TOYOTA Dealers Are In SERIOUS TROUBLE | Episode 958

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It's noon here in Ventner City, New Jersey at our nation's capital, Washington, D.C.,

and this is Car Edge Live for Wednesday, November 5th with your host, me, Ray here

in Ventner City on my way to Philly to catch a train to Washington shortly after the show,

and then, well, Zach in, oh my God, beautifully, full foliage Washington, D.C.,

had no idea there were that many trees and that much nature in downtown D.C., but what the hell

do I know?

You learn something new every day, Papa Shevska.

Toyota dealers are in serious trouble.

We're going to break down what's going on over in Toyota land in just a few moments.

Before we do, we need to remind you that today's show is brought to you by

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Dad, I want to start here.

Toyota dealers are in serious trouble and for a reason that pretty much no one can comprehend,

Toyota's CFO has come out and said Toyota can barely cover demand.

This is very true because we're going to look at the fastest selling vehicles here in the

United States and the entire list are Toyota vehicles.

Toyota dealers are on the brink of some serious trouble.

They actually don't have enough cars to match demand.

No, and you chuckle, but we know what happens when dealers don't have enough inventory.

They start adding market adjustments, addendums selling above MSRP.

That is a one-way train ticket to eroding trust with your customers.

Toyota's CFO coming out and saying we can barely match demand right now.

What do you make of this, Dad?

Do you think this is a recipe for success over in Toyota Land?

Well, if Toyota dealers are in serious trouble, then every other manufacturer's

dealers want to be in the same kind of trouble.

Nobody has been able to match and marry demand and production quite like Toyota has.

Okay, and they are producing as many cars as they possibly can, and what they're producing

barely covers in many cases the demand for their vehicle.

I don't know if that's a recipe for eroding customers.

I think that might be a recipe for, I don't know, making more people jealous

and wanting to get a Toyota or a Lexus.

It is just staggering how well they can match up production with what customer

demand is going to be, and in some of their products where customer demand was less than

what they had originally anticipated, some of their pickup trucks, for instance,

they have adjusted the production for those vehicles so that it better matches what the demand

is, which allows their dealers to sell them at higher prices with lower, with less discounts.

But don't we run the risk, Dad?

Don't we run the risk when we look at this list of the fastest selling vehicles in the

United States, caredge.com slash fastest.

You're in the market right now for a Sienna.

Yes.

There's a 19 days supply. There are 1,245 Toyota dealers in the United States of America.

They have 7,704 Sienas for sale today, yet those same dealers have sold 18,358 for $51,910.

Yes.

You're a customer who goes in to buy a Sienna.

Yes.

And that dealer says, well, you know what?

Actually, you're going to have to get on a wait list.

Oh, and also when it comes in, it's now $5,000 over the Toyota suggested retail price,

because they don't do MSRP over there.

They use PSRP.

That is a one-way ticket to eroding your brand.

And there is a tremendous benefit to having too much demand and not enough supply.

Gives you pricing power, which all these brands, to your point, Dad,

Jeep would love to have pricing power right now.

Audi would love to have pricing power right now.

All the brands of Mazda would love to have pricing power right now.

But this is, I think, a little too far in one direction.

You and I have been looking at the fastest and slowest selling vehicles lists for well over a year.

This is the first time where one brand has swept all 10 spots on the list,

and it's the same exact day that the CFO for the company direct quotes as we can barely cover demand.

But that is, I mean, maybe they're not in serious trouble yet,

but it is a precipitous path, I think, for Toyota as a brand and Toyota dealers to be going down.

It is, you run the risk of not being able to necessarily bring in additional customers who

might very well want to become Toyota customers, who may have never been Toyota customers.

You run the risk of not being able to bring them in when you say to them,

well, you're going to have to wait six, eight, 10, 12, 16 weeks, whatever it is,

to get the vehicle that you're interested in.

You might have to pay more than what you had hoped.

That risk exists, but they're trying to think of a nice way to say this.

There are enough Toyota enthusiasts out there that even though they run the risk of not bringing

more people into their tent, their tent is so full, they don't need them at the moment.

