Automakers CAN'T LOWER PRICES Fast Enough | Episode 981

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It's noon here.

Where were we?

What were you doing?

We were live for like 10 seconds.

No, now it says we're live.

It's noon here in Ventura City, New Jersey

and this is Courage live for Friday, December 12th

with your host, me, Ray here in Ventura

and well, Zach there in his apartment in DC.

And I apologize for that

because it didn't say you were live.

How are you today, young man?

I'm doing well.

Happy Friday, everyone.

Gonna be a fun, goofy day here at CarEdge Live.

We're gonna be talking about that,

how automakers can't lower their prices fast enough.

Sorry if you're hearing the background noise.

My heater in this old building is quite loud.

Now, Dad, the first thing we need to do,

we do a sponsor for today's program.

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we're gonna be talking about them in about 10 minutes

but we need to remind everyone caredge.com.

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Dad, the big story this morning,

we've got the latest inventory data

from our friends over at Cox Automotive

and wow, there were a lot of directions

we could take today.

Show new vehicle inventory holds steady

as industry navigates year end uncertainty.

I love how the industry is saying

their inventory is holding steady

when we have for the first time in a long time

reached over three million vehicles

in dealer inventory in a 90,

90 days supply of inventory nationwide

for all automakers.

These are the highest levels we've seen in years.

So sure, you can say it's holding steady.

It's also an indication that automakers

can't lower their prices fast enough.

Inventories finally building up,

sitting on dealer lots and not selling.

We're gonna break down the data here on today's show.

This is a big deal, Dad, this is a huge deal.

Well, you're assuming for a second

that the automakers are interested

in lowering their prices.

I am not convinced of that.

Everything we see always seems to indicate

that the prices are either remaining steady

or increasing slightly,

in some cases, more than slightly.

So I think this is, what I see in this

is that inventories are growing,

day supply is growing.

The number of people in the market is dwindling

and those who can afford to purchase in this market

is dwindling as well.

They can't lower prices fast enough.

They decided they ain't lowering prices.

And the hell with all us people?

No, I think you're wrong, man,

because you're the man who went viral on YouTube.

We're gonna pull it up really quickly here.

Let's all take a peek together.

I went viral too.

Yeah, you went viral.

Unsold new cars.

Wait for it, wait for it, wait for it.

There he is, right there.

1.3 million views five years ago.

My dad, six years ago with a light shining out of his back,

explaining to all of us that there is no such thing

as an unsold new car.

Dad, you and I both know that this is a leading indicator.

90 days supply of inventory is a leading indicator

that automakers are going to have to do one thing

and one thing only, and that is lower their prices.

And it's dealers too.

They are going to have to lower prices

because there's no such thing as an unsold new car.

We already know it, we have the data for this year.

There are more lingering 2024 new cars

on dealer lots right now than there were 2023s

at this time last year.

They have a problem.

The auto industry has a problem

and the antidote to that problem

is not to just keep raising prices.

Prices have to go down eventually

because these cars sitting there cost money.

You don't make money having cars sit.

I get all that.

I do, I get all that,

but there's another way that manufacturers can impact that.

Okay.

Other than lowering prices.

Make less cars.

Limiting production and producing fewer vehicles.

So right now they're proving that they're not doing that

because we're over 3 million for the first time in years

and we're at a 90-day supply for the first time in years.

These numbers are so much higher

than where they were during the pandemic that.

So I don't think they've shown a capability

to actually restrict production.

Well, I think that that could be one of the things

we see moving into next year.

I don't think there's any headlines of like,

hey, General Motors says we're gonna cut back production.

I don't know that we'll see the headlines that say it.

I think we will see the inventory levels decline

and the day supply decline

simply because most of the manufacturers

will have decided to cut a little bit of production here

and there without having to make an announcement about it

so that things can get back into their comfort range.

But I don't see any of them really rushing

to lower prices or produce less expensive vehicles.

I have heard them all say, oh, we need to do that,

but none have actually stepped up and started doing it.

They've all made the requisite soundbite

of yes, we need to address the affordability issue.

