Unveil Auto Industry Secrets: Best Time to Buy a Car?

Ray Shefska 0:00
If you were to poll most Americans, and they have 83% said they didn’t feel as if they can afford to buy a new car. 83% Okay, that’s a huge number who says, I can’t afford to I can’t afford to play in the sandbox anymore.

James Connor 0:22
Hi, and welcome to Wealthion I’m James Connor. And today my guest is Ray Shefska. Ray and his son Zach run a YouTube channel called CarEdge and Ray is going to give us the straight goods on the US auto industry. And whether or not now is a good time to buy a car.

Ray, thank you very much for joining us today. How are things in Ventnor City, New Jersey?

Ray Shefska 0:46
Well, it’s warm today. And as I like to say this is probably the windiest place on earth. But it’s beautiful here at the Jersey Shore. If you’ve ever been to Atlantic City, then you’ve almost been to Ventnor.

James Connor 1:00
Well, I’m gonna have to check it out sometime.

Ray Shefska 1:02
You’re not really missing much, but I kinda like it here.

James Connor 1:06
Ray, I am looking forward to this discussion we’ve had a lot of our viewers asked to have an auto expert on so you’re that guy. And typically we discuss the economy. So I want to get discuss what’s happening within the auto industry and across the US and if there’s any read through to the economy. But before we do that, why don’t you just tell our viewers who you are and what your background is? Well,

Ray Shefska 1:29
Well, as James said, my name is Ray Shefska. Spent 43 years in the retail automobile business, managing and dealerships running dealerships. Even working, starting as a salesman and working my way up. Four and a half years ago, my son and I started a business called car edge, where we figured we could help people navigate the car buying experience, using my insight information to well provide people with the same information that dealerships have. And that started four and a half years ago, and it has grown dramatically. We started on YouTube. And we also have a website called car edge.com. With the free guides, all kinds of tools, buy sell, tools, anything that you need for for the automotive business, we’ve got it to help you with figuring out how to buy your next car.

James Connor 2:28
And why don’t you just tell us what you do on your YouTube channel and how often you publish or release?

Ray Shefska 2:35
Well, we have two main channels on YouTube, we have the CarEdge channel, where literally we we released three videos a week. And that is I’m trying to think the days that we actually do it. I believe it’s Wednesday, Saturday and Sunday. And those videos typically are anywhere from eight minutes to 15 minutes long, where we delve into a particular topic that that we can get fairly deep into to really explain to people what’s going on. And then Monday through Friday on the Ray and Zach channel on YouTube, we do our daily news that you can use show where we delve into the news of the day to see what’s going on in the automobile business and that those shows normally run anywhere from 30 to 45 minutes.

James Connor 3:27
And so those two channels keep you extremely busy.

Ray Shefska 3:30
Yeah and I forgot to mention my son makes me work on Saturday night because we do a Saturday Night Live show on on the current channel as well at seven o’clock and that that normally runs from 7pm to 8pm. Every Saturday. He’s just a slave driver. He didn’t like the fact that I retired after 43 years.

James Connor 3:49
And I’m curious how many people show up to that live show on Saturday night?

Ray Shefska 3:56
Well, typically those those shows ended up with a viewership of somewhere around 150,000 It’s pretty crazy. The between the two channels, the current channel and the Ray and Zach channel, we reach somewhere between six to 7 million views a month.

James Connor 4:16
So right let’s get into it. I have a real love hate relationship with dealerships. I love going into the dealership and checking out the new cars. But I hate the whole negotiating process. Because every time I buy a new car, I feel like I’m getting screwed over and there’s always like 10 or 20 additional charges that I can never make sense of on the invoice and then they’re always pitching you on new services like tire insurance. Why don’t you just take us through this whole process and how can I better prepare myself so I’m not getting screwed over?

Ray Shefska 4:49
Just so you know I have that same love hate relationship with it. The way it’s designed is Customers are kind of kept in the dark as to everything that’s involved in the sale. And as I like to say, car dealership personnel are some of the most creative people on the planet. And what I mean by that is they can create these visions of you being able to come in and buy something at a particular price, until you actually get there. And then that’s not really the price. And that’s normally where the friction begins. That’s typically where the customer goes, damn, I hate dealing with these people, these these are not like nice human beings. And, and it’s only because the car business has has made it this way. dealership personnel are trained to turn everybody into what’s known as a payment buyer. No, they don’t want you to know what you’re actually paying for the car, they want you to know and concentrate on what your monthly payment is. And the reason for that is if all you’re concentrating on is the monthly payment, then they can manipulate the price they can manipulate the amount of time that you’re paying back that loan. So they can make more money when you’re just looking at your monthly payment, and not what we like to say, the out the door price of the vehicle, what’s the selling price of the vehicle, including all fees? And that’s the part as a customer, you really want to concentrate on? Not the payment.

