When you’re car shopping, it’s important to understand the mindset of the dealer sitting across the desk from you. Online car shopping has changed the traditional negotiation process for some buyers. But many of us still buy a car in person or negotiate prices that way for a car selected through a website.
So how worried is the dealer across from you about their ability to sell cars this summer? It varies widely based on who they work for.
In general, Kelley Blue Book parent company Cox Automotive finds dealers are worried. They know high interest rates have Americans looking to keep their existing cars running, and they rate the economy as weak.
But dealers of some brands are still confident of their ability to sell what trucks roll onto their lots.
Brian Finkelmeyer is the senior director of new car solutions at Cox Automotive. He recently joined the Virginia, Maryland, Kentucky, and West Virginia Auto Dealers for their annual convention. He reports that the tenor of his conversations varied based on the brand of the dealer he spoke to.
“Dealers widely acknowledged that profits through the first half of 2023 continue to be strong, but current market dynamics are shifting fast and creating downward pressure,” he explains.
Toyota Dealers Don’t Need Your Business
But Toyota dealers, he said, “could not be happier and remain optimistic.” He spoke to one who said his store, even months after the pandemic-triggered inventory crisis began to fade, continues to sell 80% or more of incoming vehicles before they reach the dealership.
Cox Automotive inventory numbers bear that out – Toyota dealers finished the month of May with an average of just 13 days’ worth of cars to sell. Sixty days is closer to the industry norm.
Buying a Toyota, therefore, could mean paying full price. If you don’t buy it, the dealer knows someone will come along very soon who will.
Domestic Dealers May Offer You a Deal
“Domestic dealers tell a very different story,” he says. “One Chrysler-Dodge-Jeep dealer said his pre-sold rates were ‘maybe 10%,’” he says, while many vehicles now have incentives as high as 10% of MSRP (more than double the industry average).
Inventory numbers also back up that impression — dealers selling cars from Chrysler, Dodge, and Jeep parent company Stellantis report a 71-day supply at the end of May.
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The Service Department Is Backed Up
A bright spot for dealers, though, is all those drivers trying not to buy a new car by keeping their old one on the road. “One universal topic all dealers agreed on was how well parts and service performed through the first half of 2023,” he says.
Electric Cars Easy to Come By
And, despite daily headlines about electric cars, Finkelmeyer says, many dealers are having trouble selling them. “I certainly didn’t detect dealers having an “anti-EV” view of the world, but I gathered some are not seeing meaningful consumer interest and feel somewhat unprepared for the shifting market,” he says.
Lessons for Shoppers
The lesson for shoppers? Look beyond the usual suspects — you may not find the Toyota you want for a reasonable price, but some domestic brand dealers would be happy to see you and offer you a discount. The most recent J.D. Power Initial Quality Study ranked Dodge and Ram as the brands with the best out-of-the-box quality.
And if you’re interested in making the EV plunge, prices are on the way down, and supplies are plentiful. One dealer told Finkelmeyer, “I’ve got over 100 days’ supply of Ford Mach-E models and haven’t cracked a door on one in over a month.”
