Insider Tips For Buying a Car in this Market with The Car Dealership Guy

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3:16Today, we are getting under the hood of the auto market, so to speak, with the go to guy in the car biz, Yossi Levy, a.k.a. the car dealership guy. You might know him from your social feed where he spills insider tips and auto industry tea. But today he's giving us the ultimate pulse check. Like how have the new Liberation Day tariffs shook up the car market? Have used cars been affected, too? important questions these days. We're also talking strategy because whether you're buying, leasing, or just window shopping, there's a right way to navigate the dealership dance. Oh, and what a dance it is.

3:49Yossi also shares what's actually negotiable, how far is too far when lowballing, and whether that old myth about end-of-month deals actually holds up. Plus, we unpack some of the buzziest tax breaks floating around TikTok these days, like the infamous G-Wagon deduction, and we decode a brand new deduction tucked into Trump's latest tax package that could make your new car purchase a lot more affordable if you play your cards right, of course. And I do ask him what car he drives because we had to know. So let's get into it. Yossi Levy, aka the car dealership guy. Welcome to Money Rehab. Thank you, Nicole.

4:25It's great to be here. Great to have you. You are one of our most requested guests. So shocking. Don't know why. And don't say that sarcastically. We absolutely know why. You have your pulse on the car market like no other. Your content is dope. It resonates. It's really, really helpful. I have a thousand questions for you. Let's start with the first. It's actually top of mind for me right now. I lost my car in the LA fires and have to go out in the car market and replace it too. So I need to pick your brain on that. I'm here to help. Talk to me. What's the market like? Post-Liberation Day tariffs, how has this affected the market for new cars specifically?

5:09So look, we had, go back to April for a second, right? There was a lot of pulled forward demand. The market, with all the uncertainty on the macro level, consumers were rushing to dealerships and almost every dealership under the sun had a tariff sale or something, right? So sales came in higher in the month of April and subsequently in May. To come into June, we started seeing a slowdown. Dealers started reporting that they're still getting foot traffic, but their conversion rates started falling, right? Anywhere between 10, 20 % from lead to sale, which is very meaningful in dealership world, right?

5:44A lead just being in customer inquiry. And that could signal many things to us, but it could also signal that people maybe are not in as much of a rush and that affordability is still very much impacting the average consumer in the market. Today, as it stands, we're here recording late July, about to be August. The market, I would call it stable and pretty healthy, right? We're not in any crazy spike period right now, like we witnessed over the last couple of months or even two to three years where we had these periods of really low inventory, then really high inventory and kept going back and forth.

6:19Things are pretty stable. Average transaction prices for consumers. Notice I say transaction because MSRP, right? The manufacturer suggested retail price. It doesn't really mean much. At the end of the day, it's what does the consumer pay for the car? Because there's rebates, there's discounts. Yeah, and it can go above, which I found out during the thick of COVID after I got into a car accident and needed to get a new car and it was above MSRP. I was like, what the heck is this? Yeah, and you're not going to see that now unless you're buying some specialty vehicle, a Porsche 911. The point I'm trying to make is that transaction prices have come down.

6:53And if you look at last two years, right, let's zoom out just a little bit. We're down from about 42 to 43 days of weekly income required to purchase a vehicle down to the high 30s, say 37, 38. The way you measure how expensive vehicles really are weeks of average income that it takes to buy a car. Because if a vehicle price goes up, but you're making more money, then you got to balance that. And so if you look at weeks of income needed to buy a car, today it's hovering in the high 30s. At the peak, right, during the craziness where you mentioned the markups, we were at like 43, 44 weeks of income from the average US consumer.

7:31And so the bottom line is that vehicle prices, while they may have not come down significantly, people's earnings have risen over the last couple of years. Vehicle prices have come down somewhat, and we're hovering in this state right now, which is pretty healthy, and the market's moving pretty well. So overall, I'm pleased with the market works out today. I think there's better deals for consumers and dealers are also, they're not as busy as they were, but things are still flowing pretty well. That's crazy. I've never heard that equation, but it makes a lot of sense. It's almost like how many months should you spend on a ring to propose?

8:05I guess we can use that analogy. So that's for buying cars with a loan, buying cars in cash, leasing cars. So that's assuming that you're buying a vehicle, like purchasing with financing, or I believe cash is in there as well. Not leasing though, because leasing is a different equation. When you look at leasing, leasing has just completely been the big thing over the last 18 months. And it keeps growing because leasing is the only way today for consumers to still get into an affordable payment, right? Most consumers are looking for payments when they're shopping in the country. If you're listening and you're not shopping necessarily by payment, then that's not how most people shop.

