Secondhand car price crash?

[Deep Thought]

teddosan said:

What The Deuces said:

Deep Thought said:

Its not a shocker. Makes sense - reduce your price and you'll sell more. Noone has said otherwise. BUT you make less profit per unit.

However if - as some manufacturers have found - they havent been able to make enough cars to go for volume, then more profit for less units sold makes a lot of sense.

I dont see low volume higher margin is either a misnomer or a red herring?

You also generate less warranty claim costs when you sell less units etc etc

But not as much revenue from servicing, repairs, finance deals, etc.

Manufacturers wouldnt be getting the revenue from servicing anyway. Parts for out of warranty cars, yes.

Finance deals, well less deals but at a higher rate? Offset by the additional profit on the new cars.

[Theoldguard]

Lightningt said:

Cut price sell more shocker…

https://www.telegraph.co.uk/business/2023/04/02/te...

Makes the whole low volume high margin misnomer look like a bit of a red herring…

Tesla can see what is coming and trying to get ahead of the pack, others will need to follow with their BEVs if they want to remain competitive. The Chinese are already producing 80% of the world's batteries and if reports are to be believed are bringing forward their ICE ban by making it awkward to register ICE vehicles in China. They are pushing toward EV as they can corner the market, there are reportedly fields of unregistered ICE cars that are not moving mainly from European manufacturers, with 1/3 of sales to China they will be forced to make the switch to continue selling there which will suit China's manufacturing sector.

[Mr Whippy]

Deep Thought said:

teddosan said:

What The Deuces said:

Deep Thought said:

Its not a shocker. Makes sense - reduce your price and you'll sell more. Noone has said otherwise. BUT you make less profit per unit.

However if - as some manufacturers have found - they havent been able to make enough cars to go for volume, then more profit for less units sold makes a lot of sense.

I dont see low volume higher margin is either a misnomer or a red herring?

You also generate less warranty claim costs when you sell less units etc etc

But not as much revenue from servicing, repairs, finance deals, etc.

Manufacturers wouldnt be getting the revenue from servicing anyway. Parts for out of warranty cars, yes.

Finance deals, well less deals but at a higher rate? Offset by the additional profit on the new cars.

It’s obviously nonsense that you make more by selling less high margin gear.

That’s a different market and is accordingly full of competition.

Could you imagine this in the board rooms of car makers?

We’re gonna make less, and sell them for more!

Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.

[Deep Thought]

Mr Whippy said:

It’s obviously nonsense that you make more by selling less high margin gear.

That’s a different market and is accordingly full of competition.

Could you imagine this in the board rooms of car makers?

We’re gonna make less, and sell them for more!

Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

[Fusion777]

I hate to break it, but the low volume model just isn’t going to work. It’s not. I’m surprised people are defending it even at this early stage, with Tesla making price cuts (thought that was impossible?), and China beginning to get a toe hold.

[Macron]

Theoldguard said:

there are reportedly fields of unregistered ICE cars that are not moving mainly from European manufacturers

Citation needed.

Big citation needed.

Not involving a photo of Avonmouth docks in 1988 when full of cars.

[Macron]

Deep Thought said:

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

Haven't we seen evidence MB is not getting the results expected with this?

Yes early days but if consumers tell you to fk off and there's negative press...

[Chamon_Lee]

Fusion777 said:

I hate to break it, but the low volume model just isn’t going to work. It’s not. I’m surprised people are defending it even at this early stage, with Tesla making price cuts (thought that was impossible?), and China beginning to get a toe hold.

You can thank deep thought for that. He seems to think if he says it enough times it will certainly come true.

[nickfrog]

Perhaps a bit of confusion here between "low volume" and yield management. Given the (fast resolving) supply issues but perhaps more crucially the end of the magic money tree, volumes have naturally gone down so perhaps they are making just enough cars for the demand compared to the excess production of the past 20 years. Which would also make sense in the context of the phasing out of ICE.

This might only mean a 10% volume reduction and might still be fine from a critical mass point of view too.

The limit for this is obviously competition and perhaps this will be blown out of the water by a Chinese or Korean maker wanting to buy market share. But car prices have different elasticity to the elasticity of the price of a brick, and besides, the reports of poor MG quality might quash those aspirations for now. Over to the Koreans perhaps?

[Deep Thought]

Macron said:

Deep Thought said:

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

Haven't we seen evidence MB is not getting the results expected with this?

Yes early days but if consumers tell you to fk off and there's negative press...

