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Very interesting article

 
Old 02-19-2019, 05:52 PM
  #1  
RonnieC6Z
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Default Very interesting article

Below is an article from The Corvette Blogger. I happen to agree with what is said about the C7 run ending with the beginning of the C8. Enjoy the read.

As the C7 Corvette generation matures, itís only natural that sales of new Corvettes would start to decline from their highs of 40,689 as we saw in 2016. Since then, we have watched as Corvette sales have dropped with each GM Sales Report and a new low was reached last month with just 800 Corvettes sold in January 2019.

Meanwhile the Bowling Green Assembly Plant continues to build new Corvettes which is leading to a huge supply of new Corvettes available.



We recently came across the website for eInventoryNow.com, a dealer-to-dealer resource that helps dealers manage their new vehicle inventories. They keep track of dealer inventories across the country for all GM models and from that, we get the following snapshot of the current inventory of new Corvettes available.

In the February 2019 report, eInventoryNow.com is showing 9,000 new Corvettes availablewhich is a 232-day supply of Americaís favorite sports cars. This is up from 8,000 available Corvettes that were posted in December.

Unfortunately, we donít see this situation improving anytime soon.

Customers purchase new Corvettes either by ordering a new one from a dealership and having it built to their specs or finding an existing new Corvette for sale at the dealership. Dealers replenish those sales by ordering new Corvettes in popular colors and options for their inventories. In both cases, the cars are paid for either by the customer or by the dealer at the time they are invoiced.

Dealers continue to order new Corvettes for their inventories because they donít want their allocation numbers to drop. Passing on available allocations now could lead to fewer Corvettes available to them in the future. And for the larger dealers, this is especially important because the C7 Corvette sales that happening right now will contribute to the kind of allocation they can get when the C8 comes available.

Meanwhile, Chevrolet hasnít shown any support for new Corvette sales in terms of rebates or incentives, or as dealers call it, ďcash on the hoodĒ since late last year and they routinely fail to show any discounts on their ďCurrent OffersĒ page at Chevrolet.com.

With the new C8 Corvette generation approaching, we had expected Chevrolet to find a way to keep customers coming back either through incentives or a new model or special edition. For example, the final year of C6 brought out the unique 427 Convertible and the 60th Anniversary package available across the line-up, the C4 Corvette offered both a Collector Edition and a limited Grand Sport model, and the end of the C3 sale the first Collectors Editions offered. So they have been through this rodeo before.

Since production of the C7 Stingray which began in the summer of 2013, a total of 177,000+ C7s have been produced over the six model years through January 2019. Many Corvette enthusiasts already own one of the four distinct models and without anything really new being offered by Chevrolet, they are holding on to their current cars.

Chevolet did reveal the four new 2019 Corvette Grand Sport Drivers Series models last month which may pull in a some passionate Corvette Racing fans, but we donít anticipate the new cars setting any sales records. Meanwhile, the C8 Corvette is dominating the news which gives owners even more incentive to hold off on any new Corvette purchases until the new car is revealed.

If nothing else, this situation with 9,000 Corvettes available across the country should nix any further talk of the C7 and C8 Corvette being produced together in the future. When the new mid-engine Corvettes arrive (hopefully later this year as has been the plan), those existing C7s on dealer lots will help to fill the void for those customers who want the traditional front-engine configuration with copious storage space, or maybe a manual transmission Corvette so they can row their own gears!

Maybe GM is going pedal to the metal with production because they know they will need inventory in the case of a plant shutdown to retool and prepare for the C8s. But with this much inventory available and a new Corvette on the way, we donít see this ending very well for Chevrolet and its dealers. But for those consumers wanting to buy a C7 in the age of the C8, it will be a buyers market for sure!


Source:
eInventoryNow.com

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Old 02-19-2019, 06:03 PM
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Walter Raulerson
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I thought their allocation was based on SALES.
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Old 02-19-2019, 06:39 PM
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Indirectly it is. Every car the dealer gets he paid GM for it. He turns around and resales it. Every car that sits on his lot he pays taxes on too. So its in dealers best interest to flip them as quick as possible. So the more the dealer sells the more he buys from GM. If he can't sell them then I doubt he would order more.
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Old 02-19-2019, 06:42 PM
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All great points. For those wanting an FE they will have options at a nice discount, for those wanting an ME we will be paying MSRP which will Help GM recover the losses on any incentives they will need to create to move C7s. Sounds like a Win Win for the manufacture.

Bad news for ME buyers we will have to wait




Originally Posted by Eric Reeves View Post
Indirectly it is. Every car the dealer gets he paid GM for it. He turns around and resales it. Every car that sits on his lot he pays taxes on too. So its in dealers best interest to flip them as quick as possible. So the more the dealer sells the more he buys from GM. If he can't sell them then I doubt he would order more.
Yep plus most dealers today are paying Floor Plan, which is why I say a car that sits past 90 days is costing that dealer $$$$.

