Jeep is a car brand known mostly for SUVs. Here, they’re talking about how Jeep’s entry-level SUV is selling less because monthly payments are too high.
Vehicle affordability is whether people can realistically afford to buy a new car. In this segment, they say prices and loan costs are rising faster than incomes, so fewer people can make the payments.
A manufacturer incentive is money or financing support offered by the automaker to help reduce the buyer’s effective cost. When there’s “not incentive,” the dealer and customers feel it because the monthly payments or total price don’t get softened by promotions.
This is a Jeep Compass SUV, specifically a 2026 Compass Latitude. The host is using its price numbers to show how discounts and dealer pricing don’t always lead to sales.
Invoice price is the amount the dealer pays the automaker for the vehicle (before dealer profit and many incentives). When a dealer sells “below invoice,” it can indicate aggressive pricing, but it may also be offset by add-ons that raise the final out-the-door cost.
Add-ons are extra items or charges the dealer adds on top of the car’s price. They can make the final deal cost more, even if the advertised discount looks good.
“60 months” is how long the loan lasts—about five years. A longer loan can make the monthly payment look smaller, but it can cost more overall.
Concept
out-the-door cost
Out-the-door cost is the total price you actually pay when you drive the car off the lot. It includes the car price plus taxes and fees, and sometimes extra add-ons.
Term
$3,000 down
The down payment is the cash you pay upfront when you finance a car. Paying more upfront usually reduces the loan amount and can change the monthly payment.
Credit history is basically how good you are at paying back loans. For car loans, it can decide whether you get approved and what kind of interest rate—and monthly payment—you’ll get.
Sales projections are predictions about how many cars a company thinks it will sell. If those predictions drop, it usually means demand is weaker than expected.
Price points are the specific prices that feel “worth it” to a buyer. The hosts are saying people aren’t buying because the cars are priced higher than what they’re willing to pay.
Credit requirements are the rules banks use to decide who gets approved for financing. If those rules get easier, more people can qualify for car loans or leases.
Interest rate is what you pay for borrowing money. For car deals, a lower rate can make the monthly payment smaller, which can help people decide to buy.
Money factor is the lease’s “financing cost” that helps determine your monthly lease payment. When it’s lower, the lease payment usually comes down too.
0.9% financing is a very low interest-rate car loan deal. Lower interest usually means a lower monthly payment, which can help people say “yes” to buying.
A “lease option” is the deal structure for leasing a car—what you pay each month and what you put down. The dealers here are saying customers won’t buy unless the lease deal is attractive.
This is an industry number for the typical monthly payment people are seeing on new cars. They’re using it to compare whether a lease deal is truly affordable compared with what most people are paying.
Term
$339 a month payment options
They’re talking about a monthly payment number that feels doable for most buyers. Dealers say they need deals that can get close to that $339/month level.
Term
$3,810 down on a lease
This means the amount of money you pay upfront when you start the lease. They’re saying $3,810 upfront is not a good idea for most people.
An “affordability crisis” means cars are getting too expensive compared to what people can realistically pay. In this episode, both buyers and dealers feel the squeeze.
Cox Automotive is a company that tracks car-buying trends and publishes data. The hosts are using its affordability report as evidence for what’s happening in the market.
Term
dealer offering this huge discount
A dealer discount is money off the car’s sticker price. But the host is saying the discount can be offset by extra fees and add-ons.
“Out-the-door” price is the total cost you pay to actually drive the car off the lot. It includes taxes and dealer fees, not just the car’s base price.
A payment calculator estimates your monthly car payment based on the loan amount, interest rate, down payment, and loan term. The segment uses it to show how different financing choices (like extending the term) can be used to hit a target monthly payment.
The “loan term” is the length of time you have to repay the auto loan (e.g., 60 months vs. 72 months). Extending the term lowers the monthly payment but typically increases total interest paid over the life of the loan.
That’s how long the car loan lasts—like 8 years (96 months) or 10 years (120 months). A longer loan can make the monthly payment smaller, but you may pay more overall.
Principal is the base amount you’re borrowing for the car. If that number goes down, your payment can go down too.
Concept
proxy for how desperate the industry is
They’re using one measurable thing—how many 0% deals are available—as a clue about how hard the industry is trying to sell cars. More deals can mean demand is weaker.
