Ever since 9-11, the industry is addicted to these incentives, especially zero percent financing. No one now dares to return to the old days for fear of losing market share.
someone posted this somewhere last week. So are the autos strong this past week due to DCX's announcement of 80 new models? or is it the phantom drop in unemployment claims? or because Jupiter is aligned with Mars?
freep.com
I sent the link to a friend who is the fleet and leasing manager for a local Ford dealership (he claims they are #99 largest Ford dealership in the US), asking him if this article is true.
His response:
Yeah, it's true! Most people are upside down when they trade in. Dealers can usually buy a car in good condition for $2-3,000 less than low blue book at the auction, so we always give the customers an equivalent amount when they trade in. It's very hard for anyone, nowadays, to build equity in a vehicle unless they had put a lot of money down, bought it at an excellent price, or got very large rebates - or any combination of these.
Since people, more and more, don't have a large down, and they all have negative equity, they will never get above water. Each time gets them deeper in the mire, until the lender says they need more down payment for them to be able to get their next car.
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