The car market is shifting from a seller's to a buyer's market, as discussed by Ray and Zach with dealer Joe Lewis. They explore rising inventories and slowing sales, highlighting how dealerships are adjusting their strategies. Joe shares insights on managing aged inventory, the impact of financing offers, and the importance of transparency in pricing. The conversation also covers the used car market, trade-in values, and consumer behavior amidst rising repossession rates. This episode provides valuable perspectives for anyone navigating the current automotive landscape.
Today on CarEdge Live, Ray and Zach are joined by Joe Lewis from JC Lewis to discuss current trends in the Mazda, Ford and Lincoln market. Tune in to learn more! Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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"Back in the spring, we saw Ford come out with their employee pricing for all. And my supposition is, and why no, for a fact, that sales increased dramatically when they did that."
Employee pricing means that regular customers can buy cars at the same price that employees of the company pay. This usually makes the cars cheaper and easier to buy.
Employee pricing is a marketing strategy where a company offers its employees' pricing to the general public, allowing customers to purchase vehicles at a reduced price typically reserved for employees. This approach can significantly boost sales by simplifying the buying process and making it more attractive to consumers.
"When they basically took all the negotiating out of a car deal for the customer. And I think you would agree that that was a pretty successful marketing idea on Ford's part."
When you negotiate out of a car deal, it means you don't have to haggle over the price of the car. The price is set, making it easier for you to know what you'll pay without any surprises.
Negotiating out of a car deal refers to the practice of removing the back-and-forth bargaining process typically involved in purchasing a vehicle. This can lead to a more straightforward buying experience for customers, as it eliminates the uncertainty and stress of negotiation.
"because when you put out low APR financing or you put out big rebates, it's great, but we've all seen that before."
Rebates are discounts that you get back after buying a car, which can lower the total price you pay. It's like getting some money back after your purchase.
Rebates are cash discounts offered by manufacturers or dealers to encourage the sale of vehicles. They reduce the overall purchase price and can make a car more appealing to buyers.
"because when you put out low APR financing or you put out big rebates, it's great, but we've all seen that before."
APR financing is a way to borrow money to buy a car, where the cost of borrowing is shown as a percentage. Lower APR means you pay less interest over time.
APR financing refers to the Annual Percentage Rate that lenders charge borrowers for the use of their money. In the context of car sales, low APR financing offers customers a reduced interest rate on their auto loans, making it more affordable to purchase a vehicle.
"Can you explain to the audience the importance of not having aged inventory? What it is that motivates you as a dealer as the inventory ages?"
Aged inventory means cars that have been sitting in a dealership for too long. Dealers want to sell these cars quickly because they can lose money the longer they keep them.
Aged inventory refers to vehicles that have been in stock for an extended period, which can lead to increased costs for dealerships and decreased demand from consumers. Dealers often need to reduce prices to move these older vehicles.
"...about floor plan cost, the longer the car's been here, there's something called a holding cost. So the interest we pay on those cars..."
Floor plan cost is the money a dealership pays in interest for the cars they have in stock. They borrow money to buy these cars and have to pay interest until they sell them.
Floor plan cost refers to the interest expenses incurred by dealerships for financing their inventory of vehicles. Dealerships often borrow money to purchase cars from manufacturers and pay interest on that loan until the cars are sold.
"...there's something called a holding cost. So the interest we pay on those cars, a holding cost is how much we pay on that car per day..."
Holding cost is the money a dealership spends to keep a car that hasn't sold yet. This includes interest and other costs that add up the longer the car sits there.
Holding cost is the total cost associated with keeping an unsold vehicle in inventory, including interest payments, depreciation, and other expenses. It increases the longer a vehicle remains unsold on the lot.
"...how many times sometimes you have to detail a car in order to keep it looking fresh on the lot..."
Detailing is a deep cleaning of a car, making it look really nice inside and out. It includes washing, polishing, and cleaning all the parts of the car to make it shine.
Detailing refers to the thorough cleaning and restoration of a vehicle, both inside and out. This process often includes washing, waxing, polishing, and cleaning the interior to make the car look as good as new.
"...We've probably sent someone a handful of people and extended test drives on them."
An extended test drive is when you can take a car out for a longer time than usual to see how it feels and fits your needs. It's like borrowing the car for a bit to really check it out.
Extended test drives allow potential buyers to experience a vehicle for a longer period, typically beyond the standard test drive duration. This can help them assess the car's suitability for their needs.
"...Let's talk about the used car market for a few minutes here. I'm going to pull this data back up on the screen from Cox Automotive..."
The used car market is where people buy and sell cars that have been owned by someone else before. Prices can change based on how many cars are available and how many people want to buy them.
The used car market refers to the buying and selling of pre-owned vehicles. It is influenced by various factors including supply and demand, vehicle condition, and market trends, which can affect pricing and inventory levels.
