Car Dealers Admit They are IN TROUBLE: Huge Market Reset 2025 | Episode 975
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Brand
Stellantis
Stellantis is a big car company that makes many different brands of cars, like Jeep and Dodge. It was created when two companies merged together.
Brand
General Motors
General Motors, or GM, is a major car company that makes popular brands like Chevrolet and Cadillac. They are one of the biggest car makers in the world.
Brand
Ford
Ford is a famous car company that makes many vehicles, including trucks and the Mustang sports car. They have been around for a long time.
Term
CAFE standards
CAFE standards are rules that require car manufacturers to make their vehicles use less fuel. This helps save energy and reduce pollution.
Term
fuel economy standards
Fuel economy standards are rules that tell car makers how much fuel their vehicles should use. The goal is to make cars that are better for the environment by using less gas.
Term
MSRP
MSRP is the price that the car maker suggests you should pay for a new car. It's like a guideline for how much the car should cost.
Car
Cadillac Escalades
The Cadillac Escalade is a large luxury SUV that many wealthy people buy. It's known for being very comfortable and having lots of features.
Car
Chevrolet Tahoe
The Chevrolet Tahoe is a big SUV that can carry a lot of people and things. It's popular for families and can also tow trailers.
Term
stair step money
Stair step money is a way for car companies to pay dealers more money if they sell more cars. The more cars they sell, the bigger the bonus they get.
Company
Chevron with Tecron
Chevron with Tecron is a type of gasoline that helps keep your car's engine clean and can improve how well it runs. It has special ingredients that clean important parts of the engine.
Concept
return to normal
'Return to normal' means that car prices are going back to what they used to be before the pandemic, when prices were more stable and predictable.
Concept
dealer markup
Dealer markup is when car dealerships charge more than the price recommended by the manufacturer. This usually happens when there aren't enough cars available, and many people want to buy them.
Concept
supply and demand
Supply and demand is a basic economic idea that explains how prices are set. If there are a lot of cars available but not many people want to buy them, prices go down. If there are few cars but many buyers, prices go up.
Brand
Jeep
Jeep is a car brand famous for making tough vehicles that can go off-road. People often think of them as great for adventures in nature.
Brand
Mazda
Mazda is a car company from Japan that makes different types of cars, including sporty ones like the Miata. They are known for their stylish designs and good performance.
Term
EV
EV means electric vehicle. These cars run on electricity instead of gas, which helps reduce pollution. Many people are interested in them, but there are challenges like needing charging stations.
Concept
charging stations
Charging stations are places where you can plug in and recharge electric cars. Just like gas stations for regular cars, these are needed for electric cars to keep running.
Concept
infrastructure
Infrastructure means the basic systems and services needed for electric cars to work, like charging stations and power supplies. Without these, it’s hard for people to use electric cars.
Car
Chevrolet Bolt
The Chevrolet Bolt is a fully electric car that is known for being affordable and practical. It's a good option for people looking to drive an electric vehicle without spending too much money.
Car
Chevrolet Equinox EV
The Chevrolet Equinox EV is the electric version of the Equinox, which is a popular SUV. It's designed to be spacious and has modern tech features, making it a good choice for families.
Term
total cost of ownership
Total cost of ownership is how much money you'll spend on a car over time, not just when you buy it. It includes things like repairs, gas, insurance, and how much the car loses value.
Car
Kia Ev9S
The Kia EV9 is a new electric SUV from Kia. It's designed to be eco-friendly and has a lot of modern features, making it a popular choice for those looking for an electric vehicle.
Term
internal combustion engine
An internal combustion engine is a common type of engine that uses fuel like gas to create power. It's what most cars have been using for many years to make them go.
Term
hybrid electric vehicles
Hybrid electric vehicles are cars that use both a gas engine and an electric motor. They save fuel and produce less pollution than regular gas cars because they can use electricity as well.
Concept
incentive money
Incentive money is cash or discounts that car manufacturers give to car dealerships to help them sell more cars, especially older models that need to be sold quickly.
Concept
aging inventory
Aging inventory means cars that have been sitting on a dealership's lot for a long time. Dealers often want to sell these cars quickly, so they might offer discounts.
Car
BMW 230I
The BMW 2 Series is a small, fancy car that is fun to drive and great for everyday use. The 2025 version, called the Loner 230i M Sport, is designed to be sporty while still being comfortable, making it a good option for people who want a nice car for daily driving.
