The Retail Automotive Meltdown Has Begun

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by Stumpknocker

The sales side (or variable operations) in the Retail Automotive sector is crashing. Service (fixed ops) isn’t fairing much better. I’m very glad I sold my store a few years ago.

I consult for several OEMs, and they are beginning to panic. At several, ROS, or Return on Sales (a closely watched metric) is down by 70% (+,-), over the last 45 days. They thought it was a blip at first, when ROS was down 25% and it just kept going. I will not name specific OEMs and risk violating my NDA.

Return on Sales is a primary indicator of a company’s health. Some OEMs are now cutting production which is still no where near pre-Covid levels.

We are about to see massive incentives (rebates) at many OEMs. Once these start, used car values will plummet even further (because new become much less costly) Days to turn on used cars is skyrocketing (drawdown of 18.2% in October which was the largest drawdown ever see Zerohedge article). This will put some dealers out of business as they will find themselves millions of dollars in the hole on their used car inventory. Only the ones with large reinsurance reserves or with significant cash on hand will survive.

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One of my points is; if you are in the market for a car, truck, CUV, SUV wait until about February. Prices will be 25% (or more) lower than they are now. Notice all the dealerships near you are jam packed with inventory again.

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I was at a conference last week where JD P….. showed some data on a huge crash in EVs. The message was all the customers willing to own one bought one. No onw else wants one. BTW, the mileage range on all of them is grossly overstated.

Sorry this is wordy, but it is just another indicator that we are again on the cliff of a major economic calamity. Act accordingly…


Used Car Prices:

And a shoutout to Liz…(EV’s crashed 32.4% YOY)

and Forbes weighing in with specific data:

This data is now stale and I will tell you it has gotten much worse! EV production is stopping at many OEMS.


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