Fun dealer shenanigans

[RedStallion]

Two things on that.

1. Almost all of the cars that will come in this Fall are spoken for. They are already gone and no one can order any more.

You know that a new house is counted as sold when a contract is signed and a downpayment is deposited. But of course, a bank wouldn't give a mortgage until the house is built and inspected. That may take a few months. And now when the interest rates are on the move, a significant number of people find out that the bank wouldn't give them a mortgage because they no longer qualify. That's how sold houses become unsold. The housing market is crashing but it's usually a slow process taking years.
But it's much easier with car reservations. Lot's of those reservation can become cancelled in a moment and the dealers may end up with the inventories surpassing the demand.

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[Mach1E]

You know that a new house is counted as sold when a contract is signed and a downpayment is deposited. But of course, a bank wouldn't give a mortgage until the house is built and inspected. That may take a few months. And now when the interest rates are on the move, a significant number of people find out that the bank wouldn't give them a mortgage because they no longer qualify. That's how sold houses become unsold. The housing market is crashing but it's usually a slow process taking years.
But it's much easier with car reservations. Lot's of those reservation can become cancelled in a moment and the dealers may end up with the inventories surpassing the demand.

Sure, it could theoretically happen.

But luckily extremely unlikely, especially on your “this fall” timeline.

It’ll take much longer than that, even in a horribly slumping economy, to suck up the extra $3 trillion in cash that US households currently have. Especially with the 3.6% unemployment.

The data (luckily) just doesn’t support your theories.

Add that to the fact that Ford and other manufacturers do not want to return to the “way things used to be” where they overbuilt, filled the car lots with inventory, then had to throw in thousands in rebates to clear out the inventory. They will be slow to overproduce, especially if the economy slows down.

 

[yngwenli]

You know that a new house is counted as sold when a contract is signed and a downpayment is deposited. But of course, a bank wouldn't give a mortgage until the house is built and inspected. That may take a few months. And now when the interest rates are on the move, a significant number of people find out that the bank wouldn't give them a mortgage because they no longer qualify. That's how sold houses become unsold. The housing market is crashing but it's usually a slow process taking years.
But it's much easier with car reservations. Lot's of those reservation can become cancelled in a moment and the dealers may end up with the inventories surpassing the demand.

There is so little land to build any new homes in prime CA areas, I think for the small amount of builders that have those lots, they're not going to have any trouble from wealthy outside USA folks (or any half decent worker bee in Silicon Valley to pay whatever). A lot are cash buyers or have large downpayments. They don't need a loan.

Yes, if you're talking about some place in TX or where there is no Prop 13 and land is unlimited, yes, those might drop, but I don't think those areas were ever good real estate spots due to rising property taxes with home values (TX).

Are you a renter? I ask mainly because I typically see people who are renters looking to buy always touting a housing implosion/crash simply because it's what they want, not what may/may not happen.


As for auto loan interest rates, that options rate at 2.7% (or 2.49% or 1.4% GT) or even 3.49% honestly doesn't look that bad even. Credit Unions I see are ~3%. iBonds are paying 9%+ guaranteed by the US government.

If someone needs a car, a MME (any EV) isn't looking too bad still with gas prices where they are.

 

[Mach1E]

There is so little land to build any new homes in prime CA areas, I think for the small amount of builders that have those lots, they're not going to have any trouble from wealthy outside USA folks (or any half decent worker bee in Silicon Valley to pay whatever). A lot are cash buyers or have large downpayments. They don't need a loan.

Yes, if you're talking about some place in TX or where there is no Prop 13 and land is unlimited, yes, those might drop, but I don't think those areas were ever good real estate spots due to rising property taxes with home values (TX).

Are you a renter? I ask mainly because I typically see people who are renters looking to buy always touting a housing implosion/crash simply because it's what they want, not what may/may not happen.


As for auto loan interest rates, that options rate at 2.7% (or 2.49% or 1.4% GT) or even 3.49% honestly doesn't look that bad even. Credit Unions I see are ~3%. iBonds are paying 9%+ guaranteed by the US government.

If someone needs a car, a MME (any EV) isn't looking too bad still with gas prices where they are.

I was with you until you mentioned iBonds.

You can only buy $10k, you’re locked into them for years, and the rate is only guaranteed for 6 months and is recalculated every 6 months. The only guaranteed part of the iBond returns is the fixed rate, which is currently 0%.

Everything else you said is spot on.

 

[yngwenli]

I was with you until you mentioned iBonds.

You can only buy $10k, you’re locked into them for years, and the rate is only guaranteed for 6 months and is recalculated every 6 months. The only guaranteed part of the iBond returns is the fixed rate, which is currently 0%.

Everything else you said is spot on.

You just can't sell in the 1st year (locked in) and you only lose your last 3 months of interest if you sell earlier after that. Just me, but I don't think inflation/interest rates are going to magically collapse back to 0% in 6 months so even at 9 months interest (if you're forced to sell), it's better than many things out there.

Yeah, the downside is you're limited to 10k per year per person, but if you have a spouse, that's $20k.

As it pertains to keeping a short term MME options loan (3-4 years) though, I think it's probably one of the safer options to park $$ and keep the options loan at 1.4% - 3% (or refi at a credit union) with the $1k-2.5k options incentive people are getting.

