Automotive

Crash in used luxury car prices is starting

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  • May 12th, 2020 11:51 am
[OP]
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Mar 21, 2013
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Crash in used luxury car prices is starting

Hey all, as some of you know I've been shopping for a used Q7. I spoke to my contact in the industry today, a sales manager, he said that "Prices on luxury are getting floored. I'm getting a lot of wholesalers and whatnot asking us for bids and they may be coming to me cheap. Repo'd Audis are being auctioned May 20th [here in AB]. Insane how many there are, and it's the same with BMW and Benz."

Apparently he bid a $108k MSRP 2019 Q7 with 4,872km for $62k and thinks he will get it. Didn't get many more details but sounds like there are many other examples. He was telling me about a loaded 2017 he could get for $43k as well.

So I'd say the fallout is starting, at least here.
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I gotta respect the upvote ratio here....

Nothing of this sort in Ontario going on at this point.

Maybe in Alberta it is different.
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Source, oh wait it's a guy you know.
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Not surprised at all.

1 year old Q7 will lose 25% of it's value normally.. There is 10-12% drop in wholesale prices, so $62K sounds about right for dealers to pad some margin in there.

So if he's willing to CPO it and sell it to you for $65K, would you take it OP?

Or is he telling you he's getting it for $62 but it's actually even less than that? :D

Oh the mind games.
Last edited by Xtrema on May 11th, 2020 6:36 pm, edited 1 time in total.
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To all the naysayers that was yelling "why would car dealers sell you a car for under mrsp? Instead the prices of new and used are going to skyrocket".
I feel they need to get educated on the basics of supply and demand.
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cristianosham wrote: To all the naysayers that was yelling "why would car dealers sell you a car for under mrsp? Instead the prices of new and used are going to skyrocket".
I feel they need to get educated on the basics of supply and demand.
Before oilerfan chimes in, this is used car, not new. It will suffer 1st due to glut. Look at lease busters where tons of people are trying to off load their leases. Used car value will hurt a lot unless there's something special or limited about your car.

Given the potential better margin on used, don't be surprised that's what dealerships may favor selling for the next little while. And repos has not even started yet.
[OP]
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kr0zet wrote: Source, oh wait it's a guy you know.
https://canada.autonews.com/coronavirus ... les-canada

But yes, a guy I know who knows a lot more than you about the car sales business.

So is your position that this isn't going to happen? Because that's a moronic position. The extent of drops is the only real question.
Last edited by Blubbs on May 11th, 2020 6:46 pm, edited 2 times in total.
[OP]
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Mar 21, 2013
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Xtrema wrote: Not surprised at all.

1 year old Q7 will lose 25% of it's value normally.. There is 10-12% drop in wholesale prices, so $62K sounds about right for dealers to pad some margin in there.

So if he's willing to CPO it and sell it to you for $65K, would you take it OP?

Or is he telling you he's getting it for $62 but it's actually even less than that? :D

Oh the mind games.
Nah I'm shopping more in the $40s. Fine with a 2017 with 50,000kms. Don't need one with only 5000kms lol
[OP]
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xjesterxx wrote: I gotta respect the upvote ratio here....

Nothing of this sort in Ontario going on at this point.

Maybe in Alberta it is different.
I wouldn't be surprised if there are jurisdictional differences, but do you work in car sales? This is still playing out at the wholesaler level right now here, so it's going to take time for it to manifest with dealer prices.
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Blubbs wrote: I wouldn't be surprised if there are jurisdictional differences, but do you work in car sales? This is still playing out at the wholesaler level right now here, so it's going to take time for it to manifest with dealer prices.
The problem is everyone is trying to predict what post-covid world is like but nobody knows. On one side there is people who can't afford payments and ditching their ride. On the other is people who can afford it will start driving more and avoid public transit until a vaccine is found. But the 3rd vector is that if everyone works from home, you don't need a car or public transit.

China has the best car selling months in 2 years after lock down but still if Tesla's Chinese number is anything to go by the pended up demand is short lives as March was strong but Apr is back to 64% lower than March.

I think the real picture will emerged in July. If dealership continue to be starved throughout May and June, then I think there will be glut on new stock that forces manufacturers hands to do something about it.