Term
loyalty
Loyalty means getting a discount or special deal when you buy a new car from a brand you have bought from before. It's a way to thank you for being a repeat customer.
Term
interest rate
The interest rate is how much extra money you have to pay when you borrow money to buy a car. A lower interest rate means you pay less extra money.
Term
destination charge
A destination charge is a fee that you pay when buying a car to cover the cost of getting it from the factory to the dealership. It's usually added to the car's price.
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It's noon here in Ventner City, New Jersey
and our nation's capital, Washington, D.C.
and this is Car Edge Live for Thursday, December 4th
with your hosts, me, Ray here in Ventner City,
sporting the I am not for everyone hoodie
and well, Zach in Washington just sporting a hoodie.
How are you, they handsome.
I'm doing okay pops.
Happy Thursday, December 4th to everyone.
Today's show is brought to you by caredge.com.
If my dad and I and our incredible team can help you out,
please check it out back at caredge.com.
As a friend and reminder,
we have our car buying service discounted 150 bucks
and Car Edge Pro discounted 15%.
And we talked about it on the show earlier this week, Dad.
For those of you who are out there looking to save money
on auto insurance, holy cow, have rates gone up.
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Dad, car dealers admit they are in trouble
and there's a huge market reset coming.
We're gonna kick today's show off first however,
with talking about things going on
at the federal government level debt.
We had an interesting announcement yesterday
over at the White House,
including executives from many of the major automakers,
domestic automakers,
including Stalantis General Motors and Ford.
And we've got a president,
the sitting president of the United States, Donald Trump,
wants a cute, tiny car built and sold here
in the United States of America.
And I think this has something to do, Dad,
with the fact that we've got dealers
who we covered this yesterday,
the sentiment over at car dealers
continues to get worse and worse and worse.
That's the latest data from Cox Automotive.
Do you think there's a connection here, Dad,
between this current administration's desire
to have smaller, more affordable vehicles?
There's a great clip from the White House yesterday.
Great speech talking about how we're gonna have
tiny, beautiful cars here in the United States.
That's what we've been talking about for a long, long time.
Maybe that would actually help these dealers
who are finally admitting,
okay, maybe we don't have cars that people want to buy.
What did you make of all this yesterday?
As everything that comes out of Washington,
the devil is in the details.
And we really don't have all the details yet.
And who knows when we will be able to get all the details.
I think it's wonderful that the federal government
is trying to address what we've been screaming about here
at Car Edge for the last four or five years,
that there is an affordability crisis in this country
when it comes to automobiles.
So wanting to try and address that,
they're going to ease gas mileage requirements
and emission requirements.
And they want to encourage foreign manufacturers
to produce those cute little cars in South Korea
and in Japan.
Well, to build them and sell them here in America,
which sounds great except for the fact that we know
that even when those cars have been available,
when manufacturers have offered them in this,
because they don't sell.
Well, dad, that's-
Why they don't sell, but they don't sell.
That's part of it.
So, dad, we've actually got a special guest for today's show.
We're going to bring Dan LaGrange from Key Automatically
pulled Dan up on the screen here.
Dan, I'm going to pop you right in the middle right there.
Dan, how are you doing?
It's good to see you this morning.
I'm doing well. How are you guys?
We're doing fantastic.
I guess this afternoon, I should say.
So, Dan, we're talking about here.
And for those that are unfamiliar, actually,
let's give a second for you to introduce yourself.
Who are you with?
Where are you from?
I think maybe the fourth time you've shown up
on the channel here,
but we'll give you a chance to introduce yourself
before we bring you into this conversation.
Yeah, definitely. My name is Dan LaGrange.
I was recently promoted to oversee our entire auto group.
The name is Key Auto Group.
So, we are across the United States, headed out of New England,
but we do have stores in Reno, Florida, PA.
So, we have quite the footprint.
Take a second here just to pull up the Key Auto Group website.
Dan, you've been providing us with insights
from your exposure, what you do for a long time here.
Folks, if you're interested, keyauto.com is Dan's group.
Very transparent, which we appreciate,
and all sorts of stores nationwide, like he said.
