Pricing of cars/trucks going to collapse?

[FordLightning]

I’m beginning to wonder whether we will see collapsing vehicle prices within a year…at least a real possibility.

Some things to consider:

- Foxconn (world’s largest manufacturer and maker of iphone) plans to manufacture EV skateboards
- Skateboards will become interchangeable, almost like the old electric race car toys
- Chinese are ramping up EV production in a big way, take a look at this link:
https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/
- Pent up demand will eventually wane, and discounts return
- Manufacturing plants (cars & batteries) are all coming online around the same time
- It will be harder to justify paying extra for brand (look at VW and Audi, ID4 vs. Q4)
- Trucks have become overpriced and most people don’t regularly haul things, with energy prices going up they will become harder to justify (gas or electric). Example: I can buy a decent Mercedes or BMW for the same price as a Lariat.

I think this will happen and it is only a matter of timing. Thoughts?

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[rdr854]

The ADM may go away, but I do not foresee the discounts that we have seen over the past 10 or 15 years. For those who bought cars in the mid 80s, there were lengthy waiting lists for Hondas and Toyotas since many dealers only had one or two demos of each model on the lot at any one time. It was mot unusual to pay ADM of $3 to $5K for an Accord or a Camry.

My prediction is MSRP with minimal discounts or incentives. OEMs would be foolish to go back to stocking hundreds of cars on each dealer‘s lot. The better play is to have customers custom order cars like they do in Europe — with just a few cars on the lot for those who need a car now because of a catastrophic failure or a totaled car.

 

[Viper GTS]

I’m of the opinion that EV demand is going to outpace supply for several more years at least. The new plants coming online just means that more people will be exposed to them and end up wanting one.

A single drive of a Bolt, of all cars, ruined ICE forever for me. I knew immediately that I would never buy another gas daily driver. That one Bolt converted two diehard car guys in one afternoon. Similarly, my M3P has been directly responsible for several Tesla purchases.

Still, a large portion of the population has never been in an EV but they will get their chance as the adoption accelerates. The more cars are out there the higher the demand is going to be.

 

[LightningShow]

It'll happen when unsold vehicles start building up at dealerships. Not likely to happen in 2022.

 

[dothedew]

The ADM may go away, but I do not foresee the discounts that we have seen over the pat 10 or 15 years. For those who bought cars in the mid 80s, there were lengthy waiting lists for Hondas and Toyotas since many dealers only had one or two demos of each model on the lot at any one time. It was mot unusual to pay ADM of $3 to $5K for an Accord or Camrys.

My prediction is MSRP with minimal discounts or incentives. OEMs would be foolish to go back to stocking hundreds of cars on each dealers lot. The better play is to have customers custom order cars like they do in Europe — with just a few cars on the lot for those who need a car now because of a catastrophic failure or a totaled car.

I have multiple quotes for a Lariat powerboost over $10K under MSRP sitting in my inbox right now. Anyone paying MSRP is just a chump and the dealers are killing it.

 

[personalt]

1/2 the things you mention have nothing to do with cars/trucks. Pent up demand will eventually wane but that could be a long time away as many people are sitting on sidelines are their cars are getting older. People that dont haul things buy a huge percentage of trucks and have been doing so for a long time. What market forces do you think will make that change.

Inventory in EV trucks are very contained. Of course it is just a guess but I am thinking we might get 20,000 F150 lightnings this year. That is basically nothing in overall truck market. Silverado starting in 2023 or 2024 so that will have no effect for years

 

[metroshot]

I’m beginning to wonder whether we will see collapsing vehicle prices within a year…at least a real possibility.

Some things to consider:

- Foxconn (world’s largest manufacturer and maker of iphone) plans to manufacture EV skateboards
- Skateboards will become interchangeable, almost like the old electric race car toys
- Chinese are ramping up EV production in a big way, take a look at this link:
https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/
- Pent up demand will eventually wane, and discounts return
- Manufacturing plants (cars & batteries) are all coming online around the same time
- It will be harder to justify paying extra for brand (look at VW and Audi, ID4 vs. Q4)
- Trucks have become overpriced and most people don’t regularly haul things, with energy prices going up they will become harder to justify (gas or electric). Example: I can buy a decent Mercedes or BMW for the same price as a Lariat.

I think this will happen and it is only a matter of timing. Thoughts?

Yes, I agree vehicle prices will probably drop maybe in 2023.

Reason: Mortgage loans are starting to drop, interest rates are rising, and new loans are being scrutinized even more - so the big real estate bubble may be bursting soon.

 

[Nick Gerteis]

All good and interesting points, but 2-3 years at the least to go from current pent up demand to oversupply and discounts. All in the middle of two major shifts, ICE to EV and dealership model to direct sales. Interesting times!

