Higher Used-Car Values Are a Wild Card for Negative Equity

First Up 10/15/20

Mercedes EQ Subbrand to Launch in U.S. with Electric Variant of S-Class Sedan

Mercedes-Benz will introduce its new EQ subbrand in the U.S. with an electric variant of the S-Class sedan, Daimler CEO Ola Kallenius told Automotive News Wednesday. Initially, the automaker had planned to launch with the EQC compact crossover. "We will start and lead with the EQS, that's our strategy for the U.S.," Kallenius said. "We said that for positioning the EQ brand in the U.S., start from the top and then go from there." It's a noteworthy strategy for the truck-obsessed U.S. market. Light trucks account for 75.5 percent of total vehicle sales in the U.S. Still, the S-class draws some of the brand's most loyal customers, with 70 percent of owners staying with the nameplate or another Mercedes model, the company says. Read more here (Source: Automotive News). 

Higher Used-Car Values Are a Wild Card for Negative Equity

It is a dilemma born of a pandemic: Will vehicles purchased during COVID-19 help or harm consumer finances in the long run? Automotive finance experts agree that longer-term loans at some of the highest monthly payments for new vehicles along with elevated used-vehicle values could result in an increase of underwater customers. That would likely push these consumers out of the market for longer periods and put them in worse shape when they return, reports Automotive News. Even as transaction prices climb, however, the roller coaster of used-car values that occurred during the pandemic may have shifted factors in customers' favor, not against. Economists and analysts at J.D. Power, Edmunds and Cox Automotive say lender appetites for a customer's auto debt and long-term vehicle supplies could be key indicators of how new and used vehicles purchased in 2020 will perform in the years to come. Read more here (Source: Automotive News). 

Complaints About Lenders Piling Up at CFPB as Auto Debt Crisis Looms

Consumers struggling to keep up with their auto debts filed a record number of complaints with a key federal consumer watchdog agency in the first five months of the pandemic, according to a new analysis of government data released Wednesday. According to MarketWatch, the report found that the Consumer Financial Protection Bureau received 2,844 complaints by borrowers, or pleas for help, on auto-related disputes from March to July, the highest of any five-month period since the CFPB started collecting consumer complaints in 2012. The complaints showed borrowers have been hard-hit by COVID-19 after a booming decade for auto financing, but also pointed to a potentially bigger crisis brewing in the months since auto debt relief was left out of the $2 trillion Cares Act passed by Congress in March. Read more here (Source: MarketWatch).

First Look: Acura MDX Prototype 

Following close behind the launch of the latest TLX sedan, Honda’s premium Acura brand is rolling out a new take on its three-row SUV flagship and while it may be dubbed a “Prototype,” what you see here is pretty darned close to what you’ll soon see in showrooms in the form of the 2022 Acura MDX, reports The Detroit Bureau. “The new MDX marks a turning point for Acura as our new flagship and the most far-reaching effort yet to deliver on our Precision Crafted Performance brand promise,” said Jon Ikeda, vice president and Acura brand officer. “We knew we needed to deliver something more emotional and premium with performance at its core. This new MDX builds on the past 20 years of success and elevates the model to an even stronger position in the market.” Read more here (Source: The Detroit Bureau). 

Americans Ready to Try Nomadic Van Life Due to Pandemic

According to a new survey from Move.org, all that turmoil also has more Americans considering getting rid of their homes altogether in favor of van life and a cheaper, more nomadic experience. USA Today reports that the moving company review site asked hundreds of respondents about how they felt about van life and found that 52% of Americans are now more open to van life, in which practitioners live full or part time in modified vehicles with basic amenities like beds, storage, toilets, cookstoves and Wi-Fi, allowing occupants to work anywhere.  Seventy-two percent said they'd try the van life thing if it meant they could pay off all their debt, and 74% said they'd try it if it meant they could retire comfortably. Another 23% said their primary motivation would be not having to pay rent or a mortgage. A quarter of respondents said they'd be willing to live on the road for six months to a year, and 24% said they'd do it for up to two years. Seven percent weren't willing to do it under any circumstances. Read more here (Source: USA Today). 

Webinar: Used Car Supersession

Join the next AutoTalk on October 27 at 2 p.m., where a panel will cover wholesale pricing and volume outlooks, as well as some best practices to stay ahead of the curve. Tune in to hear what some of the most successful dealer groups are doing to meet the shortage of used cars.

Guests will include:

  • Tom Kontos, Chief Economist, KAR Global: To provide real-time wholesale pricing and volumes through the various auction channels, and outlook for the remainder of the year.

  • Bob Grill, Senior Partner Development Manager at Carfax and Mike Rossman, Automotive Consultant:  Will share some innovative and contemporary best practices to address the current used car sourcing challenges.

Click here to register

Around the Web

The Best New Car Deals: October 2020 [Autoblog]

Cars That Are Even Rarer Than You Thought [CarBuzz]

5 Used Luxury Cars That Will Make  You Look Rich for Less Than $20K [Gear Patrol]

These Cars Were Revolutionary, But Everyone Forgot About Them [HotCars]