Toyota Deals

[JjamesIII]

How patient can you be?

View attachment 489552
This morning I discovered something *extremely* alarming happening in the car market, specifically in auto lending.

I'm now convinced that there is a massive wave of car repossessions coming in 2023.

Here's what I discovered (and what no one knows):
Background:

Over the past 2 years, many people took out exorbitant loans on cars.

Car values were inflated (and frankly, still are to some extent).

But many people simply had no choice and bought an overpriced a car.

Well...
Car valuations are now plummeting.

Some cars have declined in value as much as 30% y/y.

And these same people that took out these big loans are now "underwater".

Basically, they owe banks more on these cars than they are worth.

And the banks are well-aware of this...
But there is no easy solution.

You can't just put the genie back in the bottle.

This brings me to what happened this morning:
Every Friday I conduct a team meeting to recap our week.

This morning, one of our General Managers opened up DealerTrack — a portal that dealers use to communicate with auto lenders — and highlighted something very concerning:
9 of our lending partners have started WAIVING "open auto stipulations" for consumers.

Wait, wtf does that even mean?

Let me explain using a simple, hypothetical scenario:

1) Consumer takes out an auto loan in 2020/2021 on an overvalued car

2) 2022 comes around and that overvalued car is now rapidly declining in value

3) With the car declining in value, consumer now owes more on the car than it is worth

4) Consumer no longer wants the car. Maybe they outgrew it. Or maybe it keeps breaking. So consumer wants to trade it in.

5) But dealer can't trade the car in because the consumer owes WAY too much on it.

So dealer asks consumer for lots of money down to cover the difference.

6) But of course, the consumer doesn't have $1,000s to cover the difference between what they owe on the car and what it's worth.

And here comes the perfect storm...

7) Dealer can't sell consumer a car,

Consumer can't buy a car,

And, you guessed it, lender can't finance a car!

Everybody loses! Oh no

So what happens next?

8) Lender knows that most consumers are stuck in this situation, and does the following:

WAIVES THE OPEN AUTO STIPULATION.

Meaning, the lender lets the consumer buy the car KNOWING that they already have an open auto loan with another bank!

Why the f*ck would they do this?
Surely the lender knows that consumers that take out a 2nd auto loan are MUCH riskier and have a MUCH high risk of default? Right?

RIGHT?

Yes, but the lender does it because they know that the consumer will default on the other car !!!!

Dog eat dog style.

Let me be clear:
This is NOT normal.

But it's the only way lenders can finance cars and dealers can put cars on the road.

And the implications of this will be tons of repossessions.
I've been a doubter, but after what I saw this morning, I'm now FULLY convinced that a wave of car repossessions will hit in early/mid 2023.

If lenders are willing to backstab each other in order to put more loans on the road, we're in trouble.

This will not end pretty.


View attachment 489553

Government bail out time!!! Just like the housing market a few years ago. Don’t worry, the smart, fiscally responsible, and hard working people will carry the losers on their backs again

 

[jayhawk]

How patient can you be?

View attachment 489552
This morning I discovered something *extremely* alarming happening in the car market, specifically in auto lending.

I'm now convinced that there is a massive wave of car repossessions coming in 2023.

Here's what I discovered (and what no one knows):
Background:

Over the past 2 years, many people took out exorbitant loans on cars.

Car values were inflated (and frankly, still are to some extent).

But many people simply had no choice and bought an overpriced a car.

Well...
Car valuations are now plummeting.

Some cars have declined in value as much as 30% y/y.

And these same people that took out these big loans are now "underwater".

Basically, they owe banks more on these cars than they are worth.

And the banks are well-aware of this...
But there is no easy solution.

You can't just put the genie back in the bottle.

This brings me to what happened this morning:
Every Friday I conduct a team meeting to recap our week.

This morning, one of our General Managers opened up DealerTrack — a portal that dealers use to communicate with auto lenders — and highlighted something very concerning:
9 of our lending partners have started WAIVING "open auto stipulations" for consumers.

