4 ms·
Another aspect to consider is dealerships make much more money off used than new. Sometimes they'll even cut a deal on a new car just to get the trade-in. A us
by modwest 6y ago
Another aspect to consider is dealerships make much more money off used than new. Sometimes they'll even cut a deal on a new car just to get the trade-in.
A used car price collapse will have big impacts on dealer franchises. I know they're not necessarily a sympathetic group but it will definitely have an impact on the economy in many ways. Tighter margins, consolidation of territory as dealerships go out of business, and so on, means those dealerships are spending less on contracts.
There will be some kind of auto dealer market in a year or two but, barring massive government intervention to keep everything right where it is, it's going to be different in ways that touch many parts of our economy.
- apta 6y agoWhy isn't it a good thing if (corrupt) dealerships go out of business? Less praying on the less-informed, less disposable cars on the road, etc. Seems like a win to everyone.
- modwest 6y agoBecause of 2nd order effects
- zachshefska 6y agoI'd caution against the notion that dealers make much more money off of selling used cars than new cars... At the end of the day car dealers make their money from the Service department, not from sales: https://www.youtube.com/watch?v=B41twMsMW-Q https://www.youtube.com/watch?v=B41twMsMW-Q
- modwest 6y agoI wouldn’t caution against it because I know for a fact what I said is 100% true. The piece about auto sale vs. service as proportions of total revenue is a different data point.