Thats irrespective. The point was made that no car manufacturer was doing it. Mercedes are directly, and many other manufacturers indirectly.

I'd suggest Mercedes have factored in initial resistance. Long term benefits, not short term gains, etc.

[Deep Thought]

Chamon_Lee said:

Fusion777 said:

I hate to break it, but the low volume model just isn’t going to work. It’s not. I’m surprised people are defending it even at this early stage, with Tesla making price cuts (thought that was impossible?), and China beginning to get a toe hold.

You can thank deep thought for that. He seems to think if he says it enough times it will certainly come true.

It's what Mercedes have said they are doing.

Keep up at the back.

[What The Deuces]

teddosan said:

But not as much revenue from servicing, repairs, finance deals, etc.

You do if you put the prices up, but thats dealers not manufacturers anyway

[What The Deuces]

Mr Whippy said:

It’s obviously nonsense that you make more by selling less high margin gear.

That’s a different market and is accordingly full of competition.

Could you imagine this in the board rooms of car makers?

We’re gonna make less, and sell them for more!

Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.

You realise its a conscious best case response to a global supply chain issue don't you.......not just a whim of some bright spark. It will have been modelled to death. Nobody is 'defending' it, just pointing out that this is happening presently. Is contributes to why we have higher used prices holding firm post covid to get back on topic.

[Earthdweller]

Macron said:

Theoldguard said:

there are reportedly fields of unregistered ICE cars that are not moving mainly from European manufacturers

Citation needed.

Big citation needed.

Not involving a photo of Avonmouth docks in 1988 when full of cars.

It’s not in Avonmouth it’s in China and to do with new rules coming into force plus their economic situation

Plenty of citations out there if you want to look .. even been covered on MSM and TV channels

Here’s an example :

https://electrek.co/2023/04/01/ice-car-values-plum...


A looming crisis is brewing in China, as hundreds of thousands of unsold, polluting gas-powered vehicles may be rendered unsellable due to incoming emissions rules.

Dealership foot traffic is high, but customers simply aren’t buying. This has left dealers with a huge glut of polluting vehicles and a ticking clock that will make them unsellable in July.

Given the dealers and manufacturers are confronted with a situation where their cars will soon become valueless and that there simply aren’t enough customers interested in buying the number of cars they have in inventory, any price they can get for the cars that’s greater than zero may be worthwhile come July.

But the problem most harshly affects foreign automakers in China. Chinese companies have been faster to adopt EVs than foreign ones, so automakers from Europe, Japan, and the US will be most affected by this glut of vehicles. Sales from Chinese brands are flat year-over-year, but sales from US brands are down 12%. German and Korean brands are down 22%, and Japanese and French brands are down more than 40%.

Edited by Earthdweller on Tuesday 4th April 09:50

[Sheepshanks]

Macron said:

Deep Thought said:

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

Haven't we seen evidence MB is not getting the results expected with this?

Yes early days but if consumers tell you to fk off and there's negative press...

I suppose things change but it only seems a few years ago that Mercedes had ambitious plans to ramp up volumes, which I think they either achieved or got very close to - but then (pre-Covid etc) they started talking about focusing more on "premium" (higher profit) models.

Of course, anything they say is aimed at shareholders, not customers.

[Mr Whippy]

Deep Thought said:

Mr Whippy said:

It’s obviously nonsense that you make more by selling less high margin gear.

That’s a different market and is accordingly full of competition.

Could you imagine this in the board rooms of car makers?

We’re gonna make less, and sell them for more!

Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

Supply and demand.

(hint, someone else will fill the demand gap, thus taking away the ability to charge more)


Don't you look around at this vast economic and industrial consumer society, and wonder how we got here?

(hint, it's because demand and supply balance out)


This is why we don't have a car industry that sells one car a year for £100,000,000,000 to a very rich single owner.

After inception, car demand grew rapidly and continued/s to do so.


Now if global car demand is weakening, then I can see a need to scale back volume of production generally. However it's not in order to generate artifical demand, it's to curb over-supply and crashing prices.

They're not going to do this to 'make more money', they're doing it to 'not lose as much money'



Unless the whole paradigm of supply and demand changed over-night. I look around and see people as stupid and crazy as they've always been to buy moronic useless st... so no it hasn't changed.

[Sheepshanks]

Theoldguard said:

Lightningt said:

Cut price sell more shocker…

https://www.telegraph.co.uk/business/2023/04/02/te...