This is the typical “final price” people pay for a car. It helps compare discounts across different price levels.
Concept
qualify for that 0% interest rate
Qualifying for a 0% interest rate means meeting the lender’s eligibility requirements, typically tied to credit score, income, and sometimes vehicle eligibility. If fewer people qualify, the promotional financing may not translate into actual sales volume.
“Approval rates” means how often lenders say “yes” to car loan applications. If approval rates go up, more people can actually get financing to buy a car.
“First-time buyers” means people who haven’t financed a car before. Because their credit history may be limited, they may need special financing programs to qualify.
“High-profit margin” means the company makes more money on each car it sells. The debate here is whether they should keep selling the more expensive cars that earn more profit, or widen who they sell to.
Clearing price is the price where cars actually get sold—where there are enough buyers at that price to move the inventory. It’s basically the market’s “real” price.
MSRP is the price printed on the car’s window sticker by the manufacturer. But the real price people pay can be different, because the market may push prices up or down.
Toyota is mentioned as an example of a company whose pricing is closer to what the market really pays for cars. The point is that the “real” selling price matters more than the sticker price.
Product mix means what kinds of cars a company decides to sell and at what price levels. If they focus on the wrong mix, they can struggle to make money even if they sell some cars.
The Ford Fusion is a regular, everyday midsize sedan Ford sold for years. The host mentions it to illustrate Ford moving away from sedans because they weren’t making enough profit.
The Ford Taurus is a long-running Ford sedan that used to sell in big numbers. The host brings it up to show that Ford once did well with sedans, then later couldn’t make them work profitably.
Buick is mentioned as a brand GM uses to reach more budget-conscious buyers. The host’s point is that different brands in the same group can cover different price levels.
A “wedge” here means a growing gap between car sellers and car buyers. If cars cost too much, dealers struggle to sell and customers stop buying, which creates tension for everyone.
Stalantis appears to be a mis-transcription of Stellantis, the automaker formed from Fiat Chrysler Automobiles and PSA. The hosts use it to describe Jeep dealers as being tied to Stellantis through their dealer network.
This means cheaper car choices—models or versions that cost less. The hosts are saying dealers want automakers to offer more affordable cars because otherwise fewer people can buy.
Dealers are the stores that sell the cars. When the speaker says "dealer body," they mean all those dealerships together, and how they can push the car company by not taking more cars.
Allocations are the number of cars a dealership is allowed to get from the manufacturer. If the manufacturer only sends a limited amount, the dealer can’t sell more than that.
The Infiniti QX60 is a larger SUV meant for families and everyday trips. It’s considered a luxury model, so it usually costs more than basic SUVs. The podcast mentions it because people compare its price to other cars in the same general range.
The BMW M5 Touring is a powerful BMW wagon. In this segment it’s used to show how some cars on dealer lots are priced far beyond what most buyers can afford.
Car
Kia
They’re pointing to Kia as the cheaper option when they sort by price. The idea is that Kia has models that land closer to what many buyers can afford.
“Mass market brands” means the regular, high-selling car companies that target most buyers. The point here is that their dealers should work together when customers can’t afford the cars being offered.
A small displacement engine is a smaller engine size. The idea is usually better efficiency, and sometimes it’s boosted with turbocharging so it still feels quick.
Touch screens are the big digital displays in the car that you tap to control things like music, navigation, and settings. The host is saying this trend may not be what everyone wants.
“Slate” is the name of a vehicle the hosts are talking about. They think it’s aimed at wealthier buyers who want a more customizable car, not the average shopper.
The Toyota RAV4 is a popular compact SUV. The podcast mentions it because Toyota is working to increase production so more cars are available. When production is tight, it can be harder to find one to buy.
LIVE
Every team, every topic, everywhere, this is Believe.
It's a noon here in Ventner City, New Jersey and our nation's capital, Washington, D.C.
And this is Carage Live for Thursday, July 16th with your host, me, Ray, right here in
Ventner City and Zach, hanging out in the office.
Oh, I did not get the memo, it was blue shirt Wednesday or Thursday, but apparently it is.
How are you doing today, handsome?
I'm doing fantastic.
Happy Thursday, everyone.
So excited that you've chosen to spend some of your day with my dad and I.
Today's show is brought to you by CarEdge.com.
