Do new automobiles typically release in low numbers?
Do new automobiles typically release in low numbers? and later you say  The car released 2 days ago. I called around and discovered local dealers only have ~10 2018's total for all trims. So you are calling local dealers and they have ten after two days.  Let's say you are in New York City, population eight million (about 2.5% of the United States population).  That would suggest that there are around four hundred produced in two days (10 is 2.5% of 400), or two hundred a day.  That would be four thousand a month (assuming four weeks, each with five workdays).  Considering that the most sold in a month were 14,207 in June of 2013 and March's 7727 was the best this year, that seems to be a decent pace if a little slow to start.   Now, let's assume that you are using a local area with a population of only two million.  This could still be New York City if you only call dealers in a quarter of the area.  Their two day pace would put them on a rate to produce sixteen thousand the first month, which is more than they can reasonably expect to sell.   If your local area is an even smaller portion of the US overall, this might not actually be low inventory.   Don't forget that some dealers may also still have 2017 vehicles left.  They might want to sell those before they order too many new vehicles.  Particularly as they may not know what feature packages sell best yet.  If they're willing to tell you that they have three 2018s (and sold a fourth), they should be eager to tell you how many 2017s they have.  A high 2018 price gives them a better chance to sell the 2017s at a profit.   If you really want to check if they are having production problems, ask how long it will be to order a vehicle.  For a US manufactured car, special order should fall in the five to eight weeks range.  If that's what they're quoting, then there probably are not production problems.   When trading with a dealer, do your research, tell them what you believe a fair price is, and then be ready to walk if they won't give it to you.  Be up front.  Tell them that you're willing to pay $X to the first dealer that takes the offer.  You'd prefer that dealer because (whatever--maybe they're closest), but you aren't paying more than $X.  If they let you get in your car and drive away, then they really think they can get a better price.
"So, what's going to happen to those [400,000](https://electrek.co/2017/05/05/tesla-model-3-reservations-3/) 'deposits'?  Tesla's ""record-breaking"" 25K quarterly production figure means it'll take *four years* to build the 400,000 cars people have put down deposits on. How many tail-end Charlies are going to wait that out? The [current](http://insideevs.com/when-will-the-7500-us-credit-expire-for-the-tesla-model-3-and-everyone-else/) expiration schedule for the $7500 tax credit puts it to Mr. tail-end, *hard*. At the Model 3 price point, this is going to have a much larger effect on its buyers than on the $100K+ demographic." I understand, and I'm not necessarily disagreeing; I'm just asking how we know this.  It's one thing if it's a logical deduction you've made, but it's another if there's direct objective evidence.  Do these statistics pertain to all car sales or just factory car sales?  The car I own today is the car I've owned the longest, but it's not because I can't afford to buy another one, it's because I have absolutely no reason to.  My car was made in 2000; it has 115k miles on it.  I could write a long list of things that are still performing just as adequately as they did when it was new, and how aside from being somewhat less powerful it doesn't actually do anything worse than comparable new cars; I'll spare you. :)  Cars in 1970 were never expected to be driven past 100k miles without major service work, including an engine and transmission overhaul.  Many cars well into the late 70s didn't even come with that many digits on the odometer.  The economic conditions you mention, including the astonishing transfer of wealth between classes, are not good signs and it obviously needs to be reversed or this country is going to be a really shitty place to live soon.  And hell yes I believe it's affecting car sales.  But I'm really not convinced it's the main reason car sales peaked 40 years ago.  Housing sales only peaked a few years ago, and both markets have screwed themselves over-issuing credit, albeit in different ways.  Point is, you don't need to be able to afford a car when you can get a loan practically at the push of a button; Americans don't think in terms of what something costs, they think in terms of what it costs *per month*.  Income shrinkage has been allowed to happen because people have been allowed to spend money they don't have.  I know people living paycheck-to-paycheck who spend $150 - $250 per month on just data.  They also have $10k's of revolving credit card debt and, even worse, $10k's in student loans.  $250 per month won't save up for a new Cadillac anytime soon, but it *will* put you into a Cadillac if you don't mind having spent $63k on a $38k car by the time your loan matures.  (Edit: those numbers are pretty exaggerated, $250/mo. wouldn't get you a Cadillac until it was several years old.  You'd still end up paying several thousand more than if you'd paid cash, though... the point is that our economy is floating on credit, and this has allowed rampant overspending and living above means in the average household).  You see what I'm saying?  All other factors being equal car sales should have peaked a few years ago, or at least in the late 90s during the (first?) dot com bubble.  There was *far* more spending power out there - not income, but spending power. Currently they put out 800 cars a week, and that was before the two week shutdown to add another dual line and allow for major production rampups.  