Makes the whole low volume high margin misnomer look like a bit of a red herring…

Tesla can see what is coming and trying to get ahead of the pack, others will need to follow with their BEVs if they want to remain competitive. The Chinese are already producing 80% of the world's batteries and if reports are to be believed are bringing forward their ICE ban by making it awkward to register ICE vehicles in China. They are pushing toward EV as they can corner the market, there are reportedly fields of unregistered ICE cars that are not moving mainly from European manufacturers, with 1/3 of sales to China they will be forced to make the switch to continue selling there which will suit China's manufacturing sector.

Tesla's share price took a hit yesterday over worries about how much inventory they've got.

[Deep Thought]

Mr Whippy said:

Deep Thought said:

Mr Whippy said:

It’s obviously nonsense that you make more by selling less high margin gear.

That’s a different market and is accordingly full of competition.

Could you imagine this in the board rooms of car makers?

We’re gonna make less, and sell them for more!

Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

Supply and demand.

(hint, someone else will fill the demand gap, thus taking away the ability to charge more)


Don't you look around at this vast economic and industrial consumer society, and wonder how we got here?

(hint, it's because demand and supply balance out)


This is why we don't have a car industry that sells one car a year for £100,000,000,000 to a very rich single owner.

After inception, car demand grew rapidly and continued/s to do so.


Now if global car demand is weakening, then I can see a need to scale back volume of production generally. However it's not in order to generate artifical demand, it's to curb over-supply and crashing prices.

They're not going to do this to 'make more money', they're doing it to 'not lose as much money'



Unless the whole paradigm of supply and demand changed over-night. I look around and see people as stupid and crazy as they've always been to buy moronic useless st... so no it hasn't changed.

I suggest you give Mercedes a ring and let them know their future strategy is "wrong" then, because less volume, higher margin is precisely what they say they are doing going forward.

[Earthdweller]

Deep Thought said:

Mr Whippy said:

Deep Thought said:

Mr Whippy said:

It’s obviously nonsense that you make more by selling less high margin gear.

That’s a different market and is accordingly full of competition.

Could you imagine this in the board rooms of car makers?

We’re gonna make less, and sell them for more!

Oh how no one thought of this strategy, before a flood of free money made consumer spending indiscriminate.

You mean like Mercedes are directly doing now?

And many other manufacturers are indirectly doing by raising prices and offering less discounts?

Supply and demand.

(hint, someone else will fill the demand gap, thus taking away the ability to charge more)


Don't you look around at this vast economic and industrial consumer society, and wonder how we got here?

(hint, it's because demand and supply balance out)


This is why we don't have a car industry that sells one car a year for £100,000,000,000 to a very rich single owner.

After inception, car demand grew rapidly and continued/s to do so.


Now if global car demand is weakening, then I can see a need to scale back volume of production generally. However it's not in order to generate artifical demand, it's to curb over-supply and crashing prices.

They're not going to do this to 'make more money', they're doing it to 'not lose as much money'



Unless the whole paradigm of supply and demand changed over-night. I look around and see people as stupid and crazy as they've always been to buy moronic useless st... so no it hasn't changed.

I suggest you give Mercedes a ring and let them know their future strategy is "wrong" then, because less volume, higher margin is precisely what they say they are doing going forward.

It was mentioned on here on another thread, Mercedes aren’t doing well at all and if they hadn’t registered an entire new fleet of centrally owned demo cars in Jan it would be dire. Dealers aren’t happy and customers aren’t happy

Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%

Mercedes sales are down 37%, Audi sales for comparison are up 40%

(SMMT figures)

That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling

Edited by Earthdweller on Tuesday 4th April 12:04

[Deep Thought]

Earthdweller said:

It was mentioned on here on another thread, Mercedes aren’t doing well at all and if they hadn’t registered an entire new fleet of centrally owned demo cars in Jan it would be dire. Dealers aren’t happy and customers aren’t happy

Overall YoY car sales are up 17% with fleet sales up 38% and business sales up 7%

Mercedes sales are down 37%, Audi sales for comparison are up 40%

(SMMT figures)

That’s a lot of cars they aren’t selling and aren’t making ANY money on, whilst their competitors are hoovering up and presumably making much more money from the many more cars they are selling

Edited by Earthdweller on Tuesday 4th April 12:04

They're just several months in to a long term strategy. Long term benefits not short term gains? No?

Fundamentally, if a global company is commiting to a new long term strategy, they'll have modelled in the short term turbulence it will cause.

Edited by Deep Thought on Tuesday 4th April 12:35