FRIKINtech Car Dealership Guy says people with equity are trading down

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Alex Snyder

Alex Snyder

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May 1, 2006
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#1


Screenshot 2023-12-15 at 10.42.23 AM.png

The data looked a bit cherry-picked and the story wasn't adding up for me. So, we looked at all the sales we had for the past 3 months.

  • The average equity on trades was $9,560.
  • The average age of trades was 47 months which equates to a 2019 model year.
  • There was very little difference in terms financed originally to the next vehicle. If they financed for 72 months in 2019, they financed for 72 months in 2023.
  • The APR increased 1.8% since their last purchase, on average.
  • The monthly payment increased by $191, on average, per month to go along with that APR... plus some decent dealer profit.

Most customers stepped up in car. Few went backward from doing some visual scans of the data. I'd like to go back and focus on the deals where the original MSRP of the trade was higher than the MSRP of the car they bought in 2023. I think that would be a better representation of what FullPath and the Car Dealership Guy are trying to imply.

For the record, I'm a huge fan of the Car Dealership Guy. I mostly follow him on LinkedIn. I just thought this data smelt fishy.
 
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#2
I'll admit I've thought of trading down myself.

I'm included in the group of young families that shifted just about every part of their finances in 2021-22 to take advantage of low rates and set up for the long term.

With that, I have a fairly intimidating monthly commitment across the board for the short term.

The equity in my truck is tempting. I'd be willing to drive an older car than what I have. Though, I wouldn't give up 0% interest and low maintenance to do it.

The only move I could see is trading in for a beater I could buy with equity + cash....likely trading one problem for another there

Pay the bank or the mechanic, right?
 
#4
Alex Snyder said:
JD - anyone on DealerRefresh is part of the car business. We are not the norm of car buyers - we aren't the civilians :lol:

When it comes to these kinds of things, think about your friends, family, and neighbors. I don't know a single "civilian" who went backward on a car purchase in the last 3 years.
Click to expand...
I don't think its that odd this is happening. For fun you could make a list and see what it looks like over the next 3 years

This shows how big of an outlier event affordability is. In a 100+ yr old industry we've never seen it. When I first started seeing 84 month terms hit serious numbers years ago and we talked about it we knew there would be a consequence later on.
 
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#5
Alex Snyder said:
We are not the norm of car buyers - we aren't the civilians :lol:
Click to expand...

Fair point. They zig, we zag.

jon.berna said:
I don't think its that odd this is happening. For fun you could make a list and see what it looks like over the next 3 years

This shows how big of an outlier event affordability is. In a 100+ yr old industry we've never seen it. When I first started seeing 84 month terms hit serious numbers years ago and we talked about it we knew there would be a consequence later on.
Click to expand...

As the fed holds/cuts rates, it could be interesting to see what happens here.
 
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#6
Alex Snyder said:


View attachment 8336

The data looked a bit cherry-picked and the story wasn't adding up for me. So, we looked at all the sales we had for the past 3 months.

  • The average equity on trades was $9,560.
  • The average age of trades was 47 months which equates to a 2019 model year.
  • There was very little difference in terms financed originally to the next vehicle. If they financed for 72 months in 2019, they financed for 72 months in 2023.
  • The APR increased 1.8% since their last purchase, on average.
  • The monthly payment increased by $191, on average, per month to go along with that APR... plus some decent dealer profit.

Most customers stepped up in car. Few went backward from doing some visual scans of the data. I'd like to go back and focus on the deals where the original MSRP of the trade was higher than the MSRP of the car they bought in 2023. I think that would be a better representation of what FullPath and the Car Dealership Guy are trying to imply.

For the record, I'm a huge fan of the Car Dealership Guy. I mostly follow him on LinkedIn. I just thought this data smelt fishy.
Click to expand...

Alex Snyder checked out some car dealership claims that people were trading in their cars for cheaper ones. After looking at sales for 3 months, Alex found that most people actually went for more expensive cars, even though they were paying a bit more each month because of higher interest rates. The average trade-in gave people about $9,560 back, but the monthly payment still went up by $191. Alex wants to dig deeper into cases where folks actually did go for cheaper cars, but overall, it seems like the trend is to upgrade, not downgrade. Alex likes the Car Dealership Guy but thinks the data might not fully support his claim.
 
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#10
Carsten said:
@BillKVMotorCo I think I figured it out.
Spidey sense is saying that Nio account is a bot crawling this site to build an AI database of all the information here.

maybe it's the management? lol ...
Click to expand...
He's been pushing a CRM system for a long time. Been a pain in the butt because we always have to remove his spam links.
 
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