Posted by
Message
anc
Member since Nov 2012
16484 posts

The coming automobile market collapse and what it means

The auto industry collapse is just beginning. The next 18-24 months are going to be painful for your car salesman friends.Pre-2020, auto loan delinquencies were pretty much between 2-3%. Today that number has exploded. Its 10% in Texas and 23% in DC. Nationwide, its around 9%.

Americans owe more than $1.2 trillion in auto loans. Its the highest in history and that number is up 75% since 2009. More than 85% of purchased cars are financed.

Part of the problem is that over the last decade or so, car dealerships are making more profit on the financing deals than the car sales themselves. This has been very lucrative for the finance guys at the dealerships, but not great for the consumer. These shady places are giving customers 15%, 20%, 25% or more interest rates on cars. Even reputable dealers push up the rates. A customer that qualifies for 2% financing might be given 5%, and the dealer gets a kickback.

One study from 2021 said that about half of all auto loans were given to people who could not afford them. Only 4% of applications verified employment or income. So what's happening - these loans are starting to default.

After the China flu chip shortage slowed down new car deliveries, the price of used cars exploded, and not only were customers that couldn't afford a loan given one, they were immediately upside down. That $30k 2020 Chevrolet Impala is worth $17k.

These cars are starting to get repossessed and with used car prices down 22% from their 2021 high, banks are starting to take some massive losses. And with more and more cars getting repossessed due to high inflation and rising gas prices, they are expected to drop another 20% over the next year (Side note and not the point of the thread - if you are thinking about buying a used car - wait until 2023)

So the banks. are going to be looking for a bailout, and they might get it, even if the GOP takes over after November. Banks are big time lobbyists. Unlike student loans, mortgages and credit cards, there is no federal oversight of auto lending. The deal the banks might end up with would be "We'll bail you out, but we want to regulate auto loans."

Which sounds like a win for consumers but it isn't. Lenders won't be able to lend someone that doesn't qualify for a car any money, even at a high interest rate. It wouldn't take long for there to be a crisis.

Enter the government, who could conceivably come up with incentives for lenders to lend - as long as the cars being sold are electric vehicles. This is where we are going, folks. Everything is by design.

This post was edited on 7/24 at 3:18 pm


udtiger
US Space Force Fan
Over your left shoulder
Member since Nov 2006
88991 posts

Personal responsibility?

For suckers and rubes.


SlowFlowPro
Stanford Fan
Simple Solutions to Complex Probs
Member since Jan 2004
392747 posts

quote:

Enter the government, who could conceivably come up with incentives for lenders to lend - as long as the cars being sold are electric vehicles.

There simply are not enough electric vehicles for this policy to ever even be floated. NO matter how big the crash, this ain't the goal.


keakar
Member since Jan 2017
23150 posts

quote:

The coming automobile market collapse


its all part of the plan

they are just like S&L crisis directly caused by government policies, and just like then, congress will spend trillions bailing them out so they can start over with only green electric cars and have no more gas engines.

next they will follow that up with cash for clunkers buying back all remaining used vehicles that need gas and complete the circle

iits the same exact playbook they keep using time and time again and only the name of the excuse used changes


PrecedentedTimes
LSU Fan
Baton Rouge
Member since Dec 2020
864 posts

quote:

The next 18-24 months are going to be painful for your car salesman friends.


Lol, frick em. I could understand upping your prices a bit to offset higher prices but these guys have been overcharging by >20%.


$1500 beater civics when???


Strannix
USA Fan
Banana Republic
Member since Dec 2012
43236 posts

You have millions of fricking idiots living paycheck to paycheck running out and buying 70-100k dollar vehicles. The chickens are coming home to roost.


jvilletiger25
Auburn Fan
jacksonville, fl
Member since Jan 2014
12959 posts

quote:

These cars are starting to get repossessed and with used car prices down 22% from their 2021 high, banks are starting to take some massive losses. And with more and more cars getting repossessed due to high inflation and rising gas prices, they are expected to drop another 20% over the next year (Side note and not the point of the thread - if you are thinking about buying a used car - wait until 2023)


Good. My son turns 16 next year. Looking forward to midsize trucks coming back down into the teens, where they belong.


Replies (0)
Replies (0)
733
Hawkeye here
Member since Jul 2022
194 posts

We have a generation, or two, of consumers & investors that don't understand the carnage that higher rates can do.

The small tech companies that need cheap money to survive and grow.

