While the financial impact will keep some people from buying cars, to some extent, the current situation will simply delay purchases.

Think of it as just the opposite of the toilet paper situation.

The news interviewed a worker at the toilet paper factory, who was getting all the overtime he could want. The reporter stated "these are good times for you, aren't they?".

The worker responded "I'm more worried about what happens when people realize that they have a year's supply of toilet paper stashed in their garages.".

So car sales suck now. But the viral scare will end someday. And when it does, people will want that new Corvette, SD pickup or Hellcat.

Not everyone is ailing financially. The local grocery store cashier told me that she was getting beaucomp extra hours.

My wife and many of our friends are educators. Schools are closed, but they are still getting paid.

And pension and SS checks are still going out.

 

J,

I hope you are right. In my line of work, we went from hauling tail to dragging tail in the matter of a week. I normal handle 4-7 on site calls plus numerous phone support calls in the course of the week. I only had 1 call this week. It was in Delaware. Our sales essentially evaporated overnight. Customers cancelled equipment orders starting as early as last week. Shipments out of our warehouse were down as well. Even the UPS truck had about 1/5 of what he would normally deliver to our complex. All this week, I didn't know what was going to happen next. Everything is shutting down in stages. Right now it appears the governor of NJ is going to allow people perform last minute shopping tasks before shutting down the state. Our neighbors New York and PA have shut down. Other states are now following suit.

Delaying purchases are one thing. I think the psychological effect of all this is another. It's going to take time to get things rolling again when it does happen. If the government plays its cards right, I think this can help getting things in the right direction. The main problem is how long and how bad. If these shelters in place work. Our population illness rate is mininual, then it could allow the economy get going again. If this is a longer more drawn out issue, it going to take a lot longer to get going. The main thing is we do not know how many, how long or a combo of several different variables this is going to take.

 

Many people will get hurt, perhaps many more than benefit. But someone always benefit in an economic downturn.

For example, Kraft-Heinz says that all of its plants are running 3 shifts per day.

International Paper (they make the paper pulp used in diapers, napkins, TP, etc.), says their plants are running flat out.

And I bet a lot of the over-the-road truckers who got laid off last year are back at work.

And I talked to the FritoLay guy stocking the shelf at Wally. He said that he can't keep up. "People love this stuff!" he said.

 

J,

Well we are shut down in NJ for the most part. My employer is thankfully not considered a non essential retail employer since we are a wholesaler in the B2B marketplace. However, we have to maintain a strict protocol with social interaction in the office. We are also preparing for further restrictions in which this would push us into a remote setting which I experimented with today at home. If gave us an operational run on remote terminal work. My boss's want to make sure we can still work all through this. We are restricted on travel anyway. We are not going to rolling out on repair, installs or even deliveries. Customers who need supplies will have to come to our office and bring their own writing tools. However, once this is over there is going to be one heck of a buyer's market if someone is in the mood to purchase a vehicle.

 

Well it only took another 7 days but my company laid off myself and several others due to lack of business. They are hoping to bring us back in a few weeks depending on what happens with the reemerging from lock down plus the overall general economic health. Local dealerships are closed to all sales even though they are allowing internet sales. The dealers are not bothering. I asked the service department when I had to drop my truck off for some warranty repair work. However they will have over 130 Explorers on the lot with a number being over 90 days old by the time auto sales might resume. The question remains will people hear locally be in the mood due to high unemployment figures.

 

That's horrible brother. I hope you can get an income stream flowing as soon as possible.

The six months of payment assistance that Ford is offering is a great gesture, they make and then defer three. But if one is buying a new Ford with that in mind then IMHO, it would be better to wait till this thing is over and or simply negotiate a stronger deal. The payment assistance carries a max value of $2250 plus the $1500 incentive. Ford is going in the wrong direction in my mind.

You want me to bite the hook with minimal pushback? Start with a 22% discount.

 

I will be OK for awhile. The wife is working. We were let go on Tuesday AM. 1 on 1 meetings regarding our separation from the company. Same day separation. After the meeting, I cleaned out my large tool box of shop tools. My ex boss completely understood. I cleaned out my tool cart of shop supplies. Borrowed a couple of moving blankets wrapped them up. I cleaned out my desk. Left all company items except for my key in good faith. The ex boss said to hang on to it for now. They are working on getting us back to work. I went around said a few goodbye and left around 1 in the afternoon for my friend's shop. He is allowing me to store my tools until everything settles down for like a case of beer. LoL I have filed for UI. I tend to remember this stuff taking much longer than they say it does. It use to be every other week, now it's every week with everything going on. i joke with the wife saying by the time they get this paperwork done, I will be back to work. The wife is still working and will continue to work through all of this. She is in pharmaceuticals. Several of her co workers of her have been diverted to Covid 19 trial management and research.

