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Old 10-04-2019, 06:59 AM   #1
AVANTI R5
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Default Jeep Dealer’s $50,000 Sticker Shock Captures Auto Sales Stress

Bloomberg) -- Robert Loehr’s dealership is hanging in just fine, much like Fiat Chrysler Automobiles NV’s sales did last quarter. But just as investors doubt the U.S. car market can sustain near-record results for much longer, the Georgia retailer is apprehensive about a key issue: sticker shock.

“Prices are crazy on cars nowadays -- all of them,” said Loehr, who sells Jeeps, Rams and other Fiat Chrysler models from a showroom northwest of Atlanta and has been in the business for 35 years. “They’re crazy to me, and I do it every single day, all day long.”

New Jeep Gladiators -- the truck version of the rugged Wrangler model -- can easily fetch $50,000 and are emblematic of a trend toward eye-popping prices carmakers are commanding for the pickups and sport utility vehicles making up an ever-greater share of their sales. Even as manufacturers and lenders increasingly stretch out auto loan terms to more than seven years and subsidize interest rates with incentives, average monthly payments keep climbing.

Affordability could become more of a risk if the mounting concern that the American economy is headed for recession ends up panning out. Those fears drove the benchmark S&P 500 down more than 2% on Wednesday, to the lowest since August. General Motors Co. and Ford Motor Co. shares slumped by even more.

The U.S. car market has probably reached the end of a great run, according to Brian Irwin, who leads the automotive and industrial practice for consulting firm Accenture. “It’s a step down from where we thought we would be a few months ago,” Irwin said in a phone interview. “I expect to see stronger incentives coming out.”

For more on U.S. auto sales, click here for Bloomberg’s TOPLive blog

While Jeep’s Gladiator is drawing customers into Loehr’s dealership, many are balking at $800-a-month payments they end up being quoted. He’s been able to convert much of that foot traffic into sales of lower-priced Jeep models, but still thinks automakers ought to do more banding together on engine development and parts-sharing to cut down costs and put a lid on prices.

GM, Ford and Fiat Chrysler’s quarterly results looked less dire than the big percentage drops that other carmakers reported Tuesday for September, in part due to fewer selling days in the month than a year ago. But on both days, contraction was a common theme, both for the automotive market and the broader manufacturing sector. A closely watched gauge of U.S. factory activity flashed the worst reading since the end of the last recession.

Third-quarter deliveries rose 6.3% for GM, a smaller increase than analysts expected, while Fiat Chrysler’s 0.1% slip and Ford’s 5.1% decline beat projections. Those figures weren’t enough to dispel the narrative set by rivals a day earlier, when Nissan Motor Co., Toyota Motor Corp. and Honda Motor Co. trotted out ugly numbers for last month.

Auto loan interest rates dipped in September to 5.7%, the lowest this year, and the average term approached 70 months, according to market researcher Edmunds. Despite all that, monthly payments rose from a year ago as the average transaction price on a new car exceeded $37,000 -- a 14% jump from 2014.

Ford’s SUVs struggled in the third quarter, in part due to tight inventory of its redesigned Explorer SUV. But sales of its best-selling Escape crossover also dropped, falling 7.2%. Despite the downward trend, U.S. sales chief Mark LeNeve remains upbeat.

“The consumer, despite all the noise in the market, is still holding up remarkably well and kind of carrying the industry,” he said in a phone interview. “With the limited availability we had with Explorer and Escape because of the changeover, we’re actually pretty pleased with the quarter and we’re actually set up well for Q4.”

https://finance.yahoo.com/news/gm-fo...145336365.html
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Old 10-04-2019, 07:07 AM   #2
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Default 11-Year-Old Dodge Challenger Outsold Camaro And Mustang In Q3

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And it wasn't by just a couple digits, either.

With the arrival of fall in the northern hemisphere comes third-quarter sales reports for automakers around the world. 2019 has been a rough year in the car business, and the latest figures suggest it’s going to get worse before things improve. But there’s a surprise from Dodge buried in the numbers, and we suspect it has the muscle car executives at Chevrolet and Ford a bit worried.

