IT’S A DECEMBER TO REMEMBER! BIG SAVINGS AT CAR DEALERSHIPS!

It’s a December to Remember to wrap up 2023! For the fifth week in a row, we’ve seen significant weekly declines in wholesale Prices reported by Black Book. 

To see a full video presentation by Kevin Hunter and The Amazing Elizabeth on this topic, visit this link: https://youtu.be/tsURWoeXG3U

Welcome to The Homework Guy, where thanks to feedback from our channel members, we have the privilege of bringing you some of the latest and most exciting automotive news! 

This report written by Kevin Hunter, The Homework Guy and The Amazing Elizabeth (TAE)!

Alright, car buyers, are you ready for some great news? We’ve been directly witnessing that the tides are finally turning for real in the auto industry, and we’ve been able to see it happen right before our eyes, thanks to our regular involvement with channel members. We’ve been seeing steady weekly declines in car prices, and a lot more interest by dealers to cut prices, drop add-ons, and even eliminate fees!

That’s right! Reports are flooding in from channel members we’ve been coaching into some incredible deals — and with most new cars, we’re talking well below the Manufacturer’s Suggested Retail Price (MSRP)!

Used Prices are tumbling fast too right now.

Dealers are finally dealing, and we’ve got all the juicy details. From sedans to SUVs, the deals being signed are unbelievable, given where things were at, not long ago!

As we reported on November 19th from Black Book, last month opened with significant weekly price drops. That has carried over here into December. Just this past week alone we saw a sharp continuation of significant weekly declines, with the market accelerating its depreciation into the holidays. Despite robust auction attendance, ample inventory, and strong conversion rates, sellers are now dropping their reserve prices, which is causing the market to grapple with establishing a post-pandemic new “normal.”

Here’s some of the data! The Wholesale Car Markets are in a state of free fall! In a single week, Car Segments are down an average 2.4%, which amounts to a $360 drop, this week on top of last week’s drop of 1.82%. The 0-to-2-year-old Car segments were down another 1.82% while the 8-to-16-year-old Cars declined 2.44%. All nine Car segments decreased last week, with four of those segments reporting declines beyond 2%.

Compact Cars, which were so hard to get for so long, had the largest decline, with a record-breaking single week depreciation of 4.32%. If you’re looking for a used, compact car, on average, buyers at the auction paid $482 less this week alone to acquire those vehicles. This is on the heels of the previous week’s, also incredibly large depreciation of 3.84%. 

The Sporty Car segment is also accelerating the rate of depreciation, declining 3.32% last week, adding to the prior week’s decline of 2.05%. That means Sporty Cars are down $717 in price this week alone! 

The Truck segment is also improving for Car Buyers, which includes Crossovers, SUVs, and Vans. It had already dropped sharply in November, but still dropped another 1.64% this week, which is about $330, and 1.35% the week before. The 0-to-2-year-old models declined 1.48% on average and the 8-to-16-year-olds decreased by 1.51% on average.

All thirteen Truck segments saw price drops last week. Four of the thirteen segments had declines greater than 2%.

Full-Size Luxury SUVS had another week with depreciation exceeding 3% with a decline of 3.81%, adding to the 3.20% drop the previous week. That’s a drop of $1,536 this week alone, so if you’ve been waiting for a Full size, loaded SUV, now might be a great time to make your move!

In the midst of all of this action, here’s what we’re coaching our channel members to do. Shop a wide demographic of dealers and request OTD Pricing using the OTD Email templates found on our website. You can and should modify the template to meet your specific situation. This email strategy works with either new or used.

Let’s jump into why the email OTD strategy is so important. Using the ‘Out-the-Door’ (OTD) price in negotiations with car dealers can be a highly effective strategy to get great prices on vehicles. It’s also great for getting dealers to drop add-ons and unnecessary fees. Here’s how you can leverage this approach:

• • What the OTD Price means: The OTD price is the total cost of the car, including all taxes, dealer fees, and any additional charges. But don’t be worried immediately about details and costs you can get rid of later, because that’s exactly what you’re going to do before you buy. This price offer gives you a clear and comprehensive understanding of what you’ll actually pay, rather than just the sticker price of the vehicle.

• • Do Your Homework: Before ever stepping into a showroom, research the make, model, and year of the car you’re interested in. Use resources like Edmunds, Kelley Blue Book, Consumer Reports, or a membership with us to understand the car’s actual value and reliability. Know the value of your trade-in, if you have one, by checking its True Market Value on sites like Edmunds, getting a cash Offer from KBB, or using many of the methods we presented clearly in this video titled  Get the book value of your own car!

• • Get Quotes in Advance: Contact several dealerships via phone or email to request OTD price quotes for the car you’re interested in. This approach helps you avoid emotional buying decisions and it puts you in a much stronger position to negotiate.

• • Focus on PRICE, Not Payment: Always concentrate on the total OTD price, not monthly payments. Dealers can manipulate monthly payments in various ways that are rarely ever in your best interest.

• • This is REALLY Important: Use your OTD responses to Create a Bidding War between Dealers: Contact multiple dealerships and ask for their best OTD price for the specific car you want. Use the quotes from one dealer as leverage with others to see if they can beat the price. Even if you didn’t hear from a given dealer in the beginning, go back to them with your other offers and say, meet or beat this to be in the running. Always say “I’m working with other dealers, and I’m looking for someone who wants to EARN my business. Watch the add ons and fees disappear.

