With a pandemic and economic shutdown, you should be able to get the deal of the century on cars now, right? Not so much surprisingly. Let’s look at both new and used vehicles.
Certainly the marketing is telling you there’s never been a better time to buy a new car, but they also told you that last year and will tell you again this summer and fall. Generally, we have not seen much movement in new car pricing. We have seen improvements in some lease and loan terms, but many of those come with strings (ie 0% on 2019 models only or you give up a nice rebate). Why are prices holding up during this economic mess? Mainly because the factories are all shut down. Detroit has announced they will start reopening plants in the later half of May. It will take at least a month from then before new shipments arrive at the dealerships. So the inventory a dealer has today is all he’s going to get until around July. On popular models, we’re already having trouble finding particular vehicles for clients. Does this mean it’s a bad time to buy a car? No, not at all. The deals are slightly improved from earlier in the year; they’re just not the steal a lot of people are expecting. I don’t anticipate material changes in the market until mid-summer when new production starts hitting the lots. Keep in mind also I’m talking in generalities here. There are some models that have materially bigger rebates in the last month or two. Suburbans and Tahoes come to mind, but that’s more of a function of the coming new body style than the pandemic. Speaking of that, the newly designed Suburban/Tahoe that was supposed to be here this summer is pushed back. No official timeline yet but we’re expecting 4th quarter now.
We have seen more pricing movement on used vehicles than new. Used cars have moved materially, but haven’t fallen off the table. According to the April 27th issue of Automotive News, used wholesale prices are down 10-12% in just a few weeks. Highline vehicles have dropped the most, particularly sedans (which have been the softest part of the market for some time now). Interestingly, used retail prices are only down 1%. Apparently a lot of dealers are not ready to face the new reality, but they’ll have to shortly. Our biggest issue with used vehicles is the flow of transactions has slowed tremendously. Of course retail sales are down which means wholesale transactions are down. Many auctions have temporarily closed and volumes were down over 75% (although they’re picking back up now). This means finding the particular vehicle that fits our client’s request has been a difficult process. However, we expect volumes to pick up materially over the next few weeks. In summary, there are some good deals out there, but not as good or as widespread as the hype would have you believe (shocking, I know).
We wrote about the 2021 Suburban & Tahoe that was revealed last month and now GMC has revealed the 2021 Yukon & Yukon XL. Just like the Chevrolet counterpart, it is all new and the biggest new feature is independent rear suspension which allows for better ride but also more cargo space and flat cargo area with third row folded down.
GMC has added a new trim level called the AT4. It is their version of the Z-71. It will geard more towards off-road and will ride a little higher and be leveled out along with other “off-road” design. The Denali trim will also stand out more from other trim levels by having a unique dash with larger screens and more elegant look and feel. Optional on all Yukon/Yukon XLs is a power sliding center console which will reveal locking storage.
Here are some key things to know that are similar changes on the Chevrolet products as well:
- The size difference between Yukon and Yukon XL is a smaller delta than previous models because the Tahoe is bigger which results in 10” more length inside, most of which is cargo area behind the 3rd row.
- Push button gear shift for the 10-speed transmission.
- Engine is same, but improved, 5.3L V8 with a 6.2L V8 standard on Denali. The big news on engines is an optional 3.0L Duramax diesel engine, but it won’t be available on the AT4.
- Rear Entertainment is now dual 12.6” screens on the back of the front seat similar to the Land Cruiser.
- Sunroof is now panoramic, extending to second row seats.
- Trim levels: SLE, SLT, AT4, & Denali.
- Adjustable air suspension will be on the AT4 and Denali, giving 4” of adjustable ride height.
Chevrolet revealed the highly anticipated 2021 Suburban and Tahoe last night. They should be available in the 2nd half of 2020. We are starting our list, so let us know if you are interested in ordering. When the redesigned 2015 came out we had over 60 pre-ordered.
At the beginning of the year we wrote about the new Expedition/Expedition Max and how it had become a real contender in the full-size SUV field. Well, it looks like GM is answering back with the new Tahoe/Suburban/Yukon and has taken a few notes from Ford to improve the best in the market SUV. Besides the total redo of interior and exterior, the biggest standout on the new platform is independent rear suspension (IRS), which Ford has had since 2004. The biggest benefit in this is that it allows for better interior space. The floor is able to be lower resulting in better leg and head room for the third row and allows for a lower and FLAT rear cargo area. IFS also allows for a better and more agile ride. We still have a lot more to learn about the new platform and are waiting for the reveal of the Yukon/Yukon XL and Escalade (though Escalade has a leaked image). For now, here are key points we know:
- The size difference between Tahoe and Suburban is a smaller delta than previous models because the Tahoe is bigger which results in 10” more length inside, most of which is cargo area behind the 3rd row.