Now, if you want to say 10 years from now, this might come back and bite them in the butt,

maybe it will, maybe it won't. If you have the most popular vehicles and you keep them in short

supply, then demand is always going to outpace supply, which, as we know, psychologically

speaking, will draw more people in because they're going to want to find out why, why?

I mean, why do people stand online at an Apple store when they bring out the new Apple iPhone

every year? Is it that much different? People stand online to be able to say they're the first ones

to get it. I think the same could happen with Toyota, where basically people are standing online

in order to be able to get their Toyota and they are willing to do that.

Now, are there some people that are just going to say, that's not for me, I'm not standing online

for anybody? Yeah, but it's not the majority of the car shoppers out there, it's the minority.

I want to show you a couple of examples, though, Dad. We have, as many of you know,

the CarEdge AI agent that reaches out to car dealerships day in and day out and gets out the

door price codes. That's part of what you get with CarEdge. I want to show you a few examples, Dad,

of some Toyota dealerships that we've reached out to with the AI agent and show you what we're

receiving on the other side of that. Just to put into perspective, some of the gamesmanship that

a dealership can start to play when they have not enough supply but a ton of demand. What you're

looking at on the screen here is you've got a 2025 Toyota Sequoia Limited. Now, this is a new vehicle,

but it's got 1,254 miles on it. We got a story about that later on in today's show.

Let's look at the Out the Door price breakdown. You were interested in this vehicle. You saw an

online advertised price of $68,991. At the end of the day here, the total Out the Door price

is all the way up to $87,153. Back out the tax as of $5,500. You're still at $82,000.

Online advertised price, $68,991. Add 10, 11, 12 grand to that, which is made up from

a vehicle service contract, GAP insurance, StarGuard, MPP Plus, Resistall, AutoCare, the Dock

fee. This is the type of crap that can happen to a car shopper that doesn't have leverage or,

more importantly, when the dealership, when the manufacturer has too much leverage. That's an

example there, Dad, of a dealership. Here's another example of what happens at the manufacturing

side of things. That was an example of a greedy dealer. There are some Toyota dealers out there

that don't necessarily subscribe to adding $10,000 to $12,000 of unasked for and unwanted

dealer-installed accessories or protection packages. This is an example of a dealer that

is seriously greedy and trying to take advantage of its customers. Then one day may wonder why

it loses some of those customers. There are other Toyota dealers out there that play a little more

fairly. Dad, you actually cued me up perfectly. You said greedy dealer. It's also happening at

the manufacturer or I should say at the distributor level. Here's an example of a 2026 Land Cruiser.

Look at this. We're talking about an $82,428 Toyota. What's interesting here is the base MSRP

on this vehicle is $62,000. Look at all these installed packages and accessories. Take it up

another $10,000. Then you've got, obviously, taxes, fees, and things like that. All of these added

on packages and accessories, Dad. These can be port installed. These can be from the manufacturer,

et cetera, but this can jack up the selling price of a vehicle. We've got another example here.

This would be another Sequoia, Dad. You've got the price, which is $76,995. Great. It's got a discount.

Well, that discount's offset by the $5,200 extended warranty, lifetime oil changes for $1,000,

the preservation product for $1,000, the Spartan theft for $1,600. Another example,

dealer can add add-ons out the Wazoo. We've got another great example on a Land Cruiser,

a 25 Land Cruiser here. It says MSRP retail, $72,400. What's the selling price above it?

$74,895. Oh, and you've got security and SafeCat and Edge and Permaplate, Dad. $89,000, $90,000,

Toyota. What? This is where I do think Toyota dealers could end up in some serious trouble.

It only takes one rotten apple to ruin the bunch. We've got really tangible examples here.

I could also filter our database of 10,000 OTD quotes that the AI agent has received

by lowest add-on, biggest discount. We could find some examples at that end of the spectrum as well.

But we've got the CFO of Toyota coming out today and explicitly saying we can, quote,

barely cover demand. We have the full top 10 list of fastest selling vehicles in the United States

owned by one manufacturer. It's the first time in car edge history that that's happened. I've got

examples out the Wazoo of dealers, excuse me, jacking up the price 10 plus percent above MSRP

through the form of added products, add-ons, et cetera, that ultimately screw customers.

