[mjr24]

I don't like what's going on.

I dropped my car off at service yesterday and they seemed really fine with the dealer not having any new inventory because they said they are getting more per car in profit now.

Wouldn't be shocked if dealers start stocking very little to try to gouge us for awhile…..

I'm most certainly not going from 1300 a month for 24 months to like 1750 a month for 36 months.

[goobies818]

Originally Posted by mjr24

I don't like what's going on.

I dropped my car off at service yesterday and they seemed really fine with the dealer not having any new inventory because they said they are getting more per car in profit now.

Wouldn't be shocked if dealers start stocking very little to try to gouge us for awhile…..

I'm most certainly not going from 1300 a month for 24 months to like 1750 a month for 36 months.

Well, expect some of this being the new normal.

Ford's CEO stated as such saying they envision where dealer inventories will be minimum and the modus operandi would be each customer will order a specific build. In essence, instead of a race to win as much sales volume by building as many cars as the factory can punch out and then offering dealers incentives to move unsold product...the new game is just to make more money off of each (but fewer) cars sold.

However, as one article pointed out...this presents a prisoner's dilemma for the manufacturers. The reality is...it's in their best interests to maintain a collective low volume, high yield environment...however, they can't coordinate that effort (collusion...not legal). But the value proposition of knowing that all your competitors are selling fewer cars in an effort to have higher profits can lead to one manufacturer to go rogue and try to corner the market by flooding the market with cars and incentive to gain market share...which then will lead all the manufs to follow suit. Think of how airlilnes adjust fees and pricing...we can be headed down the same path.

[mjr24]

Originally Posted by goobies818

Well, expect some of this being the new normal.

Ford's CEO stated as such saying they envision where dealer inventories will be minimum and the modus operandi would be each customer will order a specific build. In essence, instead of a race to win as much sales volume by building as many cars as the factory can punch out and then offering dealers incentives to move unsold product...the new game is just to make more money off of each (but fewer) cars sold.

However, as one article pointed out...this presents a prisoner's dilemma for the manufacturers. The reality is...it's in their best interests to maintain a collective low volume, high yield environment...however, they can't coordinate that effort (collusion...not legal). But the value proposition of knowing that all your competitors are selling fewer cars in an effort to have higher profits can lead to one manufacturer to go rogue and try to corner the market by flooding the market with cars and incentive to gain market share...which then will lead all the manufs to follow suit. Think of how airlilnes adjust fees and pricing...we can be headed down the same path.

OH NO DOUBT. This was actually supposed to be posted in the M5 forum but I've been looking at X5M's, too, and it's the same there.

There is hardly any shortage....it's called manufacturers are scaling back production to make more per car.

[bono]

Once the chip shortage is gone, free market will kick in and competition will fix the market.

[iconoclast]

Originally Posted by mjr24

FFS….pretty much every dealer wants over MSRP right now
❯

for cars with minimal or limited options too. that is the worst part. i was very eager to ditch our M50i but the vehicles i was entertaining replacing it with don't have any of the options we require so while it is a great time to sell a car it is an awful time to buy. so come to that point in time every enthusiast reaches... keep and modify or keep looking for the ideal replacement to start anew.

[rmorin1249]

Exactly why I bought out our lease. No way I'm paying MSRP+ for a vehicle that isn't what we really want.

[GS2019]

I went to 3 dealerships and all of them are asking MSRP+. Additional $4k to $5K over the window sticker price + TTL.

[iconoclast]

Originally Posted by bono

Once the chip shortage is gone, free market will kick in and competition will fix the market.

I am fairly certain there will be a greater ADM on vehicles that will land with the highly coveted options in them and the lesser vehicles will have smaller mark-up or be sold at MSRP. This is not going to go back to "normal" overnight.

[Aimster82]

Originally Posted by mjr24

I don't like what's going on.

I dropped my car off at service yesterday and they seemed really fine with the dealer not having any new inventory because they said they are getting more per car in profit now.

Wouldn't be shocked if dealers start stocking very little to try to gouge us for awhile…..

I'm most certainly not going from 1300 a month for 24 months to like 1750 a month for 36 months.

Might be best to buy your car.

I am going to be in the same situation soon. I wonder if BMW will still charge me the disposition fee if I buy the lease.

[Aimster82]

Originally Posted by rmorin1249

Exactly why I bought out our lease. No way I'm paying MSRP+ for a vehicle that isn't what we really want.

Was this your BMW? Did BMW charge you the disposition fee?

[GS2019]

Originally Posted by iconoclast

I am fairly certain there will be a greater ADM on vehicles that will land with the highly coveted options in them and the lesser vehicles will have smaller mark-up or be sold at MSRP. This is not going to go back to "normal" overnight.

Agreed - I think it's going to take years (at-least two-years) before things become normal.

[taek]

Financial Times:
https://archive.md/EFsOt#selection-2027.177-2031.177

Carmakers Daimler and BMW plan to limit the volume of premium models they ship even once the industry-wide chip shortage eases, in a bid to lock in the hefty price increases they have achieved during the pandemic.

“We will consciously undersupply demand level[s],” Harald Wilhelm, Daimler’s chief financial officer told the Financial Times, “and at the same time we [will] shift gears towards the higher, the luxury end.”

BMW had “seen a significant improvement in pricing power in the last 24 months,” said chief financial officer Nicolas Peter. The Munich-based carmaker’s plan was “clearly to maintain . . . the way we manage supply to maintain our pricing power on today’s level,” he added.

“The pandemic has really opened everyone’s eyes — that a different paradigm is possible,” said Arndt Ellinghorst, an analyst at Bernstein. “Everyone loves it, including dealers.”