- Push button gear shift for the 10-speed transmission.
- Engine is same, but improved, 5.3L V8 with a 6.2L V8 standard on High Country. We also assume it will be optional on the RST like current models. The big news on engines is an optional 3.0L Duramax diesel engine, but it won’t be available on the Z-71.
- Rear Entertainment is now dual 12.5” screens on the back of the front seat similar to the Land Cruiser.
- Sunroof is now panoramic, extending to second row seats.
- Trim levels: LS, LT, RST, Z-71, Premier, High Country.
- The Z-71 goes back to a more aggressive off-road look and capability.
- High Country is new trim level and would be compared to King Ranch. High Country will also come with a 6.2L V8.
- Adjustable air suspension will be on the Z-71 and High Country, giving 4” of adjustable ride height.
This has been our moto from day one. It’s what sets us apart and why our clients trust us with their pre-owned needs. Quality comes with a few costs though, make-ready expenses and time.
Make-ready consists of reconditioning, up to date maintenance, and making sure the vehicle comes with 2 sets of keys, floor mats, owner manuals, etc. We spend on average $2,000 on make-ready while the industry average is $600-$700 for domestic and $1,300 – $1,500 for luxury vehicles. This isn’t because we start with lower quality cars, instead most of the money is spent on what you don’t see, the maintenance. We have seen many vehicles in our shop that still have the paper plates on them come in for hundreds to thousands of dollars in maintenance. We also start with high quality cars that have not been in accidents and are a good platform for the reconditioning we do. With this quality, we back it up with our Brazelton Certified Program. This consists of a bumper-to-bumper 3-month/3,000-mile limited warranty and free Concierge Service (loaner car for life). Also, because of our make-ready process, vehicles qualify for a full coverage extended warranty, tire & wheel policy, and windshield protection.
The other cost of time is in regard to when our clients have us go out and find a vehicle for them. We are very particular on cars we present to our clients. We scour our wholesale and retail outlets and go through hundreds, if not thousands of cars to find one that fits our client’s needs and our standards. Depending on vehicle and flexibility on options it can take 2-6 weeks to find the right car. In some cases when looking for harder to find vehicles it can take 6+ weeks, so give us plenty of lead time when in the market for a pre-owned vehicle.
Occasionally we get some older unique cars, that due to their age we may not be as particular about every single item on them, but that doesn’t mean they are not a good vehicle. However, they’re still inspected just as thoroughly, but we may be more lenient on them to keep cost down, as these are typically more budget vehicles.
Remember, most used cars we sell are ones we go out and find for our clients, though we do stock a few vehicles. Most of these are trade-ins that we know the history on. Others are ones that we sell a lot of (Tahoes, Suburbans, Land Cruisers, F-150s) that we come across and scoop up for inventory. We may not always be the cheapest, but we promise we’ll be the best quality for the money, and we back it up!
Today’s prescribed service intervals happen between 7,000 and 16,000 miles, or once a year. Quick oil change places only look at a small number of areas and employ techs with little or no experience of modern vehicles. They only focus on the limited services they offer, not on the overall health of your vehicle. Just like going to the doctor for an annual physical, your car needs that same physical.
At Brazelton Auto, our service includes an oil change and a “Vehicle Health Report” complete with pictures of potential problems. We pull the wheels off, rotate the tires, check the brakes, belts, hoses, battery, cooling system, all the fluid conditions, wiper blades, lights, and many other things on our 130-point inspection. This gives you peace of mind when you get your car back.
We have trained technicians and service advisors that understand which factory prescribed service interval is correct for your vehicle. Will our service cost a little more? Probably, but it will save you money in the long run. I could give you many examples of people trying to save money and it cost them time or damage to their car.
We know our oil-change service takes longer. That’s why we started our Concierge Service. After joining, you receive a nice, late model loaner car while your vehicle is being serviced or repaired. Just recently we started our “Lifetime Oil Change” service. For a set price, your oil service is done along with our 130-point Health Inspection for as long as you own the vehicle. Call our trained staff for all the details.
As we’ve discussed before, part of the reason we purchased a new car dealership was to gain access to lenders who would not otherwise work with an “independent” dealership. Well our little plan seems to be working, at least to some degree.
We recently signed up with Ally, the former General Motors Acceptance Corp (GMAC). Of course Ally offers a wide range of retail products including all sorts of loans and lease programs. The biggest impact on our operation though is their huge commercial programs. We now have access to one of the largest commercial vehicle lenders in the country.