For those of you that are unfamiliar, I am so proud of what we've been able to accomplish
over the last 67 years.
You like that, Dad, 67
Over the last six or seven years, we've built out so many incredible things to help car
shoppers nationwide.
We have our car search.
We have CarEdge Pro invoice pricing, Windows stickers, dealer price quotes, our buying
service, Ask CarEdge, the research center.
Holy cow, there's a lot in here, including our community forum, dealer reviews.
Wow, man.
I got to just show you something really quickly pops.
Like the thing I'm most proud of right now, if you Google search, I don't know if it works
for every single location, but if you Google search something like, oh wait, not this.
Best Toyota dealer near me.
Yeah.
Can you get past all the sponsored stuff up here?
Yeah.
Boom, man.
CarEdge, based on transparency, fair pricing, no hidden add-ons that earns the highest score
in the region.
CarEdge, so yeah, so proud of what we're doing, y'all, bringing transparency to the auto industry.
Today's show, however, we're talking about consumers refusing to purchase vehicles and
dealers feeling the pain.
We've been talking about this as a theme for a while now, and I want to kick things off
with the latest news we have from Jeep.
This is what is so surprising about what's going on in the auto industry right now.
High monthly payments send sales of entry-level Jeep Compass tumbling.
Dealers say sales of the Compass dad have fallen off.
All right, it goes 33% in the first half of this year after declining 9% in 2025.
This is the conundrum.
This is the conundrum.
The Jeep Compass is the cheap option over at Jeep, yet the payments are still too damn
high at the exact same time.
The other data set we're going to reach into today and we're going to spend some time with
is the latest data on affordability has actually gotten worse.
New vehicle affordability reverses course in June as higher prices and loan rates outpace
income growth.
What do you make of this, dad?
The freaking Compass should be selling like crazy because it's the cheap option.
Vehicles are getting less affordable.
Maybe the problem with the Compass is that it's exactly that.
It's a cheap option.
It's cheap.
It's a cheap Jeep.
It's not a very good Jeep.
It's a cheap Jeep.
And maybe the people that can and might want a cheap Jeep, well, even that cheap Jeep ain't
cheap enough.
And actually, if I may, this is like the story on the Compass.
The price has actually gone up $4,000 over the past two years.
And the big story here is there's not incentive from the manufacturer to make the payments on
the Compass look attractive.
That's the big push.
So it's an issue.
I'm just curious, if you have a cheap Jeep.
Cheap Jeep.
That starts at $32,000, which is where it starts, $31,945.
That's relatively inexpensive in today's world, correct?
Absolutely.
What's the payment on one of those?
I'm going to do a little cheap Jeep work one second here.
I mean, if they're saying, well, the payments are too high on the cheap Jeep,
what is that payment that's too high?
And then what does that indicate about the potential customers that they're attracting
with that fare?
I mean, look at some of the discounts on these.
You can see, for example, here we've got a 2026 Jeep Compass latitude, $34,585 MSRP.
Discounted down to $29,188.
Let's take a quick peak here at this one in particular, because the dealership gets a
C grade.
I'm very curious what they do here.
I'm familiar with that dealership, yeah.
All right.
So they're selling well below invoice price.
Okay.
Yeah.
So they're doing that whole thing.
The issue with this dealership is they add $2,554 in add-ons,
is what we see typically on the Alpador price quotes we receive from them.
So that's why they're getting that grade.
But let's come down to payment, because that's what you said you wanted to look at.
There you go.
Just be curious.
$600 a month.
For 60 months.
For 60 months.
$3,000 down, including fees and taxes.
So consumers are saying no to this.
Obviously sales are down 33%, but again, what makes it confounding is you would anticipate
that sales of the cheaper option would be good right now.
And again, the other headline that we're going to dig into is overall vehicle
affordability has actually moved backwards month over month.
The dealers can't even sell the cheap ones.
But again, this is not universal.
It's nuance, nuance, nuance, nuance.
Over at Toyota, you're cross shopping with something they are selling it.
So it is nuanced.
So then what does it say about the Jeep Compass buyer?
Who is it that they're attracting?
What type of credit history do they have?
What type of average income level are they at?
Because if the average new car payment today is $777, which it is.
And the payment on that Jeep Compass was $590 and that's $187 less than the average today.
Then how is that too expensive?
