Used cars are about to become more expensive

[underpants]

I was talking to my stepfather about this this weekend. We agree on almost nothing politically but we were talking about Chrysler GM and the whole thing.

He worked in some phase of the auto business since he got out of the Marines in '54 or so. From selling mufflers to tires to working for Sears until he retired. BTW- Sears retirement plan is still pretty good.

He said "You know used cars are going to be more expensive with all these dealerships getting cut off". As a car guy he knows that dealerships are what makes the whole car industry go- it is still about SALES. There are different ways to do it but you can't maintain a car if it isn't on the street.

I thought for a second, "Won't less dealerships mean a flood of product?"(supply)

He said "No you see some of these operations have to hang on for a while. This is what they know and do. They are cut off from supply of new cars so they will go into the used car business. At the wholesale level the demand is going to shoot through the roof"


Damn. That made sense. We tend to think of our level of purchasing and forget one step upstream.

Oh and he told me that dealerships do not (mostly) sell cars on a consignment type deal. They finance the car (own it) until they sell it. All those Chrysler dealerships and the GM ones come Monday will be on the hook for every car on their lot. No sign so far of fire-sales but that could change.

Used cars are going to get more expensive. Guess who buys used cars?

[sinkingfeeling]

1. Chrysler ex-dealers are selling at up to 40% off MSRP. Story was on ABC news the

other night.

Here's the story but without the price examples.
http://a.abcnews.com/m/screen?id=7611318&pid=81

[cherokeeprogressive]

2. I would add that warantee isn't an issue because Obama PROMISED

that the warantees would be backed by the US Gubmint.

Time to buy a Chrysler product. Soon it'll be time to buy a GM product, before the Gubmint turns the whole fleet into two-seat electric go-karts.

[underpants]

3. WOW that didn't take long

there is a dealership near me (we test drove a PT Cruiser there a few years ago) that drastically-VISIBLY lowered their inventory about 2 years ago and then sold off the dealership a year ago. That guy has to be really glad he did that. People out of work yes but you realize that the cream of the crop local salesman talent is going to get soaked up by other dealerships.

[ejpoeta]

4. that is a very interesting thought. and no, you don't think about that.

i'm just curious as to how used vs new will be. because with the uncertainty regarding the car makers... will that make people hesitant to buy a new car. i mean, we bought a new car because it was a couple thousand more than the used ones we saw and had a lifetime powertrain warranty. that was a chrysler mini van which we bought a year ago this past april. The dealership we bought it from is one of the ones that got a letter. i just hope they know what they are doing, because it seems that keeping the dealerships that sell more didn't seem to be the plan with these guys. we have a local place that we have taken our car to for repairs twice now. we have a lot of problems with the calipers since we got it... the second time someone left a hammer underneath. we left and immediately heard a dragging sound. we brought it right back and there it was... a hammer. uggh. we weren't going to go back there and drive all the way up to rochester to take the car to the place we bought it.

[imdjh]

5. "Guess who buys used cars?"

I went out to buy a used vehicle. I ended up buying new because it simply wasn't worth what little difference there was. The price difference is not much when the new vehicle comes with a full warranty and any savings in buying the used can be taken out with a single malfunction (perhaps the reason it was traded) like a transmission.

Buying luxury cars used at huge discount makes sense. Buying super duty trucks at huge discount might make sense. Buying a low end car or light duty truck used doesn't make sense, unless you have no other choice.

Peace of mind has a value. In my case it has more value than power windows and an mp3 player.

[dflprincess]

6. I just bought a new car and I swear the dealer was as anxous to get his hands

on my old one as sell me the new one. Before I decided what to do with it, I checked "blue book" and was a little shocked to see it listed the value on my 12 year old Civic at nearly $5,000. I took good care of the car and my mechanic said I was nuts to get a new one, but no way would I have been able to sell it to someone for that amount of money (127,000 miles, original clutch) it just didn't seem worth that kind of money.

In the end, I sold the old one to my niece for what the dealer would have given me in trade (way less than $5,000).

[global1]

7. Also Seems To Me That New Cars Will Become More Expensive When There Are Fewer......

dealers to buy from. Less competition. Higher prices. Fewer cars being manufactured. Supply and demand. Keep the supply controlled.