But what do I know, just another guy with an opinion on the internet.
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Blubbs wrote: I wouldn't be surprised if there are jurisdictional differences, but do you work in car sales? This is still playing out at the wholesaler level right now here, so it's going to take time for it to manifest with dealer prices.
I may have some relevant insights, yes.
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Xtrema wrote: But the 3rd vector is that if everyone works from home, you don't need a car or public transit.
Yeahhh few people in suburbia is gonna ditch their car just because they work from home and don't need public transit. Things that are "down the street" are still like 10km+ away (stores and stuff I mean) so no point in getting rid of your car when you still need to go to these places. Public transit is a bad idea if you're afraid of a virus, as are taxis/ubers with tons of people getting in and out of closed-quarters (vehicles) all the time. Plus if they have kids they're def. not getting rid of their cars--school's definitely gonna go back at some point, maybe not until fall but will go back. No point in selling your car if you just need to buy one again in a few months. I could see, however, selling off (or taking the insurance off) "additional vehicles" if the household has more than one though, sure.
Xtrema wrote: I think the real picture will emerged in July.
I think so too, about cars...and a lot of other things.
Xtrema wrote: But what do I know, just another guy with an opinion on the internet.
Fairly sensible one at least ;)
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Might as well wait for January 1 to get another 10% depreciation.
[OP]
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xjesterxx wrote: I may have some relevant insights, yes.
To be clear I wasn't saying you weren't allowed to have an opinion if you weren't in car sales or anything silly like that. Just asking relative to the wholesaler thing. Curious if you have insights to share.
[OP]
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Xtrema wrote: The problem is everyone is trying to predict what post-covid world is like but nobody knows. On one side there is people who can't afford payments and ditching their ride. On the other is people who can afford it will start driving more and avoid public transit until a vaccine is found. But the 3rd vector is that if everyone works from home, you don't need a car or public transit.

China has the best car selling months in 2 years after lock down but still if Tesla's Chinese number is anything to go by the pended up demand is short lives as March was strong but Apr is back to 64% lower than March.

I think the real picture will emerged in July. If dealership continue to be starved throughout May and June, then I think there will be glut on new stock that forces manufacturers hands to do something about it.

But what do I know, just another guy with an opinion on the internet.
ES_Revenge wrote: Yeahhh few people in suburbia is gonna ditch their car just because they work from home and don't need public transit. Things that are "down the street" are still like 10km+ away (stores and stuff I mean) so no point in getting rid of your car when you still need to go to these places. Public transit is a bad idea if you're afraid of a virus, as are taxis/ubers with tons of people getting in and out of closed-quarters (vehicles) all the time. Plus if they have kids they're def. not getting rid of their cars--school's definitely gonna go back at some point, maybe not until fall but will go back. No point in selling your car if you just need to buy one again in a few months. I could see, however, selling off (or taking the insurance off) "additional vehicles" if the household has more than one though, sure.


I think so too, about cars...and a lot of other things.


Fairly sensible one at least ;)
I agree that July could be peak for a lot of things. Including the stock market with Q2 earnings reports lol.

Both of you with reasonable thoughts. Some further points:

1. There is a debt bubble that relates to real estate as well as vehicles and consumer debt.
2. Even if driving remains a priority, the majority of people do not get their next vehicle because the current one no longer can serve its functional purpose. They upgrade, and this drives demand. People do not have to stop driving for a crash, they just have to hang onto and maintain their current cars en masse for a short period of time. Along with some defaults. Then luxury lease returns and repo's will flood the market.
3. Nobody buys a luxury car purely for practicality, they can get something functionally equivalent for less in almost all cases.
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Blubbs wrote: I agree that July could be peak for a lot of things. Including the stock market with Q2 earnings reports lol.

Both of you with reasonable thoughts. Some further points:

1. There is a debt bubble that relates to real estate as well as vehicles and consumer debt.
2. Even if driving remains a priority, the majority of people do not get their next vehicle because the current one no longer can serve its functional purpose. They upgrade, and this drives demand. People do not have to stop driving for a crash, they just have to hang onto and maintain their current cars en masse for a short period of time. Along with some defaults. Then luxury lease returns and repo's will flood the market.
3. Nobody buys a luxury car purely for practicality, they can get something functionally equivalent for less in almost all cases.
1. If you read the conditions on Fed's plan on commercial rental relief, it's a bank subsidy in disguise as landlord who doesn't have a mortgage won't qualify. I expect more bank saving spending to come.

And since banks don't hold much car loans or consumer debt, they will probably won't get as much help in those areas.
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Xtrema wrote: 1. If you read the conditions on Fed's plan on commercial rental relief, it's a bank subsidy in disguise as landlord who doesn't have a mortgage won't qualify. I expect more bank saving spending to come.

And since banks don't hold much car loans or consumer debt, they will probably won't get as much help in those areas.
Don't worry he doesn't need to read anything, he knows a guy...
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These are consumer goods. They need to be sold to make a profit or stem losses or they wouldn't even be produced. Also has a sensitive shelf life by way of production date and model year.
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alanbrenton wrote: These are consumer goods. They need to be sold to make a profit or stem losses or they wouldn't even be produced. Also has a sensitive shelf life by way of production date and model year.
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