Used car market prediction

[sheridany]

Cathie Woods is a respected fund manager and she believes the used car market is going tumble. Will that happen in RV’s?

Cathie Wood is expecting a 'bloodbath' in this segment of the market: 'autos are one example of…many disturbances out there in the world order'

Cathie Wood, the star fund manager and chief executive of ARK Invest, in a Tuesday monthly market update says that the used car market is where she is...

www.marketwatch.com

 

[Neal]

To me personally, inflation has reached the point that I'm done.

 

[sanda]

Cathie Woods is a respected fund manager and she believes the used car market is going tumble. Will that happen in RV’s?

Cathie Wood is expecting a 'bloodbath' in this segment of the market: 'autos are one example of…many disturbances out there in the world order'

Cathie Wood, the star fund manager and chief executive of ARK Invest, in a Tuesday monthly market update says that the used car market is where she is...

www.marketwatch.com

With inflation running at 7+% the prices might not drop much but the money we pay for them will be worth far less.

 

[MapNerd]

I don’t see it happening in 2022. Supply chains show no real signs of improving and in many ways, are worse at the moment. Chip shortage is still real, and that’s not going to be getting any better this year either.

 

[J&JD]

I’m still studying my infallible crystal ball……..

 

[Orrin]

I am in the business. I buy and sell cars wholesale for a large dealership in Madison, WI. Prices are still at an all-time high. Every truck load of new cars we are getting in are already presold. BUT, we are getting more new cars than we were before. I expect a tapering off of the prices in late spring to early summer as I think demand will soften.

 

[sheridany]

@Orrin how’s the used car side of your business? Do you foresee any softening?

 

[Joe Hogan]

For anyone who lived through the 70s and 80s, inflation is a curious phenomenon.
Analysts and pundits think in linear terms. Some event will continue to expand or contract at some predetermined rate. Basically a straight line in perpetuity.
Inflation is very persistent as it is a psychological issue.
People's expectations and the ability of the market to respond to market forces drives inflation/deflation cycle.

For instance, the local trailer retailer's lot was empty last winter and most of the summer. Long wait times for any purchase.
Today, his lot is brimming with inventory. When the manufacturers he serves need more space for dealer inventory, prices will come down to move existing inventory.
Almost any retailer is the same.
You price to avoid being "out of Stock" while inventory is scarce and discount enough to avoid stale inventory when inventory is plentiful.

The US supply chain is optimized for a planned or projected sales volume. When demand temporarily spikes, prices rise to slow the up take. When demand subsides, prices decline to avoid excess inventory.

My 0.02 on economics 101

 

[sheridany]

My concern is what’s driving this behavior and what’s the outcome down the road. Is it ridiculous real estate prices and inflated asset values? We are at motorcoach country club in indio, ca and we were here in 2020. The place has changed dramatically. Lots of younger people are buying new motorhomes and lots here and the place is packed. I could barely get my coach into the spot there’s so many cars and construction is over the top. In fact there’s very few lots for sale compared to 2020 when there was probably 20-30 lots for sale. I meet people every day who said we had to get in now as prices continued rising. If and when the economy resets and it has to at some point, those shiny new motorhome and concrete pad with barely a casita will be up for sale at firesale prices. Some people have caught on and are selling now as they can make a 100k in 3 years. This is insane.

 

[sanda]

For anyone who lived through the 70s and 80s, inflation is a curious phenomenon.
Analysts and pundits think in linear terms. Some event will continue to expand or contract at some predetermined rate. Basically a straight line to perpetuity.
Inflation is very persistent as it is a psychological issue.
People's expectations and the ability of the market to respond to market forces drives inflation/deflation cycle.

For instance, the local trailer retailer's lot was empty last winter and most of the summer. Long wait times for any purchase.
Today, his lot is brimming with inventory. When the manufacturers he serves need more space for dealer inventory, prices will come down to move existing inventory.
Almost any retailer is the same.
You price to avoid being "out of Stock" while inventory is scarce and discount enough to avoid stale inventory when inventory is plentiful.

The US supply chain is optimized for a planned or projected sales volume. When demand temporarily spikes, prices rise to slow the up take. When demand subsides, prices decline to avoid excess inventory.

My 0.02 on economics 101

I also lived through the 70's and 80's. To borrow money for homes and vehicles you were lucky to find any interest lower than 13%. If you had CD's in the bank you could live on the income from the interest generated. Problem with that is most of those with larger CD's were elderly that spent very little money as a group to stimulate the economy. Un-employment was extremely high and jobs were few. People couldn't give a house away so they turned them into rentals or just walked away. The government gave big incentives to buy vehicles and other large purchases to hopefully get manufacturing going again. We lost thousands of credit unions and banks. 2008 brought the housing bust that was felt around the world. Banks were lending people 125% of a homes value. Most of these problems were caused by government actions and policies. Looms like we are headed in that direction again.

 

[Neemer]

This is insane.

It is pretty crazy. I was shocked the other day when I made July reservations at Elkhorn Ridge and was told I got the last pull-thru available. When this bubble bursts, it will do so with a ka-boom.

 

[sheridany]

 

[Orrin]

Sheridany, sorry to take so long to reply to you. What people don't realize is that this economy is booming. Interest rates are still low. I see a strong demand for cars through the summer. This is weird I know, but new cars are a better deal than late model used right now. This will break when interest rates go up. You will buy for a lot less but pay more in interest. Those with lot's of cash will do well, they always do.