Quote:
Originally Posted by SARAFIL
The big wildcard is what “new normal” will be for volume levels. Incentive spending is way down and they’re bringing in big margins right now. How much of that are they willing to give up, etc.
Do agree used car prices will correct but still not clear to me how big of a drop it’ll be. Really depends on how quickly they product enough excess volume to close the supply/demand disconnect from past few year+.
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The real question with both houses and cars is whether there will be a broader recession -- or, rather, when there will be a broader recession.
Until then, I agree with SARAFIL--there's a lot of silver linings in what's happening here for car companies, from rationalizing their production to moving to more ordering to driving up margins to giving them an incentive to bring more of these chip and software functions in-house to better control their supply chains. All of that suggests that even if there were an infinite supply of chips and labor tomorrow, the car companies might not increase production to the point it was in 2019.
There are going to be areas where prices have been crazy high where they will come down--eventually the market for Broncos will be saturated, eg., and the markups will go away. Overall, though, prices won't easily "return" in any real sense of that word.
But I also agree that the coming EVification of the auto biz is going to lead to some demand for legacy used cars, and that will keep the prices of those last ICE cars higher than we might be used to.
All of that goes out the window when there's an actual recession.