The Dodge Challenger easily outsold Camaro in the third quarter, with 18,031 units finding homes versus 12,275 for the Chevy. That’s been a trend for quite some time, despite the emergency facelift fitted to the Camaro for the 2020 model year. However, this time around the big Challenger also outsold the reigning Detroit champion, the Ford Mustang. It wasn't a complete blowout, but with only 16,823 pony-badged cars leaving Ford, it's a decisive win for team Dodge.

In fact, the Challenger was the only vehicle in this group to post a positive gain. Compared to the same period last year, Challenger sales were up 21 percent. Mustang sales fell 12.3 percent, and Camaro continued its hard slide by dropping a full 15 percent. It’s not a complete Challenger victory though – Ford still has a comfortable lead over Dodge in year-to-date sales but the gap is narrowing. 55,365 Mustangs have been sold through all of 2019 thus far, versus 46,699 for the Challenger. At 36,791 sold units, Camaro is a distant third. As much as we love the cool Chevy, these sales figures support the rumors we’ve heard about its impending demise.

How is Dodge and its decade-old Challenger outselling its recently updated competition? That’s a very interesting question that doesn’t necessarily have a single answer. The recent Mustang / Camaro facelifts weren’t entirely well-received by enthusiasts and that could be reflected in these stats. With a new Shelby GT500 poised to hit dealerships, it’s possible Mustang buyers are holding off on a purchase until the 760-hp monster arrives. As for Dodge, we’ve said it often – the automaker has done a fantastic job of keeping its old platform fresh and exciting with all kinds of special edition models, not to mention halo vehicles like the SRT Demon, and more recently, the Challenger Redeye. As a result, it enjoys the youngest demographic of buyers in the muscle car segment despite being the oldest choice.

Can Challenger pull out a 2019 upset and unseat the Mustang from its pony car throne? With approximately 10,000 units still separating the brands, that seems unlikely. That said, we certainly wouldn’t be surprised to see all kinds of crazy incentives from Dodge before the end of the year in a Hail-Mary attempt to try.

Source: FCA, Ford, GM
Yahoo auto news
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Old 10-04-2019, 08:37 AM   #3
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Because people like bananas on their cars.

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Old 10-04-2019, 10:16 AM   #4
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“Prices are crazy on cars nowadays -- all of them,” said Loehr
Been saying this for years.

Next up is "It needs to help me drive if I'm buying it". Cool mr. customer. We have pacifiers for you and for all your family free with purchase.
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Old 10-04-2019, 10:27 AM   #5
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Originally Posted by Pre View Post
Been saying this for years.

Next up is "It needs to help me drive if I'm buying it". Cool mr. customer. We have pacifiers for you and for all your family free with purchase.
Dick-shaped pacifiers... dual use.

I was just shopping for an old truck, either restored, or to restore. Jeeps are insane - my old '84 CJ7 that cost me 3.5K in 1990 is now 20K! Something nice, with good power, suspension, interior, etc. starts there and goes to 50K. I wouldn't buy one for that even if I was Jerome Powell, paying with a company check.

A new Wrangler? Doubt I would even accept one as a gift.
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Old 10-04-2019, 10:47 AM   #6
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IMO, buying a new car today is not the best idea. Buying used with <10,000 miles on is a great deal compared to used. I'm looking at a used RS3 in the low 50s....which is a lot more reasonable than the mid to upper 60s.
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Old 10-04-2019, 01:25 PM   #7
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All this being said, there are a lot of really good cars in the 20-30k range. But a lot of the mid sized sedans, even the non-luxury ones, are 35-40k now for well equiped models.

