The Expert Podcast

As you probably know there's a lot going on in the automotive industry both new cars and used cars have a lot of changes going on we're going to talk about all of them we're going to talk about some wild price swings on vehicles and also some changes in the new car market and even the electric vehicle market something that's been overlooked so first with new cars it's getting worse with inventory look you know a few months ago beginning of the year even last year there was talk about does a chip shortage an inventory for new car dealers is less than it was you probably have been driving by all of the new car dealers in your area and seeing empty lots or if you do see cars if you look closely they're probably used cars not new cars many large scale new car dealers are down to single digit cars.

Here's an article where a major chevy dealer used to have 80 cars on a lot then it went down to 40 or 50. now today we have five according to the general manager of that dealership and this is just not from this article we talk to dealers every day a lot of our clients are major dealers we have a large-scale car dealership client in fort worth texas they used to keep 250 to 300 cars on their lot now they have none every car that comes in is delivered the same day comes in they have usually five or six cars on allocation that are going to come in every week and they go right out the door so if you want to go to that dealership to see cars they're not going to be there new car dealers are short on cars.

We have a client that we're working with that's looking to get a certain type of minivan a chrysler pacifica minivan hybrid and in their area within a 300 mile radius there is one chrysler pacifica hybrid minivan in a 300 mile radius from their location and that one is pre-sold in addition the factory that builds them is shut down for a month and a half so there's not any more coming soon new car inventory is thin and getting thinner it's not gotten better a lot of the predictions last year was well once the ship shortage works itself out there will be new cars that's not happening.

What about used cars and we'll get to evs in a second what about used cars well used cars a different story this article talks about home prices going up but car values are set to fall and this is used cars used cars are dropping like a stone here's why for the last six or eight months many people who wanted to buy a new car weren't able to find one so they bought used some of these used cars were selling for more than what they did brand new two or three years old some dealers are actually raising prices of used cars that are sitting on their lot it used to be that used cars depreciated over time every week or every month the new book value came out and it was less than it was the last book.

Some of these cars are going up in value and if you watch the auction results mannheim odessa the major auctions some cars are selling for more than they did even a month or two before so when the dealership sees that the car under a lot is there selling for more they might mark it up not marking down cars like they used to but marking them up over time that's all changing there are big volumes of repossessed vehicles starting to hit the marketplace more cars that are non-fuel efficient are going down in value suvs larger trucks because of the gas price inflation is starting to create demand destruction meaning that as people spend more money on gas for their car groceries rent is going up they have less money to spend on vehicles so more expensive vehicles or extra vehicles are not being purchased.

Right the average car payment finance payment for a motor vehicle was over hundred dollars recently that's like a rent used to be three four years ago there were some people that are paying over a thousand dollars for a car payment put in the comments let us know what your car payment is is it more or less than 700 because of that people are starting to catch their breath a little bit and there's more cars hitting the market in the used car market which is driving prices down if you're in the market for a used car call a timeout wait a month or two we're seeing this with cars and rvs too are dropping down in price now this is going to be a big swing from the last few months new cars are still going to be short supply but their prices don't change much right new car msrps they stay about the same they may go up from year to year but they don't go up that much used car prices fluctuate wildly.

What about electric vehicles well there's a new company called vinfast it's a vietnamese startup that has electric vehicle crossovers they're going to start their first showrooms in california 24 more stars open by the end of 22. so they're going to have close to 30 dealerships by the end of this year and develop rapidly they're targeting high volume production as well so you may find that this manufacturer has vehicles available where others don't what are your thoughts on electric vehicles is this the wave of the future is it a fad is it something you're interested in if that was the only new vehicle that you could get would you buy one an electric vehicle in general or a new car company in particular or do you want to wait to see are their vehicles going to be any good are they going to be reliable are they going to break down have you even heard of this company vin fast if you're in california do you see where they're constructing one of these showrooms.

The car business is probably right now at a historic moment in things changing in dynamic results of the industry new cars are in shorter supply ever in history used cars prices are dropping like a stone and electric vehicles are having new offerings here's something else about new cars there's an old joke back in the days of soviet russia the ussr that if you bought a car you might have to wait two years to get a new car three years to get a new car if you ordered one and that used to be an unbelievably kind of fantasy joke that nobody could understand like how could you wait that long well here in the u.s many types of cars if you want to order one might be a five or six month wait it's not three years but it's also not a week or two.

Call up any of your local dealers and ask them if you were going to order a new car how long would it take whatever they tell you take it with a grain of salt add a little bit because they might give you a shorter optimistic number but for most vehicles if you get an honest answer it's five or six months and it could end up being longer chip shortage excuse is no longer really an excuse it's more the companies are ramping down production because that's the new business model for dealerships is to not have inventory let us know what you think in the comments we'll see in the next video episode.