When will the used car market peak?

[SARAFIL]

With all the used car market talk, I’ve been casually tracking the various sites for numbers on our 340 over past few months. Value is fluctuating a bit but generally ~2k below what we paid. Strong, but not enough to push me to sell.

Out of curiosity I started trying the X5 too. We’re currently half way through lease and love the car but hard to not window shop with all this craziness. CarMax won’t give me a $$ online, Carvana says “we’ll get back to you” but never does, but have been getting numbers from Vroom. A month ago it was at lease payoff (not bad) and last week it jumped to $4k equity (nice!). However after seeing what used ones are listed for, felt like there was still some money on the table. I just tried KBB instant offer and came back with $9k equity (!!!). I’ve never seen this on a zero-down BMW lease half way through. Is this as good as it gets? Or do things get even crazier if supply chains are still screwed up for several more months and thin inventory gets even thinner?

(Of course the problem becomes - hard to replace it as deals on a new one are shit right now)

[JST]

Originally Posted by SARAFIL

With all the used car market talk, I’ve been casually tracking the various sites for numbers on our 340 over past few months. Value is fluctuating a bit but generally ~2k below what we paid. Strong, but not enough to push me to sell.

Out of curiosity I started trying the X5 too. We’re currently half way through lease and love the car but hard to not window shop with all this craziness. CarMax won’t give me a $$ online, Carvana says “we’ll get back to you” but never does, but have been getting numbers from Vroom. A month ago it was at lease payoff (not bad) and last week it jumped to $4k equity (nice!). However after seeing what used ones are listed for, felt like there was still some money on the table. I just tried KBB instant offer and came back with $9k equity (!!!). I’ve never seen this on a zero-down BMW lease half way through. Is this as good as it gets? Or do things get even crazier if supply chains are still screwed up for several more months and thin inventory gets even thinner?

(Of course the problem becomes - hard to replace it as deals on a new one are shit right now)

I mean, it's your last point that's key. Since the used car market is being driven in large part by a shortage in new cars, the spike is likely to keep going until new car supplies normalize (or the bottom falls out of the economy). When will that be? I mean, a few months at least, probably.

As far as a deal on a new one...what does "shit" mean? And do you need an X5 replacement, and does it have to be a lease? Even if the deals are bad, are they so bad that they erase a 9K profit on the old one?

[kognito]

I don't know about other states, but I assume dealer's new car inventory is as empty as it is here in South Carolina. The head of Toyota USA was interviewed on CNBC the other day (when the displayed the new Lexus and Toyota battery cars) and Toyota dealers inventory backlog is 9 days. So basically cars are sold as the drive off the transport trailers. (these 9 days INCLUDES delivery days)

Until chip shortages are fixed and production gets back to normal, I don't think the newer used car market will cool off IMHO

Junkers are still junkers, but my 4 year old, nicely loaded 1/2 pickup is worth more than I paid for it. But it has only 18K miles on it, it is a pickup truck, not my daily driver. But there is nothing comparable available on lots to replace it with

[clyde]

Originally Posted by kognito

I don't know about other states, but I assume dealer's new car inventory is as empty as it is here in South Carolina.

I forgot to mention...A couple weeks ago, I drove to and from Lincoln, NE. The emptiness of the dealer lots we passed all along the way was striking. Dealers don't have cars to sell.

[SARAFIL]

Originally Posted by JST

I mean, it's your last point that's key. Since the used car market is being driven in large part by a shortage in new cars, the spike is likely to keep going until new car supplies normalize (or the bottom falls out of the economy). When will that be? I mean, a few months at least, probably.

As far as a deal on a new one...what does "shit" mean? And do you need an X5 replacement, and does it have to be a lease? Even if the deals are bad, are they so bad that they erase a 9K profit on the old one?

I’ve been eyeing various options as a 2nd car if I decided to finally pull the trigger and replace the 340 but hadn’t thought of any X5 replacements. We honestly love it for the purpose it serves so I think if I even brought up the subject the answer would be “let’s look at another X5” or maybe an X7 (which we definitely don’t need). I guess there might be something Benz, Range Rover, etc. that would also pique other half’s curiosity but we all know I’m a BMW guy so I know what way I’d lean. Also not sure deals are to be had on any of these options. But at least it gives me something new to research for a few days!

As for shit deal- our current car was almost 11% off MSRP plus $3000 in lease incentives and 57% residual. Just going by the deals on leasehakr right now, a replacement would be 5-6% off MSRP, $1500 incentives and 52% residual. These are 90-100k cars depending on options so yea, 5% less residual and 5% less discount pretty much eat up 9k equity. Could basically roll it all into a new lease and come out even which is kind of “meh”. Not opposed to buying but in that case still left with ~$80k balance after trade which is a big number. At that $$ definitely prefer the flexibility a lease provides.

So I guess it’s all academic but does make me feel a bit better knowing I have some equity in car in short term if I needed to do something. Also really wondering how hard the correction will be - my residual is $50k, will it really drop almost $25k in value in next year? Doubt the supply will increase that much to drop the bottom out of it. Who knows. A lot of scenarios to think about!

