Carbitrage 2021 – Making Money With The MinnyVan!

Just as we all survived 2020, 2021 now promises to go down in history on its own merits, especially when it comes to cars and car values.

The year started off innocently enough, with automakers still looking to lure buyers into showrooms. We continued to see dealers try to transition to a more “digital” customer experience that could allow shoppers to get pricing, financing, etc. all squared away online before taking delivery. Incentives were still pretty robust through the first few months of 2021.

Market conditions allowed us to flip our 2020 Chrysler Pacifica Hybrid for a new, refreshed 2021 Pacifica Hybrid for just a few thousand dollars out of pocket. There was nothing wrong with our 2020 model, but the 2021 model received a nice little facelift, updated infotainment system with wireless Apple CarPlay / Android Auto and LED headlights. Plus, the money to upgrade would be more than covered with an additional Federal Tax Credit of (up to) $7,500 that we’ll be able to claim in a few months. Carbitrage success! All said, we paid $42,500 out the door for the 2021 Chrysler Pacifica Hybrid in the newest Pinnacle trim. This on a vehicle that had a sticker price of just over $53,000. The overall deal was similar to the one we received on our 2020 PacHy.

Then came the microchip shortage of 2K21.

Automakers across the globe were scrambling to find and source microchips, which go into just about everything in the car. With huge supply issues, automakers started to, and continue to, throttle back production volumes in just about every vehicle line. Some vehicles are losing standard features as auto companies pick and choose what they can support. Those tradeoffs also impact which vehicles as a whole are being made. Trucks and SUVs get the most share of any automaker it seems, with more support and production allocation being provided to those models in highest demand.

Car dealers, once holding dozens if not hundreds of cars in inventory on a regular basis, now find themselves with a handful, if any, as consumers have shown a remarkably strong interest in wanting to buy new cars, even when transaction prices are sky high on not just special sports cars or unique luxury cars. People are paying sticker price or even $5,000 to $10,000 above, on nearly any new car today. Discounts and incentives have also largely been pulled back on new cars, now largely limited to some low interest financing. Haven’t seen 0% financing on new cars lately, something that used to be pretty common to find.

High new car transaction prices have also lifted used car values to levels never before seen. Cars, once one of the biggest depreciating assets you could put your money into, could actually be appreciating in value. Yes, the car you bought last year, or the year before, new or used, could be worth more today than it was then. BANANAS! While this may be tempting to people looking to sell their car, it does come with the caveat that if you need to actually replace or buy another car, then the premium you pay there is basically going to wipe out any of the supposed premium you’d get from selling or trading in your car.

But if you’re able to sell a car that you have, and don’t need to readily replace it, now is absolutely that time to do it.

Case in point, our 2nd MinnyVan carbitrage opportunity:

Ever the car fiend, it’s only somewhat natural that I keep a pulse on the market and vehicle valuations. And while we absolutely loved our Pacifica Hybrid (full write up coming soon on that!) it was definitely the 3rd car in the garage and not one that we need day to day especially with the work from home life that has continued throughout this pandemic. With the growth of services like Vroom, Carvana and GiveMeTheVIN, along with digital retail tools from AutoNation and CarMax, it’s pretty easy for consumers to get an appraisal or a “buy bid” on their car without leaving home. Of course the appraisal is contingent upon a final inspection, etc.

Again, knowing we paid $42,500 out the door, it was interesting to watch the values fluctuate a bit. Early on, the trade in/sale estimates varied from about $39,000 to $41,000. As the vehicle shortages and supply issues continued, the valuations started to climb, even though our car was getting older and we were still putting some miles on it.

Watching transactions of new 2021 Chrysler Pacifica Hybrids, it was clear that the hefty incentives that we had been able to leverage, were pretty much all gone now. On top of that Chrysler even started to raise the MSRP of the van, despite no changes in features or content. A 2021 Pacifica Hybrid Pinnacle today would sticker for at least $55,045, about $2,000 more than our car did. New 2021’s are selling for well over $50,000 today.

A few weeks back, our online trade in/sale estimates crested over $44,000. So we were now in a positive position. Something I’ve never had on a new vehicle purchase, especially one from a mainstream vehicle manufacturer like Chrysler. Depreciation is ALWAYS the largest cost of ownership on a new vehicle. But this is 2021.

In my mind, I marked a value that I’d be willing to let our PacHy go for. If we could get $5,000 over our purchase, then I’d pull the trigger. While the online quotes were tempting, they’re easy and they come pick up the car, etc., I decided to see what some of the local dealer groups here in the Northern Virginia area would bite at.

One large dealer group also hosts an online portal that provides a value and you can come in to finalize the deal. Their initial appraisal came back strong at $47,000. Pretty close to my magic number of $47,500. I decided to bring the car in and let them give me a final number. This turned out to be a terrible experience as they said their number was $39,000. Nothing wrong with the car, they just said that they don’t get a lot of minivan customers. They’re a huge dealer group and right now, all dealers are effectively used car dealerships first and foremost with the inventory shortages on the new side. Seemed like the oft-noted bait and switch tactics and many consumers loathe dealers for. Why is it that many dealers never seem to stick to the under promise/over deliver customer experience?

My second and final submittal was with a local Chrysler dealership. Now they would DEFINITELY have minivan customers and they were definitely short on Pacifica Hybrid inventory, particularly of the Pinnacle trim. After a few emails and a call I was able to get them to come up to $47,500. I went in, dropped off the van and our title and received my check. So it took a bit more work than the simple paths, but paid off in at least a few thousand dollars extra. While my wife was a bit resistant to our first MinnyVan, she’s become a big fan of them, and an even bigger fan now that we’ve MADE money from our purchase.

It still boggles my mind that there is someone that no doubt bought our van, at well above what we had paid for it initially, and that secondary customer won’t be able to receive a federal tax credit for their purchase. The dealer initially tried to list it as a used car for $59,995. For a car that stickered at $53,000 new…. they then had to bring the listing price down subsequently. I have no doubt that it sold for at least $50,000. BANANAS I tell you.

Invest in vans my friends.