I was sitting around with the COO of one of Atlanta’s largest dealer networks. They now have nine different dealerships. Most of which have historically catered to the upscale and affluent. That is until now. For the first four months of this year, 60 percent of their retail sales profits came from vehicles that sold for $4500 or less. New car. Used car. CPO. Everything. That completely floored me. Then he asked the very same question I’ve heard at least fifty times this year, “How many new cars would it take for us to make as much as we get from these sleds?”
The answer is zero. You just can’t make money with new and near-new because virtually everyone has found the fountain of frugality. New is out and near-new is almost as unmarketable because everyone shops these days and very few have real money. Even funny money. That leaves cheap trade-ins and wholesale flips for my friend, which are literally keeping some of these new car dealers above water. The quality of supply in the auction market for low end vehicles is just horrid these days. New car dealers have been keeping their trade-ins instead of blowing them out for quick cash at the auctions because the banks and the consumers are taking a step back from 10+ years of stupidity. Simply put, late model finance fodder no longer pays the bills. Cheap sells.
What does this mean for you, the customer? Well, let’s just say that new cars and newspapers have one thing in common: nobody really needs them like they used to. The same goes for lowballing your trade-in. Your ride may have a problem or two. But you would still be surprised how strong the under $5K market is and how many are literally fleeing opulence for affordability. To you this information may be the mirror of the news. For me? I see it confirmed whenever I see a cheap fashionable shitbox go for more money than it was worth two years ago.