James Connor 6:39
And how can I better prepare myself though, when I go into a dealership? How can I know what the real prices are? Maybe how much their margins is, how much room do I have to negotiate?

Ray Shefska 6:50
You have to figure on most vehicles, there’s somewhere between five and 10% of margin built into the selling price. Plus, there’s some what’s known in the industry is under the line money. And what I mean by that is, you know, there’s an invoice price that the dealer pays. And then there’s money that they get from that invoice price. For instance, there’s something called hold back and hold back is usually one and a half to 2% of the base MSRP that the dealer collects after they’ve sold the vehicle. And then there’s advertising assistance, that the manufacturer pays the dealer, and that can run 567 $100 A car. And dealers don’t pay cash for their vehicles, they finance them just like customers do. And that’s called floor planning your inventory? Well, the manufacturers give dealers floor plan assistance, that’s more money that’s under the line. And floor plan assistance can be another 567 800 hours. So there could be $2,000 of money that dealerships are getting that that are below the the invoice amount that they actually paid. So what you just always want to concentrate on is the selling price. And if you know there’s usually five to 10%. If the vehicle has an MSRP MSRP of $50,000. Well, there’s probably close to $5,000 worth of margin. So work when negotiating that $5,000 down to something that’s more amenable to both parties.

James Connor 8:38
And then I guess the other aspect is like you brought up a good point of boat dealerships have to finance their inventory. So I guess they’re always trying to move that inventory, right. It’s no different than any other business. Because the longer you you’re sitting on inventory, the more it’s costing you. And maybe you can take us through that how that process works, how many cars the typical dealership would have, and in maybe how many days worth of cars or inventory they would have.

Ray Shefska 9:06
Dealerships like to turn their inventory about every 60 to 75 days. floorplan assistance can cover the cost of financing those vehicles anywhere from 30 to 60 days depending on the manufacturer. So the quicker you turn it, the less expensive there is in having that vehicle sit there. During the pandemic when there was a shortage of cars. The floor plan assistance from the manufacturer actually became a profit center for dealers because everybody was selling their cars well before they had to make any interest payments on them. So whatever the manufacturer gave them was a profit. We have seen today where what in many months might have been a 15 or $20,000 profit to the dealerships with inventory building back up again, that has gone from a 15 to $20,000 profit center to $100,000 a month or more expense. So if you go, the best way to buy a car, the cheapest possible way is to pick out the model you want go to the dealership and say, I’m interested in x, what’s the oldest one of those that you have in stock? Because the older that vehicle is in stock, the more days it’s spent on the lock, the greater the motivation is for the sales manager to make that car go away.

James Connor 10:46
Interesting. Okay, so another area that always frustrates the hell out of me when I go to the dealership, is after sales service, okay, I take it in, you know, whatever, let’s just say 1000 1000 miles, and I gotta take it in and get it serviced. And every time I go in there, they’re charging me another 1000 bucks. It says, And I’m I’ve always been told this is another big profit centers. It’s true.

Ray Shefska 11:12
Yes, as the service, the parts and service departments are really the largest profit center in the dealership, there’s, there’s a term in the business called service absorption. And what service absorption is, is they want the service department to produce enough profit, that it’ll cover a minimum of 70% of the dealerships total expenses. So that sales only has to cover 30%. Good stores that have real strong service departments that serves absorption could be at 90, in some cases in excess of 100%. So they produce enough profit to cover every expense in the store. And so whatever they sell new car wise, or used car wise, is just pure profit. So yes, service department is, is a very important aspect of the auto industry. The service advisors are trained just like salespeople are to sell you items so that they can produce more profit for the service department. And just between you and me, James. That’s how many of the service advisors get paid. They they get a commission they they get a piece of what they produce every month.

James Connor 12:41
Wow. I didn’t know that. If you’re less why they’re always trying to upsell you.

