www.laspeedgarage.com

https://www.lewrockwell.com/2016/01/...o-loan-bubble/


Snips from that link -

" . . .Automotive companies have taken advantage of the cheap borrowing costs, increasing vehicle production by over 100 percent since 2009 . . . .


. . . .Not only are more auto loans being originated, but they are also increasing in duration. The average loan term is now sixty-seven months (that’s 5.58 years) for new cars and sixty-two (that’s 5.16 years) months for used cars. Both are record numbers. .. . .


. . . Used car prices have increased by nearly 25 percent since 2009, while new car prices have increased by over 15 percent. . .

. . . The auto bubble has yet to burst, but its negative effects are already starting to gradually appear. For one, delinquencies on car loans have increased by nearly 120 percent, from just over 1 percent in 2010 to 2.62 percent in 2014. Since cars rapidly depreciate in value, this number is projected to spike. . .


. . .If defaults sharply increase in the coming years as projected, the market will become flooded with used cars, and their prices will, with near certainty, fall to a significant degree. . .


. . . Economists, politicians, and the general populace need to start learning that favoring debt over thrift isn’t beneficial to the country’s financial well-being. Failure to do so will simply lead to more bubbles, more malinvestment, and more economic headaches in the years to come. . . .

As someone who repossessed cars from 89 to 93 (Collapse of the Aerospace Industry here in SoCal) I've seen it up close. I repo'd everything from Hyundai to Mercedes. No level of consumer is immune, with the exception of maybe the 1% of the 1%

In my estimation, healthy economies are built from the ground up, not the top down. A sound economic base has savings, buys homes they can afford, furnishes those homes and buys cars within their means. Those purchases lead to stable employment for people making those goods, and they follow suit. Anything else is a recipe for disaster

Speaking of plummeting car values... I've been browsing around newish ('14-15) used cars for us the last couple days. We'd like to replace my wife's 260k+ mile car sooner rather than later. We've been browsing different models from the Camry to the Malibu. What really surprised me is that most of the mid-sized sedans we've looked at have dropped in value by around 50% in only a year or two. This is why I vowed to never buy another car brand new off the lot after my Cobra. I'd much rather wait a year or two, and pay half the price. Even when I get myself a fun car again, it'll be at least a year old.

That link, however, cites data that begins with the bottom of the bust of the bubble, when car sales were at their lowest, so that exaggerates the growth in sales that followed. Still, a lot of the sales since growth since 2009 was enabled by the "stimulus" of stupid low rates.

The bottom in used car prices likely is ahead of us.