Also as much as the pickup fad and the Obama era buyback to reduce used car supply both really suck, I imagine it's made the traditional car manufacturers a ton of money. Tesla, a company dependent on debt, is going to directly compete with a bunch of cash rich giants in a time of high interest rates. Seems like it's pretty safe to bet against them even if they probably had a head start on some stuff.
Legacy manufacturers are going to be raking it in due to high interest rates, as most of them have their own finance companies, Tesla does not. Tesla purchases are typically financed through BoA or Wells Fargo.
Used cars are another interesting area. I was talking to someone who flips cars via auctions a few weeks ago and he said the auction lots are jammed with repos that they can't move. Finance companies gave out loans that were way overvalued, people couldn't keep up with payments, and now they can't unload the cars at auction because their reserve prices are too high for the flippers to be able to turn a profit. There's a huge used car bubble looming, similar to what happened with all the bad mortgages in 2008. Least insane economic model.
Auto loans are fixed. It's the cost of food, gas and utilities that are eating up people's checks. The rising interest rates affect what resellers can get for the cars they buy at auction. Used car rates have always been really high, but bow they're astronomical, like 10% with good credit, as high as 20 for bad. At 20% you've doubled the price of the vehicle, so most people's income won't even qualify them for a loan.
Canada probably has better consumer protection laws that make it harder to repo, would be my guess.
Also as much as the pickup fad and the Obama era buyback to reduce used car supply both really suck, I imagine it's made the traditional car manufacturers a ton of money. Tesla, a company dependent on debt, is going to directly compete with a bunch of cash rich giants in a time of high interest rates. Seems like it's pretty safe to bet against them even if they probably had a head start on some stuff.
Legacy manufacturers are going to be raking it in due to high interest rates, as most of them have their own finance companies, Tesla does not. Tesla purchases are typically financed through BoA or Wells Fargo.
Used cars are another interesting area. I was talking to someone who flips cars via auctions a few weeks ago and he said the auction lots are jammed with repos that they can't move. Finance companies gave out loans that were way overvalued, people couldn't keep up with payments, and now they can't unload the cars at auction because their reserve prices are too high for the flippers to be able to turn a profit. There's a huge used car bubble looming, similar to what happened with all the bad mortgages in 2008. Least insane economic model.
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Auto loans are fixed. It's the cost of food, gas and utilities that are eating up people's checks. The rising interest rates affect what resellers can get for the cars they buy at auction. Used car rates have always been really high, but bow they're astronomical, like 10% with good credit, as high as 20 for bad. At 20% you've doubled the price of the vehicle, so most people's income won't even qualify them for a loan.
Canada probably has better consumer protection laws that make it harder to repo, would be my guess.