When to buy pickup
DON'T Buy a Pickup Truck Right Now. Supply Chain Issues = Inventories Falling and Prices Going Up.
I pops a do today oh all right Sonny Boy
I'm I'm doing good you know I'm living
large down here at the shore beautiful
sunny day can't wait to walk up to the
boardwalk and not be allowed to get on
it yeah well hopefully that only lasts a
short while longer you know things get
back to normal but you know you sent me
an interesting article last night seems
like you know I used to be the one that
would send the articles to you and now
all of a sudden it's a bit of a role
reversal I kind of like it I appreciate
it
yeah well in this one was about pickup
trucks yes
I've talked about before my car it's not
a pickup truck either yeah you know when
you you know when I lived at your house
we never had pickup trucks it never
really fit into our family but this
article was talking about pickup trucks
being in short supply and then you know
now that we're working on behalf of our
customers I'm thinking back to your work
experience that I mean you were at Audi
you are at Acura you were at BMW your
mini sale never really had pickup truck
so I've never really was exposed to
pickup trucks and then I read the sort
of : pickup trucks are in short supply
and we put out a video just a few days
ago talking about how now is actually
might be the right time to buy a new car
and an exercise I I think the key the
key word matters car as it turns out and
not truck and and so we did that video
Saturday morning yeah which is last time
I checked just two days ago yeah and and
then what can happen in two days time
and the reality of the situation is that
some of the advice in that video was on
point and for some of our customers it's
not and and the part that's not is our
customers that are looking for for
pickup trucks now might not necessarily
be the best time to buy a pickup truck
unless you absolutely need one because
dodge trucks and GMC trucks and Chevy
Silverado trucks
the day supply of those is falling
quickly and so one of the first laws of
economics is the law of supply and
demand and if you have a high demand at
a low supply well you don't have to
discount at all or as much if you have
if you have no demand and a high supply
well you got a you got a discount the
hell out of this stuff so I I think from
the car side of things now could be a
very good time to buy a car if you're
into a car or a sedan or some cotton or
a coupe but it might not necessarily be
in some cases the best time to be
looking at a pickup or an SUV yeah and
and you know while I was thinking about
it
there was the United Auto Workers strike
that happened earlier this year as well
that I know in the article they talk
about it it really impacted already
now that was last fall last fall yeah
thank you yeah that impacted supply side
to begin with and then you compound that
with factories being closed in a variety
of locations because of because of Koba
19 yes you end up with dealers who are
saying you know my my my days the
inventory are actually kind of windy
here and and we've talked about in other
videos you've shared you know when you
were in your management position that
was one of the numbers that you looked
at most religiously wasn't it was the
how many days supply of cars did you
have and I remember I asked you one time
and if you don't mind speaking to it
leading into the Great Recession back
into seven and oh eight that was the
first indicator you saw that we were
gonna get I don't want to use that for
it but we're gonna get you know really
screwed and and and we did and I did yes
I mean the biggest point about being in
any business is is watching your
supplies and and and watching your
inventory and seeing how quickly the
inventory is turning and so I tracked on
a weekly basis what money
running 90 day average of sales were
for each model of Acura that we had and
so I could see if I had more cars coming
in than going out and my 90-day average
of sales was going down but my amount of
inventory was going up and that was the
first sign to me that I think there's
trouble ahead you know our day supply of
cars especially with TLS because that
was the bulk of the acura business TL s
and M DX is the number of the day supply
of TLS was growing rapidly and the and
the number of monthly sales of TL s was
declining rapidly well you put those two
together and that spells doom and and we
saw that so you you have to you have to
keep an eye on your inventory levels and
how quickly they're turning and for
pickup trucks I I think most of the
manufacturers like to have somewhere
between the 90 and a 120 day supply of
pickup trucks on the ground and right
now like for the Silverado and stuff
it's it's less than that it's seventy to
eighty day supply and the supply isn't
gonna get build up anytime soon because
without building any other vehicles I
mean there might be building some but
they're not building them in the numbers
that are going to be needed moving
forward so they're not replenishing the
supply and if the if the supply isn't
being replenished then the value of what
you have on hand is going to go up yep
