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Car Repos Are Exploding. That’s a Bad Omen
- trenning 4y agohttps://archive.ph/13pYR https://archive.ph/13pYR
- urn_piqoq 4y agoHere I was imagining actual explosives hampering repo efforts, when they merely speak of a rising rate of auto repos. OK. I fell for it.
- seanmcdirmid 4y agoYa, I think the use of exploding here is in a confusing form. Most people will get the meaning, but a lot of people will think of other meaning at least for a moment.
- trog 4y agoMy first read was that there were more open source repositories on Github for each new type of car, and I was like, "actually that sounds awesome"
- deleted 4y ago[deleted]
- Molomby 4y agoI thought it was a story about EVs bursting into flames after being repossessed. Pretty confusing headline without context.
- shakezula 4y agoThat’s an interesting data point. makes me wonder what other unconventional metrics could be considered to get a temperature on our economy.
- mr_toad 4y agoGarbage/refuse volumes are sometimes used as a leading indicator of GDP.
- mdlman 4y agoThis is related, if not exactly on point: https://en.wikipedia.org/wiki/Waffle_House_Index https://en.wikipedia.org/wiki/Waffle_House_Index.
- xnx 4y agocardboard
- dredmorbius 4y agoUtility shutoffs are a big one.
- dredmorbius 4y ago"The Incidence of Extreme Economic Stress: Evidence from Utility Disconnections" Steve Cicala (2021) https://www.nber.org/papers/w28422 https://www.nber.org/papers/w28422
- gnicholas 4y agoA friend used to work for Korn Ferry, a publicly-traded headhunting firm. She said that their stock was a leading indicator of economic trends because firms halt executive recruiting efforts as they can see warning signs for their business. This happens before the clients issue quarterly revenue guidance that makes their expectations explicit.
- toomuchtodo 4y agoStimulus money papered over a weaker underlying economy, and the bill is coming due (no pun intended). My note: even though employment and wages are strong, the aggregate consumer is not as strong as your usual indicators appear to be.
- UncleEntity 4y agoAt some point it doesn’t make a whole lot of sense to pay for a car you can’t afford to put gas in to actually drive. Back during the last pre-recession gas hike people couldn’t even give away their monster SUVs that they also couldn’t afford to put gas in. I was going to buy one for super-cheap but ‘cash for clunkers’ took care of that problem before I got around to it.
- javajosh 4y agoWhy do people borrow money to buy a car? Why not save money, maybe invest in something safe(ish), and buy your car in cash, preferably used? I get it that people get emotional about cars, but good heavens, this impulse puts you in the hole for years. It's almost as bad as cheating on your wife (and far, far worse than cheating on a gf).
- providedotemacs 4y agoPeople cannot forgo having a car for the time it would take to save up the cash.
- MisterMower 4y agoYeah, I’m not buying it. It’s not a choice between having a tricked out 2022 Lexus that costs $70k and no car at all. It’s the choice between a 2005 beater Toyota with 200k miles on it and no car. Once you have that beater, you can start saving for something nicer. Find a make and model with decent reliability history that has hail damage or minor collision damage. It’s not hard to do. If you can’t scrape together $2k to buy that beater then you have no business owning a car, period.
- cool_dude85 4y agoEver drive a car like the one you're describing? It's a rough situation to be in to have to put 1k into a car worth 2k to keep it going, or to have your car break down and force you to call out from work on short notice. That's far from free.
- altarius 4y agoIs it any worse than paying $650 literally every month (avg car loan payment now afaict)? The problem is that people can't save. It'd be prudent to buy the car for $2k and save the remaining $3k somewhere to cover repairs instead of the 5k down payment. Also, to be fair, what used to be a $2k Toyota was probably more like $5+k lately.
- stefan_ 4y agoWhy would someone extend a loan to people based on one-time or limited time stimulus payments?
- Rury 4y agoMaybe to take their one-time/limited stimulus payments, and then repossess when people can no longer pay? I'm sure if they felt that they wouldn't be able to repossess, they wouldn't be nearly as incautious in extending the loan.
- cyberge99 4y agoPlus technology and some loan terms enable vehicle location and tracking on later model vehicles.
- jakear 4y agoLoans are assets. It’s free valuation.
- iav 4y agoUsed Car prices have increased a lot in the pandemic due to the chip shortage, logistics bottlenecks, and rising demand. So most car loans that predate 2020 are in the money - the car can be sold to fully cover the loan. But cars purchased in 2021 are not necessarily in positive equity. This is why repos are growing and why they are mostly for car loans originated in the last two years.
- troymc 4y agoWhen I read the headline, I thought "car repos" were git repositories associated with car software, such as self-driving car software. Maybe those repos are getting really huge, i.e. with lots of code, hard to maintain? But that's not the story at all!
- nunez 4y agoEmphasis mine: > Most of the loans on recently repossessed cars originated during 2020 and 2021, whereas origination dates are normally scattered because people fall on hard times at different times; *loan-to-value ratios, or the amount financed relative to the value of the vehicle, are around 140%, versus a more normal 80%*; and many of the loans were extended to buyers who had temporary pops in income during the pandemic. That's CRAZY! This means that lenders were, on average, willing to lend not only the full cost of the vehicle, but also up to 40% of the equity of a previous vehicle! (This sounds like a practice that is more common in subprime land, but still, this suggests that you can basically get a loan with weak proof of being able to pay it back). This article reminds me of the Air France 447 crash [1]. The long and short of it is that the pilots thought they were level based on the data from the pitot tube sensor, but because it was frozen and a SPOF, they not only got bad data, but they didn't know that the aircraft was actually tilting slowly downwards for hundreds of miles! Eventually, the aircraft stalled unrecoverably and crashed into the ocean. Auto manufacturers have been increasing prices on new vehicles (and dealers on used vehicles) partly due to supply chain tightening, but also due to a perceived increase in people's willingness-to-pay in response to the tightening and temporary pops in income. However, this article suggests that, like the pitot tube in the AF447 disaster, their WTP data is not only wrong, but sending them the opposite way (and taking their financial forecasting and future stock prices with them when they inevitably bring prices back down to Earth). [1] https://en.m.wikipedia.org/wiki/Air_France_Flight_447 https://en.m.wikipedia.org/wiki/Air_France_Flight_447
- endre 4y agoeven if that is the case, market will rebalance itself. it always does.
- withinboredom 4y agoAnd the chicken is always fed, until one day it is cooked for dinner.
- piva00 4y agoSurely it will. Like in 2008, we just offer human suffering as sacrifice to the Almighty Market. Gotta keep feeding its rebalances, no point in fighting or challenging the will of a god.