We need to look at producing more affordable vehicles

at lower price points, but that's just been talk.

You know, words are empty

if you don't actually increase the production

of those lower priced vehicles

and it seems from reading that article this morning

that the sweet spot for whatever reason,

and I don't buy it for an instant,

but the sweet spot is between $40,000 and $50,000.

I think that is pure nonsense.

I think the sweet spot's a lot lower than that,

but they're trying to convince the world

that that's where the sweet spot is.

I think this is a big deal, y'all.

I think, well, my dad may be onto something here

that the manufacturers will pull the lever

of producing fewer vehicles and do it kind of quietly

to try and get their inventory house back in order.

I think for the meantime, you have a market dynamic

where both automakers and dealers

have too many vehicles they can't sell

and we know what that yields.

That yields discounts or at least negotiability

and it also yields incentives from the manufacturers,

which we've seen increase a little bit,

44 or 0% financing offers, for example, this month,

unlike we've seen at any other point in time,

this year, dad Cox Automotive also shares with us

the breakdown by brand and you can see here,

even Lexus and Toyota days supply is starting to creep up

a little bit where at 44 and 45 days, respectively,

they're still significantly below the industry average at 90.

And then I'm gonna remove the comments

on the screen for a second here.

You can see Lincoln has a 161 days supply

of inventory right now.

Chrysler over 150 as well, Jeep at 148.

The higher the number here,

the more desperate the manufacturer,

more desperate the dealer body is.

And I wanna do a brief example.

We always do this on the show,

but I'm gonna go to caredge.com,

I'm gonna click on shop new.

And then dad, name a brand that you wanna look at here.

Well, let's do one of my favorite brands, Mini.

Okay, so we're gonna do Mini.

The thing that I want to look at when I go to

caredge.com is I actually wanna click

into some of these vehicles.

So we'll click into this one here.

Mini in North Scottsdale,

it's been on this dealer's lot for 86 days.

It's got a $35,440 MSRP

and the dealer's advertising it for sale,

$35,440 as well.

Dealer invoice price on this vehicle is $32,842.

And if I scroll down here,

I can see that there's moderate leverage

on this vehicle.

If I were to negotiate it,

we can see that's primarily

because it's been sitting there for so long.

We actually don't have sales data

on the new hardtop Q-Door.

So I'm gonna go back,

let's do another one,

maybe the four-door here.

We'll scroll on down.

No, man, these brand new Minis,

they haven't even sold yet.

Let's do another brand, dad.

What if we do like, I don't know, Ford?

Okay.

All right, so let's pull up a Ford here

and let's like share at an F-150, a 2025 F-150.

We can see here, there's your,

what do we got?

We've got high leverage, strong leverage

in part because there you go, 173 days supply.

This vehicle's been sitting for 241 days,

92 of them for sale in that area,

but only 24 have sold the last 45 days.

This shows you at a micro level

how the dynamics are impacting dealers

in that area and your leverage.

This is essentially the double click-in of this chart, right?

We know Ford has a 118 days supply nationwide,

but what does that actually look like

in Scottsdale, Arizona for an F-150?

This tells you that.

Yeah, it looks good from a customer's perspective.

Yeah, dad, if you're the dealer

and you've got this, this is bad.

No, absolutely, I don't disagree.

I mean, you look at that chart

and there's so few manufacturers

whose inventory levels at dealerships

are below 90 days.

It is the vast majority of the brands out there

that have more than a 90-day supply.

So I think there, I will agree with you.

I think there's any number of opportunities

for a leverage and for some better deals

through the end of the year.

And I think that is because of two things.

One, it's the end of the year

when the push is really on to move the remaining inventory.

And two, because there are some increased incentives

from the manufacturers to help right about now.

Yeah, definitely.

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Okay, so dad, you're right.

They are awesome there.

When you mentioned bad actors,

Jim Carrey immediately jumped to mind.

I don't know, but I don't think

those were the type of bad actors

that DeleteMe was speaking about.

I think you're correct.

Now that we've gotten here from Scott,

thank you for this Scott.

