The new car market is where people buy cars that have never been owned or driven before. It changes based on how many new cars dealers have and how much people want to buy them.
Day supply tells you how long it would take for all the cars at a dealership to be sold if they keep selling at the usual speed. A high number means lots of cars are available.
MSRP is the price the car company thinks the car should cost when you buy it. Sometimes you pay more or less than this price depending on how many cars are available and how many people want to buy them.
Repo vehicles are cars taken back by banks or lenders when the owner doesn't make payments. These cars are then sold as used cars, sometimes cheaper but with unknown issues.
Lease returns are cars that people give back to the dealer after renting them for a few years. These cars are usually in good shape and show up for sale as used cars.
Spring selling season is when lots of people try to buy used cars, often because they get tax refunds. This makes prices go up because more people want cars then.
Supply and demand means how much stuff is available and how many people want it. If lots of people want something but there isn't much of it, the price goes up. If there's a lot of it but few buyers, the price goes down.
Day's supply tells you how many days it would take to sell all the cars available if people keep buying at the same speed. If the number is low, it means there aren't many cars to choose from.
A pre-purchase inspection is when a mechanic checks a used car carefully before you buy it. This helps you know if the car has any problems so you don’t spend money fixing it later.
Wholesale values are the prices dealers pay when they buy used cars to sell to others. These prices can go up or down depending on how many people want cars and other market reasons.
Left-hand drive means the steering wheel is on the left side of the car, which is normal in countries where people drive on the right side of the street.
Right-hand drive means the steering wheel is on the right side of the car, which is usual in countries where people drive on the left side of the street.
Pivoting away from EVs means car companies are slowing down or changing their plans to make electric cars.
LIVE
It's noonish here in Venter City, New Jersey, and our nation's capital, Washington, D.C.,
and this is Car Edge Live for, well, St. Paddy's Day, ladies and gentlemen.
Got to get me some corned beef and cabbage. And with your hosts, me, Ray here in the
windy, cold, chilly, Venter and Zach hanging out in this apartment in D.C., what is going on there?
Handsome. Good afternoon. Pop's glad to spend some time with you here on this Tuesday, March 17th.
Today's show is brought to you by the fine folks at CarEdge.com. I encourage everyone asking everyone
to click on the link in the top of the description, CarEdge.com. We're working on some new things here
and we want your input. We want your feedback and that is really, really, really important to us.
Now, Dad, we've also got the dealer ratings and reviews, CarEdge.com, dealer ratings and reviews.
We encourage everyone to take a peek at that as well because it's also in beta and we need your
feedback and your input there as well. Today, Pop's, I want to focus the conversation on the best
time to buy a car, giving a car market update for Q1 of 2026. And you know where we're going to start,
Pop's? Oh, well, since we didn't talk before the show, I have no damn idea. We're going to look at
the Cox Automotive data that has come out so far for the month of February. We're looking in the
rearview mirror. We're going to start with the new car market and then we'll turn our attention to
the used car market. Let's start here, Dad. It depends on who you talk to. 2.85 to some even say
in automotive news, over 3 million new vehicles in dealer inventory right now. We have a significant
amount of inventory on the new car side. So we're going to start here with a Q1 update
for new vehicle inventory, new vehicle buying conditions, and then we'll move over to used
cars and used vehicle inventory. Let's start here, Dad. 2.85 to over 3 million, depending on who
you ask, new vehicles and inventory. It's a big number. It is. And depending on who you ask,
it's anywhere from a 75-day supply to, well, a 92-day supply, depending upon who you ask
and who's a daily sales rate you're actually tracking. So to say that there could be some confusion
as to, A, what the inventory levels actually look like at new car dealers and what the day supply
of new cars looks like would be, well, an understatement. But even at a low number of 2.85 million,
and even if we said it was a 75-day supply as opposed to a 92-day supply, the fact that the
average listing price is $49,170, that just continues to, well, speak volumes about how
manufacturers have set up what type of vehicles they're going to produce and at what price points.
And it just further emphasizes how they've abandoned the lower priced vehicles in an effort to,
I don't know, have larger profits to offset those EV losses.
If I may, Dad, this is what happens if you Google search car prices and go to the news tab this
morning. New York Times, it's just crazy. High car payments make ownership feel impossible.
Financial times rising prices push U.S. car ownership costs to breaking point.
Car and driver automakers have revealed just how much Trump's tariffs are costing them.