8:48You probably have a little bit more disposable income. And so most people are shopping by monthly payment. And leasing continues to be the most affordable option, obviously, because you don't actually own the vehicle. That's clear. And so leasing as a percentage of all sales is also rising, right? More people are leasing. You know, there's that meme you may have seen on the internet. You will own nothing and be happy or something like that. The point is like that meme is like sort of coming to reality where leasing has been, has literally been keeping afloat the car business because people increasingly are leasing vehicles.

9:18And you have to remember, these vehicle prices are still at astronomical, like near all time highs. And so, yes, prices have come down a tiny bit. Incomes have risen, but we're still in sort of uncharted territory. And so leasing has been a very, very big save here for the last year and a half. Uncharted territory vis-a-vis all the tariff hoopla. because I feel like that's kind of calmed down. Tariff stuff is interesting. If you remember initially, the administration imposed an immediate 25%. Then things started getting renegotiated. Then we got a 10 % on the UK. Now we've gotten a tariff with Japan and we have the EU.

9:55These deals are coming in now, but here, look, let's just talk about what this means for customers, right? I think all the smartest people I've spoken to in the industry that are in control of the levers. And when I say that, I don't mean the government. I'm talking about just dealers who are retailing thousands of cars, tens of thousands, hundreds of thousands in some cases. They all believe that the way this shakes out is vehicle prices will rise at least a couple grand. And it's not equal across the board. It depends where the vehicle is manufactured, the parts are sourced, but vehicle prices will rise.

10:25The trick with the tariffs is that it's not all equal, meaning it's not you tariff a manufacturer and it all gets passed out to the consumer. These supply chains are different and some brands have distributors, some don't. These supply chains, I mean, I'm not an economist and I don't even think an economist could predict exactly how this will shake out. But I think what we can predict is that prices will be a bit higher no matter what across the board. And that's going to hit the consumer to a certain extent. But remember, the consumer votes with their pocket. So if they're not buying that car, guess what?

10:56The manufacturer has to put more incentives on the vehicle to sell the car. And so all in all, we're going to see an interesting balancing equation over the next 6 to 12 months. But I would expect that consumers do feel it a little bit. Dealers will feel it somewhat and also manufacturers. Everyone will feel it to a certain extent. And when you say across the board, you mean electric, non-electric, I guess combustible engine, regular cars. It really comes down to where the vehicle is produced and the parts and there's the whole equation. But I think what's important here is that you mentioned electric.

11:30Electric is in an interesting state because we have been in this period, right, for over many, many years already. I don't know exact count, but for many years, we've been in a state where electric vehicles were subsidized by the government. And so we don't truly know where equilibrium is for electric vehicle market share. We are in the high single digits at this point. So let's just say close to one out of every 10 cars sold today in the country, new cars, are electric. Great. But remember, that includes lots of incentives. There's a$7 ,500 tax credit on new cars, the$4 ,000 tax credit on used cars that many people don't even know about.

12:06And so that has impacted sales and demand. I can tell you that dealers have been pushing used electric vehicles very heavily because with used electric vehicles, if the total sale price is under$25 ,000, the customer can actually get a$4 ,000 rebate on that vehicle if it's an electric vehicle. And so imagine this for a second, Nicole, right? You're working with a customer that maybe doesn't have that much of down payment to put towards the vehicle, but suddenly you offer them an electric vehicle that has an expiring tax credit. And you say, hey, you could buy this electric vehicle right now, get$4 ,000 towards your down payment, like literally free money from the government.

12:46I mean, who would say no to that? It's like unbelievable, especially when you don't have many options. And so electric vehicles have been on a tear primarily due to these tax credits. But we're going to see in Q4 of this year, 2025, exactly how it's going to play out. Once they're removed, what actually happens? And I can tell you that most dealers in the industry, the smart dealers at least, they don't care if a vehicle is electric, internal combustion. I mean, it can run on air for all they care. They care about what is good for the customer, meaning what will consumers buy, right? If you would buy, I mean, a vehicle that runs on air, then I will sell that, assuming I can get that supply.