Ray Shefska 12:47
Oh, of course, yes. I mean, they’re, you know, it’s not just salespeople that are selling the cars. It’s the service advisors or the service salespeople.

James Connor 12:58
And Ray, one of the things I’m always debating is whether or not I should buy a car or lease a car, how do I determine what’s better for me?

Ray Shefska 13:07
Well, somebody once said, who was much smarter than me, a guy by the name a Getty had an oil company, small oil company of some kind, he said, You, you buy things that appreciate in value. And you lease things that depreciate in value, I can assure you that real 99.9% of all the cars out there depreciate in value. So I don’t know what the point of trying to own a depreciating asset is. But if you ask me, I leased my cars. I don’t buy them, because I look at them as a depreciating asset. But it depends on on the person and how long you’re anticipating keeping the car how many miles you’re planning on driving the car. Leasing doesn’t necessarily make sense for all people. My wife, God bless her when she was alive. She hated the fact that I leased cars, she would look at me she goes, but at the end of three years, we We own nothing. Yeah, but we we’ve used this car for three years. And now we’re going to use another brand new car for the next three years. But we we don’t have anything to show for it other than the use of the vehicle. So it depends what your comfort level would be with leasing something as opposed to owning it. Now. Realizing that leasing it, typically you can lease a more expensive car for a lower payment than you can financing that car. It just depends on your comfort level with a leash.

James Connor 14:49
So that’s a good overview of how the auto industry works and how dealerships make their money. Why don’t we tie this all into the economy? And maybe you can just provide us with a An overview of what’s happening in the auto industry in 2024. And just as a reminder, the US economy is growing very strong three to 4%. annualized, the jobless rate is very low. It’s been below 4%. Now for 25 consecutive quarters. So we got a very strong economy. What’s happening within the auto industry? Are we seeing strong sales?

Ray Shefska 15:23
Well, yes, and no, the sales numbers that get reported seem to seem to indicate growth. But when you dig a little deeper into the numbers, you notice that the sales that have really increased is the percentage of sales that are fleet sales, to rental car companies, to governmental fleets, to large fleet buyers, retail side of things has has slowed or even stagnated to a certain degree. And there’s two things in my opinion that that contribute to that. Affordability. If you were to if you were to poll most Americans, and they have 83% said they didn’t feel as if they can afford to buy a new car 83%. Okay, that’s a huge number who says I can’t afford to, I can’t afford to play in the sandbox anymore. And that’s because manufacturers during COVID, with Chip shortages, and everything else, only wanted to produce high profit margin vehicles, high priced vehicles. And when interest rates were next to nothing, it made it easier for people to be able to buy those. Now with inflation and interest rates as high as they are trying to keep a an affordable monthly payment has become harder and harder for most people. So even though sales are up, there’s fewer people that are actually in the market who feel as if they can afford to be in the market. Here’s an interesting stat, at least in my mind. 17.3% of all people in the United States who financed a car, last quarter had a payment of $1,000 or more a monthly payment of $1,000 or more, I make a pretty decent living. I don’t have a lot of expense. But I sure as hell couldn’t afford $1,000 a month for a car payment.

James Connor 17:33
And then when you throw on fuel maintenance, insurance,

Ray Shefska 17:37
Exactly. You know insurance has gone up about 25 30% gas has been is going up again. You know, everywhere you look, it’s more and more expensive to maintain your your vehicle and depreciation of the vehicle. So, you know, I just if somebody has a car payment of $1,000 a month, and say they spend 200 hours a month in gasoline, now they’re up to 1200 hours a month and insurance is another 200 hours a month. Now you’re up to 1400 hours a month and then maintenance. Maybe that’s 100 hours, you like 1500 hours a month? How much money do you have to make to be able to afford to spend $1,500 a month just for transportation? I mean that that to me seems out of whack.

James Connor 18:33
Ray, when did, I’m curious interest rates started going up in March of 2022. When did you notice this slowdown in retail sales?