Wait, wtf does that even mean?

Let me explain using a simple, hypothetical scenario:

1) Consumer takes out an auto loan in 2020/2021 on an overvalued car

2) 2022 comes around and that overvalued car is now rapidly declining in value

3) With the car declining in value, consumer now owes more on the car than it is worth

4) Consumer no longer wants the car. Maybe they outgrew it. Or maybe it keeps breaking. So consumer wants to trade it in.

5) But dealer can't trade the car in because the consumer owes WAY too much on it.

So dealer asks consumer for lots of money down to cover the difference.

6) But of course, the consumer doesn't have $1,000s to cover the difference between what they owe on the car and what it's worth.

And here comes the perfect storm...

7) Dealer can't sell consumer a car,

Consumer can't buy a car,

And, you guessed it, lender can't finance a car!

Everybody loses! Oh no

So what happens next?

8) Lender knows that most consumers are stuck in this situation, and does the following:

WAIVES THE OPEN AUTO STIPULATION.

Meaning, the lender lets the consumer buy the car KNOWING that they already have an open auto loan with another bank!

Why the f*ck would they do this?
Surely the lender knows that consumers that take out a 2nd auto loan are MUCH riskier and have a MUCH high risk of default? Right?

RIGHT?

Yes, but the lender does it because they know that the consumer will default on the other car !!!!

Dog eat dog style.

Let me be clear:
This is NOT normal.

But it's the only way lenders can finance cars and dealers can put cars on the road.

And the implications of this will be tons of repossessions.
I've been a doubter, but after what I saw this morning, I'm now FULLY convinced that a wave of car repossessions will hit in early/mid 2023.

If lenders are willing to backstab each other in order to put more loans on the road, we're in trouble.

This will not end pretty.


View attachment 489553

Sounds like clickbait to me…..especially with his website pitch at the end.

Vehicles have always been highly depreciable assets, and people trade them in all the time despite how much they owe on them.
If the bottom falls out of the car market that much then it’s a rare time to refinance it. But that probably won’t happen.

 

[alaska_bou]

Needing a car is an indication of a lack of personal responsibility? You learn something new every day.

Even used vehicles were overpriced during COVID.

"Needing" something you can't afford is completely different than the need for a cheap reliable vehicle.

 

[Gutshotem]

Sounds like clickbait to me…..especially with his website pitch at the end.

Vehicles have always been highly depreciable assets, and people trade them in all the time despite how much they owe on them.
If the bottom falls out of the car market that much then it’s a rare time to refinance it. But that probably won’t happen.

Maybe, maybe not. It caught my attention because Elon commented and he obviously knows more about the vehicle market than me.

 

[Elite7]

I have a sneaking suspicion that car dealers have us right where they want us. During covid they had limited supply and marked up vehicles with a "market adjustment" for the shortfall and made money hand over fist. I think the car dealership model with lots of vehicles to choose from on the lot is a thing of the past. Limit supply, screw everyone who needs a vehicle with a BS "market adjustment" for the lack of supply and increased demand and have virtually no inventory overhead on their floorplan. The vehicles the dealerships had didn't cost them more, but they charged $5,000-$10,000 or more for these "market adjustments" and had less money in them and less work to do, less overhead with their floorplan, etc. Now you order, pay top dollar, get shafted with the "market adjustment" and wait for your vehicle to arrive. I may be wrong, but I foresee this being the new auto dealership model.

I was thinking the same thing would happen but the two main dealers in town are starting to get the lot filled up again. Haven’t seen them with this many vehicles for a couple years.

Wife and I are slowly shopping for a new car, but we decided to wait it out until 2024 or 2025 in hopes things get back to normal

 

[MattB]

"Needing" something you can't afford is completely different than the need for a cheap reliable vehicle.

You are the only one on this thread who has made a comment about affordability. Seems like you missed the point.