"...I'm going to pull this data back up on the screen from Cox Automotive, which is the industry conglomerate. You know, everything that underpins the auto industry, retail auto comes from Cox for the most part."
Cox Automotive is a big company that helps car businesses by providing important information and tools. They help understand how the car market is doing and what customers want.
Cox Automotive is a leading provider of data and technology solutions for the automotive industry. They offer insights and analytics that help dealerships and manufacturers understand market trends and consumer behavior.
"...especially if it's... We're down in southeast Georgia and so if people see a car fax from Michigan, they're scared about rust and all that kind of stuff."
Carfax is a company that gives you a report on a used car's history. It tells you if the car has been in accidents, how many owners it had, and if there are any issues with the title. This helps buyers decide if a car is worth buying.
Carfax is a service that provides vehicle history reports, which include information about accidents, title status, service records, and previous ownership. This information helps potential buyers assess the condition and reliability of a used car before making a purchase.
"We have a car max less than a mile from our store. We partner with car max on a platform called Max Offer."
CarMax is a big store where you can buy used cars. They make it easy to find a car and have set prices, so you don't have to negotiate. They also help people sell their cars.
CarMax is a large used car retailer in the United States known for its no-haggle pricing and wide selection of vehicles. They provide a transparent buying experience and often partner with dealerships to facilitate trade-ins and purchases.
"...we can give you at least that same number. Just trying to pull all the levers, lease turn-ins, things like that to get as many trades as possible."
A trade-in is when you give your old car to a dealership to help pay for a new car. It makes buying a new car easier because you don't have to sell your old car separately.
A trade-in is when a customer sells their old vehicle to a dealership as part of the payment for a new or used car. This often reduces the price of the new car and can be a convenient way to dispose of an old vehicle.
"For instance, the 25 Lincoln Corsair Hybrid has 0% for 72 and 0.9 for 84. Lincoln's obviously trying to get rid of these cars."
The Lincoln Corsair Hybrid is a luxury SUV that uses both gas and electric power to save on fuel. It's designed to be comfortable and has many high-end features.
The Lincoln Corsair Hybrid is a compact luxury SUV that combines electric and gasoline power for improved fuel efficiency. It's part of Lincoln's lineup aimed at providing a premium driving experience with modern technology and comfort features.
"And then on the out-the-door piece, I love that y'all harp on that because"
The out-the-door price is the final amount you pay when buying a car. It includes the car's price plus taxes and fees, so you know how much money you'll actually spend.
The out-the-door price refers to the total cost of purchasing a vehicle, including the vehicle price, taxes, fees, and any additional costs, ensuring that buyers know exactly what they will pay. It's crucial for budgeting and understanding the full financial commitment of a vehicle purchase.
"...they add a CPO fee, they add an administration fee, they add $2,000 worth of dealer installed options on it that you don't want..."
An administration fee is a charge that dealerships add to help cover their costs for handling the sale paperwork. It can be different at each dealership.
An administration fee is a charge that dealerships may impose to cover the costs of processing paperwork and handling the sale. This fee can vary widely between dealerships and is often added to the final price of the vehicle.
"...they add a CPO fee, they add an administration fee, they add $2,000 worth of dealer installed options on it that you don't want that's not on the online price..."
CPO stands for Certified Pre-Owned. It's a fee you pay for a used car that has been checked and certified by the manufacturer, meaning it's in good condition and may come with a warranty.
A CPO fee refers to the cost associated with a Certified Pre-Owned vehicle, which has undergone a thorough inspection and refurbishment process to meet specific manufacturer standards. This fee is often added to the price of the vehicle to cover the certification process and any additional warranties provided.
"...they add a CPO fee, they add an administration fee, they add $2,000 worth of dealer installed options on it that you don't want..."
Dealer installed options are extras that the dealership puts on a car, like better speakers or special paint. They usually cost more money and can be added to the car's price.
Dealer installed options are additional features or accessories that a dealership adds to a vehicle before selling it. These can include things like upgraded sound systems, custom wheels, or protective coatings, and they often come at an extra cost.
"...Cars are depreciating right now faster than we've seen since 2022 and 2023. A dealer..."
Depreciation is how much a car loses its value as it gets older. Most cars lose a lot of value in the first few years after you buy them.
Depreciation is the reduction in the value of a vehicle over time, often due to age, wear and tear, and market conditions. Cars typically depreciate the most in the first few years after purchase.
"...how much lower can you go on the selling prices of these vehicles today versus in December? And if you're looking to sell drops by another $500,000..."
Dealer fees are extra costs that car dealerships might add when you buy a car. They can include things like paperwork fees or costs for getting the car ready to sell.
Dealer fees are additional charges that car dealerships may apply when selling a vehicle. These fees can include documentation fees, preparation fees, and other costs that are added to the final price of the car.