Ray Shefska 18:43
I was gonna say probably close to two years ago, you could you could see it happening in real time. You know, every month. Most manufacturers report Versailles. And you could you could look and the headlines and in automotive news, which is the major automotive publication, you know, sales up or up this but then when you dig into the article and you’d see that, that for instance, in I think it was February 44% of Nissan’s sales in the United States were to fleet customers. When you start seeing the percentage of sales that are fleet sales, you can start to extrapolate that. And I know Zach and I talked about this all the time that I dumped it we have an affordability issue. Most people feel like they can’t afford to participate and I just kept sensing as inventories kept growing and interest rates kept going up that sales were really somewhat stagnant as compared to where you thought they might have gone. If interest straights were still at 234 percent, you know, the average new car interest rate in the United States last month was probably around 9%. About 14% on pre owned cars. Now, that’s not saying you can’t find interest rates lower than that when manufacturers offer specials. But if you don’t qualify for those specials, your monthly payment just We have done videos about how, how much more the payment becomes when the interest rates 9% compared to four and a half percent or 4%. The payment might go up 150 $160 A month higher when you’re at that higher interest rate. And the other thing that we’ve noticed is that people are extending the length of time that they’re willing to finance it for. When I started a long a long loan was 36 months, the average loan at that time was 24 months. You know, if you wanted to really take some extra time 36 months, then it went to 4860 72 people finance for 84 and 96 months that’s that’s crazy. There was we just did a story the other day about somebody that that got a Kia Evie nine and their payment is $1,800 a month. Okay and and the total that they’re paying back in interest in everything else over the life of the loan. That vehicle it’s a kid mind you turned out if they make every payment it’ll cost them over $152,000 for a Kia so when you see things like that, you realize that there’s too many people that are being priced out of the market, there needs to be lower priced, entry level vehicles and entry level in my mind is 20 to $30,000. Last month, Chevrolet the Chevrolet Trax which is a $25,000 and below price point vehicle actually outsold all Cadillac. So they sold more Chevy Traxxas last month than Cadillac sold Cadillacs. That it just indicates that there’s a huge market for inexpensive entry level vehicles.

James Connor 22:46
So a few things I want to ask you here. So first of all, your point about the fleet sales, yes, on 44% of their sales were to fleet, I guess that’s a one off is that your point? That’s a one off sale.

Ray Shefska 23:00
Well, It they couldn’t find retail buyers, they held their they’re begging their dealers to take inventory. And when the dealers won’t take the inventory, the manufacturer has to figure out ways to move it. And if they can’t move it to their dealer body, then they then they go on approach their fleet customers. And they’ll cut special deals for their fleet customers to take cars.

James Connor 23:26
So with this slowdown that you’re seeing with retail sales, what’s it doing to pricing on both new and used cars. And maybe you can also tell us about what’s happened the inventory levels.

Ray Shefska 23:38
Well, inventory levels have grown dramatically. Two years ago, there were about 900,000 new vehicles, either on the ground or in transit to dealerships that were available on a monthly basis. Pre COVID. That number was 3.4 to 4 million vehicles every month. Today that those inventory levels have built back up to about 2.8 million. So you can see inventory growing, you can see dealers costs associated with that inventory growing and we’ve seen sales stagnate. What we’re also noticing is we just talked about this yesterday the average transaction prices have begun to go down. Two years ago the average transaction price for a new vehicle was was just under $50,000. Today it’s just over $45,000 So they’ve gone down almost five grand in the past two years. Excuse me, I think it was just over $44,000 Now the ever transaction price has gone down because a the dealership become more motivated to lower the price of the vehicle. They don’t want sitting on there what the manufacturers have increased their incentive spend to get people to buy vehicles. Prior to COVID. About 11% of the cost of the vehicle, the transaction price was actually covered by manufacturer incentives 11%, that number dipped down to about 2%. Today, it’s about 5.8%. So incentive spins from the manufacturers have increased to help lower the average transaction prices. And then we’ve noticed that the big profit center for the dealers, which has always been pickup trucks and SUVs, will the pickup truck market has been contracting in the first quarter, it’s down almost 5%. So it’s forcing manufacturers to look at what it is they’re producing. And they’re looking now at figuring out ways to produce less expensive vehicles at a lower price point than the big profit center vehicles that they had been producing that are now sitting.

James Connor 26:16
One of the interesting points that you mentioned was that the inventory levels right now are 2.8 million versus Yes. Prior to the pandemic, it was over 3 million. And I’m surprised to see that are here that because interest rates were a lot lower, right, prepaying genetically, and now, interest rates are a lot higher, I would think the inventory levels would be a lot higher now. But they’re not. Maybe they’re gonna get a lot higher in the coming year.

