New car prices vs used car prices...... who really drives this?

[muddpuppy]

OK so maybe this has been discussed but I have not found anything recently.

?WHO is in control of the current new and used car prices, and how does it change?

Do the dealers control the auto industry, I have been shopping and I have noticed that a car 1-3 years old with 30-50k is selling not much cheaper then new cars. Pushing new car sales but the new cars seem over priced. So buy inflating the used car market they can justify the higher new car prices. I also notice that they barely offer more than auction prices on trade in which don't tend to reflect the current used car market. Private sellers look at what the dealers are trying to get and that is what they are asking.

Or do we the consumer run the prices up on ourselves with easy lending and wants vs. needs?

I feel we need a automotive bust similar to the housing market where cars will become more affordable as of right now its hard finding a car that fits more than 3 people comfortably for less than 20k out the door with a couple of options and your more like 30k out the door. Is it just mee or does this seem out of control?

[Hookmaster]

The cash for clunkers program got rid of a lot of used cars that were still in working condition. This dried up the cheaper used cars and thus drove up the price of the remaining used car inventory.

As for new cars I don't know but someone who worked in the business 25 years ago told me you could take 25% off the sticker price and start negotiating from their. I don't know about today's pricing.

[CJH]

The cash for clunkers program got rid of a lot of used cars that were still in working condition. This dried up the cheaper used cars and thus drove up the price of the remaining used car inventory.

As for new cars I don't know but someone who worked in the business 25 years ago told me you could take 25% off the sticker price and start negotiating from their. I don't know about today's pricing.

25% is not accurate for today's new car sales. Generally the dealership only makes a few grand, depending on the price of the vehicle. The pricing is pretty much set through Corporate, who will then offer incentives if a model isn't' moving.

As for used, the above is true. Also, because of the economy, more people are buying used vs new, which is why prices have gone up. You can still find good deals out there, but you have to be flexible - go find that car that's been sitting on the lot for a long time - they will deal. If you want to buy a popular model, your chance of finding a good deal are pretty slim.

[Powerstroke]

Market forces are in control. Supply and demand. Also inflation. Your dollar is worth about 30% less than it was 10yrs ago. A $30,000 car 10 yrs ago cost almost $40K now for the same level of vehicle.

Hook is correct that the used car market got a great boost after we completely scrapped tens of thousands of perfectly usable cars and all of their parts. Less supply means the price goes up for whats remaining.

Secondly, the average Joe can go online and find out what the invoice cost of a new car is so the minimum price on most cars is easily found. Couple that with low demand for new cars with few purchase incentives and you get a very firm price on that.

Now is a great time of year to negotiate on a new car since the new model year is coming out. A new 2011 should be a great deal, relatively, right now since the 2012's are coming out. As far as used cars, buying form a delaer will be tough since they know what they've got. You're cheapest route would be to buy private aprty, but you have to be careful and do your homework on PP sales.

[Macgyver55]

Add to that car sales numbers for all makers were down for the 2008 and I believe 2009 model years so there are far fewer cars of those years available now, putting more pressure on the market.

[Moose-Hunter]

(snip) Now is a great time of year to negotiate on a new car since the new model year is coming out. A new 2011 should be a great deal, relatively, right now since the 2012's are coming out. (snip)

Powerstroke speaks the truth!! I picked up my new 2011 Chevy a day ago for just a bit more than a song. They were SERIOUS when they told me they were "blowing them out". Find the right dealer with all the neat incentive programs and discounts and you'll be golden!

[Powerstroke]

Not only is it the end of the model year right now, it is also the end of the quarter and sales mean alot, even if they don't make a huge profit. If you're shopping and you've got the money, you're in the driver's seat.

If you're financing the purchase, make sure you compare overall cost when deciding between lightly used and new. A used vehicle may be a couple thousand dollars less in purchase price, but the higher interest rate may add enough to the total cost that a new car with a lower interest rate might cost the same. In which case, you might as well buy new, be the only owner of the vehicle and also have a bit more leverage since most dealers would rather sell you a new car. You can deal on accessories and options a bit more.