Car sales, home sales, any significant purchase that requires financing.

W


This post was edited on 7/24 at 3:31 pm


TigerAttorney
LSU Fan
Member since Nov 2017
1103 posts

I was literally just looking at vehicles. The going interest rate for excellent credit is in the 7’s. That’s insane.


oldskule
USA Fan
Down South
Member since Mar 2016
11266 posts

quote:

Enter the government, who could conceivably come up with incentives for lenders to lend


What good will incentives do for the lenders, when the public cant pay the loans back....

This is another "transfer of wealth" stategy to quietly funnel free money to the general public.


Replies (0)
Replies (0)
65
TD SponsorTD Fan
USA
Member since 2001
Thank you for supporting our sponsors
Advertisement
NorthGwinnettTiger
Auburn Fan
Member since Jun 2006
49552 posts

Love my paid off 2014 and 2015 vehicles. Car notes fricking suck.


CuyahogaTigerJr
LSU Fan
Northeast ohio
Member since Aug 2018
1926 posts
 Online 

quote:

The going interest rate for excellent credit is in the 7’s

That’s crazy


Replies (0)
Replies (0)
250
PrecedentedTimes
LSU Fan
Baton Rouge
Member since Dec 2020
864 posts

quote:

We have a generation, or two, of consumers & investors that don't understand the carnage that higher rates can do


Nonsense. Low rates exacerbate income inequality as they encourage taking on more debt. Both on a personal level (credit cards, auto loans) and on a corporate level, as shitty companies with no reason to exist continue to scrape by on massive VC loans. The past 14 years have allowed the economy to grow bloated and inefficient, and has pushed up the prices of everything as a result. Rate rises are (long term) good and needed to happen 5+ years ago.

Trust me I hate the Fed as much as the next guys but if we can’t have a fed-free America than we can at least hope that they don’t cave to cyclical political pressure.
This post was edited on 7/24 at 3:39 pm


Replies (0)
Replies (0)
240
hawkeye007
LSU Fan
Member since Feb 2010
5404 posts

The banks want have an issue as much as the lenders. Big banks l require more verification and higher credit scores for their car loans. Banks are also regulated much heavier as depository institutions. Lenders specifically auto loan lenders have very little regulation. Their fall will be quick with no bail out. The customers will burden the most of the damage.


CoachChappy
LSU Fan
Member since May 2013
30795 posts
 Online 

quote:

Love my paid off 2014 and 2015 vehicles. Car notes fricking suck.


Same here. I just sunk $1500 to fix the 13’s a/c. A damn used explorer with 65k miles cost damn near more than the sticker on my 13 F-150


Replies (0)
Replies (0)
180
llfshoals
Alabama Fan
Member since Nov 2010
12704 posts

Hoping this means the new Lexus Id planned on getting next year will be cheaper


Replies (0)
Replies (0)
112
Quidam65
Q Continuum
Member since Jun 2010
19114 posts

So the best thing my SO and I have done is both of our cars are paid off.
This post was edited on 7/24 at 3:43 pm


Replies (0)
Replies (0)
150
tigerpawl
LSU Fan
Can't get there from here.
Member since Dec 2003
20085 posts

Car and truck prices will never, I repeat never, go lower. Consumers have shown what they are willing to pay. Now go do the right thing…


Replies (0)
Replies (0)
1228
Diamondawg
Mississippi St. Fan
Mississippi
Member since Oct 2006
27972 posts
 Online 

Sounds like there should be a glut of used vehicles with the repos going up. I was going to buy one last vehicle last year but I waited too late and the chip shortage hit. Then the cost of both new and used shot up. I waited too late. Normally, I buy a CarMax like vehicle where someone else has taken the big hit on depreciation but I figured a new one would last a lifetime for me as I don't really drive that much anymore. But when a frigging Jeep Grand Wagoneer costs $90K, I'll just keep driving what I've got. My 2007 2500HD Chevy has but 130,000 on it and it's not my every day vehicle. It might dry rot before anything else happens to it.
This post was edited on 7/24 at 3:55 pm


Auburn1968
Auburn Fan
NYC
Member since Mar 2019
12352 posts

Sub-prime auto meltdown?


first pageprev pagePage 1 of 6next pagelast page

Back to top

logoFollow TigerDroppings for LSU Football News
Follow us on Twitter, Facebook and Instagram to get the latest updates on LSU Football and Recruiting.

FacebookTwitterInstagram