And that is also a massive number. Billions, 35 of them.
35 bills, yeah.
Automakers are saying tariffs of cost. So, Dad, when we look at the new car market and we're
saying, hey, when is the best time to buy a newer used car for the year of 2026?
When we look at this data that's coming in, let's give the update for Q1.
This is a healthy amount of inventory for the auto industry right now.
This is more than the automakers and the manufacturers would want.
And it's a different story depending on every single brand, which we're going to look at here,
and different classes of vehicles as well. But the long story short here is, yeah,
buying a car, owning a car more expensive than ever before. Tariffs have played a role in pushing
up those prices. That's one of the pieces of the equation. And if you're in the market to buy a car
this year, the doldrums of spring at the dealership, this could be a moment where you have a lot of
leverage. And we're talking just new cars right now. Just new cars we're going to move to used in
a second. No, I understand that. And I think one of the reasons that you're seeing this disparity
between automotive news and Cox Automotive as far as how many cars are inventory and
what the day supply is, well, traditionally, this is the time of year when new car inventories
rise. Because we've just entered spring selling season. We've entered tax season. So you would
expect inventory to increase this time of year. The hope is that the warmer weather brings out
customers again, more of them. What we don't know is whether or not it will.
There's so much going on in the world that are people going to look at major purchases and
maybe pull back. And if that's the case, well, then that would build a stronger case for having
leverage for those who actually want to go to a dealership or contact a dealership and buy a car.
Because if there's less traffic, then the dealers become more concerned and more motivated.
Yeah, absolutely. Let's break this down, dad. Let's see where there is consumer demand and
there is not consumer demand. These are going to identify pockets and opportunities for that
buying moment for new vehicles. And then we're going to switch and we're going to look at the
used vehicle update as well. The February numbers indicate that demand varies widely by price band.
All right. So vehicles priced in the $35,000 to $45,000 range continue to outperform carrying the
leanest inventory at an 81 days supply, indicating that real demand is running ahead of available
stock. So think about that for a second, dad. If you're in the market right now and you're tuning
into car edge because you want to learn when the best time is to make that purchase and negotiate
that car deal, you're still probably going to be looking at a difficult car shopping experience
if you're looking at a $35,000 to $45,000 vehicle. Difficult to a relative term here.
81 days supply is still quite high relative to where we had been in the past. But that's the
first insight here, dad, is that the car market for new cars right now in this moment, this update
for 2026, looks different depending on brand and obviously price point. What it says to me is when
you look at that, that the certainly the more affordable cars that could appeal to a larger
customer base are in shortest supply and there's the highest demand for them, which would indicate
as a customer, you would have less leverage. Okay. So the folks that can afford the least
are going to get probably the worst deals in comparison to paying say a percentage of MSRP.
They might be paying closer to 98 or 99% of MSRP as opposed to on those higher profit margin,
more expensive vehicles, perhaps you can save 7, 8, 9, 10% from MSRP. So you can see where
the manufacturers are artificially keeping the number of more affordable vehicles lower
than what the demand would call for. Yeah, absolutely. Then you can see that next line
down there in the next paragraph. It says the opposite dynamic plays with vehicles in the 45
to $55,000 range, which has become the industry's stretch zone. Middle income buyers returning
to the market after four or five years are likely surprised by the escalating price of
familiar vehicles with monthly payments much higher than they remember from their last purchase.
This mid-range band represents the weakest inventory efficiency at approximately 120 days
supply. That's crazy, man. So we've got very limited relative because, again, 81 is still a
high day supply inventory, meaning there is customer leverage there at the low end of the
market. Crazy to say the low end of the market is 35 to $45,000, but that's what it is.
Then we're going to talk about it here in a moment. Higher up in the market, there actually
still is demand, but it's in this stretch zone, 45 to $55,000, which to add to your point at the
beginning of the show, average transaction price of these vehicles is right in there. It's about
$50,000. It gets skewed by obviously the more expensive vehicles, but a 120-day supply. If I'm
thinking about buying a car right now, yeah, that's good news for me. There should be some deals to
be had. There should be some dealers that are motivated because that stretch zone is too much
of a stretch for people. People might want more and we've established over the course of time
that people need to look at what they need as opposed to what they want because once you start
looking for things like what I want, typically the price goes up. I don't want to be the guy with
the base car. I want to be the guy with the premium car. What it says to me is those people that
would probably fit comfortably in the 35 to $45,000 price range cars are having a much more
difficult time convincing themselves that they can afford to stretch up to that $55,000 premium
car that they really, really want because as we know, the average new car payment today,
I think the last thing I saw was it was up to $802 or $803 a month. That is way too much for
someone to stretch for in today's world for a lot of people. If you're a premium car buyer that would
buy in the $55,000 to plus $1,000 range, you can get yourself a hell of a deal if you dropped
yourself down into the $45,000 to $50,000 price range cars. If you're somebody that wants to stretch,
you're better off not than just staying in the $35,000 to $45,000 price range cars.