Plus the new body line, plus the new paint shop being built.  As soon as these come online, going from 800 to 2000 in 18 months is not unrealistic. Why then did Ford (and the auto industry in general) suddenly decide to court such buyers?  Clearly when they felt they had a viable solution to the financing and could open up the market of buyers they were previously ignoring. If more sales are desired, surely the same can be accomplished with simply lowering prices? Millions of people have bad credit.  Apparently Ford thinks adding millions of people to the pool of potential buyers is more effective to boosting sales than discounting product for the pool of existing potential buyers. "Model 3 passed all regulatory requirements for production two weeks ahead of schedule. Expecting to complete SN1 [Serial Number 1] on Friday, Tesla (NASDAQ:TSLA) CEO Elon Musk tweeted on Sunday.  ""Handover party for first 30 customer Model 3's on the 28th! Production grows exponentially, so Aug should be 100 cars and Sept above 1500... Looks like we can reach 20,000 Model 3 cars per month in Dec.""  The car, which already has over 400,000 pre-orders, is Tesla's cheapest vehicle to date - starting at $35,000.  TSLA +3% premarket" Maybe they want to surprise people?  They have the finishing line upgrade, body line upgrade and new paint shop all either being installed at this moment or in parallel to current production work.  It will take them all year to figure out how to get all the bottlenecks out of the system, but it 'seems' like they are doing a hell of a job with building out the capacity of the S/X lines.  Living 10 miles from the factory I hope to see some alphaX's on the road in the next couple weeks. If they wanted to surprise people, confirming it on the phone to a single LA Times reporter right after earnings, and right after saying a different number during earnings, isn't the way to do it.  It's just not going to be 100k cars delivered next year.  I'd love it to be 100k cars next year, because if that announcement came out, and the market responded appropriately, I'd make six figures in a day easily, probably several times over, since I'm heavily invested in stock and LEAPs.  But it's just not going to happen.  As for seeing Alpha Xs soon...yeah, that seems likely.  Keep your eyes open and let everyone know when you see one :-) "Here I thought I would not ever answer a question on this site and boom first ten minutes.  First and foremost I am in the automotive industry, specifically one of our core competencies is finance department management consulting and the sales process both for the sale of the care as well  as  the financial transaction. First and foremost new vehicle gross profits are nowhere near 20% for the dealership.  In an entry level vehicle like say a Toyota Corolla there is only a  few hundreds of dollars in markup from invoice to M.S.R.P.  There is also something called holdback that dealers get for achieving certain goals such as sales volume. These are usually pretty easy to hit. As a matter of fact I have never heard of a dealer not getting the hold back on a deal.  This hold back is there to cover overhead for the car, the cost of getting it ready to sell, having a lot to park it on, making it ready for delivery, offset some of the cost of sales labor  etc.  Most dealerships consider the holdback portion of the invoice to not be part of the deal when it comes to  negotiations.  Certain brands such as KIA and Chrysler have something called ""Dealer Cash"" these payouts are usually stair stepped according to volume and vary by dealer, location, past history, how the guys at the factory feel that day and any number of combinations.  Then there is CSI or Customer Service Index payments, these payments are usually made every 1/4 are on the Parts Statement not the Sales Doc and while they effect the dealers bottom line they almost never affect the sales managers or sales persons payroll so they are not considered a part of the cost of the car.  They are however extremely important to  the dealer and this is  why after you have your new car they want you to bring in your survey for a free oil change or something.  IF you are going to give a bad survey they want to throw it away and not send it in, if you are going to give a good survey they want to  make sure you fill it out correctly.  This is because lets say they ask you on a scale of 1-10 how was your sales person and you put a 9 that is a failing score. Dumb I know but that is how every factory CSI score system I have seen worked.  According to NADA the average New Vehicle gross profit including hold back and dealer cash is around $1000.00.  No where near 20%.  Dealerships would love it if they made 20% on your new F250 Supercrew Diesel at around $50,000.00.  One last thing there is something on the invoice called Wholesale Finance Reserve.  This is the amount of money the factory forwards to the Dealership to offset the cost of financing vehicle on the floor plan so they can have it for you to look at before you buy.  This is usually equal to around 3 months of interest and while you might buy a vehicle that has been on the lot for 2 days they have plenty that have been there much longer so this equals out in a fair to middling run store. General Mangers that know what they are doing can make this really pad their net profit to statement. On to incentives, there are basically 3 kinds.  Cash to customer in the form of rebates, Dealer Cash in the form of incentives to dealerships based on volume or the undesirability of a vehicle, and incentive rates or Subvented leases.  The rates are pretty self explanatory as they advertised as such (example 0% for 60 Months).  