13:22And so that's where the industry is really trying to figure out where is the puck really headed? What's going to happen come end of September? Electric vehicle incentives are removed. How is that going to impact the market? What other stuff in the big, beautiful bill should we know about? Can you explain what the new auto loan deduction is all about and how that's going to affect somebody in the market? The auto loan deduction is real and it's been well received by dealers. and I haven't spoken to too many consumers on their opinion on it, but I can't see why they wouldn't be happy about it. The idea here is that if you purchase a vehicle that has some specifications of manufactured in the US, or it meets certain criteria that you will get a deduction on your interest rate, where your interest would go against your taxes.

14:08It has about a$10 ,000 limit, and it also has an income limit for someone to qualify for it, So not everyone can qualify for it. And so again, there's more specifics online, but I think the bottom line here is that it is some relief for consumers. It does incentivize manufacturers to onshore their production to a certain extent and to produce more in the US. I think the downside is simply that I don't think it's going to be that impactful. Because when we ran the math, and if you really look at the numbers of what, if you take the max deduction on an auto loan, and you extrapolate that through how much you're paying for the vehicle, and how it impacts your taxes at the end of the year, it was a very, it was a very small number and about in the hundreds.

14:52Again, I don't have the math in front of me. But I think the point being that we ultimately, from our end, we don't think that it's going to meaningfully impact sales. but it's a great touch and I'm supportive of it because I think it incentivizes the right stuff and it helps the consumer at the end of the day. So I think it's a good endeavor and it brands very well. I think people hear auto loan deduction, US, it registers really quickly with someone to understand the benefit they're getting. Yeah. And therefore purchases made in 25, 26, 27, 28. So potentially could heat up. Are there specific brands that are getting the best values right now?

15:27what's hot, what's not? What kind of car do you drive? So we're a three car household. So we actually share one car with my father who's here when he lives in two States. And so we have a Toyota Sienna. So Toyota Sienna is the ultimate family vehicle. Love that. Before that actually had an Audi Q7. And so it was, we're like, Hey, we need something more practical. So I'm just a big fan of this vehicle. Highly recommend it. Super reliable. It's not cheap, right? It's like the high-end, more expensive minivan. But if you have kids, it's freaking unbeatable. We have a Tesla. And so I like the Tesla because you get to really kind of see what Tesla and Elon Musk are building is incredible.

16:07And you get to just experience sort of like the future of driving in a way. Not to say that in every sense, right? Like the vehicle itself is, the materials are not like high-end or anything. It's pretty basic, but I'm a technologist and I think playing with the technology, self-driving, it's cool to see these things evolve. And so So that's been a fun experience. And we have a Cadillac SRX. And don't ask me about that because that was not something that I would buy or wanted to buy. It was one of those vehicles that just gets transferred through the family and sort of ended up with us. And so I can't say I overly recommend an old Cadillac SRX, but it gets the job done.

16:41So I'll tell you something, Nicole. It's funny you ask that question because as a car guy who's been in the business my whole life, I've had the fancy cars. I'm the least interested in the actual vehicle. I always say this, I host podcasts myself and people come on and they're like, oh, I love what you do. And I love cars. And I'm like, cool. I don't love cars. I love the business. I've always just loved the, exactly. The deal, the people, the business. And so it's, that's the funny thing here that like, I'm not, I'm just not, I haven't been that into the actual cars themselves. It's kind of like nuts and bolts.

17:13It sounds, it's going to sound very cold, but it's kind of like an asset on a balance sheet. As a dealer, you're here to sell the car. So the podcast specifically kind of makes sense. But I sort of just view it as a means of transportation. And that's kind of how I've been trained in this industry. My brain is already so used to that. So all right. So let's kind of bifurcate that question because that's my personal situation. So we have three vehicles here. And by the way, those vehicles are owned. And I don't know if I would do that today if I was buying a vehicle today. But that's the situation I'm in.

17:42In terms of the market. Is it a market to get a Tesla? I'm not sure. I haven't purchased one recently. I do know prices have fallen, especially if you meet certain income criteria. I would tell you it's a good market to buy an EV right now if you want an EV, simply because you can still take advantage of the tax credit. So I can definitely say that. For Tesla specifically, prices have gone up and down with Tesla. They had this historical event two years ago where their prices were super high from the COVID demand. And then they had to reduce prices on new vehicles, in some cases as much as 50%.