• • Be Ready to Walk Away if the dealer plays games: If a dealer isn’t willing to meet your price, be prepared to walk away. Often, they may call you back with a better offer.

• • Say NO to Last-Minute Extras: Dealers often try to add extra services or warranties in the final stages of the deal. Stick to your negotiated OTD price and decline any additional offers that aren’t necessary. Stand firm on what you want, and you’ll get it. 

• • Finalize the Deal: Once you have a satisfactory OTD price, you can go to the best dealer and finalize payment. It’s advisable to have pre-approved financing from your bank or credit union.

Remember, the key to a successful OTD negotiation is preparation, knowing what you’re buying, and being ready to pit one dealer against the other with the OTD prices you are collecting. This approach simplifies the negotiation process because the dealers do the price cutting for you, thereby helping you to avoid overpaying for unnecessary fees or add-ons. Also, asking dealers about their aged inventory is always a good move, and will likely net you an even better deal!

Why the big differences in pricing between certain vehicle segments and various areas? While it’s clear the overall market is trending downward in value, the wholesale value of cars and trucks can vary for a variety of reasons including these factors:

Market Demand: Your own preferences play a significant role. If a particular style or type of vehicle falls out of favor, its wholesale value can decline rapidly. For example, large SUVs might lose value if there’s a trend toward more fuel-efficient vehicles.

• • Fuel Prices: Changes in fuel prices can significantly affect the value of certain vehicle segments. For instance, when fuel prices are high, the value of larger, less fuel-efficient vehicles typically drops, while smaller, more efficient cars retain or even increase in value.

• • Technological Advancements: As new technology becomes standard in newer models (like advanced safety features, electric powertrains, etc.), older models without these features may decline in value.

• • Economic Factors: Broader economic conditions always have an impact. In a strong economy, luxury and high-end vehicles hold their value better, while in a weaker economy, more affordable segments fare better.

• • Availability of Newer Models: The release of new models can affect the prices of older models. If a dealer is heavy with next year’s models, that helps you on current year cars.

• • There are Regional Preferences: In some regions, certain types of vehicles are more popular due to climate, geography, or culture, which can affect their value. 

• • Seasonal Factors: Some vehicles are more in demand during certain seasons. Four-wheel drives are more valuable in winter, while convertibles and sports cars are more sought after in summer.

Understanding these factors can help in predicting which car or truck segments might decline in wholesale value. As of late 2023, the car market is showing signs of moving towards normalization but there’s no doubt it will take some time to get back in line with pre-pandemic conditions. 

For EV lovers, the news is good! Prices of used EVs are dropping by a whopping 29.5% in value. This drop is attributed to reduced demand for new EVs, leading to significant discounting in the segment and affecting the residual values of existing EV’s.

Overall, the car market in 2023 is closer to normal compared to the height of the pandemic, but it still faces challenges and uncertainties, particularly in terms of pricing in various regional pockets around the country. The market is definitely showing signs of stabilization, but it’s also clear that some of the changes brought on by the pandemic will have longer lasting effects.

A quick look at rates of inflation over the last few years:

2019 was 2.3%

2020 was 1.2%

2021 was 4.7%

2022 was 7.1%

2023 is at 7.1%

This puts the cumulative inflation from 2019 to 2023 at 23.64% overall. What $100 bought in 2019 now takes $123.64 to buy today. For cars, it’s even worse, but it’s important to note that the rise in car prices since 2019 has been influenced by more than just the general inflation rate. Shortage of supplies have artificially pushed precise higher, and a significant correction is finally under way! 

NEW CARS INVENTORY

As of late 2023, the car manufacturers with the most available inventory, especially in larger pickup trucks and SUVs, include:

• • Ford: The Ford F-150, with an inventory of 60,378 units, primarily in Texas. Other models with big inventory include the Ford Escape, Ford Edge, Ford Explorer, and the Ford Mach-E.

• • Chevy: Models like the Chevrolet Silverado 1500, with 38,072 units, mostly in Detroit, and the Chevrolet Equinox, also largely in Detroit.

• • Nissan: The Nissan Rogue has a big inventory of 30,379 units, a lot of it in New York.

• • RAM: The RAM 1500 is also among the vehicles with a high inventory, with 21,443 units, in Detroit.

• • Dodge: Models like the Dodge Charger (18,820 units) and Dodge Challenger (14,235 units) have significant inventories.

• • Mazda: The Mazda CX-5, with 17,440 units, mainly in New York, is also big.

• • Honda: The Honda CR-V and Honda Accord are their top inventory models.

• • Toyota: The Toyota RAV4 and Toyota Camry have the biggest inventory levels.

For the most current and region-specific inventory information for your area, it’s advisable to check with services like https://www.truecar.com/ and realcartips.com.

https://www.realcartips.com/news/1439-cars-with-most-inventory.shtml

Friends, If you feel you lack the skills to run the Sales Process Gauntlet and you’re hungry for a car deal like we’ve described, get me and Liz in your corner by becoming a member on our YouTube channel and have us talk you through to success. The Homework Guy Team is Serving truth, justice and transparency in the car business, and always will!