So, Dan, what we're talking about here
is there was a Cox Automotive report
that came out just yesterday,
and this report talks about
how dealer sentiment has gone down significantly.
I'll scroll down to just this chart.
How would you describe the current market
for vehicles in the areas where you operate?
We have the lowest level of dealer sentiment
that we've seen since the beginning of the pandemic.
The same exact day, we have the White House.
We have this really interesting press conference
at the White House talking about
how we're gonna reduce cafe standards,
the fuel economy standards,
and make it more accessible for automakers
to produce more affordable vehicles.
What's your take on all this?
What are you seeing in the market?
What's going on over at Key?
Give us the lay of the land here.
You're operating, how many dealerships right now?
Your insights are invaluable to our community.
Yeah, operating 20 dealerships,
and I think we have a real fractured market
in a couple of senses.
First off, there's a big divide
between the upper income people
and the average Americans.
So, that upper class individual is doing fine.
They have money, they're buying vehicles,
you're seeing $100,000 MSRP cars selling,
that's Escalades, Taho's.
Those really aren't having a problem.
They have low day supplies.
And then you're seeing the other part of the market,
which is the used car buyers,
more affordability driven buyers.
And you're seeing it in the data.
I mean, there's not enough used cars to go around.
The prices are incredibly sticky.
Interest rates are extremely high,
and it's causing a real affordability challenge.
So how do we handle that challenge, Dan?
Just out of curiosity,
I know I've been screaming about it forever,
well, hell, nobody listens to me.
How do we handle it?
And then also, how is it impacting your business?
Because a lot of people right now, Dan,
in our community are buying cars.
It's the end of the year.
We tell everyone this is the best time to do it.
So how do you change it?
And then what is this doing
to impact your business today?
Well, there is a little bit of bright side.
The manufacturers are waking up.
I just, so I'll start with last month.
Last month, General Motors changed their incentive
to the dealer, the stair step money,
as we call it, three different times.
So it started at $400 per vehicle,
went up to $1,000 per vehicle,
then up to $1,500 a vehicle.
So they're really incentivizing the dealers
to make sure that we are aggressively pricing vehicles.
Then this morning on the Stalantis meeting CDJR,
they're coming up and if you hit your goals,
it's $3,000 per new car that sold.
So that's one small portion of it.
The manufacturers have to play a role.
They have to support
and they have to understand what we're going through.
I think the major part of this though,
it comes down to interest rates.
Without the interest rates falling,
it is just a challenge.
Yeah, I completely agree.
Also, dad, I want you to jump in however.
I want to just take a moment.
This is a man who operates 20 car dealerships,
giving you the inside baseball
you cannot get anywhere else, keyauto.com.
Dan, did we charge you anything
to come on the show today?
No, I was hoping to charge you.
Hopefully the invoice gets paid.
There's nobody that gets exchanged
between our companies.
We bring on dealers who don't mind
pulling back the curtain.
That's how car edge started
with my dad pulling back the curtain.
Do yourselves a favor.
If you appreciate the insights
that Dan's willing to share,
go check out keyauto.
Obviously, back at caredge.com.
We can help you as well.
But Dan, the stairs to that money,
that's so fascinating.
Dad, sorry for cutting you off.
I just really wanted to highlight.
Okay, Dan, I'm going to push back a little bit.
And here's the reason I'm going to push back.
I don't think interest rates are unreasonably high.
I think interest rates for 10 years or so
were unreasonably low after the pandemic.
Well, after the great recession
and they remained artificially low
for an extended period of time.
And the American public
and automobile manufacturers in particular
got drunk on those low interest rates.
Interest rates today are not particularly high
in comparison to other times.
And we just did the other day, Zach
and I did a little experiment.
And if the Fed lowered the rate by one point,
it would have about a $15 a month impact.
30, 30, 30.
Yeah, and most car payments.
That's not really significant.
So I don't think it's an interest rate problem
as much as I think it's manufacturers
concentrated on building overpriced product.
And that's what's forced most of the people
out of the market.
You're allowed to refute that any way you'd like.
I think it's multifactorial.
I think that does play a role.
I mean, interest rates have been artificially low
in my entire generation.
I've been in the industry 15 years now.
I remember we could get 75 months for 1.3% interest.
So those were the really nice days.
But I agree with you in a sense.
I mean, I do think we could use
some easing of interest rates.
