Car sales

[TexasFreedom]

I keep forgetting to post this. In 6 months the 2019 car models start coming out.

Yet I've been seeing this TV ad all month: 25% off all new-on-the-lot 2016 models. I think it's Hyundai, may be Kia? These cars sat on the lot for about 2 years. TWO YEARS! And they wouldn't run this ad if it was 1 or 2 cars, I bet they have dozens.

Now these are not the top brands (ford, chevy, honda...), but they're cheap and fairly popular models.

For anyone not familiar with cars, new 'year' models come out mid-year. Dealerships have major pushes in the fall to clear out the previous models, and end-of-year sales are very aggressive for 2 reasons: Cars devalue as the calendar turns and 2) they pay taxes on all inventory as of 1/1/xx.

So this dealership paid inventory taxes on 1/1/17. They paid another inventory tax on 1/1/18. They pay the manufacturer a monthly payment for having the car on the lot (you can view it as a 'rental' cost, they don't have to pay the full price of the car but it does cost something each month).

I've heard for some time that new car sales are in the toilet. I've seen before where cars have sat on lots for 12+ months, that is bad enough. But now it's 2 years? Yikes.

Anyone else seeing these sorts of ads in their region?

 

[DrHenley]

I thought car sales in Texas were through the roof due to Harvey.

 

[Squirtgunsquirter]

Here two local dealers have rented out other parking lots to store excess inventory. Hundreds of cars still with the white plastic sheets still stuck on.

I don't have TV, so I don't see any local channel ads. I am sure they are there, though.

 

[TexasFreedom]

Houston is an interesting scenario. The problem is that so many people not only lost their vehicles but also much of their belongings. They probably got insurance money for their vehicles, but not their homes/belongings. With all the things they need to replace I doubt that many bought new cars. Used car sales probably went crazy, and some new cars sold, but not crazy numbers. And note insurance doesn't give you the cash to replace a used car with a new one.

 

[Averagedude]

I find it crazy to buy a new car off the lot might as well light money on fire in my opinion. Buy one a few years old with 30-50k on it and be happy

 

[TexasFreedom]

I find it crazy to buy a new car off the lot might as well light money on fire in my opinion. Buy one a few years old with 30-50k on it and be happy

Nah. I like Dave Ramsey's answer. If you have a $million in your bank account, go buy a new car. No problem. Pay cash and enjoy it. Everyone else? Try used and craigslist.

 

[Averagedude]

Nah. I like Dave Ramsey's answer. If you have a $million in your bank account, go buy a new car. No problem. Pay cash and enjoy it. Everyone else? Try used and craigslist.

I haven’t made it to that level yet so I buy what I can pay cash for. Same lines different budget

 

[WGregMiller]

Local Ford dealer has a 2016 F150. New. Sticker is $63900, website says it’s price is $46800. They can’t sell it for $19k off? Tells me it was overpriced to begin with.....

 

[TexasFreedom]

Greg,

No question many cars have a sticker price that is stupid. Their problem is time. Usually they don't have to pay Ford if they sell it quickly, 1-3 months. Let's say Ford only charges them interest. Let's say 5% interest on the 'sticker' price. They've had that truck for 2 years. It has cost them $13,000 to park it there. Originally they would have taken $55k? And let's say they paid $40k for it. Guessing, rough numbers. The problem is after this time their 'cost' has risen due to interest, that $40k is now $53k. It now is just bleeding them. No chance of 'making money', they just need to stop the loss. Get it off the lot, and if $46k will move it, that's the price.

But who is going to drop $46k on a 2 year old truck? I don't care if it's 'new', it's 2 years old. And sitting hasn't helped it. Let me guess, it's a diesel? Ford hasn't had a diesel engine worth a lick since the 7.3liter. I do like fords, I only wish they would just take the 5.9 cummins and be done with it.

Good example.

 

[DrPrepper]

I never buy a new car. You can buy a used certified car in great condition for a lower price. I buy Toyota because they last.

 

[WGregMiller]

Greg,

No question many cars have a sticker price that is stupid. Their problem is time. Usually they don't have to pay Ford if they sell it quickly, 1-3 months. Let's say Ford only charges them interest. Let's say 5% interest on the 'sticker' price. They've had that truck for 2 years. It has cost them $13,000 to park it there. Originally they would have taken $55k? And let's say they paid $40k for it. Guessing, rough numbers. The problem is after this time their 'cost' has risen due to interest, that $40k is now $53k. It now is just bleeding them. No chance of 'making money', they just need to stop the loss. Get it off the lot, and if $46k will move it, that's the price.

But who is going to drop $46k on a 2 year old truck? I don't care if it's 'new', it's 2 years old. And sitting hasn't helped it. Let me guess, it's a diesel? Ford hasn't had a diesel engine worth a lick since the 7.3liter. I do like fords, I only wish they would just take the 5.9 cummins and be done with it.

Good example.

Not even a diesel.. I don’t see it selling for more than 30, but you never know. I see this as a ‘cut out losses’ deal.

