So ya Wanna Buy a Car Now Huh?

 

I don't go into the auto industry much on this blog. Some might say I do and I will mention my job and the fun times that come with it here from time to time but as for the behind the scenes type stuff and trends I usually try and stay well clear of such things. If I mention too much I could get myself in trouble or say the wrong thing and I don't want to carry that weight around. Suffice it to say that some part of both sides of my family have been fused with the regional auto sales industry around here since before I was born. That attachment dies with me however as I am the last. A position I am finding more and more common the older I get. Seems I have somehow managed to be the last shepherd for many things at the end.

I get constant questions whether now is a good time to buy a car from mostly locals who know a little bit about my history around here. They watch youtube videos from Vbloggers who tell them prices are falling, floor plan insurance is killing dealerships and they will lower their prices...yadda yadda they will sell at a loss etc. Well let me tell you what is going to happen going forward.

You need to remember that in a dealership that is part of a larger dealer group no one there has any more control over prices than your average store manager at Wal-Mart has over the price of that new flat screen you want. Sure the GM could probably give ya the vehicle you want free but he or she will have to explain that to someone if they do. The price of a vehicle is set in stone with only a certain amount of wiggle room per tier of employee level that is involved by how much it cost to put that car on the lot. Period. Sometimes the amount of time that particular vehicle has been in the inventory will allow a larger amount of wiggle room but unless you go to a completely 100% owner financed dealership there are rules that must be followed. Again period.

The one possible exception is if by some slim chance you want a vehicle that just so happened to have been acquired by that dealership either through direct owner to dealership sales or a trade in for another vehicle that fell under that category. 

Another words there are no outside investors who have a claim or will have any weight in the transaction. The money is all moved from an internal source with no watchdog or rules except reason.

Trust me here those type of deals are as rare as hens teeth to use a phrase most are familiar with.

Now why am I telling you this? Well it's to let people know who are hoping vehicles will get more affordable and prices will crash going forward, that I believe they will but it is going to take time. Ultimately things that are being mentioned like flooring fees (which basically is just the fee that financial investors add on to the price of each vehicle for fronting the money for a vehicle kept in inventory) will reduce the over all price a dealership makes per car but the ultimate loss will not fall directly on the dealerships. America has had years of experience in insulating itself from losses like that in business and the auto industry is no different. 

You will also hear such things from these vbloggers reporting how cars at the auto auctions are crashing, new inventory showing up with massively reduced prices etc. Again this is a financial industry thing and not something that will effect 99% of us normal people. Unless you are buying at the small end of the spectrum again these deals are financed well above the dealerships. A buyer for a dealership or dealer group is given a certain amount of money to invest in the auctions. They must follow the rules that come with that investment money.

Now again there is a certain specialty strata to this that uses "personal" money that can bend or break rules as they please but that is a very small number of sales over all.

What I am really trying to drive home to people is this thing is going to take a lot more time than even so called industry insiders think. There are deals that will keep the auto industry ticking along for years still left to be completed. I have spent the last 2 weeks receiving dozens of the same vehicle all painted white and fresh off the factory floor going to the same unnamed source. It is all connected somehow to a multi- as in a 10 million plus- law suit from another state that I now have to take care of. The auto industry is nothing more than a huge stock market type arrangement and unless you want to enter the penny market losses mean little as the final investors are insulated anyway. They are prepared to take losses for years rather than lower prices and take even more losses overall by giving the customers what they want.

Just like many of these industries today that will claim all sorts of false reasons to not give you the product you want as the financial industry is where the shots are being called. Change will only come when the financial industry is taking the hits not what industry is below them.  So don't expect to many good deals just yet. We have a long way to go before that happens. In fact I am betting Pepsi will start making actual Mountain Dew throwback with real sugar before the Auto Industry begins truly dropping prices by more than 10% or so.

Keep Prepping Everyone!!!!