SUV/Crossover prices are bonkers.
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Old 10-04-2019, 02:09 PM   #8
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monetary policy has consequences
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Old 10-04-2019, 02:25 PM   #9
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Unless heavily discounted, I typically buy old and lease new.
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Old 10-04-2019, 02:39 PM   #10
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Originally Posted by Xandernfs View Post
IMO, buying a new car today is not the best idea. Buying used with <10,000 miles on is a great deal compared to used. I'm looking at a used RS3 in the low 50s....which is a lot more reasonable than the mid to upper 60s.
It depends. Audi's depreciate rapidly so for your model, yes it's a sound idea. The truck I just bought has solid residual so used ones don't go for much less than new. Then I also got several thousand under invoice. Subaru's kind of the same thing. You just don't save that much going used compared to new, it's not worth it. Now ze Germans, yes, I'd buy used all day, especially CPO.
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Old 10-04-2019, 04:03 PM   #11
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Originally Posted by Xandernfs View Post
IMO, buying a new car today is not the best idea. Buying used with <10,000 miles on is a great deal compared to used. I'm looking at a used RS3 in the low 50s....which is a lot more reasonable than the mid to upper 60s.
Quote:
Originally Posted by Pre View Post
It depends. Audi's depreciate rapidly so for your model, yes it's a sound idea. The truck I just bought has solid residual so used ones don't go for much less than new. Then I also got several thousand under invoice. Subaru's kind of the same thing. You just don't save that much going used compared to new, it's not worth it. Now ze Germans, yes, I'd buy used all day, especially CPO.
As pre stated, it depends on what you’re buying. German? You’re better off buying CPO / Used. A lot of other vehicles are so damn close to new prices, maybe $5-7k off of new with 40k miles that it’s worth buying new.
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Old 10-04-2019, 04:04 PM   #12
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I've generally always bought something a year or less old with very low mileage and saved a tonne with the luxury brands. Any domestic I've bought has had such a huge discount off MSRP that the difference between new and slightly used was within my 'screw it I'll pay a little more and get a new one' range.
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Old 10-04-2019, 04:05 PM   #13
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Forgot to add, prices will keep going higher so long as people continue to be stupid and take out 7 year loans. I can’t wait for the autoloan bubble to fully implode, late payments and repos have been rising steadily for the last several years.


I should probably open an impound and tow company.
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Old 10-04-2019, 04:53 PM   #14
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Originally Posted by godfather2112 View Post
As pre stated, it depends on what you’re buying. German? You’re better off buying CPO / Used. A lot of other vehicles are so damn close to new prices, maybe $5-7k off of new with 40k miles that it’s worth buying new.
Civic Si is the perfect example.

New, $25k. 2 years old with 30k miles, $25k.
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Old 10-04-2019, 06:28 PM   #15
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Originally Posted by godfather2112 View Post
Forgot to add, prices will keep going higher so long as people continue to be stupid and take out 7 year loans. I can’t wait for the autoloan bubble to fully implode, late payments and repos have been rising steadily for the last several years.


I should probably open an impound and tow company.
this is exactly my argument about monetary policy; keeping interest rates near zero means loans become the preferred way to purchase large ticket items and the increased demand artificially pushes prices up. It's one of the reasons your house's market value is so absurdly high compared to the average incomes in your area. The incentives are broken and no one has the courage to fix it.
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Old 10-04-2019, 07:28 PM   #16
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Originally Posted by godfather2112 View Post
Forgot to add, prices will keep going higher so long as people continue to be stupid and take out 7 year loans. I can’t wait for the autoloan bubble to fully implode, late payments and repos have been rising steadily for the last several years.
This is very evident when car shopping. Usually the first words out of the salesperson's mouth are, "What type of payments are you looking for?". Umm, how about you just tell me the price of the car.
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Old 10-05-2019, 12:49 AM   #17
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Originally Posted by Kevin View Post
This is very evident when car shopping. Usually the first words out of the salesperson's mouth are, "What type of payments are you looking for?". Umm, how about you just tell me the price of the car.
^^^This is the exact reason I do my car buying online now. I just tell them what I’m willing to pay and if they accept it, I’ll come down and do the paperwork. Seems to cut out a lot of bull**** time wasting.
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Old 10-05-2019, 09:19 AM   #18
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Originally Posted by Kostamojen View Post
All this being said, there are a lot of really good cars in the 20-30k range. But a lot of the mid sized sedans, even the non-luxury ones, are 35-40k now for well equiped models.

