Resale value - Will we see a disaster?

[todayusay]

The aspect I didn't see mentioned is how much higher can/will the MSRPs continue to climb? Thankfully I really haven't seen mid-year price increases so far on the Tahoes/Yukons...

Bought two Ram trucks over the past year...a 2021 2500 hemi decently equipped (although its a tradesman) that stickered for $48.5 - paid $42k last spring. The same truck today - in a 2022 model is over $5k more on MSRP alone. Ordered a 3500 diesel that went up $3k between the time I ordered and when it was built - only 2.5 months timeframe - and they are going up another $1700 today.

That will help alleviate some of the pain when the car market comes back down but agree with most on here that say it'd be hard to recoup any "market adjustment" paid

 

[Banks22]

Prices are not going to come down, since I’ve ordered my refresh 2022 high country Silverado, there’s been 2 price increases due to “demand” they say, $900 and now $1300. My salesman said I was locked into my original price.

 

[GoHeels]

Dealers will eventually not be able to add their "market adjustment", but you won't see a reduction in MSRP. At best we may see prices stay mostly flat for a few years and maybe some aggressive incentives. Until the masses are no longer able/willing to buy, these prices are here to stay.

If anything, you'll start to see longer loan terms offered for vehicles.

 

[Savage Pancake]

Dealers will eventually not be able to add their "market adjustment", but you won't see a reduction in MSRP. At best we may see prices stay mostly flat for a few years and maybe some aggressive incentives. Until the masses are no longer able/willing to buy, these prices are here to stay.

If anything, you'll start to see longer loan terms offered for vehicles.

I think it will be sooner. Fed just raised the interest rate by .25%, which is basically nothing against inflation. They are trying to toe a fine line between taming inflation and trying to avoid tanking the economy; something has to give. Either way, it’s going to impact people sooner rather than later. Unless you truly need a $60-80k new car, I think by the end of the year there will be deals to be had.

 

[grouch]

As we see these overly inflated prices on used cars and even new cars where dealer ask for thousands over MSRP I'm seriously wondering what it does mean for the resale value and appreciation down the road.

What do you guys think?

1. Which Trim Level (or even what specific features) will help to hold the most value?
2. Will the market continue to be crazy and given that fact the resale values in line with the craziness? Meaning we will still get more for our cars in a few years than usual? Or will we have to take very big hits, even more than usual?
3. Will the Diesel in particular hold its value and be stable? Or will the 6.2 be much more wanted since it's one of the last naturally aspirated big V8 engines?

Thoughts? Assumptions?

When new car production catches back up to demand, you'll see more vehicles built that aren't "up contented". Right now they sell everything built so they put as much on as will fit to get more profit on fewer vehicles. A few years ago, the average profit per vehicle ran around 6-8%. Accessories, it was more like 20%. That's why so few manual transmission cars and trucks are built. The dealers order most of their stock and load them up for profit. Since fewer manuals are sold, fewer get built and eventually manual transmissions get dropped.

Let's say the new cars are back to normal. For about a year, used vehicles will still be in demand but resale will drop a little. After about a year, when the used car market catches up, like fleets selling off older stock, (Hertz, Enterprise, et. al.) You'll see used car prices start to drop. Historically, heavily loaded units hold a little more value for the first 3-5 years. Then they are just a little more than a basic unit. Consider a Mercedes S class. Very expensive new. Massive depreciation used. Before the current high market value, a friend bought a used truck for himself. He paid around $18,000 for a 3 year old pickup. (It's been a few years.) 4 door cab and 2wd. His wife is a real estate agent and bought a used Mercedes S class a couple of months later when her car got totaled. She paid right around $30,000 for a 3 year old car just off lease that sold for around $100,000 new. That's a 70% depreciation from new.

So, for a few months after production gets back to normal, newish cars will hold their value, then tank. You wouldn't think so but automobiles are NOT really considered durable goods like a washer or refrigerator.

 

[xycrazy]

When new car production catches back up to demand, you'll see more vehicles built that aren't "up contented". Right now they sell everything built so they put as much on as will fit to get more profit on fewer vehicles. A few years ago, the average profit per vehicle ran around 6-8%. Accessories, it was more like 20%. That's why so few manual transmission cars and trucks are built. The dealers order most of their stock and load them up for profit. Since fewer manuals are sold, fewer get built and eventually manual transmissions get dropped.

