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If you’ re planning on possibly purchasing or selling a car in the near future, or just curious about how the latest gyrations in the auto market are impacting your current car’s value, you’ll want to listen up to today’s guest.

Automotive YouTuber Lucky Lopez returns to the program to give us his latest boots-on-the-ground reporting on the key trends driving supply, pricing & lending in the car market right now.


Lucky Lopez 0:00
Banks right now are starting to go into critical thinking when it comes to covering their losses. And we see down the road the death of Uber Postmates lifts all these other companies because there’s so many of these cars coming to repo with so many miles, they’re losing millions of dollars every single month now.

Adam Taggart 0:25
Welcome to Wealthion. I’m Wealthion founder Adam Taggart. If you’re planning on possibly purchasing or selling a car in the near future, or just curious about how the latest gyrations in the auto market or impacting your current cars, wealth, you’ll want to listen up to today’s guest, automotive YouTuber lucky Lopez returns to the program to give us his latest boots on the ground reporting on the key trends driving supply, pricing and lending in the car market right now. Like, hey, thanks so much for joining us today.

Lucky Lopez 0:56
Thank you so much for having me. Looking forward to getting back into the conversation.

Adam Taggart 1:00
Thanks. Lucky, it’s always great when you’re on the program, your first appearance, which was I don’t know eight months ago or so in the program or so has become your Wealthion ‘s most watched YouTube video ever. So not to not to put any pressure on your shoulders for this discussion. But it’s good to have you back you did come back about a month and a half ago and talk to our conference goers at the Wealthion spring conference. Now some more times going on wanted to bring you back to talk to the general public about where things are headed. In the car market. They’ve largely been progressing along the lines that you have been kind of telling us in some of your warnings on your previous appearances on this program. But I’d love to get some updates from you. Before I do, though, just to kick this off. general question for you. What is your current assessment of the US auto market right now.

Lucky Lopez 1:57
When it comes to the health of the auto market, it’s actually stabilizing, which is a good thing and a bad thing. I’m seeing dealers starting to realize that cars are just simply not moving, and they’re getting a little bit more aggressive with pricing. I’ve seen inventory slowly start to fill up at franchised dealerships. The only two manufacturers that we’re seeing that’s not keeping up with demand is Honda and Toyota. So if anybody’s watching this looking for a Toyota Sienna or a brand new truck that’s from Toyota, or Honda, unfortunately, you have to wait a little bit longer. But one of the surprising things that I thought would probably drop about earlier this, or later this last year was the credit news. We talked about it a little bit on your program before but that was something that I was really worried about. Everybody got so caught up in pricing and everything else. And I told him at the end of the day, it’s the banks and the credit is what’s going to basically dictate how the market adjusts or crashes or quote unquote, corrects. And this is one of the things I’ve been kind of like screaming from the hilltops for the last year and a half. And finally, it’s starting to come to fruition. But I don’t want that to deep into that until you until we get to that part. But that’s kind of what we’re seeing right now is the credit crunch has started. And it’s starting to affect a lot of dealers and a lot of people across United States.

Adam Taggart 3:09
Okay, and I’m sure the tightening of lending standards that has resulted since the recent bank failures, probably not helping that situation, either. Here, you’re smiling, as I’m saying this, alright, we’ll look we’ll get to lending in just a moment. So you sort of already touched there on supply. But you know, the first time you’re on the program, we were still kind of coming out of a lot of the tight supplies from the missing chips and all that stuff from the supply chain disruptions created by the pandemic. with the exceptions of Honda and Toyota, is it fair to say that that inventory is not that much of a problem anymore for most other car manufacturers?

Lucky Lopez 3:54
I believe so. I mean, when we first talked, I think the supply chains are already caught up. Like if you had a brand new Corvette, you can literally go to a Chevy dealership and order a brand new computer, and it’d be in stock in a week. So I did this a few times on my channel to show people that there is no lag when it comes to subpart supplies. But a lot of manufacturers came out literally saying that, why are they going to build more cars, when they can keep profits higher and keep the demand low? And they’re trying to keep that happy balance of not producing too many cars. We’ll fast forward to today. You know, you hear people like oh, they’re not using the chip thing anymore. They’re using like limited availability, they keep saying limited availability, which means that they’re just going to not make as many cars as they have. Now there are some manufacturers that are starting to produce more to kind of eat up that market share and some are doing really well with like Volkswagen they’re taking up a lot of like Honda Toyota has market share, but then you have manufacturers like Jeep Chrysler and Dodge that are really getting you know the screws put to them because if you go to any state in any town, you can see multiple All dealerships with full lots of cheap products, dodge products, the new rams everything else, and they’re selling below MSRP. These are one of the very few brands that I seen, it started a trend of actually giving rebates and giving people discounts on MSRP vehicles, which was the first sense this whole pandemic started.

Adam Taggart 5:19
Okay. And is that is that supply driven, meaning their production just sort of caught up with them. And all of a sudden, they had many more cars than they they expected, or is it more demand driven, where just consumers just aren’t showing up to buy the cars at the previous prices?