Last edited by Steven Bell; 02-19-2019 at 09:09 PM. Reason: Merged Posts
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Old 02-19-2019, 07:07 PM
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Fasttoys is right, above. If you watched carefully what happened in '12 and '13 just before the C7 came out, the smart dealers who knew how to sell, sold a lot of "leftover" C6s. A lot of those cars in a relatively short period of time.

GM worked with the dealers and the dealers worked with their highly competent sales staff, and each came out for the better. All the parties are here again, and know the plan of action. There is little reason to put on incentives right now, but the time is drawing close. I hope.
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Old 02-19-2019, 07:41 PM
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Also important to know. With interest rates rising the floor plan cost has gone up substantially in the last year or so for all dealers. So inventory management is very important to any dealer these days moreso than ever. I'm in the business so I know first hand. It has increased the cost of doing business quite a bit recently.

Originally Posted by AORoads View Post
Fasttoys is right, above. If you watched carefully what happened in '12 and '13 just before the C7 came out, the smart dealers who knew how to sell, sold a lot of "leftover" C6s. A lot of those cars in a relatively short period of time.

GM worked with the dealers and the dealers worked with their highly competent sales staff, and each came out for the better. All the parties are here again, and know the plan of action. There is little reason to put on incentives right now, but the time is drawing close. I hope.
More than then likely you will see good incentives on vettes in the spring.

Last edited by Steven Bell; 02-19-2019 at 09:10 PM. Reason: Merged Posts
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Old 02-19-2019, 08:43 PM
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I am thinking that with the plant expansion the ME could be built without any interference from the existing FE line. Just a guess.
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Old 02-19-2019, 10:09 PM
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232 -day supply! Time to trade up.

https://www.motor1.com/news/306035/c...available/amp/
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Old 02-19-2019, 10:35 PM
  #9  
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GM is not putting any cash on the hood of the C7 to "make room" for the ME because the ME is not close to production.
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Old 02-19-2019, 11:22 PM
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inventory build is further evidence that the C8 is coming, as if all the PR wasn't convincing enough. despite other posts to the contrary, dealers with help from GM, are heavily discounting C7 cars. recently, ads for 25k off MSRP for Z06 3LZ, were advertised. even higher discounts are likely. if i didn't already have a C7 Z06, i might consider a C7 ZR1 with a heavy discount. of course, i might have to keep it for 25 yrs before it was worth what i paid.
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Old 02-19-2019, 11:35 PM
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good luck waiting for a zr1 with a big discount. z06 was severely overproduced while zr1 production has been constrained which will keep demand and value high.
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Old 02-20-2019, 09:08 AM
  #12  
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The massive inventory of 2019 Vettes offers no evidence one way or the other about the C8. It probably does indicate that some buyers are waiting for the, if and when, new model. It also says the C7 simply isn’t selling right now. Here in the Midwest, ice and snow doesn’t help winter sales much. And in the Midwest, the only GM incentives I find posted this morning are lease specials on the base car. No real factory money to move the inventory.

My humble opinion is that C7 sales are just flat, like so many other “cars.” Were living in a new era of trucks and crossovers, not to mention an aging population. Even my wife just traded her nice Audi A6 for a Caddy XT5, her first ever crossover which is as big as our Grand Cherokee. And,twicei in the past month, once just this week, I was sent emails or texts about C7s for sale because the owner passed away. The wait for the C8 is killing me too, but I don’t care for the C7, so I’’ll wait announcement for the C8 is as promised, I just might be a very early buyer as I was with the C6.
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Old 02-20-2019, 10:11 AM
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I can say that if the right C7 popped up in the lot at the right price, I'd have a hard time keeping my wallet in my pocket. Fortunately I just looked at that einventory link and any dealer even remotely close to me doesn't have one of the combinations I'm looking for.
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Old 02-20-2019, 11:18 AM
  #14  
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Originally Posted by Walter Raulerson View Post
I thought their allocation was based on SALES.
It is to the dealer who buys them! They will be sold (hopefully!)

Originally Posted by fasttoys View Post
All great points. For those wanting an FE they will have options at a nice discount, for those wanting an ME we will be paying MSRP which will Help GM recover the losses on any incentives they will need to create to move C7s. Sounds like a Win Win for the manufacture.
Hmm, GM gets no help, as Dealers buy at a discounted dealer cost AND GM will have to supply incentives for exiting dealer C7 inventory once the C8's are available to get them to buy C8's.
Originally Posted by tcinla View Post
232 -day supply! Time to trade up.
What is scary is that 232 day supply will only grow with time! GM has really screwed the dealers. They will have to help them sell C7 inventory in stock to sell them C8s! That will lower C7 prices enough and take away the number of buyers for C8s.

I always keep in mind what an exec from our Brazilian company said in the Carter days when our interest rates 15+%. Recall home mortgages were 17/18+% and we were "lucky" to get an assumable at 14%!

This Brazilian exec, when their inflation was 1000+% in the late 1980's, said when folks don't trust that you will pay them back accepting 15% for your bonds, the rates quickly double to 30% and then 100% etc. The longer the C8 is delayed the worse it gets!