Subvented Leased are harder to figure out and usually not disclosed as they are hard to explain and also a source of increased profit.  Subvented leases are usually powered by lower cost of money called a money factor (think of it as an interest rate) that is discounted from the lease company or a subsidized residual.  Subsidized residuals are virtually verboten on domestic vehicles due to their poor resell values.  A subsidized residual works like this, you buy a Toyota Camry and the ALG (automotive lease guide) says it has a residual at 36 months of 48%.  Well Toyota Motor Credit says we will give you a subvented residual of 60% basically subsidizing a 2% increase in residual.  Since they do not expect to be able to sell the car at auction for that amount they have to set aside the 2% as a future expense.  What does this mean to you, it means a lower payment.  Also a good rule of thumb if you are told a money factor by your salesperson to figure out what the interest rate is just multiply it by 2400.  So if a money factor is give of .00345 you know your actual interest rate is a little bit lower than 8.28% (illustration purposes only money factors are much lower than that right now). So how does this save you money well a lease is basically calculated by multiplying the MSRP by the residual and then subtracting that amount from the ""Capitalized Cost"" which is the Price paid for the car - trade in + payoff + TT&L-Rebate-Down Payment.  That is the depreciation.  Then you divide that number by the term of the loan and you have the depreciation amount.  So if you have 20K CC and 10K R your D = 10K / 36 = 277 monthly payment.  For the rest of the monthly payment you add (I think been a long time since I did this with out a computer) the Residual plus the CC for $30,000 * MF of .00345 = 107 for a total payment of 404 ish.  This is not completely accurate but you can use it to  make sure a salesperson/finance person is not trying to do one thing and  say another as so often happens on leases. 0% how the  heck do  they make money at that, well its simple.  First in 2008 the Fed made all the ""Captive"" lenders into actual banks instead of whatever they were before.  So now they have access to the Fed's discounting window which with todays monetary policies make it almost free money.  In the past these lenders had to go through all kinds of hoops to raise funds and  securitize loans even for super prime credit.  Those days are essentially over.  Now they get their short term money just like Bank of America does.  Eventually they still bundle these loans and sell them.  So in the short term YOU pay for the 0% by giving up part or all of your rebate.  This is really important DO NOT GIVE up your rebate for 0% unless it makes sense to do so.  When you can get the money at 2.5% and get a $7000.00 rebate (customer cash) on that F250 or 0% take the cash.  First of all make the finance guy/gal show you the the difference in total cost they can do do this using the federal truth in lending disclosures on a finance contract.  Secondly how long will you keep the vehicle?  If you come out ahead by say $1500 by taking the lower rate but you usually trade out every three years this is not going to work.  Also and this is important if you are involved in a situation with a total loss like a stolen car or even worse a bad wreck before the breakeven point you lose that price break.  Finally on judging what is right for you, just know that future value of the vehicle on for resell or trade-in will take into effect all of these past rebates and value the car accordingly.  So if a vehicle depreciates 20% a year for the first 3 years the starting point will essentially be $7000.00 less than you actually paid,  using rough numbers. How does this help the dealers and car companies?  Well while a dealer struggles to make money on new cars the factory makes all of their money on the  new cars and the new car financing.  While your individual loan might lose money that money is offset by the loss of rebate and I think Ford does actually pay Ford Motor Credit Company the difference in the rate.  The most important thing is what happens later FMCC now has 2500 loans with people with perfect credit.  They can now use those loans to budle with people with not so perfect credit that they financed at 12%-18% and buy that money with interest rates in the 2%-3% range.  Well that is a hell of a lot of profit.  'How does it help the dealership, well the more super prime credit they have in their portfolio the more subprime credit the banks will buy for them.  This means they have more loans originated that are more profitable for them.  Say you come in for the 0% but have 590 credit score, they get FMCC to buy the deal because they have a good portfolio and you win because the dealer gets to buy the money at say 9% and sell it to you at say 12% making the spread.  You win there because you actually qualified for a rate of around 18% with a subprime company like Santander or Capital One (yes that capital one) so  you save a ton on your overall cost of the car. Any dealership that is half way well run makes as much or money in the finance and insurance office than the rest of the dealership.  When you factor in what a good F&I Director can do to get deals done with favorable terms that really goes up.  Think about that the guys sitting a desk drinking coffee making more than the  service department guys all put together. Well that was long winded but there I broke down the car business for whoever read this far." Tesla is not planning to sell 100k cars in 2015, they plan to have an annualized run rate of 100k by the end of 2015.  