As for the Explorer thing, when I dropped the truck off at the dealership, I was looking around on what they had while waiting for my wife to pick me up. There was a 200A with towing and bench seat. Pretty much how I would want it optioned. Whether the rest of the family agrees is another thing. However even with or without a job, I would not be in the mood to buy unless the deal was too good to pass up. Personally, I was thinking about 35% off just to see how much of a mood they are in to get rid of the vehicle. It has been on the lot since November 2019! We know the high number MSRP the low number is what ever you start with. However, I found out from my neighbor, the dealership he works for has been business on line and actually moving vehicles that way. He said the owner is looking at expanding the on line aspect for the time being to keep sales reps going. I am starting to think some dealers might be waking up to the idea the showroom is no longer a good place to do business.

 

NJ, just opened up online, appointment only, no contact sales as well as few other states. @YoGeorge I know Michigan was mulling this over. So It looks like they are seeing the light with some things. However, I don't know how much people who might not be working or other hand who might be ready to buy. I think most of the on line sales stuff with most likely be lease renews and the like. But it is nice to see some stuff starting to work again with every thing going on. .

 

The light shines in Michigan too.

https://www.detroitnews.com/story/bu...es/5125050002/

 

Yes, I saw the governor's address yesterday. Online, Michigan car dealers are certainly ready to deal to cut down their inventories and pump some bucks into keeping up on their overhead. But Detroit in particular (I'm only about a mile outside the city limits) is peaking and getting hit really hard--refrigerated trucks are being rented by morgues and hospitals to store the bodies...

I sure as hell am not in a good mood to buy a car but if I needed one I'd be looking harder. I filled up at Costco yesterday for $.919 per gallon. Makes me want to go buy a Durango SRT, one reason being that the Durango/Grand Cherokee plant is 5 miles from my house, the other being that I really have a soft spot in my head for V8 Mopars. But being among the vulnerable population (a senior with asthma), I'm not sure how far out I should plan. I did go ride my bicycle 20 miles yesterday and the roads are really empty.

 

In NJ, we had another surge in the infection rates. Our hardest hit areas are also the highest population densities in the nation. One county is 235 square miles with nearly 950,000 people. The next largest county is around 800,000 within 125 square miles and in between those two 700,000 people within 47 quare miles of area. Within an area of less than 450 sq miles there is around 2.2 million people! The county where I reside is 500 sq miles with a population of 500K. Next to me it drops off to 105K ( 330 sq miles) and 140K (520 sq miles). I live close to these two counties and I resided in the larger one for about 10 years or so. these area have cases but not to the severity as the higher populations to the east. NYC is 300 square miles with 8.6 million in comparison.

In NYC, they are now performing mass burials on one of the islands within New York City. I have yet seen the cheap fuel. Most stations around me have been around 215 to one place at 270 cash regular. However that station has always been pretty high. on average 50 cents more a gallon. They play the last stop before the highway game. They generally get the fleet type trucks there to get the coffee and gas in the morning crowd. Even when I worked, we didn't go there unless you were on absolutely needed gas. I did hear that one place about 20 minutes away was selling at $1.90/ gallon. I would like to see these sub 2.00/ gal across the board. The last time i was near a Costco with gas they too were just over 2 a gallon.

As for planning out, I cannot tell you. I was talking to my former boss and he said they have been dead but one customer was talking about getting some money to be able to make a large capital purchase for the company. My ex employer hopes it happens. However, the current mood seems to see what starts back up and is working again. As I see it, I take it one day at a time. Supposedly, our area is showing signs things are flattening out but then they say the worst is yet to come. Our projected peak is supposedly in another week or so. I don't know what to make of it. If I get back to work and work feels "normal" the hours and amount of sales volume, I will have a higher confidence going in to thinking about another vehicle purchase Explorer, Ford product, or something else. If I am able to maintain bills and get some stuff paid off or down, that will be a different story. The truck is by no means a commuter vehicle or DD. Since my wife has been home, I just take her car since the ride is much better. An SUV makes more sense in several ways for our needs. The car is sometimes too tight and the truck is too big for most non hauling needs. I am wondering if it would be better to just sit back and see approach. See what happens. I would say if you can sit back and watch, do it. If you have a lease coming due, then see what you can do. It's hard to say otherwise.

 

Looking at manufacturer incentives industry wide, I'm not convinced that they are that motivated yet.

I don't want your 0% financing, that's a rip off.

I don't need you to make 3 payments for me at a $2250 total value, I'm not buying a car with a $700 p/m payment.

I don't want you to defer 3 or more payments to the back end for me, that only extends out my loan as I add more miles and the car gets older.

I want you to cut the BS and come big with a 25% discount. I'll figure out the rest on my own.

One thing that I'm a tad nervous about is their ability to service what they sell. I took my (now my daughter's) 2010 Focus to the local dealer to have the brakes checked, trans / coolant flushed and then they determined that the front motor mount is worn out and I agree with that. The car has been in the shop for a week and a half apparently waiting on parts.

