Can’t say - it’s not in the lot today… 
Not if they made a down payment or trade in, or both.
And cars are now expected to last 5-10 years, not the three years of old days- the idea that your car depreciated in value by a third once you drive it off the lot is passe. Check used car prices if you dont believe me.
IF!
Good point.
There seems to be a growing trend of buyers rolling over negative equity into their new car meaning they are underwater an soon as they sign on the dotted line.
This was predicted by many people back as Covid was letting up considering people were getting loans they couldn’t afford (sound familiar?) which is not a big deal IF you keep your car for the term of the loan. However many people only hold onto a car for 3 years and loans were going out 7 or 8 years to get the payment lower.
I have not heard of this, but weirder things have happened.
I think the negative equity was more a factor of the now much rarer (but not fully gone) zero % down, usually some sort of combination of dealer / manufacturer incentives applied in lieu of an initial deposit and often predatory interest rates (in comparison to a traditional loan). IE, yes, very similar to the concerns about the prior housing bubble loans.
In such cases, especially with 20+% initial depreciation, you could be quite upside down for a substantial portion of time, especially depending on how the loan was structured (see predatory lending again).
And we’ll leave out people who constantly confuse leases vs purchases, which shouldn’t be an issue but often prey upon younger, first time buyers who want all the vehicle (of whatever sort) they think they can swing a monthly payment on. They often do that, and forget little things like insurance, registration, and other costs and quickly become overextended.
Still it may become a bigger issue, although as stated upthread, more as a side effect of other economic issues over the next 4 years possibly prompted by kneejerk economic decisions and efforts to claim moral successes against compromise.
This was my thought seeing this thread - a mortgage is for decades, but any imbalance in the car market as seen during and right after the pandemic has worked tiself out and prices are more rational now. Even loans and associated interest rates on new purchases would adjust quickly as the fed drops its rates. Whatever mess there was 3 or 4 years ago is almost over in terms of being paid off. Earlier crazy prices were I assume a feature of panic buying - when you need a new car, it can’t wait, so prices were bid up. The last while, that is not a factor as the market is not so tight.
Other than extremely low-end budget models, at what point since the 1930s have cars been expected to last just 3 years?
My experience is that until about 25 years ago 100,000 miles meant the car was rattly and high-maintenance. That’s more like 6-8 years, but my 2010 Dodge 1500 with 205,000 miles and normal maintenance is doing fine. Pick your (Japanese) model carefully and 300+ should be easy.
Average annual mileage in the US is around 14,000-15,000 miles; if you assume a car is good for 200K miles, then it should last for about 14 years.
Due in part to manufacturing improvements, such as tighter tolerances and better anti-corrosion coatings, in 2012 the typical car was estimated to last for 200,000 miles (320,000 km) [4] with the average car in 2024 lasting 160,545 miles according to the website Junk Car Reaper.[5]
According to a recent study by Junk Car Medics the average vehicle in the USA last 16.58 years and 156,470 miles.
This. Not only do homes rise in value, people tend to prioritize paying off their mortgage. Because of that, AFAIK there isn’t much of a market for banks to package up and sell car loans as CDOs.
Ergo, banks are not going to have billions of debt on their balance sheet in the form of car loans that suddenly become worth,
Banks and car finance companies definitely package up car loans as asset-backed securities. I can’t tell if you’re using CDO as a synonym for ABS or if you mean the toxic CDOs of MBS that blew up in 2008. An ABS (asset-backed security) is a type of collateralized debt obligation (CDO).
Three years may be a little low, but planned obsolescence was definitely a thing. The ‘high’ point may have been with some American car makers in the 1970s. Chrysler pretty much admitted it, with their “The pride is back” campaign in the early 1980s.
I’m using the term CDO more broadly to refer to the extent banks held RMBS-based CDOs back in 2008. I guess it makes sense there would be ABS for car loans as banks will package up anything. But I think the big difference is that back in the 2000s there was an assumption that real estate never went down in price and people bent over backwards to pay their mortgage. So there was very much a mentality of just buy more as they can never decrease in value.
IOW, I would not expect banks to have billions of dog shit wrapped in cat shit based on auto loans to the point where they risk becoming insolvent.
Right, there are no CDOs of auto loan ABS (dog shit wrapped in cat shit, I guess) that I’m aware of. The AAA tranche of auto loans and leases really is AAA and have never defaulted, not even during the financial crises.
My first car, a 1968 Plymouth, only had a 5 digit odometer. They were not expected to last hundreds of thousands of miles.
Yes but it doesn’t even need to rise. A home’s value remains substantially similar over auto-borrowing time spans when comparing the loan types. Meanwhile, the vehicle is worth half the purchase price after, say, three years of normal driving use.
In March of last year I sold my seven year old Civic with over 60k miles for 66% of what I paid.
Hondas are good like that. In 2012, I bought a two-year old Fit for $10,000. When a cab driver t-boned me in 2017 and totaled it, my insurance paid me $8,600.
Timing matters hugely. You bought at a time of relatively low prices and sold at a time of relatively high prices.
In addition to, as said above, the pretty much industry-leading nature of Honda when it comes to slow/low depreciation.
Sure, you win some, you lose some and shame on me for making up numbers. There are better and worse times for that home purchase, too.
Maybe that Civic sale was the popping bubble OP was talking about. Imagine being the chump that bought that overpriced thing!
This is the answer. If you’re not confident enough to short the SP500 right now, then you’re not really confident that the car market is going to crash.