evlover
Member
The signs of a potential car market crash in 2025 seem to be mounting, and the points raised paint a concerning picture. Let’s break down some of the key indicators and what they could mean:
Key Factors Leading to a Potential Crash:
Overproduction and Inventory Surplus:
Example: 25K Ram pickups sitting over 220 days, Tundras stuck for 200-300 days.
Dealers are loaded with unsold cars, especially high-end trims. When inventory sits, dealers slash prices to move units.
Sluggish Consumer Demand:
High interest rates (7.2% for new cars, 11.4% for used) and skyrocketing insurance costs discourage buyers.
Average monthly payments of $760 are unaffordable for many, with 1 in 6 loans exceeding $1K/month.
Auto loan debt and negative equity issues worsen. 1 out of 5 consumers owes $10K+ more than their car is worth.
Layoffs and Production Cuts:
Nissan laying off 9K workers signals automakers are entering “emergency mode.”
As production slows to curb overproduction, factory layoffs will impact local economies.
Repossession Rates Spiking:
A 23% increase in repossessions suggests more people are defaulting.
The vicious cycle: People can’t afford their cars, they return them, flooding the used market and driving down prices.
Wholesale Price Drops:
18% drop in wholesale values over the last 4 months is starting to hit retail.
Dealers lose money, causing price drops across the board.
Falling EV Demand (Outside Tesla):
EVs aren’t selling as fast, adding to inventory buildup. Even Tesla has slashed prices to stay competitive.
Affordability Crisis:
With rising living costs (mortgages, rent, food), vehicles are no longer a top priority.
Why This is Good for Buyers:
Big Discounts: High-end models like Bronco Raptors, Jeep Wrangler 392s, and Ram TRXs are seeing $8K-$20K off MSRP.
No More Dealer Markups: With lenders rejecting inflated loans, dealers must price cars realistically.
Buyers in Control: Shoppers can negotiate harder, especially if they contact multiple dealerships.
Potential Positive Outcomes:
Affordability May Return: If prices continue to drop, affordable and simple vehicles might dominate production again.
Market Correction: Excessive pricing from pandemic markups could reset, creating fairer market conditions.
Risks to Watch For:
Economic Fallout: Layoffs and plant closures may ripple into other industries.
Automaker Health: Smaller automakers (like Nissan) might face bankruptcy or mergers.
Loan Defaults: Rising defaults could affect lending practices, tightening credit further.
Final Thought:
The market is shifting, and 2025 could bring opportunities for savvy buyers. However, economic instability could be a side effect. If you’re planning a car purchase, waiting for deeper discounts or considering lightly used models might be the smartest move.
Key Factors Leading to a Potential Crash:
Overproduction and Inventory Surplus:
Example: 25K Ram pickups sitting over 220 days, Tundras stuck for 200-300 days.
Dealers are loaded with unsold cars, especially high-end trims. When inventory sits, dealers slash prices to move units.
Sluggish Consumer Demand:
High interest rates (7.2% for new cars, 11.4% for used) and skyrocketing insurance costs discourage buyers.
Average monthly payments of $760 are unaffordable for many, with 1 in 6 loans exceeding $1K/month.
Auto loan debt and negative equity issues worsen. 1 out of 5 consumers owes $10K+ more than their car is worth.
Layoffs and Production Cuts:
Nissan laying off 9K workers signals automakers are entering “emergency mode.”
As production slows to curb overproduction, factory layoffs will impact local economies.
Repossession Rates Spiking:
A 23% increase in repossessions suggests more people are defaulting.
The vicious cycle: People can’t afford their cars, they return them, flooding the used market and driving down prices.
Wholesale Price Drops:
18% drop in wholesale values over the last 4 months is starting to hit retail.
Dealers lose money, causing price drops across the board.
Falling EV Demand (Outside Tesla):
EVs aren’t selling as fast, adding to inventory buildup. Even Tesla has slashed prices to stay competitive.
Affordability Crisis:
With rising living costs (mortgages, rent, food), vehicles are no longer a top priority.
Why This is Good for Buyers:
Big Discounts: High-end models like Bronco Raptors, Jeep Wrangler 392s, and Ram TRXs are seeing $8K-$20K off MSRP.
No More Dealer Markups: With lenders rejecting inflated loans, dealers must price cars realistically.
Buyers in Control: Shoppers can negotiate harder, especially if they contact multiple dealerships.
Potential Positive Outcomes:
Affordability May Return: If prices continue to drop, affordable and simple vehicles might dominate production again.
Market Correction: Excessive pricing from pandemic markups could reset, creating fairer market conditions.
Risks to Watch For:
Economic Fallout: Layoffs and plant closures may ripple into other industries.
Automaker Health: Smaller automakers (like Nissan) might face bankruptcy or mergers.
Loan Defaults: Rising defaults could affect lending practices, tightening credit further.
Final Thought:
The market is shifting, and 2025 could bring opportunities for savvy buyers. However, economic instability could be a side effect. If you’re planning a car purchase, waiting for deeper discounts or considering lightly used models might be the smartest move.