Is it that their customer doesn't have the $3,000 to put down?
Is it that their customer doesn't have the credit to qualify?
And when they do qualify, it's at a higher rate with a much higher payment.
It's hard to imagine that a $590 payment on a brand new vehicle in today's world
is too much for the Jeep buyer, but not nearly too much for the Toyota buyer,
or the Mazda buyer, or the Subaru Honda buyer.
I mean, I think that says more about Jeep's customers.
It's not just the Jeep story, Dad.
I'm sorry, but I have to jump in.
GM and other automakers facing lower sales projections, fewer car buyers.
This is a universal challenge right now.
This is not just a Jeep challenge.
This is universal.
This has to do with people are refusing to purchase these vehicles at their price points.
And then it's interesting, if you read the article from the automotive news about Jeep in
particular, that's where the dealers are saying it's actually a bank problem, which is so ironic.
What are we seeing in all the data when it comes to the banks?
They are actually loosening their credit requirements across the board.
They're making it easier to get approved.
But the argument from dealers is the banks need to bring back even more attractive
interest rates in the form of both lease programs, so where the money factor is lower,
and obviously the 0% financings, the 0.9% financings.
You know what it brings to mind for me, Dad?
Like the business jargon is like, we're going to pull levers to drive impacts in the business.
How many more levers can we pull?
Like at what point does the, it's a movie airplane that you always quote,
like at what point does it hit the fan?
And it seems like for some of these automakers with some specific types of vehicles,
it's hitting the fan right now and they're feeling the pain.
There is no way shape or form.
Jeep dealers love the idea of brand new on their lot.
This vehicle's been there 10 days.
We are already advertising it at what?
They're advertising it at a $5,397 discount.
Now, again, this dealer adds add-ons, but still, they don't like this.
They're not excited about that.
This is not a great moment for dealers out there.
Jeep GM Ford, for example.
Yeah, but what were the Jeep dealers saying about, well, it's the bank's fault?
They're saying, give us better lease options.
Okay, so they're not selling because they're not leasing them,
or the lease is not that attractive that there's no subvented interest rates.
But yet, that payment is significantly below the average new car payment today.
What is it that the dealer said in that article that they would really like to see from...
I'm just curious.
They want to see $339 a month payment options.
That's what these dealers want to see, which to be clear here is also what consumers want to see.
That being said, $3,810 down on a lease is not something we would recommend here at CarEdge.
My dad can explain that in just a second, but that's what everyone...
It's interesting. The affordability crisis is across both sides of the marketplace.
Consumers want more affordable options, and the dealers are saying they want more affordable
options. The title of today's show could have been, dealers refuse to sell cars, car deal.
I mean, it could be the inverse, I guess, is the point I'm trying to make.
Everyone is starting to scream from the rooftops, we have an issue with the price of these vehicles,
and then that is the irony, and it is once a month we get a new outlook from Cox Automotive,
new vehicle affordability, reverses course from June as higher prices and loan rates outpace
income growth. Okay, what's going to happen? We track that every day, go to automotive news.
What is today's average asking price for new vehicles? 52,000 what? How much higher than
last year at this time is it? 2,500. So, we've watched this in real time every day when,
you know, like two months ago I was screaming, it's $1,600 higher than it was the same time.
Well, we're up to, excuse me, over $2,500 higher than what it was a year. So,
we've watched prices go up. There's no mystery here. The mystery is that there isn't anybody in
the marketplace that has said, we're going to crush our competitors by just producing cheap cars
at cheap prices. Well, it turns out that, for instance, a cheap compass at a payment that's
$187 less than average still doesn't sell. So, who they want to sell them to? The market has gotten
so upmarket, the manufacturers, that realistically the only people that are buying
are, you know, the top 10% of wage earners out there or the top 15%. You know, I've been screaming
this forever. We're building a new vehicle sales platform based on 13 to 15% of the American
population that can actually participate. And if you're cutting out the other 87%,
this is what you get. You know, I mean, what a cheap compass buyer wants a $339 a month payment.
My guess is they prefer to have it as a purchase, not necessarily a lease.
Let's look at that. So, let's see what you have to do. Again, this particular one we're looking
at, $34,585 MSRP. That's well below average in today's new car market. Dealer offering this huge
discount $5,397 way below invoice of price. Because of all the extras that they add.