 

[alaska_bou]

You are the only one on this thread who has made a comment about affordability. Seems like you missed the point.

Not at all. The OP asked about any Toyota deals to be found on a new purchase. My comments were replies to people who made silly claims.

 

[wind gypsy]

Not at all. The OP asked about any Toyota deals to be found on a new purchase. My comments were replies to people who made silly claims.

This is what you posted.

But many people simply had no choice and bought an overpriced a car. <---- this sounds like a poor excuse for a lack of personal responsibility.

I assume what @MattB is saying is it doesn't matter if you bought a new, lightly used, or 10+ YO car the past couple years, it was probably overpriced I.E. they simply had no choice. Buying an overpriced car was the reality for most people who needed to buy one, regardless of budget. Buying an overpriced POS that fits the budget better isn't necessarily a great alternative if it's not reliable and it drops in value just as much once the market comes back to reality.

I don't think there's any disagreement that the choice to buy a new or nearly new car that is overpriced and over someone's budget usually qualifies as a "lack of personal responsibility".

I know i'd not want to be buying an awd or 4x4 vehicle with a sub $10k budget over the past couple years.

 

[Ucsdryder]

I have a sneaking suspicion that car dealers have us right where they want us. During covid they had limited supply and marked up vehicles with a "market adjustment" for the shortfall and made money hand over fist. I think the car dealership model with lots of vehicles to choose from on the lot is a thing of the past. Limit supply, screw everyone who needs a vehicle with a BS "market adjustment" for the lack of supply and increased demand and have virtually no inventory overhead on their floorplan. The vehicles the dealerships had didn't cost them more, but they charged $5,000-$10,000 or more for these "market adjustments" and had less money in them and less work to do, less overhead with their floorplan, etc. Now you order, pay top dollar, get shafted with the "market adjustment" and wait for your vehicle to arrive. I may be wrong, but I foresee this being the new auto dealership model.

Not the dealerships, maybe the manufacturer.

 

[wind gypsy]

Not the dealerships, maybe the manufacturer.

Why not the dealerships?

 

[Ucsdryder]

Why not the dealerships?

Dealerships have been begging for new cars for 2 years, but the manufacturers haven’t been supplying them with the new cars they need. At times there was a back log of customers waiting for anything and they couldn’t find them a new car.

Used cars weren’t much better. They were forced to pay 30-50% more than they were paying pre-pandemic, most 1-2 year old cars were at or over msrp. No dealer wants to buy that inventory. The risk is huge.

These manufacturers have it figured out, produce less, cut back on leases and get rid of all incentives. Produce only high end trim levels that have higher margins and discount NOTHING! They can make more off 1 car in 2022 than they did on 20 cars in 2018.


Don’t get me wrong, dealerships have had banner years the last 2 years, but it’s a supply and demand issue and not something they’ve controlled.

 

[CorbLand]

Dealerships have been begging for new cars for 2 years, but the manufacturers haven’t been supplying them with the new cars they need. At times there was a back log of customers waiting for anything and they couldn’t find them a new car.

Used cars weren’t much better. They were forced to pay 30-50% more than they were paying pre-pandemic, most 1-2 year old cars were at or over msrp. No dealer wants to buy that inventory. The risk is huge.

These manufacturers have it figured out, produce less, cut back on leases and get rid of all incentives. Produce only high end trim levels that have higher margins and discount NOTHING! They can make more off 1 car in 2022 than they did on 20 cars in 2018.


Don’t get me wrong, dealerships have had banner years the last 2 years, but it’s a supply and demand issue and not something they’ve controlled.

I remember seeing somewhere that Ford was sitting on a bunch of 2020/2021 F150 waiting on parts before they could deliver. Do you know if there is truth to that?

 

[Ucsdryder]

I remember seeing somewhere that Ford was sitting on a bunch of 2020/2021 F150 waiting on parts before they could deliver. Do you know if there is truth to that?