Hops of onto something.

Toyota has reduced production in vehicles.

That Toyota has perfected on time production

of vehicles for inventory that they are producing.

Nobody does it better than they do

when it comes to producing just the right amount

of inventory to keep sales high,

the sales pace high and prices high.

They've done a remarkable job of that.

And yet, even doing that,

they are still producing more vehicles

than they've ever produced for worldwide consumption.

We fixate on North America

and predominantly the United States,

but there are a lot of other countries in the world

where there's an awful lot of Toyotas being sold.

Yeah, definitely.

We've got here, though, another Toyota question.

Seriously, how much can you really negotiate with Toyota?

Here's some guidelines that we've been using

in car edge land here, just share this on the screen.

Some discounts that we're shooting for.

Corolla's, there's a breakdown.

Camry Hybrids, Corolla Crosses.

I mean, we've got guidelines.

So we offer a car edge at car edge.

We offer car buying services.

We also, to be very clear, provide this information back

on the car edge car search as well.

So when you're on a particular vehicle,

there is a target deal range for you as well.

So use the information that we provide,

but there are still, to be very clear,

there are deals to be had on Toyotas,

even though they have a relatively low days supply.

Let's go back to that chart though, Pops.

Let's spend a few minutes on it here.

For brands that are in the most dire,

straights right now would be all of those

to the right of the green columns.

So you've got Kia with a 91 days supply,

GMC, then Genesis Dodge, Cadillac,

Land Rover, Volkswagen, Mazda,

at a 107 days supply, Buick, Mercedes-Benz, Nissan, Hyundai,

Mitsubishi, Ford, Mini, Ram, Audi, Jeep, Chrysler,

and Lincoln, those are in successive order.

They're the brands that are in the most dire, straights.

Those are the brands that do need to lower their prices

because their vehicles are not selling.

We know that these are the brands that are,

in some cases, up to $3,000,

is what they're paying their dealers.

When they sell one of their vehicles.

So there's some desperation for a lot of these brands.

I think realistically, what it really shows

is that it's not that the automakers

can't lower their prices fast enough.

It's that the dealers are the ones

that need to lower their prices faster

because ultimately that's where it comes down to.

It comes down to the dealer being willing to

be more motivated and to accept a lower profit margin

than they would have in the past.

So the automakers themselves,

once they've invoiced the car, they're done, okay?

It's now gonna start costing them money

for every one of those cars through the PDI expense.

And then what?

Very delivery inspection for those of you

that haven't worked 40 years in the car,

the pre-delivery inspection

that the manufacturer pays for the dealership

and then whatever warranty costs

are associated with the vehicle.

So it's not the automakers.

It's the dealers that can't seem

to lower their prices fast enough.

And then the dealers beat up their brands to say,

okay, listen, we're the ones taking the shorts.

We need you to assist.

If we're gonna have to lower our profit margins,

then we need money from you to compensate us for that.

So it's the dealers that are the ones

that don't seem to be lowering their prices fast enough

at the moment, but when they do,

they're gonna turn to their manufacturing partners

and say, we need help.

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I wanna turn our attention to some final data points

from Cox Automotive,

but before I do, I wanna remind everyone

that back at CarEdge.com,

we are extra busy this time of year

as people are taking advantage of this buyer's market,

and I wanna share a few reviews we've gotten recently.

Just 10 hours ago from Brett,

CarEdge was fantastic.

Zee from CarEdge was fantastic to work with,

proactive, responsive, found the right vehicle,

negotiated a good deal,

and tracked all the details.

The outcome was very positive.

I highly recommend CarEdge.

We appreciate that from Mel, 15 hours ago.

Great folks, great folks, great service.

My associate was Stuart,

and I would highly recommend him.

So it's fantastic to see the positive responses

coming through.

We really, really, really appreciate it.

As far as I know, Dad,

I think we're the world's largest company

doing something like this this month.

If we're lucky, we'll help over 500 people

through our car buying service, which is incredible.

So please, please, please take advantage of the fact

that we have a promotion running

and meet our team before you do it.

