All articles tagged with #used car market
New car inventories have reached a four-year high, but prices remain steady at around $49,000 due to high production costs and advanced features. While used car prices are dropping, financing and high interest rates continue to challenge buyers. Lower-priced vehicles under $30,000 are still in high demand and hard to find. Buyers should also consider rising auto insurance costs when purchasing a vehicle.
Carvana, the online used-car retailer, has reached a debt restructuring agreement with most of its bondholders to lower interest payments and improve its financial position. The company, which experienced rapid growth during the pandemic, struggled with falling used car prices and rising interest rates. Under the agreement, creditors will receive new secured notes, with interest paid in kind for the next two years. Carvana also reported a second-quarter loss of $105 million, an improvement from the previous year. The debt restructuring covers over 90% of Carvana's $5.7 billion in unsecured notes, with the remaining creditors offered the opportunity to join the deal.
CarMax, the largest used car retailer in the US, reported a surprising Q1 earnings beat, with earnings of $1.16 per share on revenues of $7.69 billion, beating estimates. However, the used car market remains unstable, with retail used car revenues falling 14.4% YoY and retail used gross profit declining 8.7%. The company's adjusted earnings per share beat was due to cost-cutting measures, not sales performance. CarMax is bracing for a "used-vehicle recession" and has had to rethink its strategy to come out of the cycle leaner and more effective.
CarMax reported a better-than-expected Q1 revenue, but CEO William Nash said vehicle affordability remains a challenge due to high interest rates and low consumer confidence. The used-car retailer has cut expenses by pausing some hiring and halting share buybacks to battle a "used-vehicle recession". Unit sales of used vehicles fell 9.6% with average selling prices dropping 5.5% YoY. Despite exceeding low investor expectations, pricing and volume trends are likely to remain difficult under a "higher for longer" interest rate scenario, according to CFRA Research analyst Garrett Nelson.
The demand for used cars has increased, but the supply remains limited, leading to a significant increase in prices. The usual sources of used car inventory, such as lease returns and trade-ins, have decreased, making it difficult for consumers to find affordable options. The shift towards higher-end luxury vehicles has also made it harder to find economy cars. Interest rates have increased, making borrowing more expensive, and the average APR for new and used cars has risen. Consumers can maximize their trade-in value, shop for the best loan terms, and be flexible with their purchase to find the best deal.
The used-car market is still experiencing historically high prices, with the average transaction price in Q1 at $28,381, up 44% from five years ago, according to a report from Edmunds.com. The available pool of cheap vehicles is dwindling, with only 30.6% of used vehicles sold for under $20,000 in Q1, compared to 60.5% in the same period five years ago. The lingering effects of supply chain shortages are to blame for high auto prices, and the new car market may offer some relief if sales stall out and automakers use incentives to move new cars off dealer lots, putting pressure on the used market.
Inflation data on car prices is causing confusion as used-car prices are spiking and falling depending on the source. Investors are advised not to rely on a single month of data from any one source.
Carvana, the largest online used car retailer in the US, announced that it expects to report a profit in Q2 2021, causing its stock to surge by over 40%. While the company's Q1 adjusted EPS loss of $1.51 beat analyst expectations, its debt load of $8.7 billion has been a burden on its stock price. However, a debt-for-equity swap offered by bondholders may provide a "potentially BIG lifeline" for Carvana, according to Oppenheimer analyst Brian Nagel.
Car prices for both new and used vehicles remain at record highs due to supply chain problems that have caused manufacturers to produce fewer vehicles, prioritizing the most profitable ones. This has led to new vehicles with fewer features, driving up demand for used cars. While prices are slightly decreasing on a month-to-month basis, it will take time for them to return to pre-pandemic levels. Automakers are expected to release more affordable electric vehicles, with prices already down 7.5% year over year, which may help alleviate the high prices.
Car prices for both new and used vehicles remain at record highs due to supply chain problems causing manufacturers to produce fewer vehicles, prioritizing the most profitable ones. This has led to new vehicles having fewer features, driving up demand for used cars. While prices are slightly decreasing on a month-to-month basis, it will take time for them to return to pre-pandemic levels. Automakers are expected to release more affordable electric vehicles, with prices already down 7.5% year over year according to Kelley Blue Book.
CarMax reported a decline in net revenues for the fourth quarter and fiscal year ended February 28, 2023, due to a decrease in retail and wholesale unit sales. However, the company delivered robust margins in retail and wholesale, and made significant progress in improving its customer-centric omni-channel experience. Online retail sales accounted for 14% of retail unit sales, and revenue from online transactions was approximately 30% of net revenues. CarMax affirmed its long-term financial targets, including selling between 2 million and 2.4 million vehicles by fiscal 2026 and growing its nationwide share of the age 0-10 used vehicle market to more than 5% by the end of calendar 2025.
Audi's first-quarter U.S. sales of 52,763 vehicles, up 49% YoY, indicate that American car buyers are increasingly interested in electric vehicles. However, the decline in sales from the previous quarter also highlights the importance of the used-car market, which remains a key factor in the overall demand for vehicles in the U.S.
Carvana's stock rose by nearly 30% after the company pre-announced guidance for the first quarter and released plans to restructure some of its $9 billion debt load. The company expects a first-quarter loss of between $50 million and $100 million, a drastic improvement from a loss of $348 million a year earlier, despite significantly lower sales and revenue. Carvana is offering noteholders the option to exchange their unsecured notes at a premium to current trading prices in exchange for new secured notes, which would reduce the face value of Carvana's outstanding $5.7 billion of unsecured bond debt by $1.3 billion and its annual cash interest bill by roughly $100 million.