Used car prices about to go into free fall

[Klaus]

The worm is turning just as the fed is signaling that they are done messing around. Autos are about to get schwacked.

BoFA, Citi expect multiple 50-bps Fed hikes this year as inflation bites

Bank of America (BofA) and Citi have joined a small but growing number of top investment banks calling for more aggressive interest rate increases from the U.S. Federal Reserve against a backdrop of soaring inflation data and hawkish comments from policymakers.

www.reuters.com

 

[13COBRA]

The worm is turning just as the fed is signaling that they are done messing around. Autos are about to get schwacked.

BoFA, Citi expect multiple 50-bps Fed hikes this year as inflation bites

Bank of America (BofA) and Citi have joined a small but growing number of top investment banks calling for more aggressive interest rate increases from the U.S. Federal Reserve against a backdrop of soaring inflation data and hawkish comments from policymakers.

www.reuters.com

They are going to dip. But they're still going to stay up YOY. They went up 35% last year, probably will drop 15-20%. The lack of new inventory will keep them high.

 

[black4vcobra]

They are going to dip. But they're still going to stay up YOY. They went up 35% last year, probably will drop 15-20%. The lack of new inventory will keep them high.

Agreed.

I also feel housing cost increases will slow but in any desirable area, they will continue to rise as inventory is too low.

 

[13COBRA]

Agreed.

I also feel housing cost increases will slow but in any desirable area, they will continue to rise as inventory is too low.

Yep., I completely agree.

 

[blk02edge]

Isn't there money on this?

 

[13COBRA]

Isn't there money on this?

We had definitely talked about it, but ultimately couldn't come to an agreement on how it would be measured.

 

[MinGrey02Stg2]

The lack of new inventory will keep them high.

This all day. New car supply chain issues are going to keep prices up on average used cars. Specialty and rare used cars will be interesting to watch though.

 

[Klaus]

Isn't there money on this?

Unfortunately not

 

[Klaus]

This all day. New car supply chain issues are going to keep prices up on average used cars. Specialty and rare used cars will be interesting to watch though.

The days of $150k gt350rs on BAT are numbered

 

[13COBRA]

This all day. New car supply chain issues are going to keep prices up on average used cars. Specialty and rare used cars will be interesting to watch though.

I think high end cars will stay steady. Too many supply chain issues. Their new offerings are even less than us poor people's choices. Porsche for example is in for a hell of a ride. The plant that makes their wiring harnesses is located in Ukraine.

Ford just announced another mid-year price increase, effective next week.

 

[q6543]

Ford's sales Q1 were a disaster.

 

[Mojo88]

Watched some of Mecum's auction last weekend. I gotta say, if I was looking for a used vehicle for a daily driver, I might go to an auction. There were some pretty good deals to be had on 'normal' vehicles.

 

[13COBRA]

Ford's sales Q1 were a disaster.

Oh yes they were. But without any inventory on the ground, not sure how anyone thought it would be any different. I usually stock about 150-200 new, and I currently have 4.

Watched some of Mecum's auction last weekend. I gotta say, if I was looking for a used vehicle for a daily driver, I might go to an auction. There were some pretty good deals to be had on 'normal' vehicles.

Yes. That's kinda the norm though. No one goes to Mecum to buy a 'normal' car.

 

[Klaus]

The lack of new inventory will keep them high.

"Low inventory" is just another way of saying that demand is too high. Inventories will normalize as interest rates increase and demand is destroyed. It will not happen overnight but it is happening. Will we see a single month of y/y used car appreciation in the next 24 months? What % of car owners will have negative equity by this time next year?

 

[13COBRA]

"Low inventory" is just another way of saying that demand is too high. Inventories will normalize as interest rates increase and demand is destroyed. It will not happen overnight but it is happening. Will we see a single month of y/y used car appreciation in the next 24 months? What % of car owners will have negative equity by this time next year?

I agree and disagree.

Your statement about low inventory is true...however, there truly is an inventory shortage. The bottle neck isn't an overwhelming amount of demand that is making it impossible to have stock, but the overwhelming lack of production.

Next 12 months, no. Next 24 months, yes.

 

[IA Shelby]

"Low inventory" is just another way of saying that demand is too high. Inventories will normalize as interest rates increase and demand is destroyed. It will not happen overnight but it is happening. Will we see a single month of y/y used car appreciation in the next 24 months? What % of car owners will have negative equity by this time next year?

Isn’t the average length of a car loan now over 60 months? Nick would know for sure. I would expect that many people will have negative equity.

 

[Lambeau]

I think high end cars will stay steady. Too many supply chain issues. Their new offerings are even less than us poor people's choices. Porsche for example is in for a hell of a ride. The plant that makes their wiring harnesses is located in Ukraine.

Ford just announced another mid-year price increase, effective next week.

View attachment 1744924

How much? Sorry I don't understand your chart.

 

[PhoenixM3]

The days of $150k gt350rs on BAT are numbered

Well, I'd better get mine sold then.....

 

[13COBRA]

Isn’t the average length of a car loan now over 60 months? Nick would know for sure. I would expect that many people will have negative equity.

69.7 months.

As far as negative equity... it's hard to say. People who traded, won't be in any different shape than they would be in normal times, because they were receiving a higher trade value. There will be people who purchased without a trade, and without putting cash down that will be upside down.

It'll definitely be interesting.

How much? Sorry I don't understand your chart.

Varies by vehicle.

 

[Lambeau]

69.7 months



Varies by vehicle.

View attachment 1744976

View attachment 1744977

View attachment 1744978

View attachment 1744979

Thank you.

Two more questions if you don't mind Nick:
- Is this their third increase?
- How many increase occur in a "normal" year?