How to buy new cars for your business: Dealers
By RYDER WERTHAAPAL/REUTERS Dealers will need to spend less money on new vehicles as they can buy cheaper than the next generation.
Dealers will now be able to buy a new car for as little as 1.5 times the retail price, or $3,800 less than what they were buying two years ago, a senior industry figure told Reuters on Thursday.
Dealer spending on new cars will now drop from an average of about $9.3 billion a year in the third quarter of 2019 to just $5.3bn, the industry source said.
The new rules will also see manufacturers pay back a $1 billion loan for the initial cost of the new car, the source said, adding that it would not be possible to sell a new vehicle to dealers for as low a price as the current pricing.
Dealership spending on a new model is expected to fall from about $3.4 billion a quarter ago to $2.5 billion in 2019, the senior industry source added.
This is a good outcome for dealers and manufacturers,” the source, who asked not to be identified, said.”
This is good news for the industry, and we are hopeful that this will help the industry in its efforts to keep costs down.
“As we all know, a good relationship with a customer is vital for success.
In addition to keeping costs down, we will also be able take a lot of advantage of the reduced interest rates that will come with the reduced cost of borrowing from the FCA (Foreign Automotive Dealers Association).”
Dealers have been looking for ways to lower their costs over the last few years, as the FMA’s new rules kick in in the first quarter of 2020.
“If a car has an extra $3K or $4K in costs for the first three years, we might see the car priced lower,” said one dealer in the market.
“But it might be a good thing for us to do in the end to see that price drop to the point where we can justify that price as a savings for the business.”
In 2018, the FFA started to impose the new rules, requiring all new vehicles to be priced by 2020.
Dealers are now expected to pay $5,000 in interest on their loans, the second highest in the industry.
“The interest rates are lower for the FGA,” said the dealer.
“So I can see why we might think that we are going to save money in the long term, and maybe even increase the profitability of the business in the longer term.”
I think the longer the rule stays in place, the more competitive the industry will become.
“A spokesman for the Association of Automotive Industries (AAI) said the new pricing rules were aimed at making it more affordable for dealers to buy and sell new cars.”
A key factor in this industry’s competitiveness is its ability to innovate and adapt to change, and the new rule will ensure that this happens.”