Soaring Lease Comes back Set To Wreak Havoc Used Car Pricing and Auto Industry Profits

For months we’ve warned that declining used car prices could spell disaster for subprime auto securitizations (see “Slumping Used Car Prices Spell Disaster For Subprime Auto Securitizations”). While it’s always difficult to predict the exact timing of when bubbles will burst, a combination of record-high lease comes back in two thousand seventeen and 2018, combined with rising interest rates could imply that the auto bubble is on the precipice.

As Bloomberg recently pointed out, strong used car pricing is a critical component required to prop up the overall auto market. While American’s love their brand fresh cars, if used car prices become too soft then substitution can hurt fresh car sales. Add to that the influence of falling residual values on the finance arms of the auto OEMs and you have all the ingredients required for an auto market meltdown.

A glut of used vehicles has commenced to depress prices. That trend will intensify as Americans will comeback Three.36 million leased cars and trucks this year, another leap after a thirty three percent surge in 2016, according to J.D. Power. The fallout has already begun, with Ford Motor Co. pruning $300 million from its financial-services arm’s profit forecast for this year.

“Ford is the canary in the coal mine,” said Maryann Keller, a former Wall Street analyst who’s now an auto industry consultant in Stamford, Connecticut.

This haul may be hitting the rest of the industry, too. A National Automobile Dealers Association index of used-vehicle prices declined each of the last six months of last year. If used values weaken more than anticipated, it can lead to losses across the industry, hitting carmakers, auto lenders and rental companies.

Unluckily, the volume of lease comes back is only expected to grow even more in two thousand eighteen with comes back expected to treatment 4mm units.

As J.D. Power points out in it’s most latest “NADA Used Car Guide Industry Update,” the flood of lease comes back is driving used car prices lower.

Of course, how we got here is fairly visible. The majority of Americans buy cars based on one factor: monthly payment. And when it comes to managing your monthly payment to the lowest level possible, leasing is the way to go. Per the Bank Rate calculator below, buying a $30,000 car comes with a monthly payment of around $600 while leasing the same vehicle might only cost $420 per month.

Of course, why buy a $30,000 Ford for a $600 monthly payment when you could lease a $40,000 BMW for $560? You can afford it so long as you can cover the monthly payment, right?

Not remarkably, these dynamics have caused lease share of U.S. vehicles to skyrocket in the wake of the “good recession” as people seek to maintain their excessive lifestyles on smaller budgets.

Of course, the problem is that leased vehicles get returned to their originating lenders every three years for brand fresh leases. we wouldn’t want anyone driving around in a 5-year-old clunker now would we? But, as we all know, vehicles have useful lives of 15-20 years. Therefore, it doesn’t take too many excessive lease cycles to flood the market with used supply and bring the entire ponzi crashing down.

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• Jan 23, two thousand seventeen Ten:20 PM
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Hmmm. Maybe in a year or two: Good time to substitute my decrepit Civic with a used car, paid for with cash?

I keep observing these stories about the used car market melting down but I don’t think it means what you think it means.

What do you think it means?

Cut out all the middle studs in the car buying process.

Thanks to fedgov, I hate fresh cars.

I’ll be driving nothing newer than two thousand six for as long as I can.

HOW ABOUT WE DRIVE LESS

Substitute CARS LESS OFTEN

and not fuckup the biosphere

anybody who pays five hundred sixty a month to lease a 40K car is a moron to begin with. 40K car should be leased for about $300 per month.

They didn’t mention the manufacturer’s recommended maintenance intervals. You won’t get a elementary maintenance check for under $300 on German import. Part of the lease agreement.

best upcoming business: Popular Luxury Brands four year old exporting to 3rd world countries.

Reminisce the old chevy nova three on the tree that was shipped en masse to the ME back in the day. An order fell through. It came with Iraqi pinion steering.

Do they demonstrate up in the middle east with the .50’s mounted already, or will that be extra?

Cheapest car I never bought, was keeping my Y2K Subaru Forester. 312K Miles, one tranny/clutch, and one head rebuild. If I spend <$1200/Year in maint costs alone, I am still ahead of the cheapest lease.

” HOW ABOUT WE DRIVE LESS

Substitute CARS LESS OFTEN

and not fuckup the biosphere “

You need to take a rail in my eight hundred HP twin turbo Cadillac Escalade (the one I pretend I own). You won’t give a shit about those dying polar bears and penguins any more. It’ll take you a month to wipe the smirk off your face.