Ray Shefska 26:44
Well, my suspicion is, is that they will they that during the pandemic, you know, every one of the manufacturers said, Oh, we’ve learned our lessons, we’re we’re only going to build what people want. We’re going to build to order, we’re not going to build to stock. And and at that point, they thought they want to keep inventory levels somewhere between 2.2 and 2.4 million. Well, let’s face it, one thing manufacturers usually do well as the manufacturer, and they don’t want to have a stop. So they just kept building vehicles and and they kept shipping them to dealers, and inventories kept building back up, and they swore they wouldn’t let it happen. But yet it’s happening and probably, I don’t know, I would think by by June or July, we’ll see inventory levels of 3 million or slightly more. Some manufacturers are are begging literally begging their dealers to take inventory. not to pick on Nissan again. But they were begging they were offering dealers extra money off on the vehicles if they took them. And most of the dealership we’re not interested in the stolen answers brands of dealerships Chrysler Dodge Jeep Ram, the amount of inventory that has been turned down by their dealers keeps growing month over month. So they’ve produced vehicles. And they’re they’re having a difficult time getting their dealers to actually take them. The only way they’re going to get their dealers to take them is to increase the incentives, whether it be customer incentives or dealer incentives that the dealers would be able to use to lower the prices of the vehicles to make them more appealing to a larger audience.

James Connor 28:42
So inventories are going up across the nation and incentives are going up. What’s this doing to pricing and I guess that might be a tough measurement given that there’s such a wide range associated with cars.

Ray Shefska 28:55
An interesting statistic, in the first quarter of 2023 31% of all new vehicles that were sold, were sold at above MSRP. In 2023, the first quarter in the first quarter of 2024, that number dropped to 16%. So dealers are understanding that they can’t ask for Well, let me rephrase that they do ask for it. They’re they’re just not as they’re just not expecting to get it when they ask for it now as one of the things that Zack and I have seen and and at car edge we we have courage coaches that actually help people buy cars. And literally, we probably work hundreds if not close to 1000 deals a month with customers. So we see what kind of discounts are available. How You can work a deal or to get a better deal, depending on what region of the country you’re in things like that. And what we discussed with customers. In a lot of the videos, you know, we’ll say prices are going down and everybody in the comments always, but yeah, but not in my neighborhood? Well, just because the advertised price isn’t lower than what it had been, doesn’t mean that if you actually went into the dealership, and and threatened to take that vehicle home, that they wouldn’t work with you to get you a lower price in order to facilitate that happening. So yes, many dealers still ask for additional dealer markup, market adjustments, whatever it is. And that’s just an ask, they’re hopeful that that when you walk in, you’ll go, Okay, well, I guess I have to pay that the savvy or buyer understands that you don’t have to pay that. You just have to negotiate it off, and then some. So it’s, even though prices are still high, and many of the advertised prices are still high. Dealers are more motivated than they have been. Due to the cost of carrying inventory and everything else to to allow for a lower price in order to move the metal as we say.

James Connor 31:31
It sounds. I mean, I don’t know, I guess I’m kind of astounded by the fact that to buy a new car in the US, you’re paying 9% To buy a pre owned car, you’re paying 14%. I’m surprised on average, I’m surprised prices aren’t significantly lower, like I can’t believe they’re still moving inventory.

Ray Shefska 31:48
Well, they’re still moving enough, but not as fast as they had been. So that’s why we’re seeing prices slowly coming down. If if the Fed doesn’t cut interest rates, and you know, the most recent talk has been, well, perhaps we’ll have to raise rates some more to fight inflation. Well, if that’s what happens, then. dealers and manufacturers are going to continue to be pressured to lower prices even further. And more quickly, I would

James Connor 32:25
think. And so so far, discussion has been more focused on new cars. But what’s happening with used cars? Or is that part of the market? Well, you already said that if you financed a pre owned car, you’re paying 14%. So I can’t imagine that side of the market is very robust.

