a little stressful (it can be) then I'd look at Carvana, Vroom and Shift (depending on your geographic region). From there I'd look at local used car dealers - don't let them game you or try - Carvana/Vroom/Shift all recondition to a Lexus CPO (Certified Pre Owned) standard you just can't legally say that if you don't have the approval from the manufacturer (another weird quirk) - you should be able to find a like for like vehicle between Carvana/Vroom/Shift & a local dealer. Whoever gives you the best deal take it, but both online and in-person dealers are marking down inventory. If you can wait a few months, the prices will be lower with all those vehicles come off-lease. Keep in mind that with Hertz filing for bankruptcy that other rental car companies aren't that far behind, so there could also be a massive influx from those folks needing to liquidate some assets.
  - nerfhammer 6y ago
    What if I don't know a lot about cars and don't know exactly what I want?
    - tmountain 6y ago
      Do your research online ahead of time to narrow down what criteria you care about and then go look for the best deal.
    - henrikschroder 6y ago
      Then any car salesman will happily sell you the perfect car for you that just so happens to make him the most in commission. If you don't know what you want, or don't know anything about the make and model you're buying, you will be taken advantage of. It's perfectly fine to walk in to a dealership and look around, touch and squeeze and sit in all their cars to figure out what you like. Take one for a test drive, or five. Don't commit to anything. Before buying a car, you should ideally have picked out a specific car from a dealer's lot, with the specific make, model, trim, and options you want. Price that specific car on kbb.com or trucar.com so you know the average price range for it. This is the only way of knowing if a specific car's price is "good" or not, because you cannot trust the dealer on this.
    - jhatax 6y ago
      I cannot recommend Costco’s auto program [1] enough for a buyer with your profile. Dealers with whom Costco works have been vetted by the Costco machine. Prices are pre-arranged based on your zip code/location, and they have a live help number if you need to start with, “which car should I get”. I know three people who have bought a car through that program and they have nothing but praise for the experience. 1. https://www.costcoauto.com/ https://www.costcoauto.com/
  - foobarian 6y ago
    I used to obsess about buying a car and thought dealers were the devil to be avoided. But once I got older and started working, I got over that; and my latest car purchase went something like this: 1. pick a car I wanted 2. look around online for what the dealer's price is (understood it's not accurate) 3. go into the dealer and tell them I want car X for $Y-300. 4. Let the dealer try to sell me the car on the lot that was the wrong trim and color, stick to the original car, accept $Y+200 for the price, then sign the paperwork and wait for the delivery. 5. Few months later, come in, sign more paperwork, drive away in new car. The whole process was pretty pleasant, people were pleasant, the car was great, and now I still come over to get it serviced. In retrospect they were a little too eager to accept my offer which was way below sticker, so I was probably off on their factory price, but I figure I'm fortunate that I can afford to not obsess about a +/- $1k and do better things with my life :)
- danielvf 6y ago
  If you don't know what kind of car you want, head down to CarMax and test drive about five to six vehicles in the category you are looking for. Find the one you like, then check later that that kind of vehicle and year doesn't have some kind of terrible maintenance problem (most don't, which is why this can be done later). Right now, year or two old used cars are selling for more than they are worth - so if you are looking in that price range, a new car may be a better deal. If looking for used, I've bought all the ones I didn't regret off private party sales from Facebook or Craigslist. Just lurk daily for about a month and get a feel for what the ones that sell are priced at, and know that the ones that don't sell are probably priced a little high. When you spot a good vehicle at a good price, move! Try to get in to see within 24 hours. If it's at a good price, it will sell quickly. If you want to buy it, get it taken to a dealership for an pre-purchase inspection (Usually $100-$200). If you had a mechanic you trust, he might do it for free. If it's good enough buy it. If looking for new, then the first step is to find the online forum where the power owners of that make and model hang out, and find the forum thread or spreadsheet where they post how much they paid. This is incredibly powerful, and is the key to your success. It will often surprise you how low dealers can eventually go. Pick a price low from the list, but not the absolute bottom as your plan. Next step is to contact by email many dealers around, tell the vehicle you are asking for, say you are shopping around, and request an out the door price. If you shop say eight dealers, you will be amazed at how much these prices may vary (like 10% of the value of the vehicle). If you see what you are looking for, go for it, and walk out if they change the price later.
  - jnwatson 6y ago
    I've also observed the overpricing of 1-2 year old cars. Do you have any idea why?
    - SkyPuncher 6y ago
      My personal opinion (though I haven't paid attention for long enough). * Lease mileage seems to be trending downward. * Overall reliability is trending upwards (easy to get 200k+ miles) * This places a lot of 1 to 2 year old vehicles in the "almost new category" Combine this with certified pre-owned program, you can pretty much get a "new" car for 30% less. This is inflating the price of cars with low miles since they seen as nearly the same as new cars.
Thriptic 6y ago
Assuming that we remain bogged down by COVID for many more months / get a second spike of infections due to premature reopening, can we expect manufacturers to release new models and put dealers under additional new pressure to liquidate existing stock, or will they likely hold off and release 2021 models in 2022?
tempestn 6y ago
CEO of AutoTempest here. I'd be interested in picking your brain if you felt like it. Email is in my profile.

nerfhammer 6y ago

what's the best way to buy a car right now?