"...If it's a car that's got 0% for 72 months, you know, now is a great time..."
This means you can borrow money to buy a car without paying any interest for six years. It makes buying a car cheaper over time.
This refers to a financing offer where the buyer pays no interest on the loan for a period of 72 months, making it an attractive option for purchasing a vehicle.
"...if you wait till the incentives are really, really good..."
Incentives are special deals or discounts offered to help sell cars. They can make buying a car cheaper or easier.
Incentives are promotional offers from manufacturers or dealers to encourage customers to buy a vehicle, such as cash rebates or low-interest financing.
"...ng for? If you're really specific, hey, I want a navigator L, white with the light interior, with the bench se..."
The Lincoln Navigator is a big, luxury SUV that can fit a lot of people and their stuff. It's powerful and has a lot of nice features, making it great for families or anyone who needs a lot of space. People talk about it because it's one of the top models for luxury SUVs.
The Lincoln Navigator is a full-size luxury SUV known for its spacious interior, powerful performance, and high-end features. It is often sought after for its towing capacity and ability to carry large families or groups in comfort. The Navigator is frequently discussed due to its status as a flagship model for Lincoln, representing luxury and capability.
"...It was a seller's market for four years. We need to be very vocal that it is now a buyer's market."
A seller's market is when there are more people wanting to buy cars than there are cars available. This situation lets sellers charge higher prices because buyers are competing for limited options.
A seller's market occurs when demand for goods exceeds supply, allowing sellers to dictate prices. In the automotive industry, this means that dealers can charge higher prices because there are more buyers than available vehicles.
"...which is we're talking about new model year vehicles coming into market. I just for fun, Joe, went to Cincinnati, Ohio. I mean,"
New model year vehicles are the latest cars that companies make each year. These cars often have new designs and features, making them different from older models.
New model year vehicles refer to the latest versions of cars that manufacturers release, typically featuring updated designs, technology, and features. This is an important time for consumers as they can choose from the newest offerings in the market.
"... have, I mean, look at this row. You've got a 26 Nautilus next to a 22-24 Nautilus. It's absolutely nuts. T..."
The Lincoln Nautilus is a fancy SUV that has a lot of space and comfortable seats. It's designed for people who want a nice ride with good technology and safety features. People often talk about it because it's a popular choice for families who want something luxurious.
The Lincoln Nautilus is a luxury midsize SUV that offers a blend of comfort, technology, and performance. It is known for its spacious interior, advanced safety features, and a smooth ride, making it a popular choice among families and luxury vehicle buyers. Discussions around the Nautilus often focus on its design and the various model years that showcase different features and updates.
"... Recently, Mazda's only sending us 26s except the Miata because they haven't made the 26 yet. But try to..."
The Mazda Miata is a small, two-door sports car that is really fun to drive. It's known for being light and quick, making it a favorite for people who love driving. Many car fans talk about it because it's a great mix of performance and price.
The Mazda Miata is a lightweight two-seater sports car known for its agile handling and fun driving experience. Since its introduction in 1989, it has become an iconic model in the automotive world, often celebrated for its affordability and engaging performance. It is frequently discussed due to its status as a favorite among driving enthusiasts and its unique position in the market.
"Yeah, definitely. Repossession rates are getting close to all-time highs right now. We're seeing more and more people come in, they're budget conscious."
Repossession rates show how often banks take back cars because people can't pay for them. If many people are losing their cars, it means they might be having money problems.
Repossession rates refer to the frequency at which lenders reclaim vehicles from borrowers who fail to make their loan payments. High repossession rates can indicate financial distress among borrowers.
"Has the credit quality of your customers gone up or down recently? It feels like it's gone down."
Credit quality shows how likely someone is to pay back money they borrow. If someone has good credit, it means they usually pay their bills on time.
Credit quality refers to the creditworthiness of borrowers, which is assessed based on their credit history and ability to repay loans. Higher credit quality typically means lower risk for lenders.
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From all of us at Believe, have a merry Christmas everyone
and a happy holiday.
It's noon here in Venter City, New Jersey
and our nation's capital, Washington DC.
And this is Car Edge Live for Thursday, October 30th.
Yes, tomorrow's Halloween.
And no, I won't be dressed up.
But your host today as normal are me,
Ray here in Venter City.
And well, Zach, in his apartment in Washington DC,
how are you today, handsome?
I'm doing fantastic.
Leave some comments in the chat
and after the live show as well.
If you think we should dress in costume tomorrow,
I am one vote that we should.
I want to see what my dad comes up with.
So let us know in the chat if you think we should.
If you do, then maybe we will.
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And what a privilege today, dad.
We are gonna be talking about how the car market
has finally flipped.
We're gonna get some perspective
from one of our dealer friends, Joe Lewis from JC Lewis.