Now, the other data point

that I wanted to bring up here, Dad,

from Cox Automotive is right here.

As the year ends,

auto makers are likely to offer more aggressive incentives

on remaining 2025 models,

especially in the hyper competitive

40 to $50,000 range.

Luxury vehicles should have been as strong

as they historically do in December,

while mainstream brands must choose

between deeper discounts

or carrying older inventory into 2026.

The affordability crisis persists

for low income households,

even as inventory remains available

and models selling well below

the industry average transaction price.

Here we go.

Current inventory levels are manageable,

but underlying demand appears soft,

strong sales earlier in the year

will likely carry industry sales volume

above 2024 levels by year end.

The good news is that the industry

appears more disciplined

than in the past boom bus cycles,

but challenges like affordability,

higher costs in the EV transition

remain unresolved.

The first quarter of 2026 will be critical

in determining whether current strategies

can hold or if more significant changes are needed.

So some interesting and ominous words here

from Cox Automotive.

May I suggest that the industry appears more disciplined

than in past boom bus cycles

is true until it's not.

And trust me, in the hundred and some years

that they have been building cars, manufacturers

have never been disciplined enough

to be able to figure it out.

They have had any boom and bust cycles,

many boom and bust cycles

in order to extrapolate data to figure it out.

And they never have.

So the fact that at the moment

they seem disciplined would just indicate to me

that history will suggest that in short order

they will be undisciplined

and we will see where they'll be stuck a little bit.

Dad, I mean, I could see the first quarter of next year

being an awesome time to be in the market

because the automakers haven't restricted production,

they haven't oversupplied inventory.

It was actually, I mean,

just to pull it up on the screen,

give me a second here, I'll make you this up here.

It was January of this year, dad.

We actually had a 96 days supply of new car inventory.

The data on that, this is from February 3rd of this year.

So this was right when we got post year end sales bonanza

last year, 2024, right?

As we got into the beginning of 2025,

there was a 96 days supply of new car inventory.

You wanna talk about a buyer's market,

we had it in February of this year.

I would not be surprised if we see the same trend

happen again this year where end of year sales

probably won't be as strong as they were last year.

A lot of people have taken themselves out of the market

and then we end up with overproduction in the first quarter

and not enough demand.

I wouldn't be surprised.

What will be interesting to me, okay, moving forward,

especially into the first quarter,

is what happens with health insurance costs?

If, as is expected, that for many people,

the cost of health insurance could double or triple

especially on a monthly basis

because that's how most people pay for it.

That is going to preclude people from being able to buy cars

because if your health insurance costs doubles,

well, suddenly you have less money available

to put towards your monthly car payment.

So buying a car when you have all this added expense

is gonna become even more difficult, I think,

in the first quarter until that gets addressed.

And so there's many factors above and beyond

what automobile manufacturers do and dealers do

when it comes to rising costs of just,

I don't know, being able to protect yourself.

Here we got from Matthew

and then we're gonna go to the community forum.

It's Friday, so we gotta go to the community forum.

From Matthew, appreciate this, Matthew.

Portia screwed up and is shipping my 718 GTS to Jacksonville.

You might have to drive home cross country,

Zach Stickship lesson at the Atlanta Portia Performance Center.

All right, I'm in.

I'm in, email me, Matthew, I'll fly down.

I'll be there in a heartbeat.

That sounds fun as hell.

I gotta do that.

Wow.

God knows you are willing to travel anywhere

for some form of excitement,

whether it be climbing rocks

or I guess learning how to drive a stick on a 718 GTS.

All stuff.

I don't know if you noticed or knew this

but Portia announced that,

well, there'll be price increases starting January 5th.

So even one of the more popular

and sought after sports car brands,

we're gonna see their prices going up shortly.

Here we go, Dad, from MJC 63.

Thanks for the kind contribution.

Dealer fee is negotiable, go Ray.

Thanks, Michael, absolutely.

If it's taxable, it's negotiable.

We appreciate the kind contribution.

We're gonna turn our attention, folks.