and then you got the fact that buying a
vehicle of any type whether it be a car
sedan coupe a a light or a heavy-duty
pickup truck it doesn't matter for a lot
of people it's their second largest
purchase in their life and even if it
isn't it still represents a pretty big
commitment you want the one that you
want right and so when supply starts
thing can become short and you're
looking for something that's option the
specific way at a specific trim level
with this color interior in this color
exterior you start to kind of pigeon
pull yourself into what options you have
and what what little leverage you're
able to build and that's what's so
interesting about this new data they
came out instead for pickup trucks if
you're looking for that one
you're you're probably gonna pay a
premium one of the one of the things I
can share with you is that when there's
an adequate supply of vehicles customers
can be very picky and are and when
there's a limited supply of vehicles
it's amazing
exactly what they'll settle for and and
the reason I say that I say that from
experience
at one of the many stores or at the many
store that I I helped manage there was a
time when we sold so many minis that we
were down to like we only had a handful
left in stock maybe fifteen or eighteen
and people who might want what they want
but they took what we had because we
were in no different position than any
other mini dealership at the time
everybody we were just the demand was so
high because the cost of gasoline was so
high that that people were willing to
just settle so I know one of the things
that you ask our customers and that I
ask our customers is please share with
me what your must-haves are yeah okay
because your must-haves are completely
different from your I'd like to have and
and I know when I do it when I build
cars for myself like okay I'm gonna get
a new car and what do I have to have and
then what do I settle for there are
always two different cars that's you
know because I start to rationalize the
stuff that I don't really need that well
I just would have liked to have had yeah
and and that's what happens to customers
when vehicles are in short supply no
longer becomes I have to have this I
just have to have the damn truck okay
and if it has most of what I wanted I
could be okay with that well let me ask
you a question okay if you can speak to
the the behind the scenes the meetings
that you would have you know weekly or
monthly when you're reviewing your
inventory you know did you ever have I
mean I guess obviously in that minions
since what were the conversations around
okay we have a very short supply of
inventory we're turning it quick if
you've got a customer that comes in and
makes an offer how do you you know how
did you handle your pricing and how did
how would you train your salespeople for
that instance when you knew you are in a
position of power well I hate to use the
word power but you know you would you
would remind your your salespeople to
remind your customers that the first law
of economics is supply and demand yeah
you know and this it is what it is folks
and you know I would love to be able to
give you a deal but I can't I don't know
how I only have 15 cars to sell this
month that I can justify giving you a
discount when the next person coming in
will be more than happy to pay MSRP or
even more you know I we have a business
to run and I'm not saying that we're
trying to take advantage of you we're
not we're just trying to to maximize our
return on investment when we are running
out of product and you get future return
on investment from yeah and it was for
me it was the way I did most of the
things I was honest with people giving
it you tell them the truth
it's the same thing when I when I would
have and I hate to say this because we
do it to deal with all the time when
we're shopping for our customers I used
to say the customers that would get in
touch with me from New York or
Connecticut or wherever and they go well
I've got a really cheap price and I'd
say well you please explain to me the
business model where it makes sense for
me that sell you the car for nothing
yeah you know to make nothing so that
you can take the car to Connecticut and
when it's time to get it serviced I
don't know you're taking it to the
dealer in Connecticut and not bringing
it to me if if I don't have a way to
make up for the lost profit on the sale
by servicing the vehicle why would I
want to sell it out of my marketplace I
want to keep it in my market so that I
can I can hopefully service the vehicle
I can hopefully sell them a detail when
it's time to get the car detailed again
or if they need an accessory or a part
or whatever that
I could be the one selling it to them so
I could reap some small profits from
that to justify the the lack of profit
in the car deal so you kind of have to
think of it from both ends and I know we
put the same pressure on dealers all the
time and and the reason we do it is
because we know there's enough dealers
out there that well you know it becomes
an ego thing and they just want to show
you the bacon sell the car and and don't
do whatever it is good good I'm playing
