In the driver's seat
Q&A with the auto industry's #1 guy.
I’ve loved cars for as long as I can remember. As a teenager, I covered my bedroom walls with Japanese import posters and magazine pages. I drooled over souped-up Toyota Supras, gushed over fine-tuned Mazda RX-7s, and dreamed of sitting behind the wheel of a Nissan Skyline. Instead, my older brother drove me to school in our mom’s 1985 Volvo station wagon named Betsy, which had more than 300,000 miles on it. I didn’t get my first car until college: a 2002 Subaru WRX with the world’s tallest bookshelf spoiler. My poster dreams came true.
Now, as an adult and dad of two, my taste in cars may have changed but my love for them has not. I’d like to think my understanding of cars and the market became an asset during the pandemic, when I capitalized on supply chain issues and pocketed a nice windfall for getting rid of an SUV I hated. More importantly, though, my clients often come to me for financial advice when shopping for cars. And in those instances, I do two things: give them my opinion and tell them to follow CarDealershipGuy on Twitter.
Today, I’m excited to do you one better. Through the magic of the internet and my addiction to social media, I’ve gotten the most knowledgeable car guy on the web to sit down with me for an interview. He foolishly accepted.
CarDealershipGuy is one of my favorite accounts. He is an anonymous car dealer group CEO and founder of a quickly growing private car buying community. He is a master of the auto market and publishes one of the top car market newsletters with more than 40,000 subscribers. I’m so glad he’s here.
Q: In just over a year, you’ve amassed more than 330,000 followers. That’s no easy feat! Why do you think you’ve been so successful at growing an audience around cars?
CDG: On the Consumer side, I think I bring refreshing, authentic and insightful perspectives to an opaque industry that most people, unfortunately, despise. On the Financial side, I think investors value my anecdotes and data points as they serve as leading indicators for what could be coming next for inflation, consumer spending and the overall health of the economy. Lastly, I’m myself. Sounds trite, but lots of accounts lose personality as they scale.
Q: What has the platform done for your business?
CDG: I can’t imagine life before having this platform anymore. It’s truly underrated being able to tweet almost anything and to instantly get some specific insight, make a critical hire, launch a business or anything in-between. I’ve expanded my network with like-minded folks, made investments, hired new team members, launched businesses and even sold cars!
Q: Let’s move on to the car market, which has been absolutely bonkers since the pandemic. As an auto industry expert, what would you identify as the largest issues pressing on companies and consumers?
CDG: Wow. Fully-loaded questions. The car market is…sort of a mess. But let’s break down the core issues:
We under-produced 8.6M new cars since 2020: That has led to a fewer new cars being sold, which is now leading to fewer leases being returned, which is leading to fewer cars entering the used car market. Which brings me to the next issue…
There are 21% fewer used cars on the road today (vs 2020): That is leading to record high prices, and specifically, a market with no affordable cars.
Interests rates and vehicle production costs are at record highs: That is leading to more people being priced out of the car market. As well as pushing prices of the less expensive used car alternatives even higher.
So what’s the result? New car prices are at record highs, used car prices are close 5% off record highs, vehicle financing and affordability is at record lows, and supply is lower than it’s ever been. The situation is very unfortunate, and it will likely take at least 3-4 years until we begin rebounding.
Q: Do you think the car market will ever return to pre-pandemic norms, or is this our new landscape now?
CDG: No, it wont. And the simple reason is because new vehicle production costs have risen significantly since 2020. The prior price baselines no longer reflect reality. That said, I’m an optimist and want to believe that we’ll bounce bank from record high prices and record low affordability within a couple of years. Prices absolutely WILL decline, but it’s very unlikely that we’ll get back to pre-2020 levels.
Q: What are the most important things consumers should know when shopping for a car right now? How can they find the best deals? Are there any red flags to watch out for?
CDG: Several things come to mind:
I regularly posts inventory availability charts. These should help consumers looking for a new vehicle because the brands with the most available inventory tend to have the best deals. Of course, the biggest downside is you’re limited to Chrysler, Buick, Jeep, Alfa Romero…you get the point.
State of auto lending is atrocious. Rates are at decade-highs. But there is a solution. Credit unions. Credit unions have structural cost advantages over traditional lenders. If you’re in the market for a new or used car, please explore what the interest rates are at your local credit union. Also, reminder that most dealers have directly relationships with credit unions and can get you a competitive rate through them (as opposed to a traditional lender).
Used cars under $20K are simply overpriced. Used cars between $20-40K are coming down to reality. Used cars above $40K are depreciating the fastest. Buy smart.
Q: The “lease versus buy” debate gets a lot of attention in the world of personal finance. I noticed just the other day you tweeted that BMWs are for leasing. What’s your take on this age-old debate?
CDG: Haha. I’m typically not a fan of leasing depreciating assets. Although it can be a good decision for some people. Here’s why. Leasing offers certain benefits that flat-out buying does not. For example, all of your maintenance is taken care of. You never have to worry about certain components and costs (regardless of the vehicle’s warranty) because it’s technically not even your car. Additionally, for cars that have a tendency to become problematic at higher miles (e.g. BMWs), leasing provides a guaranteed exit route at a pre-determined residual value. This is the only time I recommend leasing.
Q: While we’re on the topic of personal finance, some of my favorite posts of yours point out just how expensive owning or leasing a car can be; especially today, when fully loaded pick-up trucks can reach well into the six figures. How would you suggest consumers balance their needs and wants?
CDG: Great question. I’ve been very vocal about the need for consumers AND dealers to work together on affordability. What most dealerships don’t realize is that it’s in their best interest to sell you a car you can afford. Here’s why: if you can afford your car payment, you’ll enjoy your vehicle for a car of years and eventually trade it in for a new one, increasing the LTV (lifetime value) of the relationship. But back to your question. I think we’ve over-indexed as a society on bells-and-whistles. As a consumer, I would simply ask the question, “Do I really need this?” The adrenaline rush of a new car purchase lasts 30 days, but the monthly payment lasts for 6 years! So ask yourself, is this really worth it? Or would I be better off with a similar car that doesn’t have cooled seats and a panoramic sunroof but is 35% cheaper?
Q: With all of your industry experience, what’s the craziest thing you’ve seen or been a part of?
CDG: I won’t forget in 2015, Hertz was running a flash sale on Chevy Cruzes. At the time, they were super affordable with very low miles. I think we purchased over 50 Chevy Cruzes in a single day — almost identical vehicles. But the deals were incredible and you couldn’t beat the price. You can’t find deals like that anymore.
Q: The people need to know: what do you drive?
CDG: You ready for this? I don’t own a car! I typically drive different cars from the dealership. But wife drives a 2022 Audi Q7 (only 10K miles and under warranty).
Q: Outside of Twitter dot com, where can people find you?
CDG: Find me on my website. There you’ll find all of my resources, car buying service, newsletter, angel investments and more. But let’s be honest, Twitter is the place I’m mostly at.
I can’t thank @CarDealershipGuy enough for taking the time to speak with me and share his insights with This is the Top readers. Please make sure you check him out, subscribe to his newsletter, and follow him on Twitter dot com. You’ll be glad you did.
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