Yes. That is one of the disadvantages for customers when a manufacturer is as good as

they are at matching production to demand. Since dealers don't have to sell at Toyota's suggested

retail price, it is merely a suggestion. Then it opens the door for dealers to do some of the things

that you have just shown, where they will add things that you might not want,

wouldn't have been interested in, are going to tell you, well, if you don't, the next person will.

That's not building relationships. That's not building long-term relationships.

Hopefully, and I don't know this to be the case, my guess would be it would not be, but hopefully

those dealers that are pulling those antics are being a little nicer to their previous customers

and not necessarily forcing them to buy all those items, but my suspicion is that they're not,

and they are forcing their previous customers to do that. Then at a certain point, at a certain

point in time, that customer is going to wake up out of the ether and go, I don't want to deal with

them anymore. I might love the product, but I am sick and tired of being forced to buy things

that I didn't want, didn't ask for, don't need, and I am asked to pay a premium for each and

every one of them. I can see ultimately where maybe you lose 10% of your customers to that,

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It's like any rational person can understand why the dealership does what it's doing. I mean,

it makes sense. It's supply and demand. And there's a power dynamic when you go to buy a car. The power

lies primarily in the dealership's hands. They do it every single day. They know the market better

than you and I. Obviously, my dad and I for the past six years have been trying to level that playing

field. There's only so much leveling you can do on a Sequoia, for example, when the supply and demand

is that out of whack. And I do want to highlight here from Florida Man, just bought a 2025 Toyota

RAV4, 12% off MSRP and no add-ons last week. There are still deals to be had. Now, when you

work at the top 10 fastest sellers list, the RAV4 is not on there. That's a great example

of a Toyota product that has huge demand, but fortunately, there's enough supply. So the power

dynamic for a RAV4 negotiation is totally different than the power dynamic of a Sequoia

negotiation, for example. And I do want to give a shout out to our team of car buying experts

back at caredge.com. Click on car buying service. You can not only book a free consultation with

our team, but you can scroll down and meet the concierges. And what I want to do here for a moment

that is just acknowledge, here's a recent deal that Brian did. 2025 Toyota Highlander, $5,000

off of MSRP. That's a huge win. Let's see, what other new Toyotas do we have here? Jerry, recently

on a Toyota Tacoma in Virginia, $5,000 off of MSRP on that particular vehicle. So lots of great

examples here and you can scroll through and see what our team has been capable of recently

for Toyota customers and for customers more broadly, but lots of opportunities. It's just the

power dynamic as I think swung a little bit too far in Toyota's favor. The only reason I made it

the headline for today's show is because their freaking CFO came out and said, we can barely

cover demand. That's too far. That's too far. You don't want to be barely covering it. You want

a little bit in the fact that they have all 10 spots on our list. You don't want to be that

successful. You don't want to be that successful, Toyota. Come on, leave some for the rest of us.

Let's talk about a brand that is not that successful and kind of grasping at straws.

Mitsubishi, dad, you know when you're turning to more fleet sales as your strategy to make

sure you don't go bankrupt, I think a bad situation. Mitsubishi turns to fleet volume

as profit plunges on evaporating global sales. We've got Mitsubishi profits falling 79%. Not

nearly as bad as one of those quarters Nissan had last year where their profits fell 99%.

But dad, Mitsubishi in bad shape right now, they've been on our list of brands to watch for

potential consolidation or ultimately going out in business. Mitsubishi turning to fleet sales

as a strategy here. I don't see it being that successful. What do you think?

Well, if it's the only place you can sell them, then that's where you're selling.

I'm pretty sure every rental car company out there needs some cheap vehicles that they can rent.

If they can get their hands on a Mitsubishi when they can't get their hands on a Toyota,

then Mitsubishi has to do what Mitsubishi has to do.

Think about it. Could Mitsubishi capture some market share from would-be Toyota shoppers who

are getting hit with that. I was like, maybe if you're out there and you're thinking about

a Toyota or a Mazda, look at Mitsubishi, the deals are going to be remarkable right now.