That would be helpful.
I also think that we are loading these cars up
with a lot of extra features
and everybody wants safety, but safety comes with a cost.
We hear in other countries
how they can build cards more affordable
and there's $20,000, $30,000 trucks that exist
in different markets that we just cannot get to.
And I'm not saying we need to cut out
all of the accessories there,
but I think we should be mindful
of what's mandatory in vehicles,
be mindful of the fuel efficiency that we need
because ultimately people need to be able
to afford these vehicles.
If you guys don't mind,
I want to bring it back just a little bit
to today's market.
So a little bit less around the macro
and more the micro, Dan.
We don't get dealers on the show all that often.
You come on maybe once every couple of months.
Joe Lewis from JC Lewis is joining us tomorrow.
And I want to read to you a Cox Automotive
shared out publicly in their dealer sentiment analysis.
And then, Dan, if you're willing to,
continue to tie it back
to how your day-to-day business is evolving.
So we had the market sentiment drop.
That was the first piece.
Customer traffic hits record lows.
Overall traffic dropped to 31
with in-person traffic at 29 digital at 40.
This is out of a 100 point index
that Cox looks at.
And then profitability under pressure,
profit sentiment declined to 36 overall.
Meaning that we've seen drops not only
in dealer sentiment for the market broadly,
customer traffic and profitability.
Does that pencil with your experience?
And again, how has this impacted or evolved your business
and how you approach operating your 20 stores here,
especially at the end of the year?
We're actually up year over year every month,
but I think it all comes down to strategy.
So I think you have to implement some level of AI
to take low end tasks away from your salespeople
and your managers and really focus on relationships.
You're not going to win with just inventory.
And I kind of got caught in that mindset.
Well, I have the best inventory and the best price,
so I'm automatically going to win.
And I had to take a hard look in the mirror and say,
it's not just all about price.
You need to really be focused on customer experience.
So I just took over this group, December 1st,
and I haven't sent one email or conversation with my team
about price or about volume.
It has been strictly about technology
and the number one customer experience.
So if you're not focused on that,
you're going to fall behind.
Customer experience for sure.
But do those stair step programs end up influencing
your pricing strategy at all?
I mean, maybe you haven't dictated anything to your staff yet,
but I'd imagine when you've got thousands of dollars
on the line per vehicle,
it can influence the way you think about things.
Oh yeah, absolutely.
We play a role in that too.
We come up with our pricing strategy at the beginning of the month,
not understanding what the program is going to be.
And as they change the programs,
we evaluate the market constantly.
If I may take a moment, Dan,
one of the things that I used to preach
when I was running dealerships
and we would get internet inquiries
and people would ask actual questions.
And as I'm sure you're well aware,
at most dealerships they do everything in their power
to avoid answering whatever that specific question
might have been.
And especially when it comes to selling price
or out the door pricing.
And I used to encourage my salespeople
to actually provide the customer
with the information they asked for
and give them reasons
as to why they should want to do business with us
as opposed to just the price of the vehicle.
And it sounds like to me
that trying to build relationships
is exactly what it is that I was trying to do
and what it is that you're trying to do now.
Absolutely, a good example is
we have our vehicles priced online,
very clear to see.
And you can just go on a car fax
and it shows your suggested retail price
of what this car should sell for right on car fax.
So I told my team, just print it out.
It doesn't matter if there's an accident there,
not an accident there.
We can be fully transparent.
And then you can say, look it, we are $5,000 below.
We didn't make up this car fax price.
And it just arms the customer with information.
If they decide not to buy with us,
so be it, but they can't say we weren't transparent
and we didn't try to help them.
Cause in all reality,
the customers come to a dealership,
they have a problem.
They either need a new vehicle,
they need to service their vehicle
and our job is to provide them a solution
in the best way possible.
I appreciate and agree that there are these ways
to operate that ultimately yield a better customer experience
and should make the dealership side more efficient as well.
And I'm going to double down on this.
The macro sentiment here
is that dealers are starting to feel the pain
and the pressure of years of obviously practicing
in a way that has not helped consumers transact.
And we know car prices have gone through the route.
So it's a one-two punch.
It's like, unfortunately,
a handful of bad apples in the auto industry
have ruined it for the bunch.
Obviously, there are good dealers out there
that are transparent that provide information.
