Photo: Rivian
As the used car market cools down from the post-pandemic madness, flippers discover that selling vehicles at a profit might no longer be possible. The Rivian R1S, for instance, has reached below-MSRP auction prices based on data gathered from auction sites like Cars & Bids and Bring a Trailer.
In 2021, supply chain mayhem and computer chip shortages have crippled vehicle production. The delivery times increased and inventory depleted, while carmakers were more than happy to raise prices. Still, the main beneficiaries of this situation were car dealers. They applied "market adjustment fees," widely known as markups, to the MSRP, sometimes doubling a vehicle's price. When the carmakers tried to curb this trend, dealers bought the hot models from the new inventory and sold them as "used" for crazy prices.
Their practice inspired regular folks to make an easy buck by selling their newly-bought vehicles on the used car market. Flipping cars became a profitable business, and those lucky enough to secure a delivery were selling the car for profit even before they got to sign the delivery papers. Those were the times, but things have cooled down significantly in 2023. A recent iSeeCars study showed that dealer markups have been steadily shrinking, from an average of over 10% in June 2022 to 8.5% a year later. As the vehicle market is heading down, many new models are now sold below or near MSRP.
There are many reasons for this, starting with inflation and rising interest rates. This made fewer people qualify for financing, while economic uncertainty put off potential buyers. Dealers adapted by reducing markups and even bringing back incentives for slow-moving models. Flippers were hit the hardest, as they lost a significant revenue stream. Some could have been forced to sell the cars at a loss, which is usually typical with a used vehicle.
User u/sincladk shared on the Rivian subreddit his own study regarding the Rivian R1S. He scouted auction websites Cars & Bids and Bring a Trailer and recorded the final bid for the Rivian SUVs sold since September 2022. He also created some beautiful graphics, which helped to understand the trends more clearly. They show that both official and auction prices have decreased in the past year while the new- and used-car markets have normalized.
The graphics also show that flippers got away with more than $30K above the MSRP almost a year ago. At the same time, the average auction prices dropped below the average Rivian R1S official prices in May. Since then, the depreciation has increased, reaching more than $7,000 in July 2023 if you add the auction fees to the final bid. It's now unprofitable to sell your recently delivered R1S at auction unless you've got a sweet deal from Rivian.
Although the study doesn't offer this information, those selling their R1S now likely are those with grandfathered prices. It doesn't make sense to sell a brand-new Rivian for $90K after you bought it for more than $100K after taxes. About 12-18 Rivian R1S SUVs were auctioned off every month since January 2023 on the two auction platforms. Still, this stream should dry out as early reservation-priced buyers dry out. Rivian will also contribute to this trend as more affordable variants of the R1S become available.
Their practice inspired regular folks to make an easy buck by selling their newly-bought vehicles on the used car market. Flipping cars became a profitable business, and those lucky enough to secure a delivery were selling the car for profit even before they got to sign the delivery papers. Those were the times, but things have cooled down significantly in 2023. A recent iSeeCars study showed that dealer markups have been steadily shrinking, from an average of over 10% in June 2022 to 8.5% a year later. As the vehicle market is heading down, many new models are now sold below or near MSRP.
There are many reasons for this, starting with inflation and rising interest rates. This made fewer people qualify for financing, while economic uncertainty put off potential buyers. Dealers adapted by reducing markups and even bringing back incentives for slow-moving models. Flippers were hit the hardest, as they lost a significant revenue stream. Some could have been forced to sell the cars at a loss, which is usually typical with a used vehicle.
User u/sincladk shared on the Rivian subreddit his own study regarding the Rivian R1S. He scouted auction websites Cars & Bids and Bring a Trailer and recorded the final bid for the Rivian SUVs sold since September 2022. He also created some beautiful graphics, which helped to understand the trends more clearly. They show that both official and auction prices have decreased in the past year while the new- and used-car markets have normalized.
The graphics also show that flippers got away with more than $30K above the MSRP almost a year ago. At the same time, the average auction prices dropped below the average Rivian R1S official prices in May. Since then, the depreciation has increased, reaching more than $7,000 in July 2023 if you add the auction fees to the final bid. It's now unprofitable to sell your recently delivered R1S at auction unless you've got a sweet deal from Rivian.
Although the study doesn't offer this information, those selling their R1S now likely are those with grandfathered prices. It doesn't make sense to sell a brand-new Rivian for $90K after you bought it for more than $100K after taxes. About 12-18 Rivian R1S SUVs were auctioned off every month since January 2023 on the two auction platforms. Still, this stream should dry out as early reservation-priced buyers dry out. Rivian will also contribute to this trend as more affordable variants of the R1S become available.
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