[JST]

Originally Posted by SARAFIL

I’ve been eyeing various options as a 2nd car if I decided to finally pull the trigger and replace the 340 but hadn’t thought of any X5 replacements. We honestly love it for the purpose it serves so I think if I even brought up the subject the answer would be “let’s look at another X5” or maybe an X7 (which we definitely don’t need). I guess there might be something Benz, Range Rover, etc. that would also pique other half’s curiosity but we all know I’m a BMW guy so I know what way I’d lean. Also not sure deals are to be had on any of these options. But at least it gives me something new to research for a few days!

As for shit deal- our current car was almost 11% off MSRP plus $3000 in lease incentives and 57% residual. Just going by the deals on leasehakr right now, a replacement would be 5-6% off MSRP, $1500 incentives and 52% residual. These are 90-100k cars depending on options so yea, 5% less residual and 5% less discount pretty much eat up 9k equity. Could basically roll it all into a new lease and come out even which is kind of “meh”. Not opposed to buying but in that case still left with ~$80k balance after trade which is a big number. At that $$ definitely prefer the flexibility a lease provides.

So I guess it’s all academic but does make me feel a bit better knowing I have some equity in car in short term if I needed to do something. Also really wondering how hard the correction will be - my residual is $50k, will it really drop almost $25k in value in next year? Doubt the supply will increase that much to drop the bottom out of it. Who knows. A lot of scenarios to think about!

Cayenne? Not sure how much space you need and to be honest I haven't really been tracking the luxury SUV space.

[clyde]

Originally Posted by SARAFIL

Also really wondering how hard the correction will be - my residual is $50k, will it really drop almost $25k in value in next year? Doubt the supply will increase that much to drop the bottom out of it. Who knows. A lot of scenarios to think about!

The uptick this time was much faster and more dramatic than the slow rise last spring/summer. The fall from peak late summer to its recent bottom mid-winter was just about as gradual. From mid-winter to mid-spring, it was a steeper climb, but mid-spring on was like a rocketship.

As soon as used inventory starts to exceed demand just a bit, I think trade values will all but collapse in very short order and (barring additional global shocks) take another 60-90 days to find a new equilibrium. When that's going to be though?

There's a lot of nearly complete new inventory waiting for just a module or two and then they can ship. It shouldn't take a very long time to refill dealer lots

[robg]

Originally Posted by SARAFIL

I’ve been eyeing various options as a 2nd car if I decided to finally pull the trigger and replace the 340 but hadn’t thought of any X5 replacements. We honestly love it for the purpose it serves so I think if I even brought up the subject the answer would be “let’s look at another X5” or maybe an X7 (which we definitely don’t need). I guess there might be something Benz, Range Rover, etc. that would also pique other half’s curiosity but we all know I’m a BMW guy so I know what way I’d lean. Also not sure deals are to be had on any of these options. But at least it gives me something new to research for a few days!

As for shit deal- our current car was almost 11% off MSRP plus $3000 in lease incentives and 57% residual. Just going by the deals on leasehakr right now, a replacement would be 5-6% off MSRP, $1500 incentives and 52% residual. These are 90-100k cars depending on options so yea, 5% less residual and 5% less discount pretty much eat up 9k equity. Could basically roll it all into a new lease and come out even which is kind of “meh”. Not opposed to buying but in that case still left with ~$80k balance after trade which is a big number. At that $$ definitely prefer the flexibility a lease provides.

So I guess it’s all academic but does make me feel a bit better knowing I have some equity in car in short term if I needed to do something. Also really wondering how hard the correction will be - my residual is $50k, will it really drop almost $25k in value in next year? Doubt the supply will increase that much to drop the bottom out of it. Who knows. A lot of scenarios to think about!

Was doing similar calculations on our RRS... it currently has about 10k in equity on the lease, so my wheels have been turning. But, like you, the dilemma is what we'd get to replace it since anything similar is going to be more epxensive plus we both really like the car. The only way to really capitalize on this crazy period is to go car-less or to buy a beater and wait it out...but even beaters are over priced at this point.

[wdc330i]

Well, it is tempting to sell a second car and wait it out… That would make the 2 pretty vulnerable.

But, it’s been (knock wood) trouble free and has the M performance LSD already installed. It’s low mileage and paid for. And anything I would buy next would cost a ton more (some kind of Boxster thing?)

So, probably staying put….

Edit: Although, could sell it. The Mazda could go in the garage (pretty much a one-car garage). And, I could stay the course until my son goes off to college and replace the Mazda with something fun…Three-5 year scenario. Definitely need FC advise now!

It would be nice to save the insurance money on the second car when it comes time to split insurance for my son…

But, the 2 brings me joy.

[Josh (PA)]

what about something on Swap-A-Lease? IE: Sell yours, make $9k and step into someone else's with a year left at a similar monthly payment?