That's why we love bringing Dan on.
Who the heck else?
In the first 60 seconds,
he's sharing with you the stair step for us.
Like where else do you get that info folks?
How much more transparent can you be?
But there is also been the pricing challenge
that these dealerships face.
And Dan, I think if you could speak to that
a little bit because yesterday
that's what the federal government was talking about
is we need to get vehicles more affordable.
Do you see, you mentioned it at the beginning,
you see a little bit of like those
that are affluent can continue to afford vehicles.
But what about that other subset?
Are you able to find the right inventory for those people
or are they going to the used car market instead?
Yeah, they're going to the used car market.
And I think that's why you see the day supply so low on use.
So everyone keeps saying,
a used pricing is gonna go down,
there's gonna be a crash.
It's almost mathematically impossible
unless it's a black swan event
because there's just not enough inventory around.
I can't go buy 500 used cars easily right now.
So you have dealers competing for the used cars.
We're paying pretty much what we're selling
to the consumers for.
So there's really no room for pricing to go down.
Now, when we see some seasonality come over the next month,
I do, but then you're contending with the refund checks
that are coming this year
and they're expected to be some of the best in history.
So I think you got a 60 to 70 day span here
where you have a shot to get a good deal on a car.
And then for the used car market,
it's gonna get really challenging next year.
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Can I ask a silly question?
As somebody that runs 20 dealerships
and so you deal with a lot of the various manufacturers,
how much of the blame falls on them
in the sense that they decided
that they were going to build high profit margin,
high priced vehicles and pretty much abandoned
the rest of the market.
And I understand there's some regulatory issues
that add costs to vehicles,
but I think in my mind,
part of it has to do with the marketing
that these manufacturers have done
over the last 20 or 30 years,
convincing people in this country
that small ain't good.
Big is better, more expensive is better,
small's no good.
So how much blame falls on them
for just saying we really don't give a damn
about the less than wealthy folks out there?
I think it depends on the manufacturer.
I can pick on the easy one with you guys.
We all know who it is.
Stellantis really went against the grain,
their own customer base.
They jacked up the MSRP's.
They started creating a lot of $100,000 vehicles,
but they're also paying the ultimate price for it right now.
So I think that they're learning
for a lot of from their mistakes
and there's other brands that are doing really well.
But I do think this is all going to come out in the wash
and as you're seeing Stellantis really step up
with those crazy stair step money,
they're going to learn,
but they play a large role in all of it.
And some of its greed from when the pandemic hit,
they jacked up MSRP's as high as they could get away
with and it's all definitely a return to normal now.
I was going to say, I mean,
I actually to a degree,
this is going to sound crazy coming for me,
have some empathy for the manufacturers
because you know what during the pandemic period there,
these cars kept selling.
The day's supply was insanely low.
Now, does that justify jacking up the prices
of these vehicles?
Absolutely not.
Just like it doesn't justify the dealers
who are adding crazy markups and addendums
and things like that.
And when you look at just supply and demand,
there was such short supply that we saw
enough demand to satisfy it.
The market has completely flipped.
I mean, especially for brands like Jeep, for example,
but it's not just Jeep.
I mean, we were looking at Mazda day's supply of inventory
and Dan, we've got a Mazda dealer joining us tomorrow.
I can't wait to ask him because Mazda
has over a hundred days supply nationwide right now.
That's the latest data we have.
That's no good.
No one wants to have a hundred plus day's supply.
And I think that'd be an interesting thing
for you to speak about.
Like you still manage inventory.
Even though a lot of this comes back
to customer experience,
that's how you differentiate your dealership.
It's not like you want to have
over a hundred days supply of vehicles
sitting anywhere at any of your dealerships,
I imagine.
Yeah, absolutely not.
And then that's where pricing comes into play.
The manufacturers can't be the only one
participating in this.
I have a dealer who wants to do well
and they want to move volume
and they want to shake hands
and build these relationships.
So you're going to have to be positioned
on the market correctly.
And yeah, there's a lot of new cars,
day one land on my lot
that I'm asking 2000 blow my actual cost for.
But I don't want to be in that position
where I have three, four,
500 day old new cars.
And that's the reality for a lot of these dealers.
And just one more comment
and I'll shut up that the fact
that they're stepping up that much
on the stair step program.
I mean, that's like,
that's them waving the flag, right?