Now, Dad, that's the new car side of things. Let's talk about the used car side of the market.
Used vehicle supply tightens as sales increase. All right, so juxtapose the numbers that we were
just looking at a moment ago is almost 3 million vehicles in new car inventory. A day's supply
about double, more than double the day supply of used. In an average listing price, that's almost
double the amount of a used vehicle. We have fewer used vehicles for sale, Dad. We have a much tighter
day supply and obviously a significantly lower average transaction price. You and I both know
this intimately and it's important for everyone to understand the quality of used cars for sale
today is very different than it was in years past. More repo vehicles showing up, more fewer
lease returns that are higher quality, etc. What's the read on the used car market right now, Dad?
Best time to buy a newer used car. Let's talk used car. This is that first quarter of 2026
update. What's the situation? Well, if I was in the market for a used car, I would be waiting.
Historically speaking, the spring selling season and tax season is perhaps the worst time to be
buying a used car because that's when you're going to pay the most relative to market conditions.
There's a huge influx in buyers this time of year. We know that the day supply,
which is an extremely important metric for dealers, is much lower than where they would
like it to be and much lower than where they need it to be. If we have more demand and a lower day
supply and a poorer quality of vehicles, you are going to have to overpay in many cases
for a poorer quality vehicle than you would have, say, last month or two months ago,
or then you will have if you were to wait three or four months. This wave will crest
the middle of May. If you can hold off on a used car, I would recommend you do that.
If you are forced in the market and you have to buy something because your vehicle was total
or something was stolen, whatever, it's just broken down. You're probably going to pay more
than you should if you buy over the next three months. It's not the best time to be buying
used cars. It is, perhaps historically speaking, this time of year, the worst time to be in the
used car market. There's a couple of charts that help demonstrate this and we'll go to them in a
second, but I want to comment not dissimilarly from what we saw in the new car market. Look
at this stat in the used car market. Price-conscious buyers have limited options for affordable
used vehicles. Used cars priced below $15,000 continue to have low availability with only
31 days supply, which is nine days below the overall industry average. The top five sellers
of the month had an average price of $23,578, nearly 7% below the average listing price for
all used vehicles sold. Think about that for a moment. It's your same comment over on the new
car side of things. Those who can afford the least to pay the most are going to end up in a
situation where there's such limited supply and high demand, which at the end of the day here,
for all of you that tuned into car edge, that's what this is. This is supply and demand. In this
particular case, you've got way too much demand and not enough supply. That's the situation in the
used car market. Now, to your point around timing, if I may all scroll up here, this chart right here
shows you the day's supply of inventory every year all the way back to 2022. You can see what
happens this time of year. The chart goes down. That means that there's more buying activity and
not enough supply. Quite frankly, we are at the lowest level. This is the dark blue line. We're
at the lowest level we've seen in the past five years in terms of day's supply. The used car market
right now is the most tight, the most constricted it's been in the past five years, dad. I think,
yeah, the update for Q1 on the used car market is it's a really tough market
to go out there and try and find a quality deal.
Well, forget finding a quality deal of trying to find a quality vehicle. If you're in the
$15,000 price range, you are going to be hard pressed to find a quality vehicle at a reasonable
price. For the most part, they don't exist anymore. You are probably looking at an
eight, nine, 10-year-old car with probably 100,000 miles or more on it. If you are looking at those
type of cars, it is incumbent upon you as a buyer to make sure that you get a pre-purchase
inspection done on it. You know what it is that you're getting. You don't want to spend $15,000
and then find out, oh, it's going to need another $3,500 to $5,000 in repairs
to make it a safe, reliable means of transportation. This would be a situation for anybody out there
looking at those type of cars that spend $150 to $200 to get a pre-purchase inspection done
before you commit to actually buying the car. If the dealerships that you're looking at for
these cars or a private party won't allow you to get that inspection done, don't buy the car.