SUV/Crossover prices are bonkers.
I agree - it's a great time if you're a sedan shopper.

I'm seeing the VW GLI autobahn w/auto routinely advertised for $28K now, which seems like a lot of car for the money (compared to some of the pricing we are seeing on other vehicles currently)
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Old 10-05-2019, 12:35 PM   #19
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I briefly considered replacing my 2014 Jeep Wrangler JKUR with a Jeep Gladiator.. until I used the online calculator to build an equivalent Gladiator for almost $53k. That's over $15k more than what I paid for my Jeep in 2014 despite it still having the same engine.
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Old 10-05-2019, 04:39 PM   #20
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The main issue is salary. I think the stat was in 1980 CEO’s made 30 times the average workers salary. Now it’s 300 X. Our salaries just aren’t rising fast enough to combat inflation. Here it’s so bad people I know have just given up hope on buying a house. Used to be pretty affordable here, those days are gone.

So these MSRP’s keeping going up and up. The more driving nannies and automation the more they’ll keep climbing. Average price for 2020 is expected to be 40k for a new car in the States. That’s a lot of dough for something that isn’t a performance car, at least to me it is. The balloon is gonna pop. What amazes me is the mfr’s aren’t seeing the neon lighted Dirk Diggler sign like they should. They are shooting themselves in the foot.
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Old 10-05-2019, 09:47 PM   #21
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Question

Quote:
Originally Posted by Kostamojen
Civic Si is the perfect example.

New, $25k. 2 years old with 30k miles, $25k.
Question 1: What's the incentive to purchase a used one?

Question 2: Is selling a used Civic Si more challenging than a car that's depreciated more? (see Question 1)
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Old 10-06-2019, 09:40 AM   #22
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Originally Posted by Skylab View Post
Question 1: What's the incentive to purchase a used one?

Question 2: Is selling a used Civic Si more challenging than a car that's depreciated more? (see Question 1)
Q1: likely a consumer who desires the NA 2.0 DOHC VTEC more than the 1.6T engine
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Old 10-07-2019, 11:29 AM   #23
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monetary policy has consequences
Yes it does.
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Old 10-07-2019, 11:54 AM   #24
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Most full-sized trucks after you get some options on them are quiet expensive. People are willing to pay for them along with large utilities. Yukons and Expeditions are $60k vehicles and provide tons of margin for manufacturers.

I looked at 3 cars on Saturday, I'm deciding between 3 row family vehicle or a mid-size hatch.

All were over $45k MSRP. I have no interest in lightly optioned models if I'm going to have it for 10+ years.

As others have mentioned 1-2 year old CPO for luxury is a good way to go especially for brands like Infiniti or Lincoln; sedans best of all.

I wish the used V90's and V60's were priced like the S90's and S60's I'd get one of those.
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Old 10-07-2019, 12:17 PM   #25
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All were over $45k MSRP. I have no interest in lightly optioned models if I'm going to have it for 10+ years.
Going to preface this by saying this is not saying genericuser will fall prey to the same trap, BUT!

I think this is the crux of the problem here. People are turning cars into long-term purchases, expecting to keep them for well-after loan term. Great, I'm all for it. Problem is they're being irresponsible about it, getting way more car than they need and they're also not people who will ACTUALLY keep a car that long. They get into a long term loan, wreck the thing in 2 years, or decide they hate the car, and then have trouble getting out without just racking up more debt. They also talk themselves into things "Oh it's fine to spend a little more than I can comfortably afford, after all, I qualified for the loan, and I'm going to keep it till the wheels fall off!"

Yeah, except just because you can "afford" the payments by stretching out the loan term so long doesn't mean it's suddenly a fine financial decision.

Also, I don't care how nice the creature comforts are. High margin items are off the table for me period. I refuse to be ripped off by some company just because it's something I want and I can afford it.
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