WCGhost

Good questions, and these are some of the same questions I had. I do know for a fact that many 992 GT3s that dealers bought used, were bought well above MSRP.. They were not bought at MSRP or even close, over the summer BH Porsche was paying up to $50K over MSRP to buy back cars they sold for $30K over. They flipped these quickly, and currently are only stuck with one, and they have the money to hold, but many other smaller dealers i don't think have this luxury. I have a feeling a lot of the cars you see for sale online by dealers with some miles on them were bought well over MSRP so they are stuck. How does the interest work for them? Assuming if these are short term loans, does it work like a traditional revolver? If their revolver is now at a higher interest rate, then I would think it is tough to hold onto a car they paid over MSRP on. If their revolver is set over a long term, they should be fine, but if it is a variable rate this seems less friendly to them in the current environment. I'm not sure exactly what interest rate they are currently paying.

WCGhost

How do they pay the same price AND interest rate when a GT3 loan would be significantly more than a Corolla? I can see the same rate, but dont understand how it would come to the same cost if the rate is the same?

yesyoucan

you are really underestimating the financial strength of the franchised dealers and the patience they can and do have .

they make a lot of money from service and recurring revenues from financing and all the add on’s. (Service and warranty work isn’t impacted by interest rates or recession type things )

they’ve made a lot of money on adm’s and losing on a couple of cars still makes them way , way ahead from what they have been selling them at in the past . They will not be doing any type of fire sales at all .

Manifold

I see that dealers can be very patient, but once prices are steadily declining, it would make sense for them to lower the price and move a car sooner rather later, especially if a car doesn’t have a really nice build and therefore less likely to elicit an impulse buy.

I ordered a few books on consumer psychology in hope of better understanding what’s wrong with many of us. 🙂

Diablo Dude

pitt911

I have been told recently by three dealers that they were instructed to ditch used inventory at auction in 6 weeks as compared to regular three months because of anticipated market decline and the losses they incurred on used cars recently
even if financially strong , dealers make decisions on what they perceive the strength of the market as compared to their financial strength

usctrojanGT3

Of course the big boys like AutoNation and Sonic can stay patient because they have deep pockets but it's also an opportunity cost when you have car prices declining and flooring interest rates increasing along with auto lenders tightening things up. Remember that the flooring lender does want reports on their collateral periodically and if they see the market values have come down enough they may issue a margin call to the dealer to bring the flooring line balance down. Of course these dealers won't have fire sales but the number of cars for sales grows and the number of impulse buyers willing and able to afford significant ADMs so it's not going in the right direction for them. Why tie up capital, keep paying more interest, and sell at a lower price later?

Manifold

My dealer is an AutoNation shop. They're underwater on some used cars and steadily dropping prices. They recently sent one to auction because it wasn't selling from the showroom floor despite being listed $15K under what they paid for it.

yesyoucan

Yeah; but you have to differentiate between car types. The expensive cars ( $200K and up for franchised dealers), tend to get treated differently.

I agree that there will be financial pressures on non franchised dealers (re-sellers), who do not have the service/warranty revenue stream coming. I do see a lot of buying/selling between certain re-sellers (it's like one runs out of time due to internal company policies or flooring companies and then they just trade it or sell it to another wholesaler and they don't discount it).

Note: I'm not in the market for porsche GT cars. I'm just observing and chiming in where I can on topics that interest me. I am still getting messages elsewhere from people who are paying the adm's and looking for cars and willing to pay adm's.

The people who are willing to pay ADM's (the ones that I know); have made money on other cars and are just taking the money and putting it into the 992 gt3rs allocation. The ADM isn't really costing them anything. The ones who have the money to pay the ADM but don't think the car is worth it, are moving onto the supercars (plenty of examples of this in real life). The ones who can't go to the supercars and not willing to pay the ADM's (they are the most vocal about things on-line).

rusmani

Dealers also have no problems playing both sides. They'll tell you the used market is down to lowball your trade and then say the new market is strong and inventory is low to keep markups going. At this point, dealers have seen the earning potential from the last 12-18 months and they'll continue to play this game.

Even outside of Porsche, so many manufacturers and dealers are sticking to MSRP or more on run of the mill cars. Dealers won't let this go so easily.

pitt911

I don't blame them in a sense , but a lot of them are starting to accept reality
the tide has changed in favor of us as customers reference buying new cars
I had couple of M5 which I loved so I was trying to grab another one
a month ago two dealers I contacted told me : one MSRP and one 5 k above
now I can get one for 8% below
on the flip side people are going to get less money for trade in , so the delta even with heavy discount on new cars will not be as big as some people think

rusmani

The tide is turning, but dealers will milk this for as long as they can. Just the nature of the beast.

BMW and Benz are definitely coming back down to earth, but they used to offer discounts beyond what Porsche ever would pre Covid. I got my 2018 M3CS for over 20% off MSRP. In my experience, Porsche was discounting Macan/cayenne and base 718/911 5-7% during more normal times. I think we are finally starting to see some very mild discounts from MSRP on macans/cayennes (base, not GTS or above).

armanslr

Flooring cost aren't that big of a factor when your talking about $10k+ gross units that are not easily replaceable.

rusmani

Also a beautiful unit that will generate buzz and probably increase foot traffic in the dealer. Sales is all about getting people in the door. Someone may show up to look at an overpriced GT3 and go home with a used 911 since it's cheaper. Or their significant other will see a Macan/cayenne while in the dealer and take that home. All money in the dealers pocket, and at bigger margins these days.

It's easy to offset flooring costs when you are selling every new car at MSRP (at a minimum).

welikethetrack

Well I think the small guys are the ones that probably drop the market the fastest (and are the majority of flippers and the ones that run it up to being with).

Of the 174+ 992 GT3 for sale, it is going to be the desperate one that needs to compete with the lowest price 249k CPO 1k mile gt3 for sale right now, and list theirs at 230 or 240 and sell for a lot less as people put so much value on going to a porsche dealer and buying in my experience.

The 400k 2016 gt3rs's dropped to 200k faster than anyone imagined, literally less than 12 months, then they sank to 150k-175k fairly quickly once the 991.2's were delivered as well.