I'm gonna pull Joe in right now.
And as I do, I'm gonna pull up the JC Lewis website folks.
Today, if you're interested, if you like Joe,
which you should, he manages some of the JC Lewis dealerships.
They are incredibly transparent.
They're down in Savannah, Georgia.
If you like Joe, check out JC Lewis.com.
He doesn't pay us to come on the show.
There's no financial quid pro quo.
He's a good guy.
He's joined us many times.
Check out their damn website if they can help you out.
How you doing, Joe?
Doing great.
It's good to be with the CarEdge fam and the CarEdge fans.
Appreciate that.
Hey, one thing, dad, I wanna acknowledge
we talked about it before we came on here.
Everyone look left to right on the screen.
No hair, some hair, lots of hair.
So good morning here in CarEdge.
And dad, first question to you, go for it.
Before we do the first question,
we could do this in the best of Jewish traditions.
Look from right to left and you could see
past, present, future.
That's right.
I'm queuing up some data before you ask your question.
Joe, we're looking everywhere macro and micro
and all signs point to the market having flipped
and it now being a buyer's market, not a seller's market.
Here's the latest headline from Cox Automotive.
New vehicle inventory increases as sales slow
in late September.
You wanna talk about the used car market?
Well, here's the latest headline for the used car market.
Used vehicle inventory sets new high for 2025 as sales slow.
The question's gonna come from my dad,
but I'm not trying to lead the witness here.
I think the question is, are those headlines right?
The pops, your question, not mine.
So my question to you, Joe, would be have sales slowed?
Yeah, we continue to see it go up and down.
Like I mentioned earlier, it's the only thing
consistent in the car business is inconsistency.
So much change, but we're definitely seeing the market flip
from a seller's market to a buyer's.
And that's what you see when inventory increases.
I can't remember the last time we sold a car at MSRP.
We're, everyone's getting deals right now
and as inventory starts to creep up,
that's kind of what you typically see.
And can I do a quick follow up on that?
How much more inventory do you have, say, today
than just 60 days ago back in August?
I would say just a little bit more.
It kind of depends on the brand.
Mazda got really lean there for a while back a couple months ago.
Lincoln's been more steady,
but inventory a year ago versus now is night and day,
especially with used cars.
And we talk a lot on this channel, Joe, and you've heard us say it ad nauseam.
It's partly supply.
It's also partly demand.
And so maybe the supply situation at some of these brands
that you represent haven't changed that much.
Like Lincoln, you're saying they haven't invaded you with inventory,
but demand is the demand there for those vehicles.
And I wonder if that's another part of the equation that you're seeing.
Is the showroom as busy as it has been over the past couple of months,
or has it slowed down a little bit?
Yeah, we've definitely seen it slow down a little bit.
And when you see that, that's typically when you see some really good rates.
Lincoln's got 0 for 72 and 0.9 for 84 on one of their model lines right now.
Mazda's got some better rates that have come out and same with Ford.
So typically it takes the manufacturer a little while to respond when we see that,
but when they see a slow month, there are a couple slow months in a row,
is typically when you see some good incentives come out.
I want to follow up on that to a degree.
Back in the spring, we saw Ford come out with their employee pricing for all.
And my supposition is, and why no, for a fact, that sales increased dramatically when they did that.
When they basically took all the negotiating out of a car deal for the customer.
And I think you would agree that that was a pretty successful marketing idea on Ford's part.
And then they switched to, I don't know what the hell they switched to, but my guess is,
this is just a guess, and you can correct me if I'm wrong, but my guess is that once they made
the switch away from employee pricing for all, that sales kind of died a little bit.
Yeah, there was definitely a drop in demand.
I think that was one of the best marketing programs that I've seen in the car business,
because when you put out low APR financing or you put out big rebates, it's great,
but we've all seen that before.
But when you put something out like employee pricing, where anyone can come in and buy a Ford
for the same thing that I can, it's a pretty big deal.
I want to talk a little bit, Joe. You and I were texting yesterday, and I'm going to share.
This is the transparency you get from us at Cardin. It's the transparency you get from Joe.
No wonder we love the JC Lewis team as much as we do. These are our text messages yesterday.
I asked you to share with me some vehicles that you have that are aged.
Stock numbers and revins, I can get them over to you. I said either.
And I'm going to pull up some of these vehicles in just a second here.
Here are the oldest Lincoln's in stock, almost no deal all turned down on these,
LOL, permission to share on social. I'll see if I can help you.
Absolutely. I've got them marked down online pretty good, but willing to probably go one to
$2,000 lower if needed. You sent me this list of your aged inventory.
Let's talk about running a dealership, managing a dealership, and what you have to do when you
have vehicles here that are over a year old. And I've pulled up some of these on your website
as well. And you are very aggressive on pricing online. You shared with us last time you were
here. Some of the manufacturers require and restrict how aggressive you can be online.
