buy

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