For a long time they were waiting on chips. A lot of cars were being delivered without chips to dealerships and sold retail with the expectation that the customer would come back later for the chips to be installed. I was told they moved through most of those vehicles. They don’t really have a choice, imagine sending a “new” 2020 to a dealership and having it sit next to a 2023. I’m not really sure what the current excuse is for “shortages”.

 

[CorbLand]

For a long time they were waiting on chips. A lot of cars were being delivered without chips to dealerships and sold retail with the expectation that the customer would come back later for the chips to be installed. I was told they moved through most of those vehicles. They don’t really have a choice, imagine sending a “new” 2020 to a dealership and having it sit next to a 2023. I’m not really sure what the current excuse is for “shortages”.

That is what I wondered and was thinking. I was kind of hoping it was true and there might be some deals on brand new 20/21 models.

The shortage excuse is like everything, manufactured to keep prices high.

 

[Elk-fanatic91]

That is what I wondered and was thinking. I was kind of hoping it was true and there might be some deals on brand new 20/21 models.

The shortage excuse is like everything, manufactured to keep prices high.

Google “ky speedway, Ford truck storage”.

 

[BRTreedogs]

I'm almost always searching for a specific vehicle. Usually a manual.

Anyways I've had good luck using auto trader advanced search and open it up to any distance.

Then you can narrow down to the exact model.
Then lower the price down to the bottom 10 percent of what its showing.

Then you are looking at the lowest prices on the exact thing you're looking for.

From there you can sort through distance, dealer reviews, anything else a dealer may offer. And work the cheapest 2 dealers against each other.

 

[doc holiday13]

not sure if it's been said yet but try toyotathon sales drive event. the commercials imply it's the best time to buy a Toyota

 

[alaska_bou]

This is what you posted.


I assume what @MattB is saying is it doesn't matter if you bought a new, lightly used, or 10+ YO car the past couple years, it was probably overpriced I.E. they simply had no choice. Buying an overpriced car was the reality for most people who needed to buy one, regardless of budget. Buying an overpriced POS that fits the budget better isn't necessarily a great alternative if it's not reliable and it drops in value just as much once the market comes back to reality.

I don't think there's any disagreement that the choice to buy a new or nearly new car that is overpriced and over someone's budget usually qualifies as a "lack of personal responsibility".

I know i'd not want to be buying an awd or 4x4 vehicle with a sub $10k budget over the past couple years.

I understand what you are saying, but I believe he was referring to expensive purchases on new or nearly new vehicles. My point was, for example, a 15-year-old 4 runner is a damn reliable vehicle and even with an increased value over Covid it is still an affordable alternative for most anyone.

 

[JeffRaines]

No matter how "damn reliable" a vehicles reputation is, a 15 year old multiple owner vehicle with no maintenance records(a very common scenario) is a stupid-ass purchase at the inflated pricing we're currently under... doubly so paying the Toyota tax on top... triply so when you consider what some people do with these vehicles.

It doesn't matter what brand name is on the grille, a 15 year old used vehicle is likely going to start needing attention in more ways than one, and, also likely, when you least expect or want it.

For a cheap commuter vehicle - sure, no big deal. You're staying local, it breaks down its not the end of the world. I would not purchase said vehicle with any desire to drive it across the country or find myself miles from cell service.

This isn't saying your personal vehicle you've owned for 15 years and kept up with maintenance on is an issue - that I'd be more comfortable with because I know the history.

Just like no one gets rid of a good animal, I feel its almost as rare for a person to get rid of a good vehicle. Yeah, you're gonna have the occasional dude needing to upgrade or go bigger but that's usually with newer stuff. Why would you sell off a vehicle you owe nothing on that's still super reliable... unless...

 

[Dos Perros]

The shortage excuse is like everything, manufactured to keep prices high.

I work in an industry that would pay any amount for some things, and we still can't get enough of some things due to shortage.