I don't care how good it looks on the outside. You need to know what's going on on the inside
and under the hood. If they won't allow you to do a pre-purchase inspection, walk away.
Absolutely, dad. Now, I just dropped a link in the chat. Tomorrow,
we will have deal school over on the main car edge channel. This year, we built a checklist
that you can use. It's caredge.com slash deal-school. Check that out back at caredge.com
deal-school. A whole checklist here. Everything that you were just talking about for used cars,
dad, it gets covered in this as well. Encourage everyone to check that out. I just dropped a
link in the chat. That's the new car market. That's the used car market. Let's switch gears,
dad, and let's go ahead. I don't know if you're ready for this,
but we got an update from Blackbook today. Once again, the amount of increase in wholesale values
compared to the same week a year ago or two years ago or three years ago is so significantly higher
than it's been. There it is on the screen. You can see that the market is up
it was down a quarter of a point. That's a four tenths of a point swing. If you scroll down
to my favorite chart, you know the chart. Keep going, keep going. There's the chart.
That is what the wholesale values are doing. When you compare it to previous years,
these prices are significantly higher at this time of year than they have been. Once again,
it points out it's going to be even more difficult than in years past to find those reasonably priced
higher quality used cars. Does this not change the dynamic, dad? The traditional heuristic was
you want to get a better value, you buy a used car, something that's already depreciated a little bit.
Right now, we know there's a massive oversupply of many new vehicles out there. We didn't even
touch on the brands that have the highest supply, but you've watched enough of our videos to probably
have a sense for that. Wouldn't that change the logic and the rationale to actually say,
you know what, I am going to go find a better value and that better value is going to be
a new vehicle instead of a used vehicle? I would think so. Do you significantly want to overpay
for a lower quality older used car, or do you want to get a much more significant discount
on an overpriced new car? Realistically, it's all based on what you can afford.
For sure, for sure. But set that aside. Say someone's already done that work,
now I'm just value hunting. I'm looking for the best value. That equation has changed.
Yes. I mean, there are going to be some brands of new cars out there that are going to offer at
least off of MSRP a better value than other cars. Now, ultimately, even if you get a huge savings
off of MSRP, is the car still worth the money that you have to pay? On some of these brands,
that's a real question mark. But it would indicate to me that there should be more available savings
for many of the new cars out there, especially relative to what the savings will not be on
many of the used cars out there. Yes. It's just a totally different market dynamic.
Dad, I wanted to switch gears. We've got more trouble over at Volkswagen and with Audi.
Some of you saw this. Audi is killing the A8 sedan. Why? Because they want to focus on their
high-margin SUVs. Last time I checked the Q5, it was one of the slowest selling vehicles in the
United States of America right now. I'll be curious to see how this playbook ends up being
executed. But yeah, Dad, Audi getting rid of the A8, one of the most stalwart sedans out there.
And may I say, it was a high-profit margin sedan that just nobody wanted,
that it was so severely overpriced. I mean, when I was with the Audi store, it was crazy as to
how expensive those vehicles were. They were lovely. They were nice vehicles. But my goodness,
gracious, the size of the discounts it took to sell them. So I'm surprised, honestly,
that it's taken them this long to kill the A8. They should have looked at the sales numbers
years and years and years ago and said to themselves, what's the point? And will they
be able to sell more Q7s because of this and more Q5s perhaps? But either, I don't think it's a win
either way for Audi. Okay, great. So they can focus on the high-margin SUVs. Well, if people
aren't buying them, what the hell difference does it make if you're focused on them?
Exactly, man. Exactly. It's interesting right now, Dad, because a lot of the headlines over
an automotive news kind of indicate these challenges that these automakers are having. Obviously,
this one here with Audi, there's another one this morning. Dad, we have more of the Japanese
automakers reverse importing their vehicles back to Japan like Nissan now getting on the
fun of this, which is just a little bit crazy to think that it makes economic sense for these
companies. In this case, Nissan is taking the Murano, which they made in the US,
and they're bringing it back to Japan. They're shifting vehicles all the way from... And it's
just an indication of how volatile and how much the auto industry has evolved recently.
Well, I was thinking of a word that started with F, and the second word was up as to how F'd up it
is. The world has turned on its head in many cases. I mean, things are just 180 degrees
from where they used to be or where you would expect them to be. And the sad reality is that
Japan has agreed to accept the build standards and the safety standards for the United States.
