The Car Market Is In FINANCIAL RUIN

Summary

The video discusses the current struggles in the automotive market, highlighting dealership challenges due to oversupply of vehicles like F-150s and Rams. Large banks like Ally are setting aside funds for rising auto loan delinquencies, while used car dealers face difficulties sourcing quality vehicles from auctions. Walter Chrysler's great-grandson offers to buy the Chrysler brand from Stellantis to preserve its legacy. The market is hurting consumers, with inflated prices and reduced inventory, while mechanics benefit from car owners keeping vehicles longer. The speaker advises consumers to buy affordable used cars and get them inspected before purchase.

Takeaways

• 🚗 AutoNation has sold two of its Ford dealerships, signaling potential challenges across the automotive industry.
• 🚛 Dealerships nationwide are seeing a surplus of trucks like the Ford F-150, leading to financial strain due to unsold inventory.
• 💸 Large banks, such as Ally Financial, are allocating more funds to cover auto loan delinquencies, anticipating an increase in repossessions.
• 🏭 Walter Chrysler's great-grandson has expressed interest in buying the Chrysler brand from Stellantis, aiming to preserve its legacy.
• 📉 Stellantis dealerships are struggling to sell inventory, with one offering a $100,000 discount to clear stock, a sign of desperation.
• 🔧 Used car dealers face challenges due to a shortage of trade-ins, affecting their inventory and increasing their auction attendance.
• 💰 High car prices, especially for new cars, are causing customers to keep their vehicles longer, leading to fewer trade-ins and poor-quality used cars at auctions.
• 🛠️ Mechanics are benefiting from the current market, as people keep their cars longer and require more repairs, increasing demand for services.
• 📉 Repossession rates are rising, particularly for 'Buy Here Pay Here' dealers, as consumers struggle to make payments on vehicles.
• 🚙 The automotive market is hurting both new and used car dealers, but manufacturers continue to raise MSRPs despite the weak demand, worsening the situation for consumers.

Q & A

Why did AutoNation sell two of their four dealerships?

AutoNation sold two of their four dealerships due to the current challenges in the car market, where dealerships are experiencing difficulties in selling vehicles, leading to an accumulation of inventory.

What is causing the large banks like Ally Financial to put back more money?

Large banks are being forced to put back more money due to the increasing level of auto loan delinquencies, indicating that many customers are struggling to pay their auto loans.

Why is Walter Chrysler's great-grandson interested in buying brands from Stellantis?

Walter Chrysler's great-grandson is interested in buying brands from Stellantis because he sees the current direction of the brands as being detrimental to their heritage and wants to save the Chrysler brand that his great-grandfather founded.

What is the proposal made by Walter Chrysler's great-grandson in his open letter to Stellantis?

In his open letter, he proposes a graceful and profitable exit for Stellantis from the Chrysler and Dodge Brands, suggesting that Stellantis is not interested in keeping these brands and is trying to exit them quietly.

Why are some Stellantis dealers trying to get out of the business?

Some Stellantis dealers are trying to get out of the business because they are unable to sell their inventory, leading to desperate measures such as offering significant discounts to liquidate their stock.

What is the impact of the current car market situation on used car dealers?

The current car market situation is negatively impacting used car dealers as there are fewer trade-ins coming to auctions, forcing them to visit more auctions to find cars worth selling, which is time-consuming and affects their bottom line.

How are auto auctions being affected by the car market downturn?

Auto auctions are being affected by having fewer vehicles to sell, which directly impacts their revenue since they make money on transactions. This is due to new car dealers struggling to sell their cars, leading to a decrease in trade-ins.

What is the current state of auto loan delinquencies, and how is it affecting the auto finance industry?

Auto loan delinquencies are rising, causing auto finance companies like Ally to see a drop in auto loan income and forcing them to set aside more money to cover expected losses due to non-payment of loans.

Why are the quality of cars coming to auctions decreasing?

The quality of cars coming to auctions is decreasing because people are keeping their cars longer, leading to more wear and tear, and only trading them in when they are in poor condition and require costly repairs.

What is the current situation with Buy Here Pay Here dealers and why are repos spiking?

Buy Here Pay Here dealers are facing challenges as they have to extend loan terms on older, more expensive cars that are more prone to breakdowns. This, combined with customers' inability to afford repairs or higher payments, leads to more repos as these cars are returned in poor condition.

What advice does the used car dealer provide for consumers looking to buy a car in the current market?

The used car dealer advises consumers to buy something they can afford, preferably used, and to have any used car checked by a mechanic before purchase to avoid buying a vehicle that will require immediate and costly repairs.