And between the dealer dock fee and the add-ons that they put on their out-the-door price quotes,
you should expect $3,127 in dealer fees. So then using all of that information, let's come down
here to our payment calculator. And let's say that we're going to still put $3,000 down,
we're going to have the taxes and the fees. We're going to have, which dad,
7% might seem high to many of you. The average interest rate on a new car auto loan actually
went up last month. It's 9.53%. That's on average right now. That's in the data that we're going
to look at again from the affordability side of things. Because one of the reasons why affordability
went down in the month of June is interest rates went up as well as car prices. But anyway, back
to our Jeep here. We'll keep it at 7%. The good news is that 73.9% of the people who applied for
a car loan last month were approved. All right. So then let's look at this. You have a couple
options. How can we get down to a $339 a month payment? One option is extend the loan term out.
I'm so proud of us. We designed this silly little calculator back on the Carriage website.
We didn't even give you the option for 96 or 120 months. Thank goodness.
Now go to what the average interest rate is, which is 9.5%.
I mean, the only way we can do this is by reducing the principal, which is to be
clear here, the options there are lower selling price of the vehicle or increase in your debt.
People have to put more money down. You put 10 grand down on a $30,000 car and you still
don't have that payment that these dealers are saying, hey, this is where we need to be.
This, folks, is the crux of the car business right now. And if I may, dad, this is why all of the
big, big, big pundits, way bigger than us two knuckleheads at Carriage, are saying that the
US auto industry is going to contract significantly. We're going to lose 2 million shoppers by 2040.
I think these numbers could be accelerated. That's going to be more than 2 million shoppers,
and it's going to be faster than 2040. It is like the alarm bells are going off for everyone in
this industry right now. Of course, customers too, who are like, come on, man. I just won an
affordable option and it reversed last month. They got less affordable. And it will continue to give
us what's going to happen next month. Yeah. You know, another thing, sorry, I'm on a roll
debt. One of the things we look at every single month is how many 0% financing offers are out
there. We use that as a proxy for how desperate the industry is. We also obviously look at the
percentage of incentives as a percentage of the average transaction price, which has been flat
at 7%, super disappointing. We would have thought that would have gone up. I haven't looked at the
numbers for July yet, but I remember earlier this year, we were looking at the numbers for 0%
financing offers compared to December of last year. December is typically the biggest sales
from the manufacturers, and we were already seeing larger number of 0% financing offers this year.
Then we saw it all in last year in December when it was sales mania. The dealers and the
manufacturers aren't feeling it that. And here's the saddest thing about that. That there's less
people today than last December that could actually qualify for that 0% interest rate.
What do you mean? There's less people today than last December that could qualify? Why?
Because it takes the top tier credit in order to qualify for those programs, typically.
Yeah, but there can be more offers for 0%.
And the cap of lenders know it doesn't really matter, because there's going to be fewer people
that actually qualify. But I would just push back on you a little bit, because all the data we've
seen and some anecdote data we've seen as well is that approval rates are higher today than they've
ever been before. And we also have seen manufacturers like Ford, for example, loosen their credit
requirements for first-time buyers as an example. There are examples out there of these manufacturers
are leaning and they are actually trying to make things quote-unquote more affordable by giving you
longer extended terms at lower interest rates and trying to make it easier for you to get approved
for that interest rate. But the dealers are saying it's not enough.
If the expectation is that they're going to lose 2 million customers.
They being the whole auto industry in the United States, yeah.
And I've been screaming for the last two years that the automobile makers are content
selling cars to the 13 to 15% of the population that feels as if they can participate. Obviously,
they're expecting that 13 to 15% that decline, because if we're going to lose 2 million customers,
my guess is we've already lost the ones that are part of the 85 to 87% that they're not coming back
in two years or 10 years. And so that loss is going to be in the 13 to 15% of the people that
feel like they can now, that number is going to go down. It might be 8 to 10% of the American
population that feels as if they'll be able to afford to buy a car by 2040. And I agree with you.