Talk to me about managing a dealership with aged inventory. Now that it is a buyer's market,
how does your approach to operating your business change?
Yeah. As inventory creeps up, it gets even more important with rising floor plan cost.
And Lincoln's a different animal. As you see, those are way older cars than I've got over at
Mazda. I think my oldest Mazda is 125 days old. And I've got a few Lincoln's that I've had to
make birthday cakes for, so it's time for those to go away. And I've priced them online as aggressively
as possible. Like we've discussed in previous streams, I'm not afraid to lose money on these
old age cars. Obviously, at some point, it doesn't make sense, but definitely willing to
get really, really aggressive on especially those old age cars.
Can you explain to the audience the importance of not having aged inventory? What it is that
motivates you as a dealer as the inventory ages? Because people out there are going to think,
well, why wouldn't they just take the same deal on a vehicle that's been there three days,
as opposed to 391 days? Yeah, good question. Like I mentioned about floor plan cost, the
longer the car's been here, there's something called a holding cost. So the interest we pay on
those cars, a holding cost is how much we pay on that car per day. And obviously, when a car's
been here 300 days, we've paid a lot of money and interest on that car versus a car that just got
off the truck. Typically, manufacturers have a program where if we sell it in the first 15 or
30 days, we pay zero floor plan. So our goal is to sell them really quickly so that we don't have
to pay floor plan. But at the end of the day, it doesn't make sense to give a car away that's
been here a week. And I want to let everyone know too, a new car that's been here 300 days,
there's nothing wrong with that car. It's a brand new car. It just happens to be
a make model trim that no one's bought for 300 days. And so it makes more sense to get really
aggressive on those cars. And I get my sales managers and my sales people to focus on those
old cars to get them out of here. How many times would you say a vehicle that's like 300 days old?
How many times would you say if you've already detailed that vehicle so that people would stop
walking around it, including your salespeople? Because in many cases, that's what happens. The
salespeople walk past it, don't even look at it. And if they're not looking at it, they're certainly
not going to share it with the customer. So please explain how many times sometimes you have to
detail a car in order to keep it looking fresh on the lot so that people won't just walk past it.
Oh, yeah. Some of those 300 days old ones have probably been detailed more than
I would like. We've probably sent someone a handful of people and extended test drives on them.
My Lincoln showroom is pretty small, so I've only got two slots to put cars in the showroom,
but I've always got two of my oldest cars in the showroom cleaned up so that
they're in front of everyone's faces every day. Now, if you're just joining us, this is Joe Lewis.
He manages and runs part of the JC Lewis dealership family, jcluis.com down in Savannah, Georgia.
Again, no financial quid pro quo here. We have no commercial relationship with Joe or JC Lewis.
We love the transparency. And again, if you're just joining us, Joe's talking about his
aged inventory. The car market has finally flipped. And you made a really good point, Joe,
at your dealerships. You've got some Lincoln's that have been sitting for over a year. Your oldest
Mazda you have is only about 100, 125 days. So when we talk about the car market flipping,
it's a little bit broad strokes the way we describe it here on YouTube. It's different
based on every year make model trim and region. And so can you talk a little bit about the dynamics
you're seeing across the board at some of your other dealerships? And we'll switch over to used
cars here in a minute as well. But what's the distinction between Lincoln, Ford, Mazda right
now? Yeah, a lot of it just depends on your location, your region. Some regions and districts
and zones will be heavier with inventory than others. Mazda, for instance, we happen to be in
a region that is lighter in inventory. If you go up in the Northeast or you go out to Texas,
they're sitting a good bit longer. And the same could be true for Lincoln. I'm sure there's
dealerships, there's Lincoln dealerships out there that have an oldest car about 150 days old,
whereas ours is 380, 390. So a lot of it just depends on market because it's a business that's so
fluid. The manufacturers try to send the cars where they're needed, but it's clear that sometimes
too many get sent in certain regions of the country. And I want to remind everyone this is
part of the tool set my dad and I have built over the past five or six years back on CarEdge.com.
If you go to the car search, just click shop new or shop used. All you got to do is scroll down,
you'll start to see days on market right here. So how long has the vehicle been advertised for sale
by a particular dealership? And then one of the really interesting things, Joe, is if you click
into any of these vehicles, you can also get, well, most of the time you can get that market
day supply. Let me click on a different one here. We'll click on maybe this one. There you go.
Market day supply. So 87 days supply of inventory. Dealers in this region have sold 31 of this type
of vehicle in the last 45 days, but they have 61st sale. These are some of the data points I
imagine you look at as a manager. How quickly are returning our inventory? How long is it sitting?