Every Friday, we do question and answer.

If you're not on the CarEdge community forum,

you should be.

CarEdge.com slash community space over there

who's also here in the chat posts every week

where we are able to get some questions

from community members and we end up answering them.

Dad, you ready to go through these?

Yes, since I've never seen them before.

Absolutely, let's see what we can do.

From Robert.

Thank you, Robert.

2026 Seabroo Outback Update.

Hello from Leesburg, Virginia.

A couple weeks ago, I asked if it was even possible

to get a deal on a 2026 Outback.

Long story short, yes.

I went to the dealership.

I got my 2015 Outback from it.

I was told 26 is they're selling at MSRP.

That's exactly what I was looking for.

And I could reserve it with a fully refundable deposit

as it wasn't due in until late January.

Contacted a couple other dealerships.

One was below MSRP.

Another gave me an OTD quote at just below invoice price.

I sent that to the dealer I had the deposit with

and was told quote, the sales manager

will honor whatever you have.

Yeah, right.

Well, I told them I wanted it in writing

and spelled it out for them.

When their back was against the wall,

they bailed and said they didn't want to take

the loss on a brand new model.

Always get things in writing.

Folks makes me wonder what they would have done

in January when the car arrived.

I went to the other dealer

and the OTD was $50,582.

That's just a few hundred more than the car edge OTD estimator.

Got my full refund from the other dealers,

saved $3,500 contacting other dealers.

Thanks for the insights, Rob.

Not a question here, Pops,

but a hell of a success story.

Well, and it might not be a question,

but it provides us with the information

that we need to really understand.

And that is, even on newer models,

there are deals to be had

if you are willing to work at it.

Okay, if you have the time, effort and energy to put in

to pick one dealer against another

or multiple dealers against each other,

ultimately you can end up saving yourself some money.

The dealer that's getting this deal is happy

because they're thinking,

okay, we got one more deal than we should have had.

The dealer that passed is thinking,

well, that's our customer.

We really shouldn't be losing our customer.

And I don't know why they're willing to,

but it just shows that if you put in all that effort,

you can save yourself some money.

Don't always believe the first things

that a dealer tells you.

And this is why we built Car Edge Pro the way we did.

Not only does it give you the data that you need

to have an informed negotiation with the dealership,

it also gives you the AI agent

that will contact the dealership.

So instead of your email and phone number

going to the dealership,

your agent will actually contact the eight dealers,

get the responses for you

and organize the out the door price quotes on your behalf.

That's what I've got up here.

Mine says 79 because we were doing some fun work

for a 104 dealer video coming out soon.

But I encourage everyone, take a peek at using

some of the tools we've built to help them get that deal.

From Greg here pops, hi, I plan on buying a 25 Tucson,

0% financing expires at the end of the year.

In Missouri, they charge personal property tax

each year based on the vehicle value.

If I could delay my purchase until the first or second,

I will secure 0% and won't owe personal property tax

until 2027.

However, I also realized that by delaying the purchase

to January, it might negate

any OTD price negotiation power.

So let's talk about this, Deb.

Is there a big deal or a big difference

between December 31st and January 2nd?

If you're a publicly traded dealership group,

there is.

If you're not, then no, many dealerships

that are not publicly traded will hold their month open,

so to speak.

So if for the manufacturer,

the closing date for the month of December

is January 2nd,

because that's when all their programs run through,

then many dealerships will hold their books open

for December through January 2nd.

So it would be incumbent upon those type of dealers

to get as many deals on the books

by January 2nd as they can.

For publicly traded groups,

the responsibility,

they have a fiduciary responsibility to the stockholders

that they can hold the month open

for an extra couple of days.

So if you're looking to take advantage

of a strong close for a dealership

that's not part of a public group,

then you can hold out to the first or second.

If it is a dealership that's part of a public group,

then you're gonna need to complete the transaction

by the 31st of December.

Love getting those insights from your pop, from Al Sleed.

Well, price shopping dealers either by phone or email,

what do I say to the dealer who says,

call me back after you've collected your offers

and I'll beat your lowest?

