[CO_Steve]

So I stumbled on this Youtube video:

I thought the guy had some interesting points. Apparently leasing has really taken off in the last five years with low interest rates and high residuals. A wave of lease returns is about to hit the market, depressing used car prices. This will lead to higher lease rates and slow everything down.

I've been helping my son look for a 535. These were $70k+ cars new and low $20s buy a pretty nice low miles example. Can it get cheaper?

[R3dliner]

Where did you get 70k+. IIRC they were in the low 50's starting.
He does have some valid points.
If this theory was true across the board, why are used F8X M3/4 still expensive?

[allinon72]

It's hard to imagine things continuing like they have been. Explosion in leasing, extended lease terms, lending to anyone with a pulse (especially FCA vehicles) regardless of credit history, used loan terms up to 8 years, etc. None of that is sustainable.

[Frozen]

Smart money is saving cash for the big downturn and then buying badass cars for pennies on the dollar when people are hurting. It's coming.

[allinon72]

To be fair, this inrush of lease returns apocalypse has been talked about for a few years now and so far it hasn't materialized. But with all the other factors, it has to eventually.

[Never_Enough]

Originally Posted by allinon72

It's hard to imagine things continuing like they have been. Explosion in leasing, extended lease terms, lending to anyone with a pulse (especially FCA vehicles) regardless of credit history, used loan terms up to 8 years, etc. None of that is sustainable.

Sounds similar to the mortgage industry before shit blew up...

[Frozen]

The govt is also cutting taxes while increasing military spending, so the deficit is exploding. Now I just heard they are bailing out farmers to the tune of billions due to Trump's Tarriffs. Dummies.

[allinon72]

Originally Posted by e90m305

The govt is also cutting taxes while increasing military spending, so the deficit is exploding. Now I just heard they are bailing out farmers to the tune of billions due to Trump's Tarriffs. Dummies.

We aren't talking about any of that.

[Germanauto]

Originally Posted by Never_Enough

Sounds similar to the mortgage industry before shit blew up...

Except the economic repercussions of any automotive "bubble" blowing up are minor compared to what happened in '08.

Worst case scenario is a hit to one's credit. It's not hundreds of thousands of dollars in equity flushing into oblivion.

[NickyC]

I hate to say this, but as somebody who loves financial doom porn on the internet, the apparent death of the automotive industry has been preached for years now. Just like folks saying another horrible financial collapse is coming to make 2007-2008 look like a minor warmup, everything just keeps humming along.

Ten years is a long time for the doomers to be wrong, and at this point any downturn is pretty much overdue anyway. The severity of the downturn is the only point of contention really.

[Germanauto]

Originally Posted by NickyC

I hate to say this, but as somebody who loves financial doom porn on the internet, the apparent death of the automotive industry has been preached for years now. Just like folks saying another horrible financial collapse is coming to make 2007-2008 look like a minor warmup, everything just keeps humming along.

Ten years is a long time for the doomers to be wrong, and at this point any downturn is pretty much overdue anyway. The severity of the downturn is the only point of contention really.

Reminds me of the Tom Brady haters like Max Kellerman who have been saying for years that Brady is going to "fall off a cliff." 2 Superbowl victories and 3 SB appearances later he's still going strong. Eventually he will fall off, but when you've been saying for 5 yrs "this time it will happen" you have no more credibility.

[Frozen]

Originally Posted by allinon72

We aren't talking about any of that.

We are talking about an economic downturn. What I said is very much on topic. It will contribute. Housing will suffer too. Trust me, as a business owner I'm all for the tax cuts, but you gotta cut spending too, especially military spending since that's where 75% of it comes from.

[irishbimmer]

Yep, ya can't have guns and butter. Although I see the next big "cuts" are social programs such as medicare and possibly an increase in social security taxes.

[allinon72]

Originally Posted by NickyC

I hate to say this, but as somebody who loves financial doom porn on the internet, the apparent death of the automotive industry has been preached for years now. Just like folks saying another horrible financial collapse is coming to make 2007-2008 look like a minor warmup, everything just keeps humming along.

Ten years is a long time for the doomers to be wrong, and at this point any downturn is pretty much overdue anyway. The severity of the downturn is the only point of contention really.

The people who try to call the downturn are the ones setting themselves up to look foolish. Variables change on a daily basis and there's many things the Fed and others can do to delay the punishment. Hell, we're still feeling the effects of Cash for Clunkers to this day. The truth is, the market was never allowed to heal after '08, we just papered over the problem with government intervention and financial jiggery pokery by the Fed.

That said - to avoid the many red flags in front of us re: the automotive industry would be foolish. This can't continue.

[ASAP]

let me point out something obvious about whats heppening with interest rates...

[insanecoder]

Look theyve given anyone with a pulse easy financing
which is why you see all these kids driving M3 s (besides the fact noone saves anymore.. and why should they .. theyve got savings rates at what?!?!?!)
this is what they did 10+ years ago except it was houses

the freakin banks are lookin for business anywhere they can find it
they got college students saddled in debt theyll spend a good part of their lives paying off
well im afraid this next gen cant pay theyre up to their ears in debt
and they will default
and when it get to a certain threshhold
yes we will have another financial calamity
and this time we're done as a turkey
cause the rest of the world is slowly getting off the USD
print all the money this time.. noone will take it

..oh and BMWs will likely be more expensive by years end