This is what happens when automakers JACK UP prices | Episode 942
About this episode
Automakers are facing challenges as they raise vehicle prices, leading to decreased sales and increased inventory. The hosts discuss the consequences of high MSRP, including longer days on the market for unsold cars and the eventual need for manufacturers to offer greater incentives to attract buyers. They analyze trends in average transaction prices and the impact of rising interest rates on affordability. The conversation highlights how brands like Nissan and Stellantis are struggling to regain market share, while others like Toyota and Mazda are performing better. Insights into consumer sentiment and market dynamics provide a comprehensive overview of the current automotive landscape.
invoiced to a dealer
"...once a car has been invoiced to a dealer, a new car..."
When a car is invoiced to a dealer, it means the dealer has paid for it and now owns it. It's an important step in the car selling process.
When a car is invoiced to a dealer, it means that the manufacturer has billed the dealer for the vehicle, indicating that the car is now officially part of the dealer's inventory.
manufacturer statement of origin
"...clean certificate of origin, which is before a title, and manufacturer statement of origin..."
The Manufacturer Statement of Origin is a paper that shows where a car comes from before it gets sold to a dealer. It's important for keeping track of the car's history.
A Manufacturer Statement of Origin (MSO) is a document provided by the manufacturer that certifies the origin of a vehicle before it is sold to a dealer. It is crucial for establishing the vehicle's history and is often needed for registration.
retail customer
"...if they can't find a retail customer for it, they very well might just send it to the auction..."
A retail customer is just someone like you or me who buys a car to drive, not to sell it again. It's important to know who buys cars when talking about sales.
A retail customer is an individual who purchases a vehicle for personal use, as opposed to a dealer or business that buys cars for resale. Understanding this distinction is crucial in the automotive sales process.
new vehicle average transaction prices
"...new vehicle average transaction prices. Here's how they've evolved over the past few years..."
New vehicle average transaction prices show how much people usually pay for new cars. It's useful for seeing how car prices change over the years.
New vehicle average transaction prices refer to the average amount paid for new cars, which can indicate market trends and consumer behavior over time. Tracking these prices helps understand how the automotive market is evolving.
MSRP
"...average transaction prices for new vehicles typically go up as MSRPs go up. And you can see here, Dad, we are back over the $50,000 mark for new vehicle average transaction prices..."
MSRP is the price that car makers suggest dealers sell their cars for. It's like a recommended price, but dealers can charge more or less depending on demand.
MSRP stands for Manufacturer's Suggested Retail Price, which is the price that manufacturers recommend retailers charge for a vehicle. It serves as a guideline for pricing but can vary based on market conditions and dealer markups.
General Motors
"...when we were talking about some of the manufacturers, domestic manufacturers like Ford, for example, and General Motors..."
General Motors is a big car company that makes many different brands of vehicles, including Chevrolet and Cadillac.
General Motors (GM) is one of the largest automobile manufacturers in the world, known for brands like Chevrolet, GMC, Cadillac, and Buick. They produce a variety of vehicles from trucks to electric cars.
Stellantis
"...and General Motors and Stellantis who have run into issues seeing many of their vehicles sit on the market..."
Stellantis is a large car company that includes many brands, like Jeep and Dodge, and was created by merging two other big companies.
Stellantis is a multinational automotive manufacturer formed from the merger of Fiat Chrysler Automobiles and PSA Group. It includes brands like Jeep, Dodge, and Peugeot.
dealer markup
"...those average transaction prices were significantly higher, not because the MSRPs of the cars went up, but because dealers attached an additional dealer markup to those vehicles."
Dealer markup is when car dealers increase the price of a car above the suggested price. They do this when they think people will pay more for it.
Dealer markup refers to the additional amount that dealerships add to the MSRP of a vehicle. This can occur due to high demand or limited supply, leading to higher prices for consumers.
Audi 100
"...ium Pluses that have sold the last 45 days within 100 miles of Scottsdale, Arizona, yet dealers have 41..."
The Audi 100 is an older luxury car that was made for a long time, known for being well-built and comfortable. It's important in car history because it helped Audi become a respected brand.
The Audi 100 is a mid-size luxury sedan produced from the 1960s to the 1990s, known for its innovative design and engineering. It played a significant role in establishing Audi's reputation for quality and performance, making it a notable mention in discussions about classic cars.
Genesis GV70
"...Let's look at both of these. We'll start with the GV70. That was a GV80 was the more expensive one. Loo..."
Genesis GV80
"That was a GV80 was the more expensive one."