How many in our region have sold in the last 45 days? How much is available inventory? This is
the same type of information that customers can equip themselves with to be more knowledgeable
when they go have that conversation. There are some cars that you shared with us
that you're willing to take an additional $1,000 off your online advertised price.
There are probably many other cars right now that a customer comes in and demands $1,000 off
here and say, no. And so having that level playing field of insight and intelligence can
ultimately make this a smoother transaction for you and for the customer. Tell me if I'm wrong here,
but that's been my hypothesis for years now. Yeah, no, I mean, you're pretty spot on.
You know, if I've got, and same thing with used cars as you want to transition to that
conversation, you know, if I've got a used car with a really low market base supply,
I know there's not many out there they sell really quickly. Well, I'm going to price that car higher
than I would use a trade-in we get that sells really slowly and the market's saturated with.
So, you know, a lot more goes into this than people think. We don't just pull a
number out of a hat and be right. Maybe you should try that.
Could be an interesting business strategy.
30 days. Let me know how it works out.
Let's talk about the used car market for a few minutes here. I'm going to pull this data back
up on the screen from Cox Automotive, which is the industry conglomerate. You know,
everything that underpins the auto industry, retail auto comes from Cox for the most part.
Used vehicle inventory sets new high for the year as sales slow. Now, to be clear here,
the numbers are still staggering. We only have 2.26 million used cars in inventory. The day's
supply is below 50. The new car side for the industry is over 75. And the average listing
price of a used car is pretty doggone high at almost $26,000. But Joe, talk to us a little
bit about what you're seeing in the used car market. Is it also a buyer's market on the used
car side of things? Is it as much of a buyer's market? What are you experiencing at your dealership?
Yeah, you know, it's the market day supply is definitely higher. It's definitely taken a longer
time to turn our inventory. We as a group have always strived to sell our used cars really
quickly. So we'd price them more aggressive right off the rip. Because again, we don't want to pay
a lot of floor plan holding all these used cars. But, you know, a year or two ago, we saw
day supply unused as low as 20 or sub 20 in a couple of our stores. And now to your point,
it's closer to 40 or 50. So it's definitely a buyer's market for used cars right now. But
on the flip side, consumers have to be aware that since prices are going down,
since the market saturated with used cars, the same thing is going to happen on your trade-in.
Your trade-in is not going to be worth quite as much. However, you're still getting a really
good deal on the newer used car that you want to buy. But a lot of people don't think about that
way that it does go both ways. If used cars are selling for less, that means your trade-in's
worth a little bit less than they were, you know, six months a year ago, two years ago.
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Have you changed how you acquire used cars over the last couple of years?
Because I know primarily when I was doing this, it was trade-ins and we would go to the auctions.
But dealerships today are trying to figure out other ways to get cars, whether it's trying to
buy them out of their service lane when people bring their car in for service, whether it's
advertising to let people know that if they want to sell their car, they can sell it to you at your
dealership. Have you changed how you're trying to acquire your used car inventory?
A little bit, but really not much. We've always been a dealer group that tries to buy little,
if not none, at the auction because we realize that customers are a little bit more hesitant to
buy a car that they know came from the auction, especially if it's... We're down in southeast
Georgia and so if people see a car fax from Michigan, they're scared about rust and all
that kind of stuff. We try to focus on trade-ins. We try to focus on the service drive. We buy cars.
We have a car max less than a mile from our store. We partner with car max on a platform
called Max Offer. If car max give you $22,000 for your trade, we can give you at least that same
number. Just trying to pull all the levers, lease turn-ins, things like that to get as many trades
as possible. We'll still go to auction every now and then if there's a demand for a certain kind
of car that we're just not getting on trade, we'll go to auction every now and then, but I'd say 90%
plus is from trade-in, street purchases, things like that. Joe, I want to come back to some of the
comments you made around the fact that used car prices are coming down. They are more negotiable,
which has this impact on trade-in values. We've got members of our community, which I think dad
have listened to us for years now have us say, excuse me, buy a car in December. You've got
E-Rodriguez here. Hold out till December, people. You've got no name here. Yes, wait till December
when the cars will be even more aged. My dad and I have been talking about this three-legged stool
recently. The three legs of that stool, the three legs of the car deal, the outdoor price of the car
you're buying, the vehicle that you're selling, and you're financing. For most people, that's the
trifecta. Talk a little bit here. Put yourself in our customer's shoes, our audience shoes. When
are you timing your purchase? Is there an incentive to wait till December because the trade-in value
could go down? Is there an incentive to do it here at the end of October today or tomorrow because
you know what you're getting into? Help us. You don't even have to give us an answer. Just help
us. You're with us how you think about this because it's an interesting conundrum for our
community. First off on the trade piece, I would say that if the car you're looking to buy has a
weighting is not going to help you. For instance, the 25 Lincoln Corsair Hybrid has 0% for 72 and 0.9
for 84. Lincoln's obviously trying to get rid of these cars. It's safe to say that the deals are
not going to get better than that. If you have a trade-in and you want a 25 Corsair Hybrid at 0.9
for 84, if you wait till December, your trade is going to be worth less than it's worth right
now. Some people will say, oh, well, I'm going to put that car in the garage and not put any miles
on it. Well, the car is still older in December than it is now, so it's still going to be worth less.
