No. of Recommendations: 17
No intention of paying CarMax's ridiculous prices, which in many cases are more than new MSRP. I'd rather wait for a new one. Understand some folks can't wait, otherwise how else would CarMax be selling these vehicles?
As an aside, speaking as a big (for me) Carmax shareholder, this comment leaves me with a happy glow.
As a rule of thumb, you want to be invested in the firms getting away with nosebleed pricing : )
On a more serious note, one might speculate that the topsy-turvy car pricing situation seen lately in the US...Used car backwardation?...
is a sign that new car prices are a likely to rise a lot soon.
The resellers like Carmax rely on flow...they like to make a couple of thousand per car, and don't really car all that much what the actual car price is.
They react to the prices they are paying for the level of inventory they need, and consequently their pricing tracks supply and demand more or less in real time.
The car companies, on the other hand, have huge stickiness and complex strategic calculations in their pricing.
Production forecasts, recession forecasts, inventory levels, and competitive pressures.
They also have the financial muscle to take losses for a while, if they deem it strategically useful in light of the above.
They can afford to diverge from reality for a while, but have to adapt to it eventually.
If those views are to some extent valid, the new/used car price gap could be seen as an advanced indicator of where car prices are likely to go.
Since, as you note, it really makes no sense for a used car to cost more than an identical new one.
If it doesn't make economic sense, it probably won't last.
Jim