I think that's going to happen sooner rather than later. And I think we're already starting to see
that. And so what's the answer? Is the answer that they just continue to sell the high-profit
margin high-priced vehicles to that 8 to 10% in the future? Or do they somehow figure out perhaps
it's time to broaden our customer base? Yeah. And before we jump straight to the answer, there's
one more piece to this puzzle, which would be what vehicles... So obviously, there's the price that
the manufacturers set for the vehicles that they want to sell. For some manufacturers, that number
matters. For others, it doesn't. I'm kind of alluding here to like, gee, you can put whatever
they want as the MSRP, but it's not going to sell at that price. That's not the clearing price that
vehicles sell for. Over at Toyota, it's a lot closer to the clearing price that they sell for.
The other lever back to our business school logic here for a second is the product mix. What vehicles
are the manufacturers producing? And we know, for example, we don't... This isn't just a Ford thing,
but the Ford headline is pretty easy to riff off of here. Ford explains why it killed sedans. We
couldn't find a way to compete and be profitable. And this is... Yeah. ...Board with the Fusion,
the Taurus, the Focus. I mean, they got rid of... The Escape is also gone. That's not even a sedan,
but it was just a cheap option. When you look at the product mix for many manufacturers,
they've made the strategic decision that we are not going to produce more affordable options.
That's not a blanket statement. Yesterday, we looked at General Motors and, for example,
they're trying to leverage Buick as their entry-level option. But then we also counterbalance that with
freaking Infinity trying to sell $150,000 or $130,000 SUVs. So there is just this awakening
happening within the auto industry right now. I think that... And it's because consumers are
refusing to buy and dealers are feeling the pain, not blanket statements. There's no
odds there, but it's happening. But you might not have one from Ford.
You know, there was a time they built a lot of sedans. They sold a lot of sedans.
There was a time the Ford Taurus was a really good-selling vehicle. I don't know if it was a
good vehicle, but it was a good-selling vehicle. So how is it that a company that's been around
as long as Ford, that has been as successful as Ford has been, how is it that they screwed it up so
bad that they can't figure out how to build sedans, sell them, and have them be profitable
when they used to be able to do that? So why... I mean, if I were Mr. Jim Farley,
I would be confronting my management team and say, why can't we compete at a profitable price
point? First of all, why? What are we doing incorrectly that won't allow us to be able to
produce those vehicles? For sure. I think perhaps if they start getting some of those answers,
they could figure out what to change so that they could get back into that. Because this industry
ultimately won't survive, at least in the United States in my opinion, if only 8 to 10 percent
of the population can buy their cars. So that's, I think, the crux of today's show,
is really at its core. Vehicles became less affordable last month. That is all the data
points to it. Cox Automotive now has done the headline. You can see the date on it. It was
yesterday that they released this at the same exact time as the affordable options at some of
these manufacturers. For example, today, we're really hoping on Jeep with the Compass. They
actually saw their sales, not my clickbait, y'all, tumble. That's the word that they use, a 33 percent
sales decline. The overall industry is anticipating 2 million shoppers take themselves out of the
market over the next decade and a half. And to your point, Dad, these automakers are asking
themselves the question, why can't we compete on affordable vehicles? That's the lay of the land
right now that is really, really, really driving a wedge between dealers and consumers. And to your
point, Dad, will likely bring about a lot of change in a way that makes it different. Owning
a car may be a more elitist thing in a decade or two. And you've talked about it on this show,
and I've talked about it. It might be you just take Uber's everywhere. It might be your Robo
taxi drives around. It is like we are watching a movie. It's like seeing a thunderstorm out in
front of you and thinking, okay, it's not coming here. It's not going to rain on me. No, the auto
industry is going to change a lot. And this conversation today, I think, demonstrates why.
Well, yes, absolutely. And I guess you're starting to see it with some of your Jeep dealers,
where the Jeep dealers, who are Stalantis' customers, are saying, we, your customer,
need much less expensive options for our customers. And if we can't get less expensive
options for our customers, we don't know how much longer we can continue to be your customer.
I mean, that's the real issue. That's where the change will take place. I mean, we keep thinking
there are many pundits who keep suggesting that, and I see it in the comments all the time, well,
if the people just stopped buying cars, and we said it, we had a website, don't buy cars.
