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Originally Posted by BRAKE!
It is quite interesting to see how the market works - less options, less for your money, and yet the consumers are paying MORE than MSRP. Just goes to show you how unpredictable everything is.
The other side of the equation is also fueled by the low interest rates for borrowers as a result of unprecedentedly low reserve rates set by the fed reserve. More (cheap-to-borrow) money out in the market, the more consumers are willing to spend despite the higher prices.
I am not sure when all this will come to an equilibrium, but certainly as someone in the market for a car, it’s not a good time to be a buyer. I think it’s also important to recognize that we, the consumers, may be setting a precedent for the dealers where they may expect this “market adjustment” to be commonplace in the future…
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IMO a majority of customers in this segment want to lease their vehicles and may also write off the payments as a business expense. The high residuals of this segment make leasing attractive. Lesser priced vehicles have lower residuals and customers are less sensitive with regards to the difference in payments.