Products and benefits we can offer through Ally:
- Loans in your personal name or the company name
- Closed-end leases (defined residual)
- Open-end leases (you set the residual but are responsible for any difference)
- Available without a personal guarantee for strong, well established companies
- Upfitting can be included
- Any vehicles from passenger cars to 18 wheelers
- Lines of credit, so adding additional vehicles is fast and simple
- New or used vehicles, with terms up to 75 months
You could certainly get to Ally through many new car dealerships. However, through Brazelton Auto you have access to any make or model under the same Ally account. There’s no need to recreate the wheel every time you need a different vehicle. Don’t tie your people up for hours or days shopping for a vehicle. We can be your one stop shop, insuring the best deals AND the greatest efficiency. Brazelton Auto also offers fleet discounts on multi-vehicle purchases. We can also set up (or work with existing) fleet numbers with any manufacturer.
If you have company vehicles (from a few to hundreds), we’d love to show you how we can bring the same level of service and integrity we’re known for into your company’s operation. We’d love the chance to become part of your team.
First off, Brazelton Auto is still running strong (some clients thought from our last newsletter that we were shutting down Brazelton Auto!!!). I will continue to spend the majority of my time over the coming months at our new dealership, South County of Sealy CDJR. Since I’m now a “seasoned vet” from the new car franchise world, I thought I’d share some observations about this side of the industry with you. I’ve been drinking out of a firehouse now for 2.5 months. A franchise dealer adds a whole new dimension to the game. It is more different than I anticipated.
First, pricing is brutal. Our strategy is to price very aggressively; to give customers a reason to drive out to Sealy. My dealer partners are located in a small town called Gilroy, CA about 40 miles south of San Jose. Despite the small population, they sell 400-500 new cars a month. They see Sealy as a Texas version of Gilroy, and are helping us to get to that volume level. The only way to attract that sort of volume is deep discounts. We price vehicles at a material loss, hoping to make up the difference on trade-ins and the back end (finance, warranties, etc). Fortunately, it seems to be working. We’ve taken a store that historically did 15-20 units and moved 82 vehicles in March making it the first month it has ever broken even.
Much like Brazelton Auto, the success of the store is primarily determined by the people. When the discussions of this store became serious, I called our long time Jeep/Ram fleet guy, Brandon Everitt. I was interested in having him join us, but our immediate need was a good general sales manager. He put me in touch with Roel “Taco” Guerra. Two weeks later Taco was my first hire. Taco brought in a whole new sales team. Brandon joined us a few weeks later. Together they add the expertise I sorely lacked, and they deserve 100% of the credit for turning up the volume.
And I call on their expertise daily. Chrysler has a ton of programs and little ways to bring money to the bottom line, from certified pre-owned programs, to demo allowances, loaner car programs, make-ready allowances, volume bonuses, etc. I’ll be learning for quite some time but lean on these guys to get me though. I’ve spent much of my time where I can add value; used cars and the service department.
All those little programs are needed. It’s obviously a very capital-intensive industry. We stock over 200 new vehicles and about 50 used. Being $10M in debt doesn’t help my sleep at night! Unlike used cars, you have to plan your new car inventory at least 60 days out. We order new vehicles not knowing what the market or rebates will be when the cars finally arrive.
Operationally there are some similarities and differences from Brazelton Auto. We use fixed pricing on new cars (can’t go any lower), but we do some haggling on used vehicles. We stress straightforward dealings though, without the manipulation and games most dealers play. We’re trying to build our reputation while we build profitability. Like Brazelton, our people will be the core of our business. Hire the best and take good care of them, so they take care of the customers.
We have a long way to go, but I’m very happy with the progress we’ve made so far. I’m still working 12+ hours a day but can breathe a bit during the day. I look forward to the day when my time is more evenly split between the two stores, but it’s exciting the see things improve out here daily.
GONE TO THE DARKSIDE: WE BOUGHT A DEALERSHIP!
Well, we bought into and are running a Chrysler, Jeep, Dodge, Ram (CJDR) store in Sealy, Texas! Brazelton’s South County of Sealy is the name (yes, it’s a mouthful). Our partners in the deal are the South County dealerships in California, one of the top 10 CJDR dealers in the country.
Buying into a franchise dealership basically allows us to serve you better, mainly on the lending side. The trend in the lending world has been to cut off independent dealers, and we’ve lost all our best lenders over the last couple of years. Unfortunately too many sketchy dealers ruined it for the good ones. However, if you are tied to a franchise they think you are golden! So now we have access to more lenders which gives us more lending power and even more competitive rates to pass on to our customers. It will also speed up our process as well. As many of you have seen, the process of handling loans went from taking an hour or so to process to taking a couple days (at least).
Some other benefits are access to more pre-owned vehicles through franchise dealer only sales. Of course, this is only to CJDR products, but we sell a lot of used Wranglers and Grand Cherokees. We’ll also be building up the fleet department and CJDR has a great fleet program. Please let us know if you or any of your friends are looking for a very aggressive fleet program!