[BobT]

Quote:

?WHO is in control of the current new and used car prices, and how does it change?

I believe the simple answer to this question is the buyers. Those that are buying must decide if they are willing to pay $X.XX dollars for the vehicle. If the buyers aren't willing to pay the price, the sellers are stuck with a lot of cars they can't get rid of. Unfortunately, one buyer by himself hasn't got much power to influence the price unless the seller is desperate.

[Scott K]

You are right, the best time to buy is laate Aug-October if your willing to get one of last years models. My last truck I bought new, the sticker price was $37,000, I ended up paying $19,000 with all of the end of the year rebates, loyalty customer, and they had other rebates going on as well. I couldnt hardy pass that one up!

[Ufatz]

Just happened to be in dealer's den this afternoon. Looked at a nifty blackberry colored Tahoe. Sticker was $58,800. Who in their right $%@##% mind is gonna pay that for a %$%#$^ truck!!

Obviously some folks can deal with those prices. Us old dudes can't. Buy late model used.....still overpriced because we all want them.

You ain't gonna git out of this game ahead fellas! LOL.

[ted4887]

25% is not accurate for today's new car sales. Generally the dealership only makes a few grand, depending on the price of the vehicle. The pricing is pretty much set through Corporate, who will then offer incentives if a model isn't' moving.

Bingo! The new car profits a dealership makes is generally in the realm of between $2-5k depending on the vehicle. When I was selling new cars, a lot of people still thought we had the old 25% markup in our vehicles. Most every volume dealer will deal off of the invoice price. That still leaves a little bit of profit, plus the ability to move a car, and possibly get the financing and the aftermarkets. And most volume dealers will sell a vehicle for little profit because they know that the majority of the dealerships revenue is generated in the shop. We always figured if we could sell a car and make $1500 profit, we would make two to three times that through service work depending on how long they owned there cars.

[tcwin]

So if the dealer makes money off financing - will I get a better price on the vehicle if I finance through the dealer and then just pay it off? Or, will I get a better price as a cash sale?

[mainbutter]

You always spend less money in the long term if you just pay it all up front.

[Scott K]

I would shop interest rates. If they are at or near 0% for the life of the loan, then sit on your cash and let it draw the little bit of interest from your bank, but if the interest rate is above 2%, if you have the spare cash, you might as well use it.

[zamboni]

UFATZ- price a brand new King Ranch. Last one I seen at a dealer was $65K+

[Ufatz]

Yeah, and anybody who would pay that much for a pickup truck is delusional. Or disgustingly rich. Or perhaps both! LOL

[ted4887]

Yeah, and anybody who would pay that much for a pickup truck is delusional. Or disgustingly rich. Or perhaps both! LOL

You'd be surprised how many delusional people I sold GMC Denali 1500's (60-65k) too over the course of three years. A lot of the time, it comes down to someone needing to spend some money for "tax purposes".

[delcecchi]

If it's a business expense it could be like getting it half price for say a farmer or other self employed person. 28% fed, 7% state, Self employment tax 13.3% makes 48%. Well, a little less because some taxes are deductible when calculating others.

So that wasn't a 60K Denali but a 35K Denali. Hard to deny yourself at that price.

[BobT]

If it's a business expense it could be like getting it half price for say a farmer or other self employed person. 28% fed, 7% state, Self employment tax 13.3% makes 48%. Well, a little less because some taxes are deductible when calculating others.

So that wasn't a 60K Denali but a 35K Denali. Hard to deny yourself at that price.

This is not accurate. First, these items are not technically "tax" deductions. They are income exemptions. In other words the deduction is not applied directly to the tax liability but subtracted from the gross income thereby reducing one's taxable income. Then the tax rate is applied accordingly. Remember too that my statements are from a strictly legal perspective and throwing in illegal use of business property is not pertinent. It is illegal to use a vehicle purchased for business use for personal use. If a vehicle is purchased because it is needed in the normal operation of a business it is an expense of operating said business and therefore the expense is levied as a cost of goods produced.