Ray Shefska 32:44
Well, average transaction prices for used cars have gone down as well. But there is a shortage, there’s still a shortage of good quality, younger, pre owned cars, 1234 year old cars. And the reason for that shortage is during the pandemic, when there was the chip shortage. Globally, there were about 15 to 18 million vehicles that were scheduled to have been produced, that were never produced. And since those cars weren’t produced, those were potentially lost sales. For instance, if if 10 million of those 15 80 million would have been cars through the United States, typically about 60 to 70% of people who buy a car trade in a car. Well, if those 10 million potential sales were lost, there were six to 7 million trade ins that were lost. So there’s just this natural shortage of vehicles out there. And during COVID, we saw a phenomenon that you very rarely see. And that was used car values, appreciate it. So if you had leased a vehicle, and typically, when leases are up the residual value that you as the customer can buy it for if you wanted to. Typically the residual value was higher than what its true market value is during COVID shortages. residual values were actually 25 to 35%, below what the market values of that vehicle was. So people didn’t turn in their leased cars. They bought them because there was money to be made by buying them. They could buy it turn around and sell it they could make 567 $1,000 Or they knew how how they had treated the car and they knew they could buy it for 30% below its market value. So those were additional cars it never made it to the used car side of things. So there’s, there’s this shortage of used cars that will probably continue for the remainder of the decade. Even though used car values have come down about 15% from their high watermark came down 15% year over year, just in March. They’re still well above where they had been. And and probably will continue to, to remain at a much higher level than the historically should have been. If that makes any sense at all.

James Connor 35:31
So you just mentioned something else that I want to ask you about. And you just mentioned about trade ins. Yeah, this is, this is another area where I feel like I’m getting screwed over. Okay. So I go into buy a new car, and they say, oh, no, don’t worry, don’t worry, we’re gonna give me a great deal here. And maybe, you know, they give me 10% off MSRP. But then on the trade in, that’s where they get me. Any, do you have any words of advice there when it comes to trading in?

Ray Shefska 36:01
Well, the words of advice when it comes to trading in is one of the things that we offer on the current website, is the ability to get instant offers for your vehicle from sources in your market area. So you can plug in the information about your car, miles transmission, year, make an answer a few questions, and and get offers as to what dealers would be willing to pay for that. That’s valuable information in the sense that you can utilize that when you when you go to a dealership and you try and trade it in. And they say well, we’ll give you 25,000 for your car, and you go, yeah, but but Carmax said they would give me 30. And here’s the written offer, or Carvana said they would give me 29,000. Here’s the written offer. So the other thing you can do is you can contact local dealers that would possibly be interested in adding your car to their used car department and get them to bid on your car, get an offer from several get get several offers from several dealerships. So that if you decide you want to trade it in, wherever it is, you’re buying a new car, you can say, well, yeah, but your competitor down the street was willing to give me they’re willing to just write me a check for the vehicle for $5,000 more than you’re trying to get it for. I need you to find that $5,000. So you’re just opening it’s almost like opening up to bidding. Let the dealers

James Connor 37:58
compete. And I like that. That’s great advice.

Ray Shefska 38:01
Well, that’s what people pay us for.

James Connor 38:04
So Ray, I want to get your opinion on a few of the big trends that are happening right now in the auto industry and and there’s a lot of them EVs being a big one autonomous driving, also ride sharing, and I want to get your views on how this is impacting the industry. But why don’t we just start with EVs. In 2020, there was 3 million EVs sold globally. And by 2023, that increased to 15 million. But everything I’ve been reading here in the last few months, it looks like evey sales are definitely slowing down. Tesla just came up with their q1 sales, they produced 433,000, but they only sold 387,000. So a big mess there. What’s your maybe you can give us your view on what’s happening with EVs.

Ray Shefska 38:49
I think globally, there’s a huge push for EVs. I think, in Europe, the take rate for evey seems to be much higher than it is here in North America. And I, I read the comments every day from from our viewers and, you know, people, I don’t know if it’s an American thing or what, but but us Americans, we don’t want to be told what we have to buy. And I think that’s the prevailing mentality. And so people hate the fact that they feel like EVs are being forced on them. So the early adopters adopted, the others who were never convinced are fighting it off. Ford recently announced and when I say recently last week announced that they’re cutting back on Evie production and more investment into their Evie growth. And they’re turning that money and the We’re going to use it towards hybrids so that they can offer hybrids in every model line by the end of the decade. Well, that’s, that’s almost 180 degrees from where they were. And so I think part of it is priced. Most people understand that EVs are more expensive average transaction price wise than any other vehicles out there. Many people don’t understand the the charging of them the infrastructure that’s necessary to allow for that charging. It doesn’t seem to be as readily available, as I don’t know, finding a gas station on just about any corner. So there seems to be a hesitancy in it, at least in the United States. I can’t speak for Canada. But there seems to be a hesitancy for the vast majority of Americans to move forward towards EVs. Will that change? Probably at some point. But at this point, many people were just saying, No, I’m never doing it. Whether they will or won’t, we’ll find out.