If I thought CO2 was actually a “pollutant” or a real danger to the environment, I might see the need for alarm. Fortunately, that’s globalist horsehit pseudo-science (and even that was meticulously corrupted the minute politics got involved) so I don’t worry about it.

how convenient to leave behind the

MINING OF THE METALS

AND THE MANUFACTURING OF THE BASE MATERIALS

TRANSPORTATION OF THE ABOVE

My car is emitting carbon which is plant food, therefore the more I drive the better I feel about it.

i work at ground level zero and yes indeed near fresh lease comes back are flooding the auction lots. sea of toyota camrys.

swings of hyundi, fords washed up everywhere. yes the flood has begun.

“. as we all know, vehicles have useful lives of 15-20 years. Therefore, it doesn’t take too many excessive lease cycles to flood the market with used supply and bring the entire ponzi crashing down. ”

Yeah baby! Used car buyer’s market comin’ big-time! Time for me to think about substituting my two thousand two Toyota Pickup shit-hauler! LOVE these ponzi lease shemes!

Yeah, it sounds good. But these days they won’t let anything go down, I wouldn’t be astonished to see another ‘cash for clunkers’ scheme.

We shopped for a fresh car with a trade in. Five weeks later, we determined to pull the trigger. Not happening. The trade in value dropped by $8k. Walked away. Must drive this car for much much longer.

If you do not have a decent car, you are in luck. If you do have a fairly fresh car, keep driving.

Fresh? What’s that? I drive a nineteen year old Ford Ranger, a thirteen year old Ford Lightning and a eleven year old Suzuki M109R (motorcycle).

Have zero intention of buying a “fresh” vehicle, and most especially of ever leasing one. What a rip off vehicles have become.

As for decent, just maintain them decently and they’ll always be decent.

Ranger has 147,000 miles and is still running good. Lightning has 63,000 miles and runs exceptionally (supercharged). Motorcycle has 27,000 miles and is like fresh.

sounds like me: two lincoln town car, four ford ranger, and ninety six bmw r1100 motorcycle. i’m 54, and may never buy another car. town cars can routinely go 400k miles – mines no where near that, and the ranger only has 50k on it. i can go most anywhere on the planet on the bmw, too 🙂

Total shit-tier cars at that.

Whither the manual transmission?

Its a taxpool they can steal.

Pollution bad, Co2 good.

very first, yelling doesn’t make you right so you can secure that shit right now.

2nd, automobiles are the most recycled consumer product on the planet bar none. they don’t have the influence on the environment that you think they do. same goes for the steel and aluminum industries, the vast majority of the embarking material stock is recycled. don’t believe me? look up Nucor and what they do. they have this down to a science.

“how convenient to leave behind the MINING OF THE METALS AND THE MANUFACTURING OF THE BASE MATERIALS, TRANSPORTATION OF THE ABOVE”

Why shouldn’t we leave behind those? The Al Gore nuts leave behind the mining of uncommon earth minerals and all the radioactive and other toxic waste polluting the land, the water, and the air, which, BTW, is coming right back to California on the trade wind. Ironic, don’t you think? Our goverenment claims to be so green for exporting all of our manufacturing jobs, even tho’ everything manufactured in China now creates a lot more pollution than when it was manufactured here and was subject to more stringent pollution controls.

I used to recycle until I found out the stuff got shipped

To China in empty containers. It’s far less polluting in local landfill.

I used to recycle.

Damn stu%er post.

These fresh cars with their computer controls. It’s like having a five year old attempt and run your life.( I’ll turn the damn interior light on IF i want.)

CO2, it’s like Brawndo

Good site for witnessing the bull shit of global heating, oh excuse me climate switch. http://www.climatedepot.com

Dammit. Just burned a mattress and a sofa on my pit. A few tires as well. Darn biosphere is going to have to reabsorb my carbon. Oh well.

Searing carbonacious fuels is feeding the biosphere, not fucking it up. Not very bright, are you?

finding a car is hard now. I dont want it without a key. I have to look at least ten years back.

15 year old toyotas are good.

Whats indeed mean with the newer vehicles is that you can’t maintain many of them yourself, you need the software to find the problem in many cases and then ‘Special Implement B, X and y to fix a minor problem. No thanks.

you’d be astonished with what you can fix with HP Tuners and a 10mm socket set. it’s not as hard as you think it is.