 

[LightningShow]

Home prices won’t be dropping anytime soon. There’s still a huge amount of demand for new houses that has nothing to do with the pandemic. It’s due to years of building less than we needed because so many builders went under and/or became very conservative after the 2008 crash. Every year from 2008 to 2019 there were far less homes built than the historical average. We probably still have at least 3-5 years of high demand in the housing market. Prices won’t stall, let alone correct, before then. Mortgage rates rising might slow prices slightly but there is no bubble to pop.

 

[KevinC]

I see an EV Glut in 4-6 years along with a bubble bursting. Everyone seems to be trying to ramp up to build a million EV's within 5 years and when all that comes on line and the backlogs are caught up there will be a huge glut. It's like the 2000 internet bubble that wiped out many huge tech companies who overbuilt capacity.

The sucky part of the journey there for customers is going to be all the proprietary flip flopping around with battery technology, voltage standards, charging standards and such. Eventually they'll narrow things down and get semi standardized ala the USB-c Phone charger, but until then it'll be a mess.

Hopefully in 10 years batteries and motors will get to the point where they're semi-interchangeable and aftermarket options come out. It's possible carmakers could ultimately become more of glorified chassis makers.

 

[jazzmanmonty]

Unfortunately, there really isn't such thing as "temporary" inflation, especially for cars. Once a car manufacturer gets a chance to bump up the MSRP, you rarely see it go down much. Just look up car price charts for last 30 years for average car. I mean look at the "cash for clunkers" era.. instead of lowering MSRP by a lot, they just offered more incentives. Once the economy was better, the MSRP just kept slowly going up. Don't forget wages are going up for many due to this inflation/lack of workers. Its like saying "hey workers, things are better so lets give you a pay cut now." Not gonna happen.. So the only thing we will see once the smoke clears is some more seasonal/promotional deals and incentives.. but MSRP will always go up!

On the contrast, what will suffer severely is the used car market. Right now, dealerships are fighting for the limited amount of used cars out there. Many buying anything they can at depleted auctions and overpaying on trade-ins just to have used inventory. Once this all cools down by next year, many will be stuck with a lot of crap cars (beware of the large amount of used auction cars coming in from Canada.. very few with clean titles and carfax won't show the truth about them!!!) So they will be taking huge losses on old used stock once new car inventory settles.

 

[Viper GTS]

I see an EV Glut in 4-6 years along with a bubble bursting. Everyone seems to be trying to ramp up to build a million EV's within 5 years and when all that comes on line and the backlogs are caught up there will be a huge glut. It's like the 2000 internet bubble that wiped out many huge tech companies who overbuilt capacity.

The sucky part of the journey there for customers is going to be all the proprietary flip flopping around with battery technology, voltage standards, charging standards and such. Eventually they'll narrow things down and get semi standardized ala the USB-c Phone charger, but until then it'll be a mess.

Hopefully in 10 years batteries and motors will get to the point where they're semi-interchangeable and aftermarket options come out. It's possible carmakers could ultimately become more of glorified chassis makers.

We already have a widespread charging standard. CCS has basically won, Tesla is the only holdout and they are currently deploying CCS equipped supercharger stalls. IMO it is likely that Tesla will change fully to CCS at some point given they already sell CCS cars in some regions. Different voltages etc all run on the same connector it’s just negotiated much like USB-C PD.

 

[Lavaorange]

I don't see things calming anytime soon with new car supply. Inflation is approaching 5% in Canada and gas in Vancouver is expected to hit US$5.65/gallon in a few months. Premium costs that now already. The shift to EV has been accelerating here for some years with Model 3's at every corner. If Lightning MY23 is adjusted only for inflation the price would be $4-$5k higher. I'm very curious to see what happens to pricing for MY23 as well as how/if they change packages/options for buildout. Demand will continue, at least fo the growing EV segment. The only discounts will be for the bricks nobody wants to buy.

 

[GolfR]

I predict several things will happen…

1)Production will catch up to demand - this will mostly cause used car values to drop

2) Interest rates will go up. This will cause more incentives to be in the form of low borrowing rates. This will further drive used car prices down because it means a higher monthly payments without new car incentives.

3) New car MSRP will continue to rise. With inflation at 7%+car prices will eventually catch up as labor rates eventually drive up the cost of everything.

3a) Empty shelves Joe will continue to deny this is a problem and it will be the #1 issue in the next election.

4) EV demand will continue to outpace supply which will drive EV prices up faster than ICE vehicles.

5) The ridiculously high demand for EV trucks will plummet. The cost is too high and they simply don’t make sense to use as a truck because the range will take huge hits when hauling or loaded. Add to that the huge batteries and how long they take to charge. Sorry lightening buyers!

6) More performance cars will go hybrid and drop the big V8s. The torque curve with electric motors is enticing to go with boosted V6s and companies can’t keep V8s in their lineup because of mileage. Full EV sports cars still won’t go mainstream because the battery packs can’t handle hard driving for very long…for instance Tesla can barely get a vehicle around the Nuremberg ring.

 

[Sam James]

The only discounts will be for the Toyotas nobody wants to buy.

Translated that from Canadian for you, friend.

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