The Army has delayed my daughter's transfer to Ft. Stewart, Ga until perhaps late May / early June. No one really knows yet. She has her 2018 truck so no real issues with the Focus but it's still laid up none the less.

 

Tim,

They have a ton of inventory right now. However it will get more expensive beyond 90 days. For instance, I have seen some Explorers sitting from Late Oct/November 2019 on my local lot. That's what at this point? 150 days? I am going to say the dealer is going to target those models first to get them off the balance sheet. However, I see where you are coming from. Just make the discount and MFR and go from there. It will be interesting to see if they go this way. I have a feeling it is going to take some time to get the plants back on line. So that 100 days of inventory can last a dealer for at least a couple of months if not more if sales are really down after this is over.

As for vehicle repair, that is going to be tricky. Yes ford is going to need to stock a part for that vehicle 5 to 7 years of last production. However, many vehicles of that era (great recession) had parts made by companies that may be out business. I read about Dodge product in which the dealer was unable to get the part for the vehicle in for service. It turns out the part was discontinued since the OEM went out of business in 2011. Once stock was exhausted, that was it. However, there were aftermarket solutions to repair the matter. Dealers are generally not keen on doing this. In your case, it might be the fact they cannot get the part to begin with due to age and supply. Also it might be in a Ford warehouse affected by Covid 19. I can see the fustration. I recently had my wife's vehicle in for warranty service. During that service, they found a couple of recalls that needed to be performed. One of them was able to be done that day. The other was an inspection of a component and order/replace if needed. They didn't have it in stock so it was ordered. The service adviser said we will call you next week when the part comes in for scheduling. No biggie.

This not just an auto industry thing. It's an every industry thing. The equipment I was working on before furlough, one company had a policy of one generation back service. Anything older, we no longer support it and once parts run out, that's it. Replace it with the new model. It's hard to tell someone who has used the same equipment for 15 to 20 years it has to be replaced. The manufacturer had a rep for reliability and finally fixed the accuracy issues from early on. HP has EOL on their stuff. One of their printer lines have been slated for end of supplies life this august. This means no more Gen 2 latex printers. Gen 1 were done last year. The current Gen 3 are going to be supported for the longer term until a gen 4 product comes out. I worked on one equipment brand in which we did a few parts from overseas to keep the cost of repair down. However, Japan will still ship OEM parts for a printer that was built in 2006. That is not bad for a product that was slated to have a 5-7 year life span. Many printers still want to keep the printers going. However the cost of repair can outweigh replacement due to age and the crap that breaks down. I am not supporting the idea but I can see why and how it happens.

 

In my experience, most dealer have a "grass is always greener" mentality. In other words, they feel that in a few minutes, someone will walk in and buy the car you are looking at for full MSRP. So why should they take a hit? They don't lose money until they sell the car. Sort of like stocks. The stock market is down, and you might have lost money, but only on paper. You don't lose actual cash until you sell.

The dealers can only really do so much. They need factory help. And the rebates now are not any better that 3 months ago. A little worse, in fact. The deals now are long term financing.

The other thing to consider is that what is on the lot now will probably be it until late June. Demand now is slow, but it still exists. But there is no new supply. So by late June, picking will be getting slim and the dealers will try to get the most out of the inventory they have.

Now is different from 2009. Then the factories were still running. The dealers could get all the cars they wanted, but demand was slow. Anything they sold, they knew they could get replaced.

Personally, I lucked out buying my van when I did. The inventory of 2019s was pretty much shot by mid-March, and FCA announced the end of Caravan production in May. Now I figure they will use up the parts they have in stock and that will be it. So few 2020s and the deals will not need to be as good as were on the 2019 ($6750 rebate).

 

Floor plans are still costing someone something. I know when I worked with construction equipment. The sales manager for the branches would make a list of the equipment that needed to go first. If it was not cleared, the cost to the dealer went up. Usually it was around 120 days or so. Most of the time sales team who blow though them with the cheap skate buyers. Then sell the newer ones without much trouble to everyone else. However, there would be a handful of equipment that would make it through the cracks and be on the list. I'm pretty sure we had manufacturer kick backs and bonus money for X amount of units sold. I have noticed 90 days with vehicles. Ford always seems to add more money on the hood when it comes to 90 days. They may call it preferred inventory plan or something like that.

I see your point about total inventory. I would tend to agree. However, I see too much inventory of the current MY. Even if they hold on to the numbers til June, there is going to be a point in which the dealer will need to do something to move inventory. I am not suggesting the dealer not make a profit. However, from what I see locally, there is too much inventory, demand was OK prior to all of this. Now coming out of it, demand is probably going to be much weaker in a crowded market for vehicles. Personally, I think dealers in general will have to step up their big time to make every opportunity count. The grass is greener on the other side is not going to work for them. Like I said before, it's going to be a buyers market. I saw an Explorer that if I was in position to purchase I would have to make a good hard look at it. However it was well over 120 and now going on to 150 days on lot. To me that shows me poor inventory management. That should work in the buyers favor.