Well, if you'd like to have the opportunity

to match or beat the lowest,

you need to provide me with a quote first,

whether it ends up being the best or the worst,

at least by providing me with a quote and you saying,

well, give me the opportunity to match or beat

the your best offer,

then I would accommodate you

and allow you the opportunity to beat it.

But if you're not gonna give me a price at all,

then I'm not interested in coming back to you.

I think that's spot on.

We've got here from Kevin.

Once my lease is coming to an end,

what's the best thing to do?

Well, it depends on what it is that you wanna do

once your lease comes to an end,

but you need to get a lease end inspection done.

And so you'll find out if there's any excess wear

and tear that they might wanna charge you for.

And there's, you might wanna look into the possibility

of buying it if your residual value

is below its current market value.

So there's just follow the guideline set up

by the leasing company is to have a wanna inspect the vehicle

when they wanna do the pre-inspection and all that stuff.

I think that I appreciate you going to the inspection,

but I actually think that's a little in the nitty gritty.

Your options are return the vehicle,

get into a new lease or buy the car.

So I would just start there,

like really assess what you wanna do.

And then regardless of what you want to do,

yes, there will be an inspection,

but I would not,

but the question from Kevin being,

what's the best thing to do?

The inspection is gonna happen no matter what.

Don't worry about that, Kevin.

You need to decide what do you wanna do,

which my dad wrote a great article about.

This is a long time ago,

but you can just Google search,

lease and car edge and this will pop up.

Looks like I updated it and stole your thunder here, dad.

But you wrote this article that really breaks down

with options are at the end of the lease.

Just between you and me,

you've been stealing my thunder for six years now,

but that's okay, I don't mind.

From Jesse here,

what are your thoughts on the new provisions

that allow for interest you pay on a car loan

to be subtracted from your taxable income?

I think, yeah, I don't know if space put the answer in here,

but the too long didn't read on this one is,

you gotta have obviously a specific type of vehicle

and a specific manufacturer of origin.

And then you also have to have a hell of a lot of interest

on that thing to deduct any of it.

I forget the exact dollar amounts,

but this can help no way.

You've deduct up to $10,000 of interest a year.

A year, yeah.

But do you have any idea

what the size of the car loan would have to be

in order for you to accumulate $10,000 worth of interest

in a year, that would have to be astronomical.

But it is limited to country of origin

and things of that nature.

The idea is the tax credit for interest on your car loan

is if you buy an American car, not a foreign car.

Yeah, but space is right.

Lots of vehicles do qualify.

Dad, we had a kind contribution come in earlier

from David, thank you, David.

You said that the automakers don't care

about making affordable cars.

They cater to the top 13% of earners.

The bottom 87% of your gambling life is becoming draconian.

Whether you agree with draconian or not,

this is generally an accurate statement.

Everyone's talking about a K shaped car market

and appealing to those that make the most money.

So yeah, that is where our auto industry is today.

And that's why partly we're seeing

day supply inventory grows so much

into being a shoppers market.

Because they've gone too far in that direction.

It is painfully obvious with the average transaction crisis

hovering near $50,000 that the manufacturers

have abandoned the vast majority

of potential customers out there.

And they've done it for a couple of reasons.

And one of the reasons is, well,

there's obviously a higher profit margin

and the more expensive vehicles for the manufacturers.

But there have been manufacturers out there

who have offered less expensive cars

and they have not sold well.

So part of it's on customers not being willing

to buy the lower priced stuff.

And part of it is on manufacturers saying,

well, they ain't buying it, we ain't building it.

Just that's-

Draconian, it's our reality.

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We've got the weekend on the other side of today's show.

So we're gonna go enjoy that.

But we're back on Monday with more Car Edge Live.

We hope you tune in and spend some time with us.

Yes, well, and you, young man,

have a great weekend and everybody else

who's watching, listening, viewing, whatever,

have a great weekend and we'll see you back here Monday

and please tell a friend.

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Automakers CAN'T LOWER PRICES Fast Enough | Episode 981

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