Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.
Used Car Wholesale Values Drop 10.6 Percent Year-Over-Year, Per Maheim
Used car wholesale values continue to drop with the latest Manheim Index update showing decline through October, down 4.5 points from last month to sit at 200 flat — that’s down 10.6 percent from last October’s 223.7. In case you’re not a frequent reader of The Morning Dump, Manheim is a massive wholesale auction house that shifts more than five million cars a year, so it has a ton of data on wholesale car values. While wholesale trends don’t always directly correlate to retail trends, the Manheim Index is a useful leading indicator of where the car market is going. While, for some, it’s good to hear that the Index is now sitting at 200 points flat, there are a few things to keep in mind. On the negative side, the last truly normal month before the fan hit the shit was February 2020, with the index clocking in at 143.5, so we still have a long way to go before things return to anything resembling “normal.” On the plus side, the index is down from peak January silliness of 236.3, so the slow return to no longer screaming is happening. In addition, pricing continues to fall behind what Manheim expects. MMR is basically Manheim’s version of Kelley Blue Book or NADA Guides – a way of valuing used cars. So what does all of this mean? Well, every dealer who bought used inventory at the top of the market and let it sit on the lot with high profit margins is likely not thrilled right now. Get ready for loads of write-downs heading into year-end. Oh, and from where I’m standing, I’d think used car prices are only going to continue to drop as new car supply increases. Speaking of new car supply, Manheim has some lovely insights into the state of the market. Wow, a 14.9 million SAAR pace. After years of shortages and production cuts, don’t you just love to see it? What’s more, these sales aren’t just for retail customers. Approximately 2.1 million of those vehicles are expected to go into government fleets, corporate fleets, rental fleets, and the hands of other new fleet buyers. This is fairly critical when it comes to the supply of late-model used vehicles and Manheim’s already seeing ex-rental car values decline by four percent month-over-month and 5.2 percent year-over-year. In addition, average mileage on these “rental-risk” units is down 6.9 percent year-over-year. Nice. If you don’t need to buy a car right away and are just looking to add to your fleet rather than replace an existing vehicle, I’d think it might be best to wait things out for another few months. We’re still quite a way from used car prices approaching pre-pandemic levels, so I’d hope for further declines in used car wholesale values over the next few quarters. However, if you need to buy a used car relatively soon and are looking at buying from a dealer, be sure to weigh reduced prices against interest rates. One good interest rate hike could effectively cancel out month-over-month price reductions, plus as used car values decline, so does the value of any car you’re trying to sell. Come to think of it, we have a whole podcast episode on this subject that you’ll probably want to check out.
Carvana Appears To Be Falling Fast
Speaking of used cars, Bloomberg reports that used car retailer Carvana is cratering in the marketplace, quickly losing value as reality continues to bite. Between falling inventory values, interest rate hikes, and some apparently questionable business practices, I’m not terribly surprised to hear of Carvana’s valuation tanking. While the general state of the used car market means that fiscal year 2022 will be a rocky one for dealerships, Carvana certainly hasn’t helped its cause by making several states hate the company. If you want to learn more about Carvana’s dealer license suspensions and criminal charges, check out this excellent piece Mercedes Streeter did on the used car vending machine chain.
Bosch To Pay $25M Dieselgate Settlement
Oh, you thought Dieselgate was over already? Nope. The emissions cheating saga continues as Reuters reports that Bosch has agreed to pay a $25M settlement over California’s own diesel emissions probe. Well, that last clause just made things more interesting. It could open up a can of worms for any automaker that’s used Bosch-supplied equipment to squeak through laboratory emissions testing. If I were a manufacturer who engaged in a bit of dodgy emissions certification, I’d be quaking in my boots right now. Bosch confirmed the settlement but said it “neither acknowledges the validity of the claims brought forward, nor does it concede any liability.” Under the settlement, Bosch must disclose to California if it concludes a manufacturer will use or has used software to evade emissions rules.
Europe Expected To Import A Ton Of Chinese Cars
Despite some pleas for more protectionist vehicle trade policy, Automotive News Europe reports that the analysts at PwC expect 800,000 Chinese-built cars to be sold in Europe by 2025. It’s true, Chinese brands finally seem to be making waves in Europe. MG is already gaining a foothold with affordable, sensible cars that seem positioned for the average person, while Polestar has benefited from affiliation with Volvo. Perhaps more interesting is that if this forecast comes true, Europe could go from being a net exporter of new cars to being a net importer of new cars in just three short years. “Chinese [automakers] are now seeking to consolidate their foothold in Europe,” PwC said. “Compared to their previous market entries in the past decade, the playing field has now been significantly leveled.”