Consider this HSOforum. Don't you think it would be unfair to apply income taxes against the gross sales for the business rather than the actual profit? The cost to build build the HSOforum, manage the HSOforum, purchase the software to operate the site, the cost to canvas and sell the advertising to pay for the HSOforum which could include vehicles, etc. are all expenses incurred in the process of running the site and it is only right that these costs are deducted from the gross sales to arrive at the end profit. Profit is what is taxed.

[BobT]

Quote:

You'd be surprised how many delusional people I sold GMC Denali 1500's (60-65k) too over the course of three years. A lot of the time, it comes down to someone needing to spend some money for "tax purposes".

I always have to chuckle to myself when I hear this statement. People are so intent on not paying taxes they are willing to spend $65,000 to avoid paying $13,000 in taxes. Sounds like someone I wouldn't want to put in charge of my investments.

[Powerstroke]

I had the discussion with my wife last night because we are making a lot more money this year than the last couple years and we were discussing if there were any purchases we could make that could serve as a business expense.

[BobT]

If there's something you need for the business but have been putting it off it can make good sense to buy it at a time when the expense can be used to reduce taxable income. In this way, the tax savings are like a coupon toward the purchase of the item. Suppose your business computer is getting near the point where an upgrade is necessary. It makes more sense to buy it during a year when the expense can be used to offset some of your tax liability. If your business is losing money there's no advantage in making the purchase in that year unless you just can't do without it but if your business is doing well then that's the time to make the investment because you can make use of the reduction in your taxable income.

For example, in 2008 I managed to do pretty well with my farming. As a result my tax liability that year was likely to be increased by about $2,000.00. For the previous few years due to cash flow limitations I had been neglecting my fertilization needs and so this extra cash gave me an opportunity to catch up a little. By investing in the extra fertilizer in 2008 I reduced my taxable income and so rather than pay Uncle Sam I paid the local fertilizer dealer instead. Likewise, I also bought my seed for 2009 in 2008 so what would have been tax dollars paid to Uncle Sam became money for the local seed dealer.

Of course, since I bought my seed for the 2009 planting year a year early I didn't have that expense 2009 and having a decent year in '09 again I was forced to buy my seed for 2010 in 2009 and so on. Looks like 2011 may be the year I get back to normal because my wheat was the worst ever yielding about half my average and my soybeans were frozen last week so they aren't expected to do well either. This year I may wait until 2012 to buy my seed for 2012.

[delcecchi]

This is not accurate. First, these items are not technically "tax" deductions. They are income exemptions. In other words the deduction is not applied directly to the tax liability but subtracted from the gross income thereby reducing one's taxable income. Then the tax rate is applied accordingly. Remember too that my statements are from a strictly legal perspective and throwing in illegal use of business property is not pertinent. It is illegal to use a vehicle purchased for business use for personal use. If a vehicle is purchased because it is needed in the normal operation of a business it is an expense of operating said business and therefore the expense is levied as a cost of goods produced.

Consider this HSOforum. Don't you think it would be unfair to apply income taxes against the gross sales for the business rather than the actual profit? The cost to build build the HSOforum, manage the HSOforum, purchase the software to operate the site, the cost to canvas and sell the advertising to pay for the HSOforum which could include vehicles, etc. are all expenses incurred in the process of running the site and it is only right that these costs are deducted from the gross sales to arrive at the end profit. Profit is what is taxed.

It is a deduction, not an exemption. Look at schedule D. Exemptions are something else entirely. So, yes, it is a deduction from income. So if you spend 60,000 and your marginal tax rate is (28+13.3+7)percent, then the 60,000 only reduces your net income in your pocket by 35,000. Yes, I know about business vs personal. I bet almost all the use of that vehicle will be "business". I see the folks with the name of their business on the side of the vehicle. And I am cynical enough to figure that farmers make most of their trips to town to pick up something for the farm, eh?

I may have fallen off the turnip truck, but I didn't fall off yesterday.

Sure, businesses have to be able to deduct expenses. But along with that we get a certain amount of dubious stuff. And I would wager that you know it.