Manheim Steamroller

A couple weekends ago I visited a car dealership to buy a new car.

Like most people, I look forward to this as much as I look forward to, say, going to the dentist or watching the Oscars. And like most people, I suspect you look forward to hearing someone complain about a car dealership experience about as much as you look forward to reading a rant about a bad airline experience.

Don’t worry - this is not that kind of story. But it is an unusual story.

I went to buy a car for a very ordinary reason. My wife is 8 months pregnant with our third child. Since my pickup truck can’t really accommodate three car seats, it was the obvious choice to take one for the team. So it is that I am now officially “regularly googling Korean-made three-row SUVs” years old.

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  1. Looking forward to seeing how the BLS will twist these shockingly high increases in car prices into a 1-2% impact on the CPI reports

  2. Rusty, I feel your pain. We looked for 4 months for a vehicle – ANY vehicle: car, SUV, truck, whatever. Only through the grace of Midwestern small-towns and dumb luck did we manage to find something suitable at an decent price. An experience I would wish only on a few, specific worst enemies.

  3. I think the last calc had a 8-9% change in this category, but at the weighting it gets it didn’t do a fraction of that.

  4. Absolutely, Steve! Although I’d already resigned myself to paying pretty close to sticker, TBH. But the $5,000 gap between what two dealerships were willing to offer on a pretty basic pickup was the really wild part.

  5. It seems like the perfect time to sell your car in a private transaction…

  6. From my Twitter feed this morning, and yes base effects are at play. But still.

    SentimenTrader has a good stat on inflation. For the first time since 1971, over half of commodities within a broad commodity basket have registered gains of over 50% YoY

  7. Congrats Rusty!

  8. I must just be an absolute sociopath because I love shopping for a new car. I’m already tormenting my poor family with my discussions of the new Mustang Mach E and I don’t need to look for a car for another six months.

  9. My friend that is general manager/minority owner in a Chevrolet dealership in Houston said he thought inventory of new and used would be better by now, getting to a critical point where he will not be able to deliver on current demand if things don’t improve pretty quickly. He ordered a bunch of Chevrolet volt’s to fill spaces on the lot, thought that might be a good transition. He needs to sell 6 per month to breakeven, has sold 2 in April. He has said time and time again for about 2 years, he just cannot compete with publicly traded companies like Carvana’s for used cars because he can’t lose money and they can.

    It’s embarrassing in 2021 to admit this, but I listened to the last earnings conference call for Carvana, Vroom, and AutoNation. I know, I know, don’t laugh at me for being a dinosaur and listening to a conference call. :-) The themes on all 3 calls were pretty much the same: tight inventory, higher prices at auction and trade-in, and demand durability related to stimulus. They all also said, they expected higher prices for some time in the future and would manage their way through it. I swear the guy from Carvana could take Powell’s place, he said everything but the word…TRANSITORY.

    There is this wildcard theme that keeps getting mentioned, analyst keep asking about “talks” with all the new car companies/brands i.e. Canoo, Lucid, Fisker, etc and if there are distribution agreements coming? It’s the biggest load of crap, but it’s just enough of a prospect to keep up with bizarro land valuations in 2021. 

  10. CME will start offering Used Car Futures based on the Manheim Index so used car dealers can hedge their inventory. It will be cash settled, no physical delivery.

  11. One begins to wonder the level of social unrest from this chicanery that is going on in the inflation numbers. Working people’s wages are lagging far behind and at some point somethings going to break.

  12. Direct quote from First solar CEO on conference call this afternoon after they beat EPS by $1, but guided EPS for the year inline…

    “Facing near-term cost challenges” “number of projects not going to happen.” “Aluminum going up copper going up” 

  13. My career-only section has a lot of that same information, especially when it comes to auto loans, how dealers finance new inventory, etc. I walked into a car dealer a month ago, to buy 2 cars – wife’s car finally died after being parked for covid and my car, a newer 3-row SUV, was the trade. I know how the game works, I still let them rake me over the coals. The price of the wife not getting her first new car in 10 years, was greater than overpaying a $1,000.

  14. I am looking at the Mustang Mach E as well and preordered the VW ID4 just in case. Have you looked at both by any chance?

  15. Avatar for jrs jrs says:

    My lesson from the “broke the model” part is that these people were less certain than they should be about the value of your pickup.

    I am too young to have lived through the 70s. But my understanding from people who write about inflation, mostly John T Reed and his citations, is that a major reason inflation/hyperinflation becomes annoying/deadly is that everyone gets lost in a kind of economic fog and can’t figure out a good price for anything any more.


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