into their weakness of the weakness of
their ego that they they have to show
the other dealers they can do it which I
was more pragmatic than that which also
though is influenced by what we've
talked about the past the factory dealer
incentives right if it's the end of the
month and you're five cars away and you
got a showroom full of people you know
you might be but but but come in full
circle here and really looking at the
big picture there was a strike earlier
and excuse me during the fall of last
year so we're down production for
certain makes and models yes we have an
industry that has been trending towards
and people moving away from sedans to
trucks and SUVs yes then we have the
unfortunate shutdown of factories that
are really cutting off supply when you
start to break out the industry into its
sub sectors based off of type of vehicle
you have very different stories you have
the story that we reference the other
day that was part of the driver for why
we even talked about now being attended
by a new car emphasis I mean there are
literally ships in the ocean that can't
dock to get rid of Toyota
you know sedans and get them on you know
on ground Toyota is Lisa
there was Nissan's but thank you I think
it's either Toyota or Nissan is leasing
a sports you know events area where they
can actually you know store vehicles
away from the port area because it's
cheaper I mean they haven't done it yet
but they they've leased that space it to
be to do it so there exist yet concerns
on the supply side of that segment of
the car industry and on this other end
it's the polar opposite well
first as we talk about the incentives
the other day and looking the average
cost to a manufacturer wasn't and for
every vehicle sold for BMW was sixty
some hundred hours per car to help them
move the units to a retail customer but
if you look within the incentives the
incentives today will be higher to help
move the sedans and the coupes and the
convertibles and things like that and
much lower to move the SUVs and the
pickup trucks that are in somewhat
shorter supply the overall total might
be higher because the overall day supply
of the sedans and the convertibles and
the coupes is much higher than where
they want it to be so the average might
be higher but the amount per type of
vehicle will fluctuate greatly yeah yeah
and I think what we'll do is we'll link
to this most recent automotive news
article in the description of this video
I think you have to have a subscription
to be able to do it I do believe that
it's I think it's I think that's the
case however if you do definitely read
it if you don't this is the meat and
potatoes of that article and and we can
speak to it from our own experience
working for our clients I mean I'm
working to jeep gladiator deals right
now at the same time I know your work
and Silverado deals and it's just the
polar opposite of the experience I'm
having when I'm working on like a
Corolla deal rule is you know I can get
a good deal for a customer like you know
not saying that they should work with us
but it's it's not not rocket science
when when there's too much you know I
think you found some relative ease and
say working on a on a minivan which is
different than a small pickup truck or
light truck so yeah I mean we see it in
the vehicles that we're trying to deal
with it's yeah will happen and we'll see
over the coming days if there's more
data that comes out and on the luxury
side because you can break out the auto
industry into its segments based off of
type the vehicle but also you
luxury versus economy and I'm very
interested to see what's going to happen
on the supply side for luxury vehicles
as we've seen such an increase in
unemployment maybe you have less people
who are reaching for those luxury
vehicles maybe that would drive up
supply I'd know who I'm speculating
right now but well it'll be interesting
to get some data and some guidance there
well I won't I will say this that
certain luxury vehicles are aspirational
and those aspirations take a backseat
when you suddenly find yourself
unemployed yeah what was that sack did I
think we've both been there before it
yes so yeah but there there is a nice
size set of customers who make a nice
living and even in a downturn like this
we'll continue to make a nice living and
we'll continue to buy luxury cars but
those that were on the aspirational end
of getting those cars that Alexis's to
the Mercedes the BMWs of all those
things like that that that might be
taking a little bit of a backseat
because presently there's 30 million
people that find themselves out of work
who weren't six or seven weeks ago who
at the present time are no longer in the
market to buy a quarter of any kind yeah
again we're keeping tabs on this stuff
so if you haven't already subscribed to
the channel let us know what you'd like
to hear about in the industry and you
know we'll share updates as quickly as
we're able to consume the information
it's a wild time to be in this business
and see how things are having and
flowing but yeah there you go pickup
trucks let's see what happens it's
tricky times to get a good deal right
about now it seems too big
