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Originally Posted by Leondros
Wicked build. Any interior photos?
Why do you think catastrophic collapse? Is that what the industry is talking about?
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I haven't taken any interior shots... I will and upload a couple.
I believe your looking at a 30-40% decline when the bubble bursts. 100k cars will be 60-70k. 50k cars will be 35-40k. At the bottom end with the 20-40k cars, it will likely be 10-20%.
I'll explain what has happened. When new cars couldn't be produced with any volume or predictability during the meat of Covid, all us dealers were buying any used cars we could to fill our lots. We were sourcing them out of our service drives, privately from Kijiji/Trader/FB Marketplace, and just getting in contact with existing clients. The private owners basically said "Pay up." and we did.
We needed inventory to keep our doors open, service and parts departments running, and sales people paid. With a lot of families in Canada/US having 2-3-4 cars, some people were cashing in and getting what they paid for these cars a couple years ago and basically refunded in full. So instead of a 3-4 car household, they were now 1-2 car households. The high prices on the street, also drove up prices at the auction, and subsequently prices on the lots.
Well, it's hit a point where more people were selling to dealers, than dealers were selling to their customers, and the market is currently in a decline, as there is now a massive glut of used cars for sale. It's basic supply and demand economy stuff, and it crept up on the dealers FAST. we went from a shortage to a glut in about 90 days based on current market data.
Most dealers finance their inventory on what's called a floorplan. It's basically a line of credit, and after a car is in stock for 6-9 months depending on the agreement, that car has to be paid off. Once that happens, and the bank starts calling in these loans, a lot of dealers will be forced to liquidate.
I'm not worried for our dealership, I've seen this coming for 6 months, and have been running pretty lean, and staying away from the luxury stuff. But there are some dealers out there with hundreds of aged cars that are going to be absolutely boned.