James Connor 41:10
Yeah, I would agree with a lot of your comments is the same thing in Canada, the big I’ve taken out, I’ve done a few test rides with Tesla’s beautiful car. But there’s a few issues and, and the big one with me is range, right? Because I want to have 500 miles or 800k, you got to have that. That’s what a lot of most cars have. And then the other big issue is battery chemistry, right? Because you and I both live in cold climates. And in cold temperatures, these EVs lose 20 to 30% of their charging capability. So that’s a big issue. If you’re in Florida, or Texas, California, it’s not a big, that’s not such a big deal. But in Toronto, it is. And, of course, and then to your point to the infrastructure, they still have a long way to go with that. And then and also the pricing,

Ray Shefska 41:58
you know, they’re much, much more expensive than than most gas powered vehicles. And I, it’s, I have said that the infrastructure has to get way ahead of adoption. If suddenly, people saw charging stations, up and down the interstate highways, or in their local neighborhoods, it would become easier for somebody to say I want to consider an Eevee. I live in a condominium. There’s nowhere for me to charge my vehicle if I had an Eevee. So what do you do in inner cities where there’s huge apartment buildings, condo complexes, even row homes where people don’t have garages? How are those people supposed to charge their vehicles. So if you want people to, to move to that, you have to make charging readily available, they have to just it has to become as as easy to find as a gas station. And until that happens, I think the adoption of more and more EVs is going to continue to stagnate to a degree.

James Connor 43:22
I found I’m sure you saw the story about hertz trying to sell their fleet of ships. Yeah, kind of humorous, because one of the reasons why they were doing because the residual value, the pre the depreciation just collapsed. They couldn’t sell the damn things because Tesla kept cutting their prices so we can lose our inventory. So I thought that was kind of humorous.

Ray Shefska 43:44
Yeah, it’s, you know, every time every time Tesla would cut their prices, it was it was killing hurt, because the value of their fleet just kept going down. There’s there’s a very good friend of our channels. Igor, who’s a former Major dealer in in the Northeast United States. And Igor is always keeping us up to date as to what’s going on. He was at the auctions yesterday. He says you would not believe how cheap Evie prices are at the moment. I mean, everybody’s afraid of them, because nobody knows what the floor is. There was there was a story we did the other day where Edmonds had bought a new Fisker ocean, Evie, and they had paid 60 some $1,000 for the vehicle. And they took it in to Carmax to see what it might be worth $21,000 was the written offer from the over over a $40,000 loss in three months. And, and my comment to Zach was I don’t If I was a higher up a car Max, I’d probably be chastising the appraiser to put for having put $21,000 into a Fisker for a vehicle for for a company who’s about to go bankrupt. So you look at some of these things in and it’s hard to extrapolate what values really should be, when they’re all competing for a limited number of buyers and all finding out when I say all the manufacturers are finding out, then we got to cut our prices. I mean, Ford had to cut prices on the on the marquee on the lightning’s it’s the only way they could move them because everything was priced too high. So yeah, I have no idea what the floor is. But I am certainly glad I’m not running a store these days.

James Connor 45:53
So if I’m, if I’m reading you correctly, when it comes to traditional cars or gas cars, prices have pulled back a little bit, but they have a long way to go. So if I was going to buy a new car, I would hold, I would hold off. But if I want to buy an EV, now might be a good time.

Ray Shefska 46:10
If you especially if you want to buy a pre owned, you should be able to get some you should be able to find some good values out there on EVs. Now, you know, the thing that you have to remember when you’re looking at an EV is you need to check on the battery health. And, you know, there’s there are members of our team that own EVs and the amount of battery degradation literally has been next to nothing in the first couple of years of ownership for these, these guys. So but there’s a company out there called recurrent that can do a battery check for you. I don’t know how they do it, but they do it. And so you can get some idea as to what the battery health is on a pre owned Evie, because that to me would be the most important thing you need to know if you’re looking at a pre owned EV.

James Connor 47:05
Now that’s a very good point. And that’s great advice. Thank you. Because I if it’s anything like my iPhone, yeah. You know, you go and spend 1000 bucks on the new iPhone and then like it’s starts losing its charging ability like oh, yes, every year.