The Genesis GV80 is a larger luxury SUV with lots of space and high-quality features, designed for comfort and style.
The Genesis GV80 is a luxury midsize SUV that offers a spacious interior, high-end materials, and advanced safety and technology features, making it a strong contender in the luxury SUV market.
BMW
"...The first vehicle that pops in my mind for luxury mass market type vehicles would be Mercedes-Benz or BMW or Lexus. It certainly isn't Genesis."
BMW is a German car brand that makes luxury and sports cars. They are known for their performance and stylish designs.
BMW, or Bayerische Motoren Werke, is a German automaker known for luxury vehicles and high-performance sports cars, emphasizing driving dynamics and engineering excellence.
Lexus
"...The first vehicle that pops in my mind for luxury mass market type vehicles would be Mercedes-Benz or BMW or Lexus. It certainly isn't Genesis."
Lexus is a luxury car brand made by Toyota. They focus on making comfortable and reliable vehicles with many features.
Lexus is the luxury vehicle division of the Japanese automaker Toyota, known for its reliability, comfort, and advanced technology in luxury cars.
Hyundai Genesis
"...ten, when I think of a luxury vehicle, and I know Genesis has been around for 10 years now. The first vehi..."
Mercedes-Benz Be Mercedesbenz
"It's just, I don't, listen, when I think of a luxury vehicle, and I know Genesis has been around for 10 years now. The first vehicle that pops in my mind for luxury mass market type vehicles would be Mercedes-Benz or BMW or Lexus. It certainly isn't Genesis. That's not to take anything away from Genesis. I mean, they're good looking vehicles. They're attractive."
The Mercedes-Benz E 500 is a high-end car from the 1990s known for being very comfortable and reliable. People talk about it because it represents quality and luxury in cars.
The Mercedes-Benz E 500 (W124) is a luxury sedan produced in the 1990s, celebrated for its blend of performance, comfort, and durability. It is often discussed for its classic design and the reputation Mercedes-Benz has for building long-lasting vehicles.
engine issues
"...My suspicion is that even though it'll say Genesis on the engine, it's a Hyundai engine. The one thing that we know Hyundai has had issues with over their history is their engines imploding."
Engine issues are problems that can happen with a car's engine, which can cause it to not work properly. Some brands have had more problems than others.
Engine issues refer to problems that can occur within a vehicle's engine, potentially leading to performance problems or failures, which can be a concern for some manufacturers.
incentives
"...you start to see them increasing their incentives, but that has been what is so confounding about the car market over the past couple of years."
Incentives are deals or discounts that car companies give to help sell their cars. This can mean money off the price or better financing options.
Incentives are discounts or financial benefits offered by automakers to encourage consumers to purchase new vehicles. These can include cash rebates, low-interest financing, or special lease offers.
profit margins
"Do you think that might have anything to do with the fact that their profit margins have eroded dramatically over the past couple of years?"
Profit margins show how much money a car company makes after covering its costs. If profit margins go down, it means they are making less money on each car they sell.
Profit margins refer to the difference between the cost of producing a vehicle and the price at which it is sold. When profit margins erode, it means that manufacturers are making less money on each vehicle sold, which can impact their overall financial health.
battery electric vehicles
"there was all the write-downs and write-offs due to the exuberance they all expressed when it came to their investment in battery electric vehicles."
Battery electric vehicles are cars that use only electricity to run, instead of gasoline or diesel. They are seen as better for the environment because they don't produce exhaust fumes.
Battery electric vehicles (BEVs) are cars that run entirely on electricity stored in batteries, as opposed to traditional internal combustion engine vehicles. They are considered more environmentally friendly and are part of the shift towards sustainable transportation.
publicly traded companies
"They only have so much money. And last time I checked, these are all publicly traded companies and they are beholden to their stockholders to figure out how to get a return on the investment from those who hold stock."
Publicly traded companies are businesses that sell shares to the public, meaning people can buy a part of the company. They need to make money to keep their investors happy.
Publicly traded companies are businesses whose shares are sold to the public on stock exchanges. These companies are accountable to their shareholders and must focus on profitability and return on investment.
Nissan
"...this is Crane Communications Automotive News posted the headline, Nissan Profit Falls 99% on US downturn."
Nissan is a car company from Japan that makes many types of cars, including electric ones. They are known for being dependable and affordable.
