Are dealerships going out of business?

[mburtsvt]

I have said it before - all of the new car dealerships, (read "all) around me here in northern California look like they are having successful "going out of business" sales.

Sponsored

 

[mburtsvt]

It (and inflation right now) isn’t that insane when you consider this one chart:

https://fred.stlouisfed.org/series/CDCABSHNO

Summary? There’s an extra $3 trillion in the bank right now that wasn’t there in 2019.

People have OBSCENE amounts of cash and can afford to pay high prices.

It's a little "false fact". Most of the individual liquify is money that was "parked" out side of the stock market when things started heading south in late 2021. People will not reinvest in the market until more stability sets in.

 

[Ghost Ryder]

ADM always existed. It was just called Lojack, window tinting, fabric protection, etc. Dealers an just more brazen about it now because there's a shortage of cars.

Dealership model will be changing. Probably for the better. They make most of their money on the repair side anyways, not the sale side. Would be great if they focus all their time, effort and money on better service. The less I have to interact with a sales person, the better.

 

[Mach1E]

It's a little "false fact". Most of the individual liquify is money that was "parked" out side of the stock market when things started heading south in late 2021. People will not reinvest in the market until more stability sets in.

That’s only the last tiny bit. Absolutely not “most” as you said. The few trillion before that was just cash in bank accounts. People put money in and out of the stock market many times in that chart. And none of it resulted in a 3+ trillion jump. The chart goes back to 1950 for goodness sakes.

It came from a combination of government money, lack of vacations and eating out/entertainment for a couple years and short supply of stuff to buy.

Either way, the abundance of cash explains half of the inflation formula.

The 5 year chart gives you a clearer picture. The jump happened in 2020, not just the last bit in late 2021 as you suggested:

 

[GreaseMonkey]

So what do you think about homeowners who list their houses for more than the Zillow estimates? Isn't that basically the same thing as adding ADM? There is a house down the street from me where the homeowner was asking $50K over the Zillow estimate.

I don’t disagree with your overall premise. But Zillow is not a competent appraiser that you want to rely on…$880M losses in 2021 valuing homes and trying to flip them.

Besides, the house gets professionally appraised by someone who knows the local market, does actual research, and represents a loan underwriter that has an interest in not overvaluing the transaction. I don’t think you’ll make it too far in the mortgage closing process overpaying for a home (after 2008).

It’s just a bad example, but we get his point.

The better example he gave is how much we are selling our used cars for. Pre-pandemic my 2016 Prius would be worth $17k. Now prices are around $27k. So a nice $10k in Additional Private Seller Markup (APSM) that someone will have to cough up while paying 5% interest rate.

 

[TGIF]

So what do you think about homeowners who list their houses for more than the Zillow estimates? Isn't that basically the same thing as adding ADM? There is a house down the street from me where the homeowner was asking $50K over the Zillow estimate.

Don't get me wrong, I don't like ADM, but looking at it from the dealers perspective, I can understand it. The part I hate most is when dealers lie. The dealer I bought from told me over the phone they weren't adding ADM. When I went there the next day, they tried adding a $5K mark up. I refused to pay it and they eventually removed it completely after trying to get me to pay a reduced ADM.

Ok. Lay off the Zillow analogies. Zillow has my house valued less than a recently sold that is 20% (@400 sq ft) smaller. Mine is totally remodeled in ‘16 unlike the recently sold which was built 30 years ago. Zillow is frequently wrong/inaccurate.

 

[fmtexmme]

How about this one: Don McGill Toyota is not charging ADM per se, but they basically auctioning off all their vehicles. Here is the link to their new car inventory. You will notice for every vehicle, the MSRP price is crossed out and there is a "Submit Offer" button.

https://www.donmcgilltoyota.com/new-inventory/index.htm

 

[RedStallion]

How about this one: Don McGill Toyota is not charging ADM per se, but they basically auctioning off all their vehicles. Here is the link to their new car inventory. You will notice for every vehicle, the MSRP price is crossed out and there is a "Submit Offer" button.

https://www.donmcgilltoyota.com/new-inventory/index.htm

Yeah, that's the best way to match the demand and supply. Ebay is also running Mach-E auctions, but as far as I can see, only used cars are auctioned.

 

[Socalsp3]

That’s only the last tiny bit. Absolutely not “most” as you said. The few trillion before that was just cash in bank accounts. People put money in and out of the stock market many times in that chart. And none of it resulted in a 3+ trillion jump. The chart goes back to 1950 for goodness sakes.

It came from a combination of government money, lack of vacations and eating out/entertainment for a couple years and short supply of stuff to buy.

Either way, the abundance of cash explains half of the inflation formula.

The 5 year chart gives you a clearer picture. The jump happened in 2020, not just the last bit in late 2021 as you suggested:

the federal reserve printed $8 trillion overnight in 2020 because the markets crashed. who knew it would've caused massive inflation