Car prices are dropping like a rock in the used vehicle market, with prices down by -23% over the last 18 months, the biggest drop on record according to Cox Automotive.
These price declines on cars are especially severe for Tesla, where Elon Musk has dropped the price of the electric vehicles by 25% for new versions. Leading to a massive 50% collapse in prices used Teslas. Many Tesla buyers are now experiencing huge buyers remorse as the values of their vehicles plummet by the day.
These plummeting car prices are now resulting in many subprime borrowers defaulting on their car loans. With the 60-day subprime car delinquency index spiking to its highest level in 30 years. These skyrocketing default rates will lead to repossessions and could cause prices to crash by more.
Now – the prices of brand new cars on dealer lots having gone down by as much. Only down -2% over the last year. With the average price of a new cat still sitting around $48,000, well above its pre-pandemic levels.