Chris Collins explains how inflated car prices created a problem for recent buyers. People who paid huge premiums on vehicles like RAV4s are now underwater on loans, stuck with $1,500 monthly payments, and will keep their cars longer. Service departments will benefit from captive customers as the market corrects over the next year or two.
Think about this, everybody. When you're kind of processing this, that.
What probably is going to happen. Right. I don't have a crystal ball and I'm not doom and gloom, but our economy is going to slow down. As our economy is slowing down in the next year, manufacturers are going to figure out their production and the production is going to come back to a degree. Now, some manufacturers have a different strategy. Some manufacturers are saying we like having more demand than we have supply.
Yeah.
But for the most part, we know manufacturers are greedy. We know a lot of, especially the American ones have union contracts to fulfill. They. They're going to want to do volume. I would assume the Japanese brands are going to want to do volume also. But it's an assumption in their game. But the volume is going to come back.
You buy a RAV4 for 40,000 more than MSRP in. 40,000 more than what it's worth. The second drive it off.
Yes.
The lot a year from now.
You're so bare. If you're the average consumer, you're so buried in that car.
There'S no way you're, you're getting rid of it and you're pissed.
Yeah, I would, if I was investing, I would buy stock in dynamite.
Yeah.
Because I think people are going to.
Blow their cars up because we know these values are going to come back down to a realistic number eventually. It might be a year, might be two years, but the people that are buying a car today that are paying over are buried in those cars. And what does that. It almost doubles the payment in a sense. Right?
It exactly doubles the payment. You know what a payment is on a $90,000 car if you're financing it for RAV4?
1500.
I almost think it's more than that. Even if you did six years. 72,000. 8,000. Yeah. 1500 bucks including interest for a RAV4 for six years.
Yeah.
That's crazy, right?
It is. It doesn't make sense. And so how is this going to affect the service drive when people are in the car more than the more than the car is worth is they are going to keep the cars longer. They're going to be forced to keep the cars longer. And, and so them keeping the cars longer also is going to. If supply increases, we're going to have dealerships again with certain brands that will have a 90 day supply of cars and the value of those cars will dramatically drop.
And they won't be able.
To sell them because there's no one that can buy them.
Yeah.
It's going to Be a really, really weird situation. Right. In speaking of production, so I was thinking about this the other day. I've heard this thing on the news where they're starting to recommend that women shouldn't have kids over 40. And I feel like that's kind of a controversial topic. I know. But the funny thing is I actually know, now that I've thought about it, I agree with him. Because 40 Kids is a lot.
Okay. It's an interesting time.
It is an interesting time. But, yeah, the thing that I wrote down was that, that that's a captive audience. They're not going anywhere. They're service customers. Also, the people that normally would buy, they see all this going on, they'll say, I'll wait a year and I'll fix the car. So I think that it's a really, really good time. It reminds me a little bit of 2008, but, like, on steroids.
Why? I think the thing different than 2008 is if you buy that RAV4 and you pay 40 over, your cognitive dissonance is going to create an additional value or an additional esteem for that vehicle. You're gonna be more enthusiastic about it because you have to be.
I hope so. Yeah. Otherwise you'd be depressed.
Yeah. And so you're going to be more apt to maintain it. You're gonna be more apt to, you know, service it, wash it, wax it, all that. And so we as an industry need to feed to that. We need to compliment people on their cars. You know, really understand that a lot of people that are buying new cars right now are paying a lot of money. It's a big deal. Thanks so much for watching this clip of Service Driving Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.