What about Brazelton Auto?
Brazelton Auto is still here to help with ALL makes and models with an UNBIASED approach to car buying, though many of you have known we have praised the Grand Cherokees for some time (just ask Lewis’ wife). As mentioned before, we’ll have even better lending potential with both leasing and conventional financing. Lewis will be splitting his time between Sealy and Brazelton Auto, particularly in the early stages. Bill will be handling most of the day-to-day management operations at Brazelton Auto. Hopefully you won’t notice a difference, except that Lewis might be a bit slower returning your call.
So, this is an exciting time for us, and more than a little nerve wracking. There is quite a bit more to running a new car store vs our little operation! We are drinking out of a firehose right now, but we are seeing good progress already.
In mid-2018, Ford’s all new Expedition and Expedition Max came onto the market to go head-to head with GMs Tahoe/Yukon and Suburban/Yukon XL. After years of a mediocre product, the new Expedition came out swinging. It’s certainly caught the attention of our customers as well, as we have sold more Expeditions in the past several months than we have in the past several years.
So, what’s new? Everything; new sheet metal, all new interior, upgraded drivetrain, steering, and suspension. However, it shares a whole lot from its pick-up truck counter parts, so there is less worry of the first-year model issues. It’s powered by the EcoBoost 3.5L twin-turbo V6 that puts out 375 HP and 470 lb-ft torque (on the Platinum trim level it is tuned to put out 400 HP and 480 lb-ft torque) and is backed by a new 10-speed transmission that is found in the F-150s. The technology in the Ford is just about unmatched from the simple infotainment and navigation, to safety and towing features, the car can even park itself (kind of). Some of the features offered also seem to be unmatched, from the panoramic sunroof to 2nd row seats that can give access to 3rd row seats easily even with a car seat in them.
The big question from our clients is “how does it compare to the GM products” since that has been our bread butter for years? Well, there is a lot that goes into it. There are things on both that are good and bad, but Ford finally has a vehicle that is bringing a lot of clients away from GM.
On the trim levels, Ford offers XLT, Limited, and Platinum. Within the XLT and Limited trims, each have three package levels. It’s a little tricky to compare apples-to-apples, you have to compare them with certain options within trim levels, but below is as close comparison of some of the more common trim levels we sell. There are some small differences still, but this gets you close. You always have us to call to make sense of it all!
Price wise, they are neck and neck, but Ford may arguably have more bang for the buck. The mistake a lot make is thinking the Expedition is more expensive because they compare the Tahoe Premier trim level with the Expedition Platinum trim level (because they are the highest trim level for each) but remember Platinum level is comparable with the Yukon Denali.
In the end, Ford has a full-size SUV that is making an impact in this market. It’s long overdue after having years of an average product that was lacking power and appeal. Now, to see what GMs next play is!
Everyone has their gift. I consider myself somewhat of an expert at both getting stuck and getting unstuck. “If I had a dollar for every time ….”. Now a lot of times getting unstuck takes a lot of work; but a lot of times it doesn’t. Here are some low effort hints that could get you out of a jam without too much sweat;
- Rule #1 – when stuck in a hole, stop digging! If you’re tire is spinning and you’re not moving, you’re just digging a rut and making the situation worse. This is common sense can apply to so many aspects of life, but it’s regularly ignored!
- Point your front tires straight – If you have a two wheel drive vehicle and your front wheels are turned at all, you’re increasing the resistance for your back wheels to get you moving. Even if you have a four wheel drive, it’s better for all the wheels to be pulling in the same direction than battling each other. Once you’re moving, then turn.
- Rock it – Quickly shift from drive to reverse and back to get a rocking motion going. The momentum may lift you out of the rut. But remember, as soon as you stop moving, refer to Rule #1!
- Partially depress your parking brake – Most vehicles have what’s called an open differential in their axle (sports cars and trucks/SUVs with a tow package are the exception). An open differential means that power from the engine is sent through the path of least resistance. If one back wheel is on ice and the other on pavement, the ice has less resistance so that wheel will spin, and the vehicle does not move. Push your parking brake about half way down (can’t do this if you have an electronic parking brake). That will engage the brakes on both sides of the axle, but not enough to fully stop them. Now the resistance is equal. Both the tire on the ice and the one on pavement will get power, and the vehicle will move.
- Deflate your tires – this can roughly double the “contact patch” between your tire and the ground. Think of a basketball sitting on the court as it deflates. Drop your air pressure into the mid-upper teens, or if you don’t have an air gauge, to where your sidewall is about half its normal height. This works well on all surfaces, but particularly on sand. It does not work as well if you have low-profile tires.
Everyone needs at least one redneck friend. We’ve got you covered.