Yeah, the problem is that after you've purchased it, you wake up the next day and,

well, it's still a Mitsubishi. I don't mean that in a bad way in the sense that

it's necessarily a bad product. It isn't necessarily a bad product. There was a time

where they were building some really interesting and desirable vehicles for this country. I think

it was the 3000 GT. They made the Montero four-wheel drive off-road vehicle. They made the Eclipse.

They have made some really interesting and desirable cars. It's always been a pretty decent

brand. It just seems to me over the last 10 years or so, they've lost their way as to what it is that

they want to be. That's part of the issue. Not every Japanese manufacturer has enough cash on hand

all the time to eat all the tariffs that are eating away their profits.

Yeah, I want to pull up from Igor here. $8,000 is what he's seeing in terms of just cash on the

hood to get these vehicles moved, 12% off of MSRP. I'm just saying, man, if you're a real deal

hunter, the biggest percentage off of MSRP, you don't really care about the brand. Go to Mitsubishi.

Go to Nissan would be another one. Obviously Mazda in some areas too. Big discounts to be had.

It's the polar opposite. Think about that polar opposite of what we talked about with Toyota.

If the title of today's show is Mitsubishi dealers are in serious trouble, in that case,

it's because they can't sell them. In Toyota's case, it's because they don't have enough.

So it's just so interesting to see the power dynamic like I talked about before. It shifts

materially depending on what type of dealership you go to. I just thought of something crazy.

If you said be a big deal hunter, naturally my brain thinks, well, what's that similar to?

That's like being a big game hunter. So what we need to do, we need to encourage people who are

interested in Mitsubishis who buy them to then pose with them, kneeling down like they just

took the dealership down to get this phenomenal deal on their Mitsubishi. Much like you see big

game hunters doing with whatever it is that they were hunting for.

We'll send you the invoice Mitsubishi. We've got from T. Winkle here. I love my 2022 Mitsubishi.

We need you to pose with that as if you shot it in the Serengeti. All right. Let's keep moving

here, Pops. One more comment before we do from Annie. Thank you. This just happened to me with

Toyota. Went to look at a GR68 and they said they ordered one. I want it and then changed it and

ordered one that had tons of add-ons and walked away. So there you go. It's the GR86, right?

I think it's 86, not 68. Anyway, this is what happens, Dad. You think you're going to get the

vehicle that you want, but then they pack it full of all these add-on options and window things and

all this crap, all this crap that you didn't ask for and it ends up in a situation like this where

customers walk away. They have a bad taste in their mouth. Listen, it's similar to-

and it's akin to, say, a resort fee at a hotel. Why is there a separate resort fee? You have to

pay it. So why is it a separate fee? Why isn't it just in the price of the hotel room? It's no

different than all the fees the Ticketmaster adds to any ticket you might buy. So it's like,

yeah, at a certain point, people get exasperated and they go, I don't want to deal with this anymore.

I want what I want at the price that it's listed for, not some artificially low price that you

won't sell it for. Or in the case of Toyota, Dad, you cannot factory order a Toyota. You get on

allocation wait list. And so you think you're going to get allocated one that's specced the way

that you want it. And then it comes in specced the way that you want it, plus, plus, plus,

with all the additional add-ons you didn't ask for. Did that deal? No, no, I know. I know. That's

what I'm saying. That's the other downside. That's different than Ticketmaster. Dad, you're going to

get hit with fees like the Dock fee at the car dealership. You're going to get hit with the

processing fee on Ticketmaster. That's fine. But on Ticketmaster, you don't place an order for

something or get on a wait list for something. And then next thing you know, another intermediary

adds on even more crap that you didn't ask for. This is, again, why Toyota dealers.

Okay. For those of you that are unaware, my dad suffers from gout. Occasionally, he gets this

really intense pain in his foot and it's debilitating. And gout, if I'm not mistaken, Dad,

came. It's like a rich person's disease because it comes from eating a lot of chopped liver and

red meat. The idea with gout was that you eat all this gluttonous food and end up with gout.

Good liquor, good wine, good gout. That's the potential here for Toyota dealers,

is they're going to get gout. They're going to be so happy. They're going to be so exuberant.

They're going to be eating so much good food, good wine, good liquor, making so much money.

But in reality, they're hurting themselves. They're hurting their relationships with customers.

They're ultimately tarnishing their own businesses' health and viability.