The Flush
Whelp, time to drop the lid on today’s edition of The Morning Dump. With used car prices continuing to slide, I bet we all have our eye on a specific make and model of car we want once depreciation sets in again. Perhaps you plan on picking up a cheap Nissan Leaf for around-town use, or maybe you want a gently-used Ford F-150 for towing but don’t want to pay through the nose for it. Whatever the case, I’d love to know what you really want to buy once all this craziness is over. Lead photo credit: “Car Dealership on Western Ave” by David Hilowitz is licensed under CC BY 2.0. Oh baby, when it comes to depreciation do I have a plan. I love the BMW M550i. It’s huge, comfy, has a big old V8, and is apparently a sharp driving experience for what it is. But new they’re 80-100k cars. I can’t afford to go that route…but I see certified ones with reasonable mileage pop up in the 50s/low 60s all the time. For that price they’re one hell of a buy…granted I’d definitely only take that plunge on a certified one or maybe one from Carmax where I can use the Demuro method and extended warranty the hell out of it. But in a few years, when the newly refreshed ones are in that range? Oh baby…I’ll make a move and have the dad car to end all dad cars, and the wife will approve because it’s an all wheel drive boat with seating for 4 adults. NGL I just want a V8 sedan and the Charger is decidedly not my style and I’d like all wheel drive so the IS500 just doesn’t do it for me/they’re probably never depreciating. Carvana is not some ‘hot new tech startup.’ They never were. They are literally Ugly Duckling, one of the most notorious BHPH dealers in the world. Same owners. Same management. Same staff. All Carvana ever was, was an attempt to use rebrand-away while taking their scam online. And how bad are they? Well, they got an $8M fine from CFPB for illegal debt collection practices – which is absolutely unheard of. Scumbag downstream collectors get fined daily, but the loan originator can go ten times further legally. And that wasn’t far enough for these criminals. The complete list of organizations these felons are running or involved with is almost impossible to figure out, because they make extensive use of private ownership, Delaware corporation laws, shell corporations, rebrand-away(TM), and shuffling the deck to hide it. The short list includes ownership of DriveTime, Bridgecrest Acceptance, Carvana, GO Financial, SilverRock Group, and dozens of subsidiaries under those. Oh, and it should surprise no-one at all that patterns of blatant insider trading at Carvana are rampant. After all, they learned from experts. Welcome to reality, where 75% of everything is a scam. Unfortunately there are just so many people who lack the ability to use common sense and critical thinking, and they get scammed. Anything lower and you are looking at rotten frames, cabs, rockers, major issues, for 8 grand. If I can pick one up for around 10k that will not be a basket case, I would be happy. I even went to 2wd/v6/normal cab and you are looking over 10k. Those usually are sub 10k and would work for me. I am really looking into mid next year. https://www.carfax.com/vehicle/5TEWN72N53Z300974 https://www.carfax.com/vehicle/5TEGN92NX3Z247821 https://www.carfax.com/vehicle/5TEGN92N53Z169156 The right truck is the one I want, not that hive mind says I should buy. 🙂 And if a recession hits and companies like Caravana have to dump their stock, then a 30% drop becomes likely. Beyond a quick “no fucking shit Ugly Duckling’s attempt to run the scam online is tanking.” Oh, and the collapse and federal seizure of FTX for wire fraud is going to be absolutely hilarious to watch. With used car prices continuing to slide, I bet we all have our eye on a specific make and model of car we want once depreciation sets in again. Perhaps you plan on picking up a cheap Nissan Leaf for around-town use, or maybe you want a gently-used Ford F-150 for towing but don’t want to pay through the nose for it. Since FCAtlantis has truly gone and fucked themselves (removing every engine but the shitty 3.6 from the WL in order to force customers to buy Wagoneer/Grand Wagoneer,) I’m watching the market on ’22 WL’s. Lots of 1-year buybacks for attempted dealer flips in the market, and they are all going to be eating a big pile of shit. Prices are already dropping a bit – $1-2k at a time. And ain’t nobody going to be dropping literal mortgage money ($65k+, over $1k/month) on these things. Not with the scale and breadth of profiteering, extraction, and rent-seeking going on. I went to see what Carvana’s PE ratio is because I’ve seen a few other tech companies whose stock cratered in the past few months but are still overpriced for what they make. Unfortunately, Carvana has no PE ratio because it has no E. They’re apparently losing money on a consistent basis, despite the insanity of the car market for the past couple of years. How do you lose money as a shady used car dealer? I don’t even understand. I also have a leased vehicle to replace in May. I’m sure not going to get a sub $400 lease rate with 0 down on a near-luxury 7 passenger SUV again, but luckily I don’t need something that big anymore now that 2 of 3 kids are out of the house. I’m hoping to go PHEV or EV for the replacement. Maybe a Mitsubishi Outlander PHEV or Bolt EUV. I had a rental Trax a few months ago that was just a godawful car. Ugly, sluggish at best, boring to drive, chintzy in every way, not comfy at all, bad NVH.. I couldn’t find anything positive about it at whatsoever… but now that I’m looking at your list I agree that it was “simple”, had (10 I guess?) airbags, and had a hand brake. Visibility was ok. 5 star rating apparently (for crash safety I guess?) “Nimble” is a stretch. “Well made” is absolute lunacy. I should probably sell my sportsmobile now, though, while prices are still high.