And then on the out-the-door piece, I love that y'all harp on that because
you'll see a lot of dealerships and a lot of the ones that we compete with
offer crazy low prices online. Let's just say use cars because there's some pricing restrictions
on new, but I've seen it on new as well. You might see a used car that's priced $1,000 lower than mine
and you go, oh, that's a better deal. Well, when you get there, they add a CPO fee, they add an
administration fee, they add $2,000 worth of dealer installed options on it that you don't want that's
not on the online price. And when you add all that stuff, the out-the-door price is 2,000 bucks
higher than ours, even though their online price is less. So you've really got to be careful. We
try to be really transparent and send out quotes on all of our inquiries within a day or two so
that they see that breakdown of taxes, tax fees. Yeah, I mean, I hope that kind of answered.
It definitely helps to answer for me how you think about it, which is that vehicle that you're
looking to trade in and sell, even to your point, because I would push back, hey, it's older. The
reason it's worth less in six weeks is because the market's deteriorated. Six weeks older doesn't
mean it's going to be worth, in my opinion, and I'm to be very clear, not the expert here. Joe
runs dealerships presently. My dad ran them for 40 years. This is just my mental model, how I think
about it. Cars are depreciating right now faster than we've seen since 2022 and 2023. A dealer,
a businessman, a businesswoman is going to be way more tentative on the offer they're going to give
you six weeks from now. But to your point, is Lincoln actually going to juice up the offer they're
making on their financing even more in December? I don't know how much lower you can go. And then
you've been incredibly transparent with us. How much lower can you go on the selling prices of
these vehicles today versus in December? And if you're looking to sell drops by another $500,000,
that's meaningful. So I do think there is an incentive to really strongly consider making a
purchase today if you have a trade. If you don't have a trade, then you can keep waiting.
Yeah. And like I said, it depends on the car. If it's a car that's got 0% for 72 months,
you know, now is a great time. If, on the other hand, a 25 navigator, there's a super low supply,
even though there are $100,000 to $120,000 cars, there's a super low supply of them.
We don't have many. I believe the rate right now is $59,000 for 72. Is that rate going to get better?
Yes. But if you wait till December or January when the 26th is start coming in,
now you're on the risk of, can I find the make and model and trim that I'm looking for? If you're
really specific, hey, I want a navigator L, white with the light interior, with the bench seat,
et cetera, et cetera. Well, if you wait till the incentives are really, really good,
it's probably going to be really hard to find that car.
You know, I mentioned the other day that if a customer has a budget in mind and they find
a vehicle that they like and it fits into the budget, then just buy the dancing. Don't try
yourself crazy trying to figure out exactly when the bottom of the market's going to be,
because typically we'll always miss that. Okay, so if you can buy it when it's close to the bottom
of the market, don't feel bad that you didn't get it right at the bottom of the market.
Right. If you are not in a hurry and you are willing to accept what might be available
at the end of December and not be quite as picky as to what it is that you want,
then there could be and many times are really great deals to be had towards the end of the year
as you at the dealership are trying to hit your goals that you've set for the year and damn it,
Ford and Mazda and Lincoln are trying to hit their goals and pushing you to become even more
aggressive. But you have to be open to the fact that you might not be able to get exactly what
it is that you want, except what you want is a really good deal. That might happen. It just might
not be on the car you wanted. Yeah, we see it all the time. There's a lot of people that think
way too much about the process. Now, obviously, if you go to a dealership that has their used
car listed at 20 grand and after taxes, tag fees, it's 35 grand out the door like I've seen
Zach show in social media. Obviously, that's probably not the place you want to do business,
but as long as you find a transparent and a dealership that tries to do things fairly like
we try to do, it's pretty easy to get a good deal these days. I would also say the timing
piece of this, pops and Joe, we're in the fourth quarter. It is a market that has flipped whether
it is the penultimate moment. Who knows? I think that's why you're hearing me so strongly
and vehemently over the past week or so. Really say it is a buyer's market and try and build that
narrative because whether you're going to get it absolutely perfect from a timing perspective,
who really cares? You're in a buyer's market, which is so different for our audience and
our community and quite frankly, everyone in the United States who goes to a car dealership
by car. That is so different than it was this time a year ago, this time two years ago. It's
been a seller's market. I wish I had it queued up. Actually, give me a second, guys. I'm going to
pull it up because it is a perfect example of how different today's market is than it has been in
the past. Bear with me for one second. It's this chart right here. Let me pull it up on the screen.