So, because the rationale was, well, if everybody stops buying cars, then the manufacturers will
have to take notice and do something about it. But the reality is, it is not us, the ultimate
customer that has to stop buying cars. It is the dealer body that says to the manufacturer,
sure, I don't want any more of your allocations. I'm not taking any more of your cars. I can't
sell them. I don't have enough customers that can afford to buy them. So until you figure out a way
to produce cars that are affordable for me, that ultimately are affordable for my customers,
I'm not interested. So that's where the pressure has to come from. It has to come from the dealer
body. So let's do one more experiment then we're going to turn to the chat. Go to caredge.com right
now. Go to Shop Cars. And Dad, what I've done is I've filtered by year. I want 2027. I just want
to look at 2027 inventory because we do have 2027 new cars sitting on dealer lots. And let's see,
maybe, let's click through a couple pages here, maybe the next model year here is going to bring
affordable options. So here's first page we've got, and I used my zip code here in Maryland,
where the business zip code is. So we've got a QX80. That's not affordable. We've got a QX65.
That's not affordable. Let's get past the infinities because these are
certainly, okay, so here's a Toyota. That's $72,000. More infinities, Toyotas that are all over $70,000.
Here's a $68,000 Toyota, $74,000 Toyota. I guess the QX60 at, I mean, these prices,
$100,000, like, let's look at the next page. Let's just see. I mean, these prices are
ridiculous. Let's do something slightly different. Yeah. And sort them by lowest,
by cheapest to most expensive. Just add a Korean option. Optics at $57,000. One more page, and then
I'll do that for you, pops. Yeah. Mercedes across in, I mean, yeah, now we're in BMWs. These are
going to be expensive. Wow, that M5 Touring is $134,000. It's an M5, buddy. Okay. So you said by
cheapest? Yeah. Do it by... Ops, that was most expensive. Yeah. Do it least expensive to most
expensive. Lowest MSRP to highest MSRP. So here's some Kia options at $26.85. That's good. Yeah.
Come on. They're there. There are, there are vehicle... Kia. Look at Kia. Yeah. Yeah. That are
between $25,000 and $30,000. Now, the sad reality is just six years ago that those might have been
between... Some Hondas, a Chevy Bolt. Look at that. They might have been between, I don't know,
$17,000 and $22,000, but now they're between $25,000 and $30,000. So you can... We know that the
number of options available for people that transact below $20,000 are less than two-tenths
of one percent of all the vehicles that are sold. Think about that for a second, folks. That means
if there are a thousand, we got to go out to a thousand new cars for sale, 20 of them
are under that price point that my dad just mentioned. You can't even do... I mean, that's crazy.
Okay. Only 4.7% sold for under $25,000 and just 15% sold for $30,000 and below. Here's the really
telling stat of that. In 2019, 40% of vehicles transacted at $30,000 or below and that's down to
15%. So if it is incumbent upon the dealers of the mass market brands... I'm not talking BMW,
I'm not talking Mercedes, the higher-end vehicles, but of the mass market brands,
it is incumbent upon those dealers as the customers of their manufacturers to come together as a group
and say, no more. You're either going to start giving us some vehicles that we can transact
at the customer's need or we are not taking any more of your vehicles for the time being.
Which we've seen happen in the past with Stalantis dealerships to buying allocations.
With Stalantis dealers for a time there. Yeah, let's turn to the chat.
Yes. Really great conversation from Cyrus earlier in the show. Thank you. This is very generous,
very kind. Removing physical controls, small displacement engines, cheap fingerprint,
magnet plastics and touch screens everywhere. Maybe consumers don't want expensive iPads with
wheels. The Slate experiment is going to be so interesting. Yes. I think you and I both agree
on this one. We do not think Slate is going to be a massive success. I have this core belief
that even though we talk about affordability all day long, that thing is not going to be a mass
market. Well, let's see. Let's see. But Slate, the reason I bring it plays, they're the antidote to
and I think I've said this on the show that I believe that vehicle will appeal
to an older, well-heeled clientele that says to themselves, hey, I just want to buy something
that I can do with it whatever I want and customize it any way I want. And it's an inexpensive way
to start it. And the people that really need inexpensive transportation are going to look
at it and go, it doesn't have enough for me to want to buy it. That's my whiny voice. I'm sorry.
And I apologize for my whiny voice, ladies and gentlemen. Don't apologize for your whiny voice.
We love your whiny voice. I bet you that's what the outcome is going to be.