brogrammernot 6y ago
New or used? If new - the best bet is to call your local dealers and talk to them. I'm aware of many dealers that haven't turned a unit in 3 weeks now, they need the business and likely will be willing to give you a great deal because they need a move inventory. If used - I would wait until some of the auction houses re-open and try bidding on a car. If that's a little stressful (it can be) then I'd look at Carvana, Vroom and Shift (depending on your geographic region). From there I'd look at local used car dealers - don't let them game you or try - Carvana/Vroom/Shift all recondition to a Lexus CPO (Certified Pre Owned) standard you just can't legally say that if you don't have the approval from the manufacturer (another weird quirk) - you should be able to find a like for like vehicle between Carvana/Vroom/Shift & a local dealer. Whoever gives you the best deal take it, but both online and in-person dealers are marking down inventory. If you can wait a few months, the prices will be lower with all those vehicles come off-lease. Keep in mind that with Hertz filing for bankruptcy that other rental car companies aren't that far behind, so there could also be a massive influx from those folks needing to liquidate some assets.
- nerfhammer 6y ago
  What if I don't know a lot about cars and don't know exactly what I want?
  - tmountain 6y ago
    Do your research online ahead of time to narrow down what criteria you care about and then go look for the best deal.
  - henrikschroder 6y ago
    Then any car salesman will happily sell you the perfect car for you that just so happens to make him the most in commission. If you don't know what you want, or don't know anything about the make and model you're buying, you will be taken advantage of. It's perfectly fine to walk in to a dealership and look around, touch and squeeze and sit in all their cars to figure out what you like. Take one for a test drive, or five. Don't commit to anything. Before buying a car, you should ideally have picked out a specific car from a dealer's lot, with the specific make, model, trim, and options you want. Price that specific car on kbb.com or trucar.com so you know the average price range for it. This is the only way of knowing if a specific car's price is "good" or not, because you cannot trust the dealer on this.
  - jhatax 6y ago
    I cannot recommend Costco’s auto program [1] enough for a buyer with your profile. Dealers with whom Costco works have been vetted by the Costco machine. Prices are pre-arranged based on your zip code/location, and they have a live help number if you need to start with, “which car should I get”. I know three people who have bought a car through that program and they have nothing but praise for the experience. 1. https://www.costcoauto.com/ https://www.costcoauto.com/
- foobarian 6y ago
  I used to obsess about buying a car and thought dealers were the devil to be avoided. But once I got older and started working, I got over that; and my latest car purchase went something like this: 1. pick a car I wanted 2. look around online for what the dealer's price is (understood it's not accurate) 3. go into the dealer and tell them I want car X for $Y-300. 4. Let the dealer try to sell me the car on the lot that was the wrong trim and color, stick to the original car, accept $Y+200 for the price, then sign the paperwork and wait for the delivery. 5. Few months later, come in, sign more paperwork, drive away in new car. The whole process was pretty pleasant, people were pleasant, the car was great, and now I still come over to get it serviced. In retrospect they were a little too eager to accept my offer which was way below sticker, so I was probably off on their factory price, but I figure I'm fortunate that I can afford to not obsess about a +/- $1k and do better things with my life :)
danielvf 6y ago
If you don't know what kind of car you want, head down to CarMax and test drive about five to six vehicles in the category you are looking for. Find the one you like, then check later that that kind of vehicle and year doesn't have some kind of terrible maintenance problem (most don't, which is why this can be done later). Right now, year or two old used cars are selling for more than they are worth - so if you are looking in that price range, a new car may be a better deal. If looking for used, I've bought all the ones I didn't regret off private party sales from Facebook or Craigslist. Just lurk daily for about a month and get a feel for what the ones that sell are priced at, and know that the ones that don't sell are probably priced a little high. When you spot a good vehicle at a good price, move! Try to get in to see within 24 hours. If it's at a good price, it will sell quickly. If you want to buy it, get it taken to a dealership for an pre-purchase inspection (Usually $100-$200). If you had a mechanic you trust, he might do it for free. If it's good enough buy it. If looking for new, then the first step is to find the online forum where the power owners of that make and model hang out, and find the forum thread or spreadsheet where they post how much they paid. This is incredibly powerful, and is the key to your success. It will often surprise you how low dealers can eventually go. Pick a price low from the list, but not the absolute bottom as your plan. Next step is to contact by email many dealers around, tell the vehicle you are asking for, say you are shopping around, and request an out the door price. If you shop say eight dealers, you will be amazed at how much these prices may vary (like 10% of the value of the vehicle). If you see what you are looking for, go for it, and walk out if they change the price later.
- jnwatson 6y ago
  I've also observed the overpricing of 1-2 year old cars. Do you have any idea why?
  - SkyPuncher 6y ago
    My personal opinion (though I haven't paid attention for long enough). * Lease mileage seems to be trending downward. * Overall reliability is trending upwards (easy to get 200k+ miles) * This places a lot of 1 to 2 year old vehicles in the "almost new category" Combine this with certified pre-owned program, you can pretty much get a "new" car for 30% less. This is inflating the price of cars with low miles since they seen as nearly the same as new cars.

Thriptic 6y ago

Assuming that we remain bogged down by COVID for many more months / get a second spike of infections due to premature reopening, can we expect manufacturers to release new models and put dealers under additional new pressure to liquidate existing stock, or will they likely hold off and release 2021 models in 2022?

tempestn 6y ago

CEO of AutoTempest here. I'd be interested in picking your brain if you felt like it. Email is in my profile.