Ford also has said it will be moving forward in the future with a "lower inventory" business model.

Mercedes is now making $75k per transaction, so their stance isn't surprising. BMW's change isn't as extreme. Being a BMW buyer at MSRP is probably one of the better places to be in this shortage. I'm shopping for a Rav 4 Prime for my dad, and they are going for $16k over MSRP.

Daimler average transaction Sep 2020: $59,899
Daimler average transaction Sep 2021: $75,369

BMW average transaction Sep 2020: $57,797
BMW average transaction Sep 2021: $64,094

Cadillac average transaction Sep 2020: $54,202
Cadillac average transaction Sep 2021: $81,938

Genesis average transaction Sep 2020: $46,328
Genesis average transaction Sep 2021: $60,087

https://mediaroom.kbb.com/2021-10-13...lley-Blue-Book

[nZtiZia]

we're not due until March 2023 with my wife's lease, and we're hoping the 545e makes its way to the U.S. by then. I'm hopeful the buying/leasing environment will improve by then

[YuicyYumboYack]

I have a somewhat hard time believing that in the long term dealers are going to keep low inventory and force buyers to order instead.

Not always the case, but a lot of the time dealers want you to make an emotional decision and make you purchase something directly off the lot. This probably applies more to certain brands than others, though.

Also, I imagine that for a lot of people, a new car purchase happens when they need a new car immediately, e.g. their current car breaks down. For many, they want to go a dealer, pick out the car they want, and drive home with it that day.

[goobies818]

Originally Posted by YuicyYumboYack

I have a somewhat hard time believing that in the long term dealers are going to keep low inventory and force buyers to order instead.

Not always the case, but a lot of the time dealers want you to make an emotional decision and make you purchase something directly off the lot. This probably applies more to certain brands than others, though.

Also, I imagine that for a lot of people, a new car purchase happens when they need a new car immediately, e.g. their current car breaks down. For many, they want to go a dealer, pick out the car they want, and drive home with it that day.

I agree...consumer behavior and how the dealers conditioned us hit on every point you make. But i think at the end of the day...the manufs are enjoying the hefty margins derived by the lower sales volumes and eliminated incentives offered to dealers to keep inventory turning over.

I think this will prob lead to a battle between the dealers and manufs. Dealers have invested heavily on sprucing up their facilities, and having a ginormous footprint to carry as many permutations of vehicles in the lineup to accommodate that impulse, walk on the dealer lot and drive off with a new ride the same day philosophy

I think it'll really depend on what the major dealer chains (ie: the Autonations and Penskes and Lithias) feel about this change in shopping philosophy. If they're cool with operating more as order takers and service and financing departments...and not as a holding pen of unsold inventory...this can be the new normal post chip shortage (IMO)

I'll add that there's also operational plusses for the dealers as well...you prob don't need as big of a sales staff to manage the business...so there's prob some cost savings to be had there as well. I'll also throw in that they won't have to have as much "flooring" costs as well.

Moreover, the manufs will have better intel as to exactly what features (once they're available) consumers are willing to pay for...and can leverage that intel to fleece us even more (think of Porsche and it's phonebook sized options list)

[allinon72]

While it sucks for buyers, if dealers can't sell on volume because they have no inventory, they have to make that up on the gross per vehicle. This isn't price gouging, it's simple supply and demand. Until people stop submitting orders for MSRP+premium, this will continue.

I have a feeling this is going to come to an abrupt end here very soon.

[BMWBear]

I think I just heard the price of my 2020 go up.

[hyde]

Maybe the darn thing won't lose half its value in first 3 years anymore? It's still difficult, would I own it, maybe, maybe not, considering how expensive it will be to repair or service once the warranty is over.

[mjr24]

All good comments.

No, it's not gouging…..but it's not good for us as buyers and will cause me to look elsewhere.

They need to adjust residuals then on leases. To sit here and say these cars will be 54 percent in 3 years is a joke and ultimately they are going to lose sales and customers.

[iconoclast]

i dont mind overpaying if it is exactly what i want but the problem with me is whatever i want is not available so then the only option is stay put in what i already own but that being said this is a global issue not dealer specific or in a small corner of the world. one's choice becomes overpay at bmw or audi or range rover or whomever else is selling. if you don't want to overpay at bmw then why would one want to overpay somewhere else? who would they lose sales to if everyone is experiencing the same issues and selling in the same fashion?

[goobies818]

Originally Posted by iconoclast

i dont mind overpaying if it is exactly what i want but the problem with me is whatever i want is not available so then the only option is stay put in what i already own but that being said this is a global issue not dealer specific or in a small corner of the world. one's choice becomes overpay at bmw or audi or range rover or whomever else is selling. if you don't want to overpay at bmw then why would one want to overpay somewhere else? who would they lose sales to if everyone is experiencing the same issues and selling in the same fashion?

I wouldn't necessarily call anything overpaying...these are all arm's length transactions and we all have our own internal supply & demand equilibrium equation running in our head. Granted...none of us wants to pay more than the next guy for essentially the same product...but the price differential between what customer A (min) and customer b (max) paid for the same car can only be so wide. the low price can only go so low and the high price...eventually even the biggest fool will say "wait a minute"

As long as i feel like i'm paying a fair price for what i budgeted...i'm relatively happy...maybe i'm a total luddite and yeah...probably leaving some $$ on the table...but if i'm buying a $90K car....am i really going to start haggling over $500-750 here and there?

[reli]

I went through a Broker picking up tomorrow in PA - took about 4 weeks they had a build slot and allocation - 3% off MSRP + PendFed I'll take it in this market