Just Sayn'

Last edited by JerryU; 02-20-2019 at 11:19 AM.
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Old 02-20-2019, 08:40 PM
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Initially when a high demand product comes out the dealers that sold the most get more allocation. When the factory starts producing more than the market is consuming, they keep making them and send them to the dealers. They have no choice but to take them.That's why you'll see some small dealer in the middle of nowhere with 3 or 4 Corvettes. Better to sit on dealers lots than at the factory staging lot. They can always be cross shipped later. How many to over produce I'm sure is an accounting science that occasionally we see go wrong.
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Old 02-21-2019, 07:02 AM
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Originally Posted by wilfie View Post
Initially when a high demand product comes out the dealers that sold the most get more allocation. When the factory starts producing more than the market is consuming, they keep making them and send them to the dealers. They have no choice but to take them.That's why you'll see some small dealer in the middle of nowhere with 3 or 4 Corvettes. Better to sit on dealers lots than at the factory staging lot. They can always be cross shipped later. How many to over produce I'm sure is an accounting science that occasionally we see go wrong.
Not quite what you are saying.

My understanding is GM does not make the decisions on what colors, options etc OR just ship cars to dealers.

They have financial incentives to get dealers to buy more of what the dealer thinks they can sell! May be extra incentives for certain options as well.

Last edited by JerryU; 02-21-2019 at 07:05 AM.
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Old 02-21-2019, 04:45 PM
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This isn't rocket science. It happens with every generational shift, but is more pronounced given the C8 will be such a massive change. Dealers are willing to sell C7s at a loss to maintain allocation to make the gravy selling C8s at MSRP or higher. If you're a late adopter of the C7 you can get amazing deals. Same thing happened with the 2004 C5s and 2013 C6s. A buddy bought a brand new 2004 C5 Z06 for $41K if I recall ($52K sticker).

If the C8 is an $80K+ car I'm buying a C5 vert to supplement my C7 trackday car. If it's under $70K then the calculus changes for me. If a base no-option vert is mid $60s I'm a buyer.
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Old 02-21-2019, 05:19 PM
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Originally Posted by JerryU View Post
It is to the dealer who buys them! They will be sold (hopefully!)




What is scary is that 232 day supply will only grow with time! GM has really screwed the dealers. They will have to help them sell C7 inventory in stock to sell them C8s! That will lower C7 prices enough and take away the number of buyers for C8s.

I always keep in mind what an exec from our Brazilian company said in the Carter days when our interest rates 15+%. Recall home mortgages were 17/18+% and we were "lucky" to get an assumable at 14%!

This Brazilian exec, when their inflation was 1000+% in the late 1980's, said when folks don't trust that you will pay them back accepting 15% for your bonds, the rates quickly double to 30% and then 100% etc. The longer the C8 is delayed the worse it gets!

Just Sayn'
Originally Posted by JerryU View Post
Not quite what you are saying.

My understanding is GM does not make the decisions on what colors, options etc OR just ship cars to dealers.

They have financial incentives to get dealers to buy more of what the dealer thinks they can sell! May be extra incentives for certain options as well.

JerryU

It's not easy being a car dealer today & good luck making a profit selling new cars, most of the control is with the manufacturer. Another reason we keep seeing smaller independent dealers getting bought out by larger national chains. When GM tells a dealer HEY you want some new C8's well we have over a 1000+ C7's you need to purchase first or you are out of luck. Manufacture holds the cards. Most car dealers don't actually own the cars they're selling. There is usually several million dollars worth of inventory on a typical dealer's lot, and those cars are all owned by a bank or finance company. The dealer borrows money through what's called "floor plan financing" in order to keep the inventory on their lots. Floor plan financing is a type of short-term loan that is paid off in 30 to 90 days, the time it normally takes to sell a car. A typical new car costs a dealer about $5 to $10 in interest per day. So if a car sits on the lot for 30 days, the dealer will be charged $150 - $300 in interest payments. This is why dealers want to sell cars as quickly as possible - to reduce their financing costs and increase profits. Most manufacturers reimburse these finance costs through what is called Dealer Holdback. This is usually 2 - 3% of the invoice price of the vehicle. On a typical $28,000 car, a 2% holdback would amount to around $550. If the dealer sells this car in 30 days and incurs financing costs of $300, then they will make a profit of $250 on the holdback. If a car has been sitting on the lot for a long time, the financing costs will eat up all the potential profit and the dealer may have to sell the car at a loss. You can usually get the best deals on cars that have been sitting on the lot a long time since dealers are anxious to get rid of them and cut their losses.

Last edited by fasttoys; 02-22-2019 at 09:38 AM.
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Old 02-21-2019, 07:56 PM
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don't want a ZR1. need something with better traction. can't quite afford 340k for a 720s. just hoping that C8 is lite enough with enough power to run low 10's w/o DR's. my C7 goes mid 10's with DR's and a huge burnout, but is easily beaten in a typical non race street light take off by a standard 911.
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Old 02-21-2019, 07:59 PM
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if the C8 is 70k, it will be a base car. to compete with other mid engine supercars, it will need about 800 hp and is likely to cost 140k just like the outgoing ZR1.
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