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Used Car Price Bubble - Jeep Impacts

LifeisaBeach

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Several sources which track used car pricing are predicting the used car price bubble to burst in 2022. Given the extreme run up, used car prices are predicted to fall 30% by year end. Given the run up, this takes us back to a more normal market for used cars. Do you think Jeep will fall in line with the rest of the used car market in this price bubble?
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johnnyj

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There's a lot of factors here. The dilemma with Jeeps is they have always been vehicles that hold their value - in my opinion more than they're objectively worth. This was true in the used TJ market years ago, and the JL has exacerbated this.

I'm not sure if burst is the right word, but it's fair to assume prices will correct beyond their COVID bonanza levels. There's a few reasons for this. First, supply will pick up eventually and inventory will increase. Secondly, there's a lot of "frustrated lockdown" people who purchased outdoors type things, including Jeeps, who are going to realize they aren't necessarily as into this stuff as they originally thought moving forward. This is visible in many areas, even (sadly) the adoption of pets.

The last thing to remember is Jeeps are premium in their demographic. It's one of those items that, more than most, meets the definition of "does way more than I'm ever going to do with it" for most consumers. These types of items tend to fall the hardest when prices correct.

What's it all mean? My prediction is Jeeps benefitted more than normal in the price hike craze, and this will result in a commensurately big correction when they fall. Again, not a "bubble" bursting but just normal market. For example, a quick offer-up search revealed a 2017 JK, non rubicon, with 46k miles for 37,999 right now. IMO that's bat-shiz crazy.

I chose to trade my Jeep in on a truck during this time, as we need to haul more things this year, in no small part because I got back more than I paid for it. (Yes, the truck was marked up too - but it had already hit max depreciation, so the loss was negligible.) If I was a person who was thinking about changing vehicles, to another Jeep or otherwise, and "gets more than I paid for it in trade" was a requirement of mine - I'd jump on that. It's a very safe bet that scenario will end...and very abruptly when it does.
 

aldo98229

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Several sources which track used car pricing are predicting the used car price bubble to burst in 2022. Given the extreme run up, used car prices are predicted to fall 30% by year end. Given the run up, this takes us back to a more normal market for used cars. Do you think Jeep will fall in line with the rest of the used car market in this price bubble?
I donā€™t think Jeep will have a choice. The market does what the market does.

To be fair, Wranglers havenā€™t had any factory incentives in ages, but dealer discounts of 5%-10% off MSRP were common before this bubble started. My guess is we will go back to that, and to seeing units on dealer lots. And Iā€™m fine with it.
 

jellis4148

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I don't think this bubble will burst for at least another year to two. Lots of factors come into play. Right now the program companies are paying stupid money for cars at the auction. So they are driving up the price. Manufacturers are loving that they can sell cars and use very little if any rebates. Lets say today all new cars start getting chips for their vehicles. It's still going to take time for them to ramp up production to catch up with that. Then the rental companies will have to have vehicles, and they will be in service for 6-12 months before they release them back to auction to sell. Then it will take a while to sell them, cause at first they will still want more than the vehicle is worth, and dealers won't buy them so it will take a little while for them to come to their senses. Finally dealers start buying cars at a reasonable price from the auction, and that will slowly bring the market down. My guess is this will continue for at least 2 more years.
 

JLRyder

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If we talking cars where the cost of entry new is already low (Kia/Hyundai) then yes the used market will deflate. Jeeps (much like the pickup market) is not that type of market, CPO/used is the only way many can stomach the cost of entry. For that, I expect our values to stay where they are.
 

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I work at a luxury dealer, and the word is, short supply for at least 6 more months. Prices are still staying up, demand is up, orders are up, used car trade-in is still up. The upper management is saying the market might start to correct by fall. Entirely dependent on supply ramping up, which is looking a little lack-luster currently. We're not expected to catch up and have any kind of stock level until fall, everything coming in until at least April is sold/spoken for. We're taking orders for summer delivery currently. We sell Porsche, Mercedes, Jag, Rover, Volvo, Acura.