Ray Shefska 47:23
Yeah, no, I mean, because they do degrade over time. There’s no way to prevent it. So. And let’s face it at this point. I mean, there’s varying numbers that you hear is what it’s going to cost to replace batteries. I mean, you see numbers 40 $50,000, you see some numbers that say, oh, no, it’s closer to 10 to $15,000. I mean, who knows. But typically, they say the life expectancy of these batteries is a couple of 100,000 miles. But, you know, a couple 100,000 miles, if you only drive 3000 miles a year, that takes a really long time. So there I think there has to be some time or mileage, it can’t just be mileage as to how fast they degrade.

James Connor 48:14
And now I’m curious, you said a typical battery’s good for, you know, at least a couple of years. But

Ray Shefska 48:21
they I think what you’ll find is the batteries are probably good for seven to 10 years. And I believe most of the manufacturers offer like a seven, eight or 10 year warranty on the batteries on the battery pack itself.

James Connor 48:37
Now I’m curious, when you look at your various businesses, you have a good sense of what’s happening across the nation just in terms of sales and, and how the consumer is feeling. What’s your sense, if we were to summarize everything you see, what’s your what’s your feeling, how the US economy is doing?

Ray Shefska 48:57
Well, you know, everything you read, the economy’s great. And, and but everybody says, oh, but I’m hurting. You know, I don’t know, I I’m not hurting. You know, it’s, I think, in reality, most people aren’t hurting as bad as they might think they are, or might have been told that they are. But we do see the number that that has scared me was was that survey of people? Would you can you buy a car and when at 83% of the population says they can’t. That’s a scary number. You it just seems to me that if you’re a manufacturer, you want to you want to be able to have as many people as possible in that sandbox, not as few people as possible. You don’t want the market to continue to shrink as to who you’re trying to sell cars to. You have to figure out ways to Increase the number of people that you can sell cars to. So I think as the manufacturers look at those statistics, and how deeply that ultimately can impact their businesses, I think that we will see a shift in what is being built so that they can bring more people back into the market. That’s just my opinion from what we’ve seen.

James Connor 50:28
So that was a great discussion, Ray. As we wrap up, is there anything else you would like to offer up to our viewers, any other words of wisdom when it comes to purchasing a vehicle.

Ray Shefska 50:38
Never concentrate on your payment, always concentrate on the out the door price, the discount on the vehicle, and discussion about every fee? There’s, there’s a saying we have there’s, I should have worn the sweatshirt today. That says on the front, if it’s if it’s taxable, it’s negotiable. So if the fee is taxable, it’s a negotiable item. Just remember that if it’s a state fee registration, things like that, that’s not taxable. But if, if it’s some hip Bates fee that they’re charging, and they charge tax on it, that’s a negotiable fee. So always work, the outdoor price, work them on whatever fees they’re charging to make sure that you can either get them taken off or have them reduced, and just concentrate. If I were to have to write you a check, what would the size of that cheque be? What would the exact amount of that check be? And then once you’ve established that, prior to buying a car, get pre approved for a car loan, so you know what your interest rate should be? That would be my advice.

James Connor 51:53
That’s great advice. And I want to thank you for spending time with us today and sharing your insights on the car industry. If someone would like to learn more about you and your various services, where can they go?

Ray Shefska 52:05
Just go to www.CarEdge.com C-A-R-E-D-G-E.com. That’s our website. And you can find all types of free resources, guides, videos, anything that you would need that can help help you navigate that car buying experience.

James Connor 52:24
And your YouTube channel?

Ray Shefska 52:27
The Ray and Zach channel and the CarEdge channel are the two main channels where you can find Zach and I exposing nonsense on a weekly and daily basis

James Connor 52:39
I might tune in this Saturday night to the live show and ask a couple of questions.

Ray Shefska 52:44
We’ll let you.

James Connor 52:46
Ray, once again. Thank you.

Ray Shefska 52:48
Thank you, James. I enjoyed it.

James Connor 52:50
Well, I hope you enjoyed that conversation with Ray Shefska of CarEdge. I found it very informative, especially when he through many insights, including if it’s taxable, it’s negotiable. I’ll keep that one in mind. But if you have any other ideas on who else you would like to see on our channel, please let us know in the comment section below. We’d love to hear from you. Don’t forget to subscribe to our channel, Wealthion.com and also hit that notification button to be kept up to date on future events. Once again, thank you for spending time with us today and I look forward to seeing you again soon.