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"I don't think you should wait until May to buy a car; by then, interest rates will be higher." -- KMX salesman trying to create a sense of urgency.
Edmunds published a Q4 used car report this past week that affirms several trends we've previously identified as a risk to the industry.1 What's most frightening is that consumers are almost completely unaware that their ability to buy their next car has been compromised by negative equity. The average age of a trade-in is four years +/- mileage. People who bought cars during the pandemic three years ago will seek to trade these cars in only to learn they can't get a bank to roll the old loan into a new loan. Our research and analysis indicate that the dollar amount of the negative equity is much higher than Edmund suggests, and many more consumers will be affected than the pundits realize. This is a bad sign for the dealerships and the banks. Here is why…