The jobs report and minutes from the Federal Reserve’s June meeting were the economic highlights of the week, but they are, respectively, a lagging indicator and old news. This column instead digs into the auto market, where there is an underappreciated ticking time bomb.
Lucky Lopez is a car dealer who has been in the business for about 20 years. In recent meetings with bankers, where he bids on repossessed vehicles before they go to auction, he has noticed some common characteristics of the defaulted loans. Most of the loans on recently repossessed cars originated during 2020 and 2021, whereas origination dates are normally scattered because people fall on hard times at different times; loan-to-value ratios, or the amount financed relative to the value of the vehicle, are around 140%, versus a more normal 80%; and many of the loans were extended to buyers who had temporary pops in income during the pandemic. Those monthly incomes fell—sometimes by half—as pandemic stimulus programs stopped, and now they look even worse on an inflation-adjusted basis and as the prices of basics in particular are climbing.
I saw this coming when Biden shut down the Keystone pipeline on his first day in office. All fuel prices where guaranteed to soar. People will be freezing this winter also. The housing market and defaulted loans will fall right in line shortly.
All the ‘teat-suckers’ thought the stimulus checks would keep coming…
The opposite happened – they stopped and the price of everything skyrocketed!
Now, the can’t afford continuing payments – let alone food and gas….
And if you received a STIM – you noticed that the amount was deducted from you taxes. Some folks thought the STIM was FREE.
Nothing is free, we just borrowed from the future and many got “sticker” shock when taxes were due.
Must always read the fine print in everything!
What are you talking about? That’s just not true. The stimulus payments were not taxable income. You’re free to debate the wisdom or foolishness of things, but don’t just make stuff up.
Prices TOOOO HIGH !!!! People can’t afford them !!!!!
I heard Ms. Giordano is going to let her two Jeeps get repoed if she doesn’t get elected as the County Executive like she did her house. She knows that she will lose her gravy job with the Board of Education after her constant attacks on them. Don’t let her pity party be a reason to vote for her!
So repo’s are up (ok its a business with the bank needing their $$$$, repo’s needing theirs and auction houses…ok ok)
Big 3 and other automakers are still behind with chips to run the cars/trucks
There are no rental cars due to chips so they are keeping their inventory longer
I’m wonder how much did the Big3 and others pull back on model years 2021/2022 or is there a future glut of cars/trucks coming. Right now would be the normal time to turn to making 2023 models.
Interesting times!
just look at all the cars and trucks with temp tags on the road right now