Like that is the concession
of we have to do something here.
I think so because there's always some level
of stair step program,
but I haven't seen this aggressive
from these manufacturers.
I don't think ever.
I think this is some of the strongest programs
I've ever seen.
And it's just starting now.
You know, and it has everything to do
with the fact that they,
that they sat on their hands for way too long
before they finally decided,
okay, we got to help the dealer body out.
Because if we don't,
they're all going out of business
and we got nobody to sell cars to.
But how much do you think it has to do with end of year too?
Because we know this is an incredibly busy time
where they want to hit, you know,
their manufacturer sales objectives.
Like I do think the timing is somewhat strategic.
Don't you think that?
Well, to a degree, yes.
But I just think, especially with Stalantis,
they took too long to realize
the error of their ways
and they're paying for it now.
I do have an inventory question for you, Dan.
And this goes back to pandemic days
when there were hardly any cars to be had.
And so I am sure during those days
you had limited to no floor plan interest expense.
And your floor plan assistance from your manufacturers
was actually a profit center.
Today, how much more is it costing you
to carry that inventory
than during the heyday
when there was limited inventory?
I'll tell you, that was a massive process
at a during COVID.
We're talking hundreds of thousands of dollars.
So how that works for the consumers that don't know,
you get paid upfront for your interest that is accrued
first let's just use around number 60 days.
So that you pay you upfront
to hold that vehicle for 60 days.
So if you sell it in two days, you make money.
So let's assume it's somewhere around $500 a vehicle.
So if you're selling hundreds of vehicles
making $500 per because none ever hit 60 days
you're not even paying the floor plan company.
You're selling these cars before they come.
That obviously wasn't realistic.
That typically doesn't happen.
It's something to be concerned of now
and if you're not pricing aggressively
and you're letting those vehicles hit past 60 days
it's a vast difference.
I still have brands that are mostly even
does not export a expense
but it's not a credit either.
And you know, Stellantis, there is an expense there
and it has to be monitored carefully.
I've got one more question for you, Dan.
And then dad, if you wanna come in with the final one here
we know you've got 20 dealerships to run.
So thank you for taking the time out.
And again, the company that Dan is with
is keyauto, keyautogroupkeyauto.com.
You can check it out.
Again, we have no commercial relationship with key.
Dan comes on every once in a while
to share with us what he's seeing in the market.
Love that we're able to do this
and it really something I'm very proud of.
Yeah, and I wanna just ask a little bit
what do you see happening in 2026?
Do you see a continuation of where we are today?
Do you see it becoming more of a dealer's market again?
We've been proclaiming that it's a buyer's market right now.
Do you think it'll continue to be a buyer's market?
What is your magic eight ball say
is gonna happen in 2026?
I think the buyers were in the driver's seat for sure.
But I think it all depends on what you're
in the market for.
I think that consumers are gonna be able
to bully the manufacturers around a little bit
to get those rebates.
I think the dealers are gonna be more than happy
to get those vehicles off their lot.
But I think that affordable use car
is gonna be a major challenge.
If you're in the market for something under 100,000 miles
under $20,000, it is going to be a real challenge
and I don't see that softening anytime soon.
Okay, one last question for me.
Here we go.
Where do you see the future for EVs here in our country?
I think it's fractured completely.
So I run stores that do great with EVs
and I have other stores that do really bad with EVs.
So there is a demand for EVs.
And even when they said, oh, 2035 are gonna be 100% EV,
I thought it was funny because in reality,
not everyone can own an EV.
You need charging stations, you need infrastructure,
you need a garage or there's multiple things
that kind of the stars need to align to own an EV
for a lot of Americans.
What I think is a realistic number
that they should have been saying all along
is somewhere around 15% of the market.
Especially in states like Vermont,
they do extremely well.
We've sold upwards to 50 EVs in a month before.
So there is a market, there is a demand,
but it's not what they were trying to proclaim.
Are you still heavily involved in the EV market?
I wouldn't say I'm heavily involved,
but it is something I'm gonna continue to sell
because I think there is a market for it.
I think it needs to be managed carefully.
And the EVs that don't make a whole bunch of sense
are the ones that start with six figures.
I think there's a really good,
like the Bolt for example,
they just redesigned the Bolt.
That's a good EV, the Equinox EV.
