In the latest video from Automotive Life, Lucky Lopez provides an update on the used car market. Opening with his signature greeting, Lucky welcomes his “YouTube family” and announces that today’s video will be focused on explaining why dealers are struggling to sell cars at a time when sales should be booming due to tax season. Lucky notes that although dealers are filling up their lots in preparation for the season, sales have slowed down dramatically and the demand simply isn’t there. Lucky has spoken to numerous banks, dealerships, and consumers, and it’s clear that despite efforts to build inventory, dealers are having trouble moving cars off their lots.
Lucky explains that dealers are overpaying for cars at auctions, with some paying over 18% more than MMR value. MMR, or Manheim Market Report, is the industry-standard valuation tool used by dealers to determine a vehicle’s worth. The problem, according to Lucky, is that many dealers blindly rely on MMR prices and don’t take into account other factors such as Kelley Blue Book and other industry resources. This tunnel vision leads to dealers bidding up prices for cars that aren’t worth the inflated values. Lucky points out that Cox Automotive, the parent company of Manheim, has been known to increase MMR prices when the company needs to move more cars and units.
Despite the lack of demand, dealers are still charging high prices for their vehicles, and Lucky explains that many dealers are doubling down on their overpriced inventory rather than lowering prices and taking small losses. Dealers are buying new cars at a premium, and some are holding firm on their overpriced vehicles in the hope that someone will eventually buy them at the inflated price. Lucky warns consumers that many dealers are upside down on their inventory and can’t afford to lose too much money on a sale, which is why some refuse to lower their prices.
Lucky concludes the video by advising viewers to negotiate better prices based on the information provided. He also raises the question of when prices will start dropping back down, as they have been continuously dropping for the last year and a half but have gone up 3% every month during the last month and a half.