Used Car Values Poised For Big Drop

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Negative equity looms for those with used car loans, there is a leadership shake-up at Ferrari, and Nikola. All that and more in The Morning Shift for December 21, 2021.

1st Gear: Used Cars

Used car prices have spiked for months because of low new car inventories, itself because of the chip shortage that has gripped the industry. This is not news, though the accounting firm KPMG said in a new report that prices have gotten so far out of whack that negative equity is now an issue, and likely will be in the future, too. Basically, if you took out a loan to buy a used car in the past year or so, you might owe more than your car is worth.

From Automotive News:

The used-car market has historically been closely correlated with the new-car market, KPMG global head

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Used-car prices are poised to peak in U.S. after pandemic surge

The record-breaking increase in used-car prices is probably coming to an end – and with it a key driver of the recent spike in U.S. inflation. The bellwether of the industry – the wholesale market where dealers buy and sell in bulk – already has topped out and prices of individual secondhand cars should follow in a matter of weeks, said Zo Rahim, industry analyst at Cox Automotive. Cox owns Manheim, the biggest U.S. auction house that sells millions of vehicles every year. Soaring prices for secondhand vehicles have helped push U.S. inflation to the highest in more than a decade. The cost of used cars and trucks climbed 10% in April, and another 7.3% in May, when they were responsible for one-third of the overall increase in consumer prices. All kinds of pandemic-driven shifts in supply and demand have contributed to the run-up. But there are signs that

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