There are some spaces where it is a very affordable vehicle.
And if you look at total cost of ownership
through the life of the vehicle, you can't beat it,
but that's not for everybody.
We've had a few moments on this show
where we use the car edge car search and we go
and we look at KIAs and the first page results
are $75,000 plus MSRP EV9s.
And we're just like, whoa.
Or the new, sorry, the new SUV,
whatever the heck the naming convention is for the SUV.
It's like, I don't know, I'm gonna get it wrong.
But it's just like, holy cow,
that's a, or maybe it's a Hyundai, forgive me.
But anyway, it's like very expensive from a brand
that you would not anticipate.
And it's obviously that EV powertrain.
Yeah. And then the affordability goes out the window.
So that buyer that wanted the affordability,
that's why they're going towards EV.
I mean, there's different buyers with EVs.
These are affordability buyer
and the environmentally conscious buyer.
And I would say more lean towards the affordability.
Let me just actually pull up one data point
and we'll let you out of our hair, Dan.
This is incredibly valuable for us.
Here's the data from Edmunds
on average transaction price for the month of October
broken down by powertrain.
And there you go.
Plugged hybrid electric vehicles
transacted over $70,000 EVs, $64,000
internal combustion engine vehicles at $48,972.
Hybrid electric vehicles with battery $43,000
and overall we're at 49.
So you can obviously see plugins and EVs
significantly more expensive
than all other powertrain types.
Yep. And that's why you see their sales go down
and their days on lot go up.
Before they took away that credit,
we did have a mad rush and a ton of demand to sell them.
And then it cooled right off.
And I expected that to happen.
I do think EVs will pick up again,
but I also think it's an opportunity
because a lot of dealers are going to be terrified of them
because they did get burned on them.
They didn't manage them correctly.
So I do see a slice of the market
that I think that we can do well in.
Dan, what a privilege.
Thank you so much for taking the time to meet with us.
Again, Dan Lagrange, he runs 20 dealerships
for Key Auto Group.
If you're in the market to buy a vehicle,
obviously we're trying to help you out back at CarEdge.com.
But check out Dan's website, KeyAuto.com.
And if you end up working with any of his dealerships,
let him know CarEdge sent you that way.
Good people over there.
Dan, thank you so much.
We really appreciate your transparency and your insights.
Absolutely. It was great talking to you guys.
Yep. Thanks, Dan.
That's awesome.
Yeah, really is.
Dan's one of the good guys in the industry
and has no problem sharing information with us
and our listening and viewing audience.
It's wonderful.
Yeah, and again, just to come full circle here
for those of you that joined maybe towards the end,
we were really starting today's show
with we've got the latest data from Cox Automotive
that has a dealer sentiment survey
that's showing how dealers are really not feeling comfortable
with where the car market is right now.
We also, obviously yesterday,
for those of you that are unaware,
there was a federal government announcement
talking about a relaxation of fuel economy standards
and the push for more affordable vehicles.
All that then compounded with Dan's insights
from his reality, running 20 dealerships,
getting thousands of dollars in incentive money
from the manufacturers to sell aging inventory.
You even heard him say it,
consumers are in the driver's seat right now.
It is a buyer's market and it is so valuable
to hear the insights from,
he runs 20 dealerships,
there's what 40,000 dealerships in the United States
new and used, like there's a lot of dealers out there,
but that's his slice of pie,
his little micro economy, which is not so small.
He's selling thousands of cars,
but it's really insightful to hear from him
what's going on there.
And you have leverage in today's market.
There's a lot of pain going on right now
on the industry side.
You think Stalantas wants to spend $3,000
in stair step incentive to sell their cars?
Probably not, dad.
Well, you know, they don't want to,
but they finally realized they have to.
And, you know, the hope is-
What is that to you, dad?
If you're running a dealership
and you know you've got three grand on the hook
for every new vehicle you sell,
how does that change how you manage your dealership?
Because you never oversaw 20, dad, you oversaw the one.
So in your day-to-day,
how would you manage that dealership?
Well, you would approach every deal
as if you're going to earn that extra $3,000.
So the question becomes from the dealership perspective,
how much of that $3,000 do you want to give
to the customer in order to get them to say yes?
And in many cases, it could be the entire $3,000.
So it is indeed the manufacturer waving the white flag
saying we made a huge error.
