I sold my first car in 2004. A Cavalier for $14,000. Those customers exist but we have nothing to sell them anymore. We have $45,000 as an average because we built up from there. The entry level customer didn't disappear, we just stopped making the product they could afford. That's why hardly no one finances a car under 72 months anymore.

The financing side of this is equally broken. Someone buying a $46,000 vehicle at current rates on a 72 month term is paying well over $700 a month. The debt-to-income ratios that used to qualify buyers no longer work at those payments. Lenders know it. We know it. But nobody at the OEM level wants to talk about it.

To answer the franchise model question directly: what shrinking volume toward the high end does over time is accelerate consolidation and kill smaller single-point operators. A luxury-skewed transaction mix sounds good on margin per unit but the franchise model was built on volume. The fixed costs of running a dealership, facilities, compliance, staffing, floor plan interest, do not scale down proportionally when you sell fewer units at higher prices. A store that used to sell 120 units a month at $32,000 average and moves to 80 units at $46,000 average has better gross per deal and worse total economics. The OEMs understand this abstractly but their incentive structure still rewards volume metrics in ways that conflict with the margin-per-unit story they tell publicly. The dealers who survive the next consolidation wave are the ones who have either scaled up to absorb fixed costs across multiple points or shifted their service absorption ratio high enough that new vehicle sales become less critical to overall profitability.

The buyers moving to used are not exiting the franchise network entirely. Certified pre-owned and even non-certified used sold through franchise dealers is still a franchise transaction and in many cases a more profitable one per unit than a new vehicle deal right now. The longer-term concern is loyalty.