Nissan is a Japanese automotive manufacturer known for producing a wide range of vehicles, including sedans, SUVs, and electric cars. The brand has a reputation for reliability and innovation, particularly with models like the Nissan Leaf and Nissan Altima.
pre-pandemic levels
"I expect to see this orange line, dad, go sky high back to pre-pandemic levels, 10% plus in December because of that growing inventory that they're seeing."
Pre-pandemic levels mean how things were before the COVID-19 pandemic affected car sales and production, which caused many changes in the market.
Pre-pandemic levels refer to the state of the automotive market or sales figures before the disruptions caused by the COVID-19 pandemic, which significantly affected production and sales.
Tesla
"...everybody's talking about with Tesla at the moment is, yeah, they've lowered the prices, but a lot of things disappeared when they lowered the prices."
Tesla is a company that makes electric cars. They are known for their high-tech features and have become very popular in recent years.
Tesla is an American electric vehicle and clean energy company known for its innovative electric cars, battery energy storage, and solar products. The brand has gained significant attention for its advancements in electric vehicle technology and autonomous driving features.
Mitsubishi
"I know, but I think it's important to get into the nuance. Mitsubishi and Nissan have struggled mightily here in the United States."
Mitsubishi is a car company from Japan that makes different types of vehicles. They have had a hard time selling cars in the United States lately.
Mitsubishi is a Japanese automotive manufacturer known for producing a range of vehicles, including sedans, SUVs, and electric cars. The brand has faced challenges in the U.S. market in recent years.
Mazda
"Dad, we haven't even talked about Mazda. They bounced back."
Mazda is another car company from Japan that is known for making fun-to-drive cars. They have been doing better in the market lately.
Mazda is a Japanese automaker recognized for its sporty cars and innovative engineering, including the use of rotary engines in some models. The brand has seen a resurgence in popularity in recent years.
tariffs
"...even though profits are being eroded on the other side because of tariffs, because of EV, exuberance, et cetera."
Tariffs are extra fees that countries charge on products coming from other countries. For cars, this can make them more expensive if parts are imported from abroad.
Tariffs are taxes imposed by a government on imported goods. In the automotive industry, tariffs can affect the cost of manufacturing vehicles, especially if parts or materials are sourced from other countries, leading to higher prices for consumers.
Cadillac Escalade
"...the rare era of six-figure vehicles, the Cadillac Escalade is still king, selling 4,300 units in the month."
The Cadillac Escalade is a big, fancy SUV that lots of people love because it has a lot of space and nice features. It's often seen as a status symbol, meaning people buy it to show off their wealth.
The Cadillac Escalade is a full-size luxury SUV known for its spacious interior, high-end features, and powerful performance. It has been a symbol of luxury and status since its introduction, making it a frequent topic of discussion in the automotive world, especially in the context of high-priced vehicles.
Ford Maverick
"...at's not an $85,000 truck, it's a $40,000 truck. Maverick at $35,000, it's a $25,000 truck tops. The finan..."
The Ford Maverick is a small truck that you can use for carrying things around, like groceries or tools. It's popular because it's cheaper than many other trucks, making it a good choice for people who want a truck without spending too much money.
The Ford Maverick is a compact pickup truck that was reintroduced in 2021, offering a blend of utility and affordability. It is significant for its low starting price and hybrid option, making it an attractive choice for budget-conscious consumers looking for a versatile vehicle.
original equipment manufacturer
"Thank you kindly, Chris. Original equipment manufacturer dynamics. So the automaker dynamics have just changed."
An original equipment manufacturer, or OEM, is a company that makes parts for cars that are sold under another brand's name. For example, if a car company makes its own parts, those are considered OEM parts.
An original equipment manufacturer (OEM) refers to a company that produces parts and equipment that may be marketed by another manufacturer. In the automotive industry, OEMs are the car manufacturers that create the vehicles and their components.
Jeep
"Wasn't it kind of notorious in the industry that if you wanted to buy a Jeep, you were paying nowhere near, or maybe Jeep's a bad example, but like a Ram pickup truck..."
Jeep is a car brand that makes tough vehicles, especially good for driving off-road. They're popular for adventure and outdoor activities.
Jeep is a brand known for its rugged vehicles, particularly SUVs and off-road vehicles. It has a strong reputation for durability and off-road capability.
Toyota
"...some other automakers Toyota, for example, where the prices are typically closer to the MSRP."
Toyota is a car company from Japan that makes many different kinds of cars. They are known for being reliable and lasting a long time.
Toyota is a Japanese automotive manufacturer known for producing reliable and fuel-efficient vehicles. It is one of the largest car manufacturers in the world and has a strong reputation for quality.
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