To be clear, do you think they're still going to want to make a boatload of money while they can?

Of course, just like my dad eats red meat every once in a while or shellfish when he knows he

might not need to. They're like, it is potentially poisonous, I think. And there are dealers out

there. I showed some examples that are doing just that. It is a decision that the business owner

makes. And what do I mean by that? The decision could be, I am going to maximize the amount of

profit I could make today and not concern with myself with what that might do to my business

in the future. Or I will make my business profitable, but profitable in such a way that

my customers are going to want to come back to me and actually help me grow my business.

So that's a decision the business owner makes on a daily basis. So if the decision is,

I'm just going to maximize the profit. When we were in the Phoenix area, when we lived in Phoenix,

which is one of the great automotive markets in the country because, well, public transportation is

almost non-existent. And the valley is so wide and everybody needs vehicles, two or three. And so

it truly is one of the greatest markets in the country. And there were many dealers out there

that operated in the manner of, we are going to sell, since this is a growing population,

we are going to sell each person one car. We are going to treat them so poorly when we sell them

that one car that they would never dream of coming back to us again. But because the population is

growing, we can be profitable and stay in business for a pretty long time. I worked at a dealership

where we realized we can't sell every one one car. We want to sell our customers many cars.

For sure, Dad. For sure. But the choice, that's a business decision.

The point being, when you can barely cover demand, it really pushes you to be greedy. That's all.

That's the only point I'm trying to make. I want to come here. I want to come here, Pops.

Happy Valley Farmers has a question. O.T.D. price before the deposit. So this is when

you're factory ordering a car, getting on an allocation wait list. Can you just talk about

this briefly? Because a lot of people that don't realize it, both that our car buying service works

for factory ordering a car or that you negotiate, if you do it yourself, you negotiate before you

order the vehicle. You negotiate the agreed upon price of the vehicle, including all fees,

before you ever leave a deposit, so that there isn't any confusion when the vehicle comes in.

It's you and if the dealership refuses to do that, you are at the wrong dealership.

Okay, it's pretty simple. As a salesperson, you're treating it like the car is there,

even though it's not. And when it will be, it's an in and out sale. So would you discount that

vehicle? Yeah, you have to give your customer a total breakdown of all the costs so that everybody

understands what it is. So there's no confusion, absolutely. And after you do that, then you can

leave it deposit, but not before. And I just want to pull up on the screen. We've got a guide,

Google Search Factory Order Space Car Edge. And we've got the how to factory order our car in

2025 guide. Right there. Encourage everyone to take a peek at that. All right, pups, we're going

to call it a show for today. All right, there's more stuff to talk about, but we're going to talk

about it tomorrow. Force people to tune in when we're live side by side. If we can help you out,

folks, ouredge.com. Again, we have a promotion running right now because it's the end of the year.

Our car buying service is $150 off. Car Edge Pro is 15% off. Please check out both back on

caredge.com. And for the car buying service, you can book a free consultation. So chat with our

team, make sure it's the right fit before we get started and obviously meet our team. Excuse me,

everyone on our team has different specialties, different capabilities. Please learn more about

our incredible team and identify who you think you want to work with. Check it all out back at

caredge.com. We're back tomorrow, folks, with more car edge live side by side here. And then I guess

some in the Northeast, maybe New England, something like that. So I don't know. We'll see what the

background is tomorrow. But I'm looking forward to wherever it is I'm going to be, even though I

know it's going to be a tiny, yes, we work office. See you tomorrow, folks. Safe travels, Dad.

Thanks. I'll see you soon.

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TOYOTA Dealers Are In SERIOUS TROUBLE | Episode 958

About this episode

Toyota Land

MSRP

market adjustments

demand and production

Lexus

Sienna

PSRP

Toyota Sequoia Limited

Out the Door price

vehicle service contract

GAP insurance

dealer-installed accessories

extended warranty

OTD

dealer markup

Toyota Rav4

Toyota Highlander

Toyota Tacoma

Mitsubishi Got Mitsubishi

Nissan

Mazda

cash on the hood

dealer fees

allocation wait list

add-ons

Dock fee

factory ordering

negotiating price

Request an Explanation

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