We apologize to our dealers
for having taken so long to open our eyes
and see the errors of our ways,
but we're trying to correct it now.
So yes, you heard it from someone running 20 dealerships
that the buyers are in the driver's seat at the moment.
Now, that doesn't mean that vehicles still aren't overpriced.
In many cases, they are.
But what it does mean is that you can obtain a better deal
or a larger discount on those vehicles today
than you could have even 60 days ago.
So yes, dealers ask for it all.
No, they tend not to give you their best absolute price
till you're actually there threatening to buy a car.
But if you're working with the right dealership,
you're going to be able to get a much better deal today
than you could have in the past.
It's simple.
Today's show is brought to you by caredge.com.
It's almost six years that my dad
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Again, a friendly reminder for all of you out there,
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We've had a couple of thoughtful contributions
come through earlier in the show.
Let's spend a few minutes here from Matthew.
Good to see you, Matthew.
Thank you so much.
Thank you, Matthew.
They cured the daily driver, a 2025 BMW Loner 230i M Sport
with non-run flats, $45,200 MSRP, 4,000 miles on it,
paid $38,000 before $1,000 loyalty
and 3.49% interest rate for 72 months.
That's a cult meter test too.
Sounds like Matthew got himself a heck of a deal
on a new daily driver.
There are good deals to be had
on retired service loners in many cases.
And this is just an example of that.
Many concierge customers that come to us
end up going this route as well
because you can just get such a good deal.
We've got here from Andrew.
Good to see Andrew.
Thank you for this.
Good morning.
I'm actively looking to purchase a 2025 or 2026 Ram RHO.
Notice the base price started in August 25th
at $69,995, then $72,495.
Now $73,045 delivery went from $21.95 to $25.95, thought.
So these are price changes on the MSRP
at the manufacturer level, Dad.
This is kind of abnormal.
It's becoming more normal
for these really rapid price changes during a model year.
Well, and what they're doing
is they're hiding the price increase
in the destination chart.
You know, I'm pretty sure
that the destination costs haven't gone up
as high as what they've increased recently.
It is, this is just a perfect example
of the type of vehicle for the type of buyer
that Dan was talking about earlier.
And that's the wealthier customers
that don't have an issue at this type of price point.
So the vast majority of us would look at this and go,
okay, that's crazy.
I can't do that.
Even if they discounted the vehicle, $10,000 or $12,000.
I still can't do that
because it's not gonna come down
to an affordable monthly payment for me.
But yeah, we're seeing significant increases
in the MSRP partially due to an increase
in the base MSRP and further increases
in the destination charges.
Yeah, the sneaky way to raise the MSRP
without raising the MSRP.
Saying that tongue in cheek, obviously,
the destination charge does increase the MSRP.
All right, folks, we've got another dealer joining us tomorrow,
Joe Lewis from JC Lewis.
So please tune in to tomorrow's show.
We'll get more of a Mazda and Ford update from Joe.
Those are in Lincoln as well.
I know they've got some aged Lincoln's over there
that he's gonna want to move on.
So very excited to talk to Joe.
So tune in tomorrow at 12 p.m. Eastern 9 a.m. Pacific.
If you're not subscribed to the channel, please do.
And please check out caredge.com.
Continue to share our videos
and this time of year, it's more important than ever before.
And as the market has shifted, Dad,
I think it's extra important that people are aware of that.
So please share the content.
It goes a long way and we really appreciate it.
Absolutely.
Looking forward to seeing everybody back here tomorrow.
And as I like to say, tell a friend to join.
All right, guys, we'll see you back here.
Love you, Dad.
Love you too, handsome.
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About this episode
Car dealers are facing significant challenges as market sentiment declines and a major reset looms for 2025. The episode features insights from Dan LaGrange of Key Auto Group, who discusses the divide between affluent buyers and those seeking affordable vehicles. With rising interest rates and a lack of inventory, the used car market is under pressure. The federal government's push for more affordable vehicles and the impact of dealer incentives are also explored, highlighting the evolving landscape of the automotive industry.
Original notes
Today on CarEdge Live, Ray and Zach are joined by Dan LaGrange from Key Auto Group to discuss the current state of the car market. Tune in to learn more! Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
for information about our collection and use of personal data for
advertising.
CarEdge Live
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