Yeah. But it'll be interesting because this from Cyrus is exactly the argument of,
give us the opposite. And your hypothesis is a bunch of rich people are going to end up buying it
because it's kind of a toy for them. And it will, it'll be so interesting to see. But you know,
I think there's conviction here, Dad, that it's not going to sell well. Why don't the Nissan
cheap options sell well? People do want the touch screens. They do want some of the nice stuff.
Not everyone. It's so interesting.
Much as we can say that people don't want it and can live without it,
the part I believe with is, yes, they can live without it. The part I don't believe
is that they don't want it. The real dilemma for American consumers is everybody wants more
than what they need. And nobody wants to settle. Everybody feels like, well, if I don't get what
I need, I'm settling and I don't want to have to settle. Damn it. And that's part of the problem
is that you have to, we all have to step back and take a close look at what it is we really need,
as opposed to what it is we really want. I mean, what is, well, for instance, when I got my CX
story, what's important to me? I'm hard of hearing. I wear hearing aids. And there's one thing in
life I really enjoy, and that's music. So when I get a car, the one thing that I insist upon
is it doesn't have to have a mover. If I could care less about that, it doesn't necessarily
but what it has to have is an upgraded sound system so that these weak ass ears
can hear it and enjoy the music. For sure. Needs versus wants is a huge aspect to all of this. Let's
keep it going here, Dad. We've got from Dale. Thank you for this, Dale. We appreciate it. I think
1226, so December, the last day of the day after Christmas, excuse me, will be the best month to
buy a vehicle in a very long time between inventory days online, consumer demand, put 20% or more down
if you can on top of your trade. I think Dale's right. I think this year is going to end up in a
huge buyer's market towards the end of the year. And I think even some of the tough to buy brands
right now will be better at the end of the year. Toyota is going to turn it around on RAV4 production.
They have to. They're missing out on millions, tens of hundreds of millions of dollars in profit.
So huge incentives for them to figure things out by the end of the year from Scott. Thank you for
this, Scott. We appreciate it. Slate will expose the Americans idea of what a car must have. Yeah,
exactly. Have versus needs. It's going to be really interesting. I think Slate is a great
experiment and one that I can't wait to see happen. Now, let's call it a show for today. We've got
so much to cover tomorrow. Tomorrow is going to be answering your car shopping question. So please
email me, Zach at CarEdge.com with the subject Friday show, share your questions, or we will
likely spend a lot of our time back on the community forum. So for those of you that are
unfamiliar, tomorrow's show, no news. Just helping you buy a car. Go. It's under research here.
Excuse me. Click on community forum and share what your question is back on the community forum,
and then we can help you out so much on the show tomorrow as well. Back on CarEdge.com,
car search, the buying service, ask CarEdge Research Center, dealer reviews. Please, please,
please spend some time there. It is incredibly humbling, brings a lot of gratitude to us to
see everyone use the services that we provide back on the website. And the real winning idea
of that community forum is if you post something there today, you will get answers to help you
in your quest today, as opposed to waiting for us to get it done. Because the amount of interaction
on that community forum is just unbelievable. It's worth mentioning the community forum and all
the conversations that go there actually power aspects of Ask CarEdge. So if you're using Ask
CarEdge as well, like if you're chatting here with Ask CarEdge, it is informed by the conversations
that are happening on the community forum, which is super cool. So you're also helping power
our systems to make things more accessible to even more people. So really awesome
what we've been able to do there. Dad, let's call the show. We're back tomorrow with more CarEdge
Live. Enjoy your afternoon, and I'll see you back here tomorrow. Absolutely. Have a great one.
How's the air quality in DC? It's not clear to shore yet. Yeah, we got the smoke. Yeah. So,
but it'll be an interesting run this evening for me. Hopefully it's hot and smoky, but we'll
see what we can do. Okay, well, take it easy. Love you, Dad. Love you too.
About this episode
Dealers are feeling the squeeze as customers refuse to buy at today’s prices—especially when monthly payments stay high. The hosts connect the drop in demand to affordability worsening, with examples like the Jeep Compass: even when discounted, add-ons and financing terms can push payments out of reach. They also explain how dealers pressure manufacturers through allocations, and why “MSRP” isn’t the same as the market-clearing price. CarEdge tools are highlighted for shoppers navigating dealer quotes.
Today on CarEdge Live, Ray and Zach discuss the latest data on the new and used car market. Tune in to learn more! Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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