Let's say the new cars are back to normal. For about a year, used vehicles will still be in demand but resale will drop a little. After about a year, when the used car market catches up, like fleets selling off older stock, (Hertz, Enterprise, et. al.) You'll see used car prices start to drop. Historically, heavily loaded units hold a little more value for the first 3-5 years. Then they are just a little more than a basic unit. Consider a Mercedes S class. Very expensive new. Massive depreciation used. Before the current high market value, a friend bought a used truck for himself. He paid around $18,000 for a 3 year old pickup. (It's been a few years.) 4 door cab and 2wd. His wife is a real estate agent and bought a used Mercedes S class a couple of months later when her car got totaled. She paid right around $30,000 for a 3 year old car just off lease that sold for around $100,000 new. That's a 70% depreciation from new.

So, for a few months after production gets back to normal, newish cars will hold their value, then tank. You wouldn't think so but automobiles are NOT really considered durable goods like a washer or refrigerator.

I agree. But there's a difference between an S class and a Tahoe/Yukon: These trucks are considered family SUVs and are way cheaper in maintenance, repairs, and sometimes insurance as well. Typically, the resale value of a used Tahoe / Yukon is pretty good compared to other SUVs. They've been in high demand all the years and I don't expect that this will change soon unless gas prices are skyrocketing even more. At some point gas prices have to drop - and they will, since it's not sustainable. For millions of American's it's a huge burden. And by the way.... you can't win an election that why. Neither with an economy in recession mode nor with high gas prices like this.

 

[firsttimetahoe]

Typically, the resale value of a used Tahoe / Yukon is pretty good compared to other SUVs. They've been in high demand all the years and I don't expect that this will change soon unless gas prices are skyrocketing even more. At some point gas prices have to drop - and they will, since it's not sustainable.

Maybe I have a different mindset on the topic, but I can’t wrap my head around why anyone looking to purchase a full size SUV with a 5.3L V8 engine would have purchase concerns because of high gas prices.

 

[firsttimetahoe]

The aspect I didn't see mentioned is how much higher can/will the MSRPs continue to climb? Thankfully I really haven't seen mid-year price increases so far on the Tahoes/Yukons...

People are paying over $10k MSRP where I live. Not kidding. 1 dealer is charging MSRP and Ofcourse there’s a wait. Cheapest I’ve been quoted to get a Tahoe within 2 months was $3k over MSRP, but you only know the trim and you’ll have to live with whatever color and add-ons come with it

 

[petethepug]

Looking at history, cars, the market in general fluctuates. As this is the biggest swing in used car pricing where you can actually buy a used car and have it double or triple in value, yes, there’s also going to be a swing of the pendulum.

The weird thing is, it may not swing back hard at all because new standards are set so high. Now, it costs money to save money. New trends are definitely coming down the road.

 

[SSGUNNER]

Maybe I have a different mindset on the topic, but I can’t wrap my head around why anyone looking to purchase a full size SUV with a 5.3L V8 engine would have purchase concerns because of high gas prices.

You should ask my sister n law the same question, my brother just got her a 22 RST 5.3 and the dumb broad doesnt want to even move the hoe cause of gas prices…

Personally I could care less about resale value because well Im not planning on reselling. Most people who paid cash for these rigs took out a loan against their mortgage and quite frankly that seems like a wash. I preferred to finance for way less than 84 mo and at 30k in should be done paying it off within the next couple of years.

 

[robgreg75]

If you have to finance anything for 84 months, you are buying the wrong vehicle. Most people pay cash for these and don't really care about what it's worth in 6 years. They just get something else. This is not a lower income, 3 kids and a mortgage, Paycheck to Paycheck, I can't afford the gas, vehicle.....

I agree with the statement but if it s 84 month and 0,1 or even 2% interest I would probably take it just to have the lower payments and pay it off sooner anyway. I have always been one that does the "just in case" when I bought my Lamborghini I actually financed it for 10 years with 50% down so my payments were only $500 a month. I paid it off in less than 6 months but I knew if shiiit hit the fan I could always make a $500 payment until I got rid of it.

 

[R32driver]

You should ask my sister n law the same question, my brother just got her a 22 RST 5.3 and the dumb broad doesnt want to even move the hoe cause of gas prices…

Should have got her a nissan leaf I guess...although electricity costs are on the rise too so maybe he should have got her a bus pass.

I don't think our yukon does too bad in the fuel department (17 mpg average per EPA, I see 17.5 so pretty accurate) when I consider a few other vehicles I regularly drive. These numbers are per the EPA but I can confirm all these vehicles are thirsty and more so if you drive them spiritedly

1995 silverado: 13 mpg average
2002 audi s8: 15 mpg average
2004 vw r32: 19 mpg average