This chart right here shows you the narrative. This is the average dealership gross profit per
vehicle metric. White is new vehicles. Blue, dark blue is used vehicles. It doesn't get any more
clear than this. Dealerships are making less money per vehicle sold. It was a seller's market
for four years. We need to be very vocal that it is now a buyer's market. I don't want to say
customers can put their guard down because to your point, Joe, there are a lot of dealers out
there that still play shady games. Are you going to get the absolute best deal if you go on December
17 versus doing it here at the end of October? I don't know. All you need to know is that the
damn buyer's market finally, and it's important to just continue to beat that drum because for four
years it wasn't. That's good news for consumers as they have some leverage nowadays that they
didn't. I had one more thing I would like to share, which is we're talking about new model
year vehicles coming into market. I just for fun, Joe, went to Cincinnati, Ohio. I mean,
there's some Lincoln dealers out here that just still have, I mean, look at this row. You've
got a 26 Nautilus next to a 22-24 Nautilus. It's absolutely nuts. There's still some 24
model year inventory out there that's being sold as new vehicles. Obviously, we have 25s and 26s
as well. There's a crazy mix of model years out there in the market today. Yeah. I would just
say the dealer that still has a 24 new car in the lot is not doing a great job at managing
the sales. I've got 25s, but the reason I've got 25s is we're still getting,
Lincoln and Mazda are still sending us truckloads of 25s. Mazda's a little quicker to
go to the next model year. Recently, Mazda's only sending us 26s except the Miata because
they haven't made the 26 yet. But try to do a really good job of managing inventory and
selling those old ones because I don't want a brand new 20-24 on my lot.
I would hope not. My kids is. If that new car manager worked for you, he'd be out looking for a
new job. I'm just guessing. I do have a question for you about affordability. Are you seeing
people more stressed out about taking on the debt of an auto loan today than perhaps we had seen
two years ago? Yeah, definitely. Repossession rates are getting close to all-time highs right now.
We're seeing more and more people come in, they're budget conscious.
And frankly, it seems like it's one or the other. You either have the customer that comes in and
buys a navigator for cash, or you've got the customer looking for a $15,000 or $20,000 car that
wants $300 car payments. But you're definitely seeing that squeeze right now as affordability
comes into view. Has the credit quality of your customers gone up or down recently?
It feels like it's gone down. I think the people who have higher credit are trying to time the
market, whereas the people that don't have the higher credit are buying because they have to buy.
And so, you're always seeing a mix of both, but it does seem like when times get tougher
and things are squeezing a bit, it does seem like you get more of the lower credit quality customer.
Now, folks, if you've enjoyed today's show, obviously, subscribe to the Car Edge Live channel.
Joe Lewis manages multiple dealerships over at JC Lewis. You can check out their website,
JCLewis.com. It feels repetitive, but I'm going to beat it here again. Joe does not
pay us to come on these shows. No dealers pay us to come on these shows. You bring Joe on here
because he's incredibly transparent about what's going on at his dealerships and gives us an
incredible insight into what he is seeing. So please, if you're interested and you're in his
area, heck, if you're not in his area, check out JCLewis.com. Again, today's show is brought to
you by CarEdge.com. We are running our promotion since it is a buyer's market. Take advantage of
our $300 off for the car buying service as well as 30% off CarEdge Pro. And then Joe and Pops,
just want to share with both of you here because we got to let Joe go run his dealership, get him
out of here and get back to work. We were in automotive news yesterday. Well, Joe, you weren't,
but we were. Me and my dad, artificial intelligence will change the dynamic of third-party leads,
a little, excuse me, letter to the editor that I got to write, got published over in automotive news.
Really cool seeing the amount of press that we're getting. I don't know, Joe, if I share it all with
you, but my dad and I were in the damn economists this week. What an incredible moment for our company.
Really cool stuff. Love you guys and what y'all are doing. It's awesome. Thank you, Joe. We really
appreciate that. Again, check out Joe's website, check out our website and leave a comment on
today's show if we should dress up in costume tomorrow. Joe, what are you going to be for Halloween?
I don't know yet. I don't know yet. Any ideas, put them in the comments, but I'll dress up as
whatever you want. If it means I can sell some of those old cars. Also, let us know in the comments
if you want to see Joe come back on here in the future. We always love getting his insights.
Guys, thanks so much for your time today. This is really fun and Joe, all the best. I hope you
sell those one-year-old cars. Thank y'all. Appreciate it as always. Thanks, Joe. You're the best.
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our members are losing more weight with expert nutrition and side effects support. I'm Mike
and I've lost 135 pounds. Weight Watchers prescribing GLP-1 medications. It's been life-changing.
I'm Shariah and I lost 80 pounds on Weight Watchers. I realized that it would take more than a
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