Until there's something on the lots to negotiate with, it's looking like more of the same for months.
 

Hennessey17

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One of my friends is the GM of a large Chicago area Honda dealer. When I was shopping last summer, he guessed that it would start getting back to normal the Spring of 22.

I've been getting alerts on my phone of prices dropping on used cars a lot lately.

The dealer that I ordered mine from (a large suburban Milwaukee dealer) now has several Wrangers on their lot. When I was looking last summer, they were all sold while in transit.

So I think at least in larger areas, it's slowly returning back to normal.

I used to work in kitchen design and the Midwest was always more stable than either of the coasts, and the Chicago market is the biggest in the Midwest... so this is just speculation, but maybe watch Chicago prices as a barometer.
 

CT_LFC

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Vroomā€™s latest offer for my JL has already dropped 12% from its peak in October.
Same here. Highest i got from Vroom was $53K a few months ago and the last one i remember was $47K a few weeks ago. I should give it another whirl and see where it is today.
 

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aldo98229

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One of my friends is the GM of a large Chicago area Honda dealer. When I was shopping last summer, he guessed that it would start getting back to normal the Spring of 22.

I've been getting alerts on my phone of prices dropping on used cars a lot lately.

The dealer that I ordered mine from (a large suburban Milwaukee dealer) now has several Wrangers on their lot. When I was looking last summer, they were all sold while in transit.

So I think at least in larger areas, it's slowly returning back to normal.
Yeah, Iā€™ve notice the same cargurus: I see small discounts on JLs that a couple months ago were at full MSRP or higher.
 

JSFoster75

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Here's what kills me about New inventory...

Dealer #1 - Friendship CDJR in Bristol, TN has 34 new wranglers (as of today) on their lot b/c they just built a new dealership and moved to the new location (but been in business for many years)...

Dealer #2 - AutoNation CDJR in Johnson City, TN (15 miles away) has 1 new wrangler on their lot.

What sense does it make to load one dealer up while the other dealer gets NOTHING???

Dealer #1 also slightly discounts all of their new Jeeps, of course they add a ton of useless garbage back on, but it makes most people think they are getting a good deal.

Dealer #2 has a "One-Price" policy and they stick to it. Whatever the sticker says is what they sell it for (during COVID at least, prior to COVID new vehicles were somewhat negotiable).

At the end of the deal, trading my wife's Jeep on a brand new Jeep, Dealer #1 was $6,700 higher than Dealer #2 because Dealer #1 slightly discounted the new Jeep and way undervalued the trade-in. Dealer #2 Sold the new Jeep for MSRP, but gave top dollar for my trade-in...

Obviously I went with AutoNation because I ultimately got the deal for $6,700 less than Friendstrip. I know AutoNation sells far more Jeeps nationwide than Friendship, but yet they get almost nothing to sell....
 

aldo98229

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They have 0% for 36 months on Wranglers right now.
Right! I wonder who takes that offer.

A $60,000 Jeep over 36 months is a $1,700 monthly payment...! šŸ˜«
 

The Last Cowboy

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They have nohting to sell because they do a more honest business transaction than the other dealer. Even with lower inventory, they probably outsell them on volume.
 

JABCAT

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Values will come down some and normalize. At what point, who knows. Much of it depends on when dealerships start refilling their inventory.

Example: I have a 2016 Unlimited Backcountry Edition. A bunch of extras, and some nice factory options as well (locking diffs, Nav, Alpine, remote start, heated seats, etc. ). Last year I looked into selling/trading in and with about 45k miles, the highest offer I received was $23k.

Currently the vehicle has 61k miles on it and Iā€™ve received offers from dealers of $31k - $33.5k. I listed it for sale privately yesterday for $37k and showed it within an hour of posting it. The gentlemen gave me a cash deposit to hold until tomorrow morning when the banks open and heā€™s paying cash - full asking price. Weā€™ll see if it goes through.
So a year and a half later and 16k more miles resulted in $10k increase in dealership offers. That wonā€™t last, unfortunately.
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