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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk -- Ignore unavailable to you. Want to Upgrade?

To: Winfastorlose who wrote (175932)	7/3/2022 9:28:13 AM
From: robert b furman	10 Recommendations Recommended By #Breeze Ben Smith D.Austin DrO mark2market and 5 more members Read Replies (1) \| Respond to of 206750

Hi Win, Autos are at an inflated price - due to shortage of product. The reduced production of new cars has sent buyers searching for and driving up the price of used vehicles. The subprime financing model almost always requires "proof of income stipulations". Those loans usually include buyers fees from the dealer. Underwriters of those loans know and expect repossessions. They often reserve 30 to 35 percent for repos. The loan origination fees fund that reserve. The older the loan is the higher the probability that it will be paid. Often times a car loan is the only equity a poor credit customer has - he'll protect that equity and continue paying. The author is trying to build a scary scenario. Dealers lots are empty. Believe me if repossessions did pick up, there would be a long line of dealers wanting to buy every one of them. Car loans are easy to repossess. When repossessed they are turned into cash very quickly via a nationwide system of auto auctions (Adesa and Mannheim being the two largest). I told my partner I needed a new truck to pull my car trailer. I said let me know when $5.50 diesel starts creating repos on diesel trucks - he said none to talk about so far just last month. I think that used car prices will remain high for longer. Used car prices only drop hard when OEMs have such a large inventory of new, they have to place large cash rebates on them to move them off the lot. Then so many trades are taken in that the auctions get flooded. I DO NOT see that happening this year at least. There are a whole lot of dealers out there hoping that author is correct. I think he is an alarmist warning about something that just isn't going to happen. IMHO Bob