I vapid reject to own a front wheel drive vehicle with their side-mounted engines. Both my trucks are rear wheel drive, one a V-6, the other a supercharged V-8. I do practically all the maintenance on them myself. There’s a few things I won’t do, like the nineteen year old Ranger I own needs a front end rebuild due to bad ball joints. I don’t even want to mess with it. So much so, been driving it for three years with a squeaky front end. Hasn’t hurt a thing, I just spin the tires inwards out once a year and keep on driving it. 😉

tell me more about this super cahrged v8. heheheh PRAISE the almighty V8

and those front end ball joints can be a bitch without the decent implements but its doable man. I did it on two thousand ford expedition in an afternoon

2004 Ford Lightning. Not stock by far. After market intake, cat back stainless steel harass, plenum on top of the blower is large compared to stock, slightly clears the fetish mask. Johnny Lightning Perfoormance long bars (traction bars) and drive shaft safety loop. Panhard bar from the differential to the passenger side framework. Ten inch rims in the back with 305/45-18 Nitto haul radials. Seven inch front rims with 225/60-18 Michelins.

It’s an awesome rail for sure. 😉

Something else I’ve noticed is they seem to have an odd combination of standard and metric bolts in some places. My wifey’s escape is like that, doesn’t make any sense, odd for an “american” car. I miss my old jeep with its cast metal inline 6. Tons of space under the spandex hood, too, and no shit in the way.

Been that way for years. My ninety eight Ranger, I was removing the computer out of the firewall today. Took a 10mm and a 7/16 socket to get it out.

Yep. My one thousand nine hundred eighty two F-100 (built in the land of back bacon and hockey plunges) is the same way. I’ve restored it from teh ground up over the last ten years. Eight ft bed and a bench seat. The way a truck was meant to be — not a four door car with a four foot box that can’t even hold a mountainbike.

And the 351W/C6 with headers, RV cam, Edelbrock Performer and Holley carb does have some advantages that make the hassle worthwhile.

Fresh pickups are so cissified and overpriced IMO.

Leather interior and multi-stage paintjobs.. Those trucks were never meant to WORK. Just tall, high center of gravity gas hogging status symbols IMO.

I’ll keep my single cab oldie, thank you very much. With Autozone parts being lifetime warranty, my last four repairs have been bascially free (alternator, Heater core, waterpump, and master cylinder).

Don’t need any software. Just buy a little $40.00 dollar orange device from Sears, has a butt-plug that fits the OBD II port under the dash of all newer vehicles, like my ninety eight Ranger and my four Lightning. You use this device when the stupid Service Engine Soon, or Check Engine light is on. Buttplug it in, activate it, it scans, gives you a code. Look that code up in the book that comes with the contraption, or online, and you know what’s wrong. Most of the tiime it’s a sensor gone bad. Most of the time the sensors are not that hard to get at. I’ve substituted every one in my old ninety eight Ranger. And several in my four Lightning.

Took out the crankshaft and cam position sensors in my Ranger today, took maybe ten minutes. Bought fresh ones at the local NAPA, will put them in tomorrow.

I know not all vehicles are effortless to work on, which is why I despise front wheel drive vehicles and their STUPID side-mounted engines. Attempt switching an accessory drive belt on those, FUCK. But I can switch the one on my Ranger in ten minutes, same with the Lightning, cause their in front.

Agreed. And doing a timing belt on a FWD is a major bitch.

Who the fuck thought it would be a good idea to install a high wear rubber belt in an interference engine?

Won’t buy cars with timing belts (after doing one myself). Nissans have timing chains that last

300k, not a bullshit 60k service life with a $800 repair.

Fuck that noise.

Needed a special socket to pull oil drain buttplug on VW. Truly?

Got a 2wd F150. Stupid reliable, cheap to fix, runs on eighty seven octane vs 91, I can lay across the bench seat, head on armrest and have nice nap.

My TDI (230k miles, one clutch, one fuel pump, two timing belts) is a 19mm. Oil switches every 10k. I did end up removing the plastic panel under the engine. Nineteen screws to liquidate before accessing the drainpan? Fuck that.

Oil switches on my Jetta take about ten minutes. The filter is at the top of the engine for ease of access.

BEst car I’ve ever wielded. And I should point out that TDI Jetta wagons were built in Wolfsburg, not Tijuana.

That’s a YUGE difference (I had a TJ built TDI Fresh Beetle that, other than the engine was a total cheap POS).

Any VW made somewhere other than Germany is a chunk of shit IMHO.

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