Little Insight on Dealership Auctions Currently

[13COBRA]

The used vehicle market is absolutely INSANE. It won't get any better until manufacturers are able to re-stock new inventory, which will hopefully be in the 3rd quarter, if not 4th.

Below is a screenshot of the madness I'm witnessing. This is a 2018 F-150 Crew Cab Platinum 4x4 with just under 33,000 miles. It's a one owner, no accident, no story, etc truck. It has a condition report of 4.3/5, which translates to about $500 of needed reconditioning.

MMR, or average auction price for this truck is $48,500 (which is insane). NADA Clean Trade-In Value is $48,300. The average price listed on Cars.com and Cargurus.com is $46,214/46,688. So yes, the average auction price is $2,000 higher than the average selling price.

This sold to Bill Knight Ford in OKC for $51,500. On top of that, they will have to pay a $425 auction fee, and between $300-350 to ship it from KC to OKC. So before they recondition it, they will own it for almost $52,500.

When this truck was new, it had an original MSRP of $65,315 and a dealer cost of $58,930.28. Then there were at least $1,000 in rebates, if not $2,500. So worse case, you could've purchased this truck for $58,000 or so....3 years and 33k miles ago.

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[GTS Dean]

Ford just announced that they are cutting off production early this year due in large part to unavailability of semiconductor chips. All the manufacturers saw this coming with their supply chain forecasts during the depths of COVID-19 despair. I ordered some work trucks for lease late last fall because of this and they are almost ready to ship.

[13COBRA]

Ford just announced that they are cutting off production early this year due in large part to unavailability of semiconductor chips. All the manufacturers saw this coming with their supply chain forecasts during the depths of COVID-19 despair. I ordered some work trucks for lease late last fall because of this and they are almost ready to ship.

Ford announced that weeks ago. I had 51 fleet Super Duties get cancelled and pushed to MY22, and 27 fleet Transits.

It's crazy. The inventory shortage will continue throughout the rest of the year.

My hope is that manufacturers will be able to seize the opportunity to become more of a order-to-purchase model rather than having millions of dollars worth of inventory sitting on dealer's lots.

[Patentlaw]

Obviously, you have more insight into it than I do, however I started seeing things a few months ago and posted about it. The start of this was just with a few different models...and now has spread far and wide. All of this can be compounded by certain manufacturers switching over their lines to electric vehicles, essentially further reducing the cars in the pool. The days of making "widgets" are over. This is almost like OPEC reducing production to drive prices higher......similar concept.

[MO_Better]

I have a friend that owns a small local used car dealership - he was complaining to me about this very thing. What he told me was that large/new car dealers are now reselling used cars they formerly would send to auction. Chalk it up to improved reliability of cars, and car manufacturers are now offering spiffs back to dealers to "certify" and resell used cars. Now some cars will still go to auction and, for the good cars that do make it to auction, a big dealer can pay more and still make money because they are now getting a spiff from GM or Ford or Chrysler to certify it and resell it.

This puts the small independent used car dealership in a tight spot. The auction market supply has gone way down, and what he can afford to buy (that the big dealers don't want because they can't certify it) is typically in overall worse shape that he used to find. Which means his margins are getting really thin - because the cars he buys at auction cost more due to the small supply and then need more work ($$) put into them before he can resell them.