Are Car Prices Headed Down? | Yossi Levi
An auto dealer explains the suddenly industry shift towards "affordable"
If you' re planning on possibly purchasing or selling a car in the near future, or just curious about how the latest action in the auto market is impacting your current car's value, you'll want to listen to today's guest.
We're fortunate to be joined today by auto expert and car dealership owner Yossi Levi, who privides his latest boots-on-the-ground reporting on the key trends driving supply, pricing & lending in the car market right now.
With consumer demand weakening from the surge in cost of living, “affordable” is suddenly the name of the game. Yossi explains how, as a result, buyers are increasingly finding themselves in the drivers seat.
To hear his advice for both buyers AND sellers, click here or on the image below:
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Adam’s Notes: Yossi Levi (recorded 5.9.24)
EXECUTIVE SUMMARY:
Yossi describes the current auto market as bifurcated, where sought-after brands like Toyota, Honda, and Porsche maintain strong margins and low inventory, while others like Chrysler and Dodge struggle due to overpricing and lack of consumer demand. Toyota's inventory is more than 30% below 2019 levels, while Chrysler's inventory has surpassed 2019 levels. The average transaction price remains around $48,000, highlighting the divided market dynamics.
The pandemic caused significant disruptions in the auto market, leading to a shortage of new cars and a spike in prices by 30-45%. People have been holding onto their cars longer, with the average age of vehicles on the road now at 14 years, and the average mileage increasing from 65,000 to 71,000 miles. The market is still 30% below 2019 inventory levels, indicating ongoing inventory issues.
Delinquencies on auto loans are rising, particularly in the subprime category, with 60-plus day delinquencies eclipsing 2019 levels. Deep subprime lending has significantly decreased, comprising well under 1% of loans. Yossi notes that while lending performance is deteriorating, it is not in crisis mode yet, thanks to low unemployment rates and tighter credit availability.
Auto insurance premiums have increased by 25% year-over-year due to higher costs of repairs, parts, and theft. The average repair order at a body shop in America recently exceeded $1,000 for the first time. These rising costs are putting additional pressure on car ownership expenses, influencing consumer behavior and potentially impacting car prices.
There is growing consumer pushback against
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