And so these vehicles that are going to be imported from the United States,
they don't have to do any adjustments on them at all for Japanese standards. Well,
the sad reality is that they're sending over vehicles that are left hand-dried.
And in Japan, the vehicles are right hand-dried.
So how does this work? In reality, how does this work?
So it means that these become a niche vehicle
because it's set up on the wrong side for drivers. And so somebody in Japan could say,
well, I've always wanted a Murano. Now's my chance. So they're going to export these vehicles.
And the headline sounds like it's a big deal. The reality is that they're going to sell so
few of these because they are left hand drive as opposed to right hand drive,
that the total numbers that might get imported and actually sold are maybe around 6,000 cars.
Well, I would say a company that sells 3.2 million cars worldwide,
6,000 doesn't sound like it's enough to make any type of impact whatsoever.
But it was a way to show the United States that we're going to import vehicles from the United
States to the Japanese market. It's also interesting, Dad, because one of the
brands doing it, Nissan, has a tremendous oversupply of inventory in the United States.
And they look for anyone and everyone to buy their vehicles, whether it's a government fleet,
a corporate fleet, or now reverse importing their vehicles back to Japan as niche cars.
It is a little bit of a strategy here to sell more cars, reverse import what you produced in
America back to your home country, even if the steering wheel is on the wrong side.
That is crazy, but that is now what's happening.
It is, but that's the world we live in today.
Yeah, it really is. And it's also, to be clear here, a lot of what we're talking about today
does come on the heels of, or as a direct result of, excuse me, what's happened with
regards to global trade and tariffs. And I have to bring up, we mentioned it briefly earlier,
but here it is, tariffs have cost automakers $35 billion. And so it's really important to
understand that that's a lot of what's driving Audi's decisions, Nissan's decisions. Many
of these automakers' decisions is this impact. Let's add this up for a second.
So the reports are that the tariffs have cost automakers $35 billion.
The reports are that automakers pivoting away from EVs is costing automakers another $70
billion. That's $105 billion that in essence has disappeared. That's a lot of damn money.
And so if you have to make up that $105 billion, you're not going to be producing as many low-profit
lower-priced cars as what the market might want because you just can't afford to. It's really
kind of crazy. It really, really is. All right, Dad, we also have something kind of crazy,
an incredibly thoughtful and kind contribution from Lego Joe. Thank you, Lego Joe. Really
appreciate this. Using CarEdge and their free tools for valuation, dealer ratings, and market
comps, I was able to get a certified used vehicle this week. And for a few thousand less than they
were asking, thank you, CarEdge. That's awesome, man. That puts a huge smile on my face. Thank you,
Lego Joe. Yeah, when people get to utilize the tools that are available and use it to their
advantage and make a better deal, that's what we're here for. That's why we exist. That's
very nice. Yeah, it really is. Thank you, Lego Joe. Appreciate you. Appreciate you sharing that.
All right, Pops, let's call it a show for today. We're back tomorrow with more CarEdge Live. If
we can help you out with anything, caredge.com, please check out the website. And like I said
earlier, we've got a lot of things in beta, so please check those out and share your feedback
with us. Dad, it's cold and windy here. All right, the storms moved through yesterday and now,
it's pretty frigid. So hopefully that happens and it warms back up soon.
Well, it's supposed to be up to the 60s here in the vent near on Sunday before it drops back down
into the 40s and 30s again. But yeah, looking forward to Sunday when it warms up.
Yeah, absolutely. All right, folks, we'll see you back here tomorrow. Love you, Dad.
Love you too, handsome. Thank you, everybody. See you tomorrow.
If you liked the show, please take a moment to rate, review, and subscribe. It really does help
the show to grow. Thank you for listening.
About this episode
A deep dive into the Q1 2026 car market reveals a complex landscape for buyers. New car inventory is high, especially in the $45,000-$55,000 range, offering potential deals, while more affordable new cars remain in short supply. Used cars are scarce and pricey, especially below $15,000, making spring a tough time to buy used. Tariffs and shifts in automaker strategies, like Audi killing the A8 sedan and Nissan reverse importing vehicles to Japan, add to market volatility. The hosts emphasize using tools like CarEdge for smarter buying decisions and highlight the importance of timing and pre-purchase inspections.
Today on CarEdge Live, Ray and Zach discuss the latest data from Cox Automotive and the 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
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