18:15And so people took a bath, right? Meaning they purchased vehicles that lost lots of value really quickly. Again, I can't exclusively blame Tesla for that because other manufacturers were in similar situations and have brought prices down to earth. Look at Chrysler, for example, or Jeep. They also had these Wagoneers over$100 ,000 for Wagoneer. And that has since come down significantly. So this pendulum swung in a big way over the last couple of years. as it stands today, EVs, you can get great deals simply because you can still take advantage of the tax credit, which is real money out there. And other than that, I would tell you that historically, the highest value has been sort of the Japanese and Korean brands, right?

18:56So think Toyota, Honda, Hyundai, Kia. Hyundai, Kia have phenomenal warranties. Toyota and Honda are just known for their longevity and great value. You just can't lose with these vehicles. And listen, I think when it comes to, if you're leasing a vehicle, as an example, I don't know if I would optimize for longevity, right? If I'm leasing for two to three years, maybe I'll take a Jeep, which has really great deals on it because I know that I can just pay less and I'm not going to have car for more than three years. So it really depends on your personal situation. But historically, I would say there's no doubt about it that best value has come from the Japanese and Korean brands.

19:32And right now, still the same? If we're out buying a new car or a used car? Used car is a bit trickier. Yes, these vehicles that I just mentioned do hold up really well on used, especially Toyota and Honda. There's always these jokes. You see these 30-year-old Toyotas that are on the roads that are still running. And this trickles all the way to the business side, by the way. Every investor wants to own a Toyota store. Every dealer wants to own a Toyota store. Everyone wants to work at a Toyota store because it's the gift that keeps on giving. These things are so profitable. And the customers love them.

20:05And there's a reason they love them. So Toyota was a little, they're a little gun shy of the whole EV game. They did not really invest much in EVs like other manufacturers. In hindsight, they made a pretty good decision, but they are leaning more into it now. So I think you're going to see some more electric stuff from that angle as well. But overall, the brand has just done phenomenally well.

20:27Hold on to your wallets. Money Rehab will be right back. And now for some more Money Rehab.

20:40So if you're in the market, maybe stop by a Jeep dealership if you're looking for a new and maybe a used Tesla. If you're in the market, I would shop in a couple of ways, right? If you're looking for affordability, I would look for best lease deals. I just think there's no reason to be overly picky if you're only keeping that car for two to three years and you don't intend on buying it out. Start by shopping the lease deals and looking at the make and mod or the class that you're interested in, right? Maybe you need an SUV, maybe depending on what you need, maybe you can settle for a sedan. But you start with what are the best deals out there?

21:11If you're looking at - And what are they right now? Well, they're constantly shifting. Like I said, Jeep has really, really great deals out there. Hyundai has really great deals on its EVs, right? There's a BMW on its high line. If you're looking to lease in certain regions of the country, they're constantly putting out new deals, especially on the EVs. Again, this is luxury, obviously. So we're not talking deal like 400 a month, but it just really depends on your personal preference. But I can tell you, conversely, you're probably not going to get a deal on a Toyota Grand Highlander or a Toyota Sienna, right?

21:40So just as it's important to highlight where you will get a deal, you have to think about where you're not going to get a deal. And what drives that, and this is the key to what drives deals in general, is supply. And so when you look at a chart of day supply on vehicles, it just means how much supply is out there in the market to fulfill demand, customer demand. Toyota, Honda, these brands are consistently, Porsche, which is obviously very luxury, they're consistently on the low end of supply. And so there's just not enough supply to match demand. And naturally you're going to see less incentives and fewer deals.

22:15If you really want deals, you got to go on the higher end, right? There you will see Ford, you'll see Audi, you will see GM, as I mentioned earlier, Jeep. These are the brands right now that have increasing supply and you're more likely to find deals with those brands because they simply have more to offer and they're putting incentives in certain cases in order to stimulate demand. So that's really how I typically recommend when it comes to shopping. The other thing to note is about timing of the year. We haven't talked about this, but it's not just about what's the timing right now. And you'll typically also see deals where there's model year changeovers, right?

22:53So when you're going from a 25 to 26, a 26 to 27 model year, the brands are going to incentivize the older models so that they can sell them quicker. So that'll typically come up in the form of incentives, which also, of course, is very attractive to certain buyers who maybe I don't care about having the most recent model. I'm okay to settle for one year older, but I know that I'm getting a great vehicle at a better price. What time of year does that happen? It's different for every brand. And let's say I'm looking at a Lexus, right? Or probably not a great example, but if I'm looking at a Honda, I can really track, literally see on the website, okay, when are they releasing new models?