^
|------- Not investment advice, Please consult your own tax/investment advisor for your specific situation.

 

[Mach1E]

You just can't sell in the 1st year (locked in) and you only lose your last 3 months of interest if you sell earlier after that. Just me, but I don't think inflation/interest rates are going to magically collapse back to 0% in 6 months so even at 9 months interest (if you're forced to sell), it's better than many things out there.

Yeah, the downside is you're limited to 10k per year per person, but if you have a spouse, that's $20k.

As it pertains to keeping a short term MME options loan (3-4 years) though, I think it's probably one of the safer options to park $$ and keep the options loan at 1.4% - 3% (or refi at a credit union) with the $1k-2.5k options incentive people are getting.

^
|------- Not investment advice, Please consult your own tax/investment advisor for your specific situation.

Yup, I know all the iBond rules.

My point is it really has nothing to do with the rest if your argument. And people who don’t know the rules (I get those calls all the time) read somewhere online and think they can get 9% guaranteed for 30 years from the government right now.

I don’t think inflation will collapse to zero. But most economists think the current spike is temporary and most investors are betting it’s temporary.

Either way, an extra $300 to $900 (currently) in interest per year on a $10,000 iBond really isn’t going to do squat for most people.

That’s why I was “with you until you brought up iBonds.” ?

 

[ridgebackpilot]

This has always been my concern with the whole drive (or fly) 4 hours away (fly half a day to another state/drive back) dealership and if it has problems or the salesperson is lying (or bending the truth), you're already out time/$$/hassles if the dealer/salesperson just tells you to pound sand or the car was sold already, price has been raised, etc.

You can write all the google reviews, BBB, AG, whatever, but you're still at a loss of time/$$/stress/etc.

I think it's hard to change the salesperson's mindset since it's been like this forever and ultimately, it's a "sales" job (similar issues in other industries), but agreed that car buying in general is mostly not a pleasant experience for a lot of people.

In the current market, it's unrealistic to expect the deal you want to be right at your doorstep. Perhaps in a normal market, but not today.

These days, if you're not willing to travel to find a better deal, then you're stuck with what you can find close to home, which might be obscene levels of ADM.

Like it or not, we live in a global economy where people are flying from LAX to Denver to buy Toyota Forerunners because they can find the vehicle there for a lot less.

 

[Steady Eddie]

Having sold my SR RWD, I'm on the hunt for an ER AWD and found a potential candidate at a dealer in TX. The vehicle is a '21 Premium ER AWD in Rapid Red and it is a certified pre-owned. It has 4k on the clock and I was amenable to their sales price of $59,9xx. Granted, this is above what this car cost new, but such is the name of the game in today's market right?

I called and spoke to a salesperson, got assurances on the condition of the car, its history, etc. I clearly asked, "Is $59,9xx the actual sales price of the car?" The answer was yes. Yay! I found a car that I think would suit my desires and in the price range I was looking for.

Then comes the first build sheet....

I quite literally LOL'd when the sales guy texted it to me. He was right, their sales price was just under $60k, no "dealer markup," just some useful packages for peace of mind. A mere ~$7700 worth of said useful packages. Not a word about this ahead of time.

At my polite decline of the deal (thankfully this was through text so they couldn't hear my loud guffaws), then came the second build sheet....

Almost like magic, just about all of those useful packages vanished, almost as if they weren't really worth anything at all. Weird, right? All that remained was that final GPS tracker nonsense (folks, the car is trackable via the app...). I again politely declined, at which one that last package then became their "final offer" at $899.

I ended up completely declining to work with the dealership. Though they finally did get their car's price into a territory I am willing to pay, their unethical games turned me off of them. They are trying to take advantage of desperate, impatient, or ignorant people, not only making a killing on the resale of a used vehicle they picked up at an auction but also on those insane packages.

FWIW, if anyone else is looking for an ER AWD and wants to use this to get the same or better deal, go for it! After that back and forth, I personally couldn't stomach working with them. The sales guy was nice. The dealership's ethics, not so much.

Name names.

 

[TheCount2]

Got a call Friday from a dealer I contacted last July. He had a new ER Premium AWD in Rapid Red. Upfront he quoted $15k ADM and $10k if there was a trade and Ford financing in the deal. I considered trading my 21 Select but by the time I sent the VIN at the end of the day the vehicle was sold. Waited too long.

 

[Skepteach]

Name names.

I wasn’t going to, but after a couple more shenanigans whatever. Killeen Certified. Probably going to post about this on Google and DealerRater too. The sales guy was nice enough, but damn….that is the most profit hungry dealer I’ve ever attempted to work with, and that’s saying a lot!

 

[JoeBeach]

It is getting close to time for Ford to start using the Tesla business model and start selling and servicing their vehicles directly from from Ford and close out dealerships. This way they protect their brand name from being sullied by unethical dealerships and probably can offer the vehicles at a lower price as they are not including a middle man. Obviously there will be start up costs to do this but perhaps they can buy out the dealerships and use those facilities.

 

[sprinkles]

I was in a Facebook group for Mach E owners, I think it was the largest one? Every time someone talked about ADMs or dealers came into the group posting a car for sale with ADM, the loudest voiced were defending the dealerships and citing the "free market" blah blah blah. I found it bizarre especially since on this forum, and most others, that's the opposite consensus. I left the FB group because of it.

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