Also, the luxury market is pretty close to 50/50 between large sedans and SUVs, so Tesla figures they can sell as many SUVs as they can sell sedans, and they can almost certainly sell 50k sedans considering they're easily selling 35k without advertising whatsoever and with long wait times and barely having penetrated China or RHD markets.  Also, that 100k is worldwide, not just in the US. This caught my eye because the auto industry and the parts manufacturers are notorious for pushing output and human productivity to the point where working conditions are very unsafe.  If Musk is doing exactly the same thing that is newsworthy imo. "Correct, but then you have to think of all the people that have to buy new transmissions, new engines, new suspension, etc.  Production of those also require manufacturing. I'm not saying holding on too a car is bad, but it's not a black and white ""running a car until it disintegrates is better"" situation. And why not get a Tesla and then run THAT into the ground? You don't have to buy it right away, but your next car could be a Tesla or other electric vehicle." "Thing is, it's already explained in the letter, in the end of the first paragraph: ""Tesla’s annualized delivery rate should exceed 100,000 units **by the end of next year**"" (emphasis mine).  When I first saw the number I got excited, but then I read the actual sentence, realized what they meant, and it's still impressive but it's not 3x increase in production YoY (which would be absurd to expect, esp. when Tesla's trajectory has been just-under-100% increases per year so far and into the mid-term foreseeable future).  *Then* they explained it *again* on the CC (Elon said *something like* ""we'll exit next year at a 100k rate, but it's hard to tell how steep the curve will be, but we'll probably have over 60k deliveries...I think...yeah probably"").  I emailed the author of this article and he still believes that Tesla has ""unequivocally"" stated that they will produce and deliver 100k cars in 2015...but that's simply not correct.  I have some people who know press contacts within Tesla working on hammering it out, though their efficacy at press communications has not been ideal at times in the past.  If Tesla did unequivocally state that they would deliver 100k cars next year, after delivering just over 35k this year and 22k last year, that would be enormous news and should have sent the stock to $300 today, up 30-50%+ instead of the 4% it did go up.  But it didn't send it that high, because that's just not what's happening.  I'm extraordinarily bullish on Tesla, but 100k in 2015 is just not what's going to happen.  100k+ in 2016, though, sounds about right.  And is in line with every other estimate everyone has done for the past several years, including Tesla themselves.  So yeah, this number isn't really news, but it's nice to see them reiterate it." "This is the best tl;dr I could make, [original](http://www.france24.com/en/20170601-us-car-sales-struggle-may-despite-record-discounts) reduced by 77%. (I'm a bot) ***** &gt; Auto makers offered big discounts over the Memorial Day holiday, but the response from US car buyers in May was not enough to definitively reverse months of sales declines.  &gt; After seven years of gains, there were further signs that US car sales have plateaued, analysts said, as monthly sales data suggested a mixed picture amid heavy incentives to lure buyers into showrooms, even as truck and SUV sales surged.  &gt; The biggest US car maker, GM, saw its sales fall 1.3 percent last month compared to the same period a year earlier.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6eqkaa/auto_makers_offered_big_discounts_over_the/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~134307 tl;drs so far."") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **sales**^#1 **percent**^#2 **car**^#3 **truck**^#4 **consumer**^#5" On what do you base that? They are literally selling all the $90,000 cars they can build, at a per-unit profit, and the only reason they're posting losses is massive R&amp;amp;amp;amp;D outlays, which is perfectly normal for a company in its growth phase.   You could argue the novelty will wear off soon, but what makes your take on that market any more reliable than any old guess? Mercedes and BMW prove there's steady streams of people with $80k to drop on a car.   They are just ramping up in China and they have a HUGE appetite for American luxury products.   I totally think they're current share price is, oh let's call it incredibly optimistic... But going bankrupt? "That sounds like a particularly egregious version of exclusivity. However, the way that you could handle that is to include a ""contingency"" in your purchase agreement stating that your offer is contingent upon the seller paying the brokerage fee. The argument against this, and something your broker might use to encourage you not to do so, is that it makes your offer less attractive to the buyer. If they have two offers in hand for the same price, one with contingencies and one without, they will likely take the no-contingency offer. In my area, right now, house offers are being made without very common contingencies like a financing contingency (meaning you can back out if you can't finance the property) or an inspection contingency. So, if your market is really competitive, this may not work. One last thought is that you could also use this to negotiate with your broker. Simply say you're only sign this expecting that any offer would have such a contingency. If it's untenable in your current market, it will likely cause your broker to move on. Either way, I'd say you should push back and potentially talk to some other brokers. A good broker is worth their weight in gold, and a bad one will cost you a boat load. And if you're in Seattle, I'll introduce you to literally the best one in the world. :-)"