A lot of the newer F150s are over 70k now.

 

[Arcticdude]

I personally only buy new "American" made cars that I order through the dealer, not off the lot. Within the next year or two I'll start replacing our vehicles. In our retirement plan we'll replace all vehicles every 5-7 years. We currently put about 5,000 miles per year on each of our 3 vehicles.

 

[Arcticdude]

Not even a diesel.. I don’t see it selling for more than 30, but you never know. I see this as a ‘cut out losses’ deal.

A lot of the newer F150s are over 70k now.

I guess you could pay that much for a 1/2 ton if you want, but you don't have to. I just started looking at new 4 wheel drive 1 ton diesel pickups to replace my '97 3/4 ton and they are no where near 70k. Expensive yes, but not that expensive....yet.

 

[WGregMiller]

I guess you could pay that much for a 1/2 ton if you want, but you don't have to. I just started looking at new 4 wheel drive 1 ton diesel pickups to replace my '97 3/4 ton and they are no where near 70k. Expensive yes, but not that expensive....yet.

I don’t understand it. Here, most of the 3/4 and ton trucks are the high end trim models. Of course, most never get muddy or used....

The 2016 on the lot is a platinum 4wd.

 

[Arcticdude]

I don’t understand it. Here, most of the 3/4 and ton trucks are the high end trim models. Of course, most never get muddy or used....

The 2016 on the lot is a platinum 4wd.

That's why it's best to order your truck; you can pick the trim level and options that you want. Everyone around here has at least 1 truck and a couple SUV's, and they all get used. My vehicles are always in 4 wheel drive from around October thru May. Even during summer I still need 4 wd on occasion.

 

[TexasFreedom]

Not even a diesel.. I don’t see it selling for more than 30, but you never know. I see this as a ‘cut out losses’ deal.

A lot of the newer F150s are over 70k now.

I believe you, but I don't get it. A 'new' basic pickup should be $20-25k. Maybe $30k if you really like it with extra bells/whistles. 3/4 ton add $5-10k. 1 ton another $5-10k. A fully loaded heavy duty 3/4 ton should be in the mid-$30k range.

But hey, if people are out there paying these prices, God Bless them. I won't be in that line. I like the 2 year old 25k mile vehicle. Best thing is to buy off an older retired couple (you know it's been well maintained & driven very lightly).

I look at a vehicle as cost per mile. That includes everything. Original price, license, oil changes, tires, gas/diesel, repairs. 30-40c per mile is about right for me. OK, that doesn't include the RV, we're talking regular vehicles. But if you add it up, you'd be shocked to see how much people dump into a vehicle.

A couple examples:

Buy a new $30k car. Drive it 100k miles, minimal repairs. Sell it for $7k. Costs:
* $22k depreciation
* $8k fuel
* $3k oil changes/tires/repairs
* $1k registration

$34k spent, or about 34 cents per mile.

I picked up an old pickup truck a few years ago. It's old, it has it's quirks, but it's reliable. It's my hauling stuff vehicle. Let's say I sold it today, paid $3k sell for $2k. 50k miles. Nominal repairs.
* $1k depreciation
* $7k fuel
* $3k oil changes/tires/repairs
* $500 registration

$11.5k spent, or 23 cents per mile. And this is a truck compared to the car above.

And there are some really nice things that most people don't realize with driving an older car/truck. I truly do not care what I hit or what hits me. Another ding? Yawn. Wash it weekly to keep it clean? OK, I do wash it once a year. It's less work all the way around.

 

[WGregMiller]

Or, like one of my uncles used to do was to drive dead men’s cars. When one of his buddy’s would die he’d buy their car from their widow. For very little.

 

[TexasFreedom]

BTW, I just saw the same commercial again. 25% off 'new' 2016 Kia's. It's an Austin dealership.

So weeks of offering 25% off the cars hasn't finished the 2-year-old cars off!

I know someone who bought a new kia minivan maybe 5 years ago, it was not loaded but had the basic power package, $20k give or take. I remember them complaining that the new honda minivan was $35k+ which is why they went with kia. I don't know sticker, that was the 'real' sale price. But this would mean a $20k car is now 'available' for $15k, and nobody is buying them?

Is Kia that bad a brand? I've never owned one. Or maybe Austin is too 'snooty' for a simple car like that? Or maybe the stickers are that overpriced. I don't know, just reporting what I'm hearing.

 

[DrHenley]

Is Kia that bad a brand? I've never owned one.

Buy one and check back with me 12 years and 150,000 miles from now and let me know how it's running. (that's what I have on my Toyota)

 

[WGregMiller]

Buy one and check back with me 12 years and 150,000
miles from now and let me know how it's running. (that's what I have on my Toyota)

I wouldn't bet on it lasting that long. Cars are made like crap now. A friend owns a body shop. The emblem for the front of a 2017 Toyota Corolla was $495 (that's his cost). That much because there is a sensor (an additional $800) behind it that reads through the emblem.

Henry Ford said that he could give Model T's away and still make profit off the parts..... Kinda got that way now, it seems.