Lucky Lopez 5:36
I think that it’s a little bit of both like they knew that the supply was going to was going to catch up. So they figured they would line their stores, a lot of my friends that run docstore said that they were going to get in certain allocations in new trucks, which would fill them up. But the demand was so high, they just figured that it would just keep going like this. But once rates got out of control, and the prices just got so ridiculous, regular Americans just simply couldn’t afford, you know, some of these trucks are 70 $80,000. That’s not even the fancy ones, you can go all the way up to $170,000 in some of these Dodge Ram trucks, so the market is just simply not there. As I talked to a lot of these companies, they just they keep saying the same thing over and over again, they’re selling out of cheap used cars, but their new cars are starting to pile up on lot. And not only that people are walking away from their allocations, they had a lot of these limited edition Hellcats. And some of these red line or semi red I supercharged challengers and all this other stuff, stuff that people were putting 10 $20,000 down for a security deposit are now coming back to these dealerships and taking it back. And because they know that, why waste the money, they’re just gonna wait prices are going to come down. So instead of paying 30 $40,000 over MSRP for a truck, now they’re able to get them under MSRP, just by literally taking their deposits back and coming back. So this is kind of the trend that we’re starting to see now it’s starting to favor the buyer instead of the seller.

Adam Taggart 7:00
Okay. And that’s really interesting. Probably music to the ears of folks who are watching this, given how absolutely bananas, car prices went during the pandemic, right, where you had limited availability, and people were getting stimulus checks and, you know, burning a hole in their pockets, and they were going to have to spend them. Alright, I want to dig into this a little bit further. But I just want to underscore something really important that you said, which was that there’s a pretty big difference right now between the dynamics of the new mark new car market and the used car market, right, where if I understood you correctly in this, This corroborates I had a car dealership guy on the program two months ago or so. And for folks that are familiar with him, he is a car dealership. He owns several car dealerships. And you know, he speaks out anonymously, because he doesn’t want the industry in all the partners that he deals with in his regular day to, you know, doesn’t want any retribution from speaking the truth. But basically, he was saying what I believe you’re saying here lucky, which is that we’re seeing a very visible slowdown in demand in new cars, or at least a willingness to pay the prices that they were getting up until, you know, a year ago. But we’re seeing we’re seeing, I’m gonna say unnecessarily more demand but strong demand in the used car market. And let me explain why I think that’s the case. And then you can correct me if I’m wrong here. But it’s basically as as people are looking for more, quote unquote, affordable cars. There weren’t all that many in the in the new car market. And I remember a car dealership guy said something like, can’t remember the exact price. But he’s like, if you’re looking to buy a car that’s under like, 20, a new car that’s under like 25,000 or 30,000, the US can’t remember what the exact number was. At the time we were talking, he said there’s like less than 2000 of those cars in the entire country right now. Just inventory wise. So people who are looking to buy a more affordable car are then going into the used car market. And so you kind of have an increase in demand where the supply is still, you know, fixed. And that’s what’s pushing up used car prices right now. Am I Am I getting the story? Correct?

Lucky Lopez 9:16
Nope, pretty much. You got it. Exactly. The affordability just got ridiculous where, you know, like, these dealers, I, I’m trying to say it nicely. But basically, they took advantage of the American consumers. They figured, okay, we’re just gonna rack these people for 2030 $40,000 of SRP. We’re gonna get these people traditionally financed for 84 months, no big deal, low interest rates, we’ll just kick the can down the road. And I remember last time we talked on your channel, we kind of had the similar opinion that dealers are robbing their future for the next two to three years. Now. I said two years ago, and everybody thought I was losing my mind. And now I’m starting to hear this even on the news where they’re like, yeah, they believe that dealers are going to outsold themselves for the next two, three years. And it’s true because When interest rates gone up now I think the average rate is anywhere from 7% on a new car all the way up to 11%. For a used car, if you have good credit, so to buy something now is just is just getting tougher. And as these bank regulatory start coming in, they start now there with all these banks collapsing financers, for hedge funds, and even the government are starting to double check the criteria of what they’re getting approved for. So now they’re being more strict on steps, which is proof of income, you got to have not only your bank statements, but your W twos, your pay stubs gotta match, you got to manage your job for maybe six months, instead of the three months that were before. You know, full coverage insurance, they’re just they’re double checking everything. And it’s getting harder and harder for people to get approved back in the pandemic. I remember last time, I mean, they were giving these Dodge Chargers and challengers away $30,000 Or MSRP, with like, $1,500, down $1,000 Down, just letting these people drive away, it blew my mind. Now, the same dealers I’m talking to, you know, they’re selling under MSRP, even with four or $5,000 down and the banks are asking for more down payments, and I believe this is going to be the final push to get the car market back to normal because as this credit crunch starts to happen, dealers just simply can’t afford to basically finance these cars, they’re going to have to either lower their prices, or customers are going to have to come up with money. And unfortunately, the American public does not have any money. I know, credit cards at record high. They’re actually savings deposits or semi savings amounts are record lows and the American population. So now it’s there pretty much the only thing dealers can do is lower prices or give some sort of incentives to actually get this done. I remember that’s the Lantis Lithia and a few other ones, I think auto nation, they’re creating their own captive lenders, kind of branching them out adding more money to their so this way, they can start financing all the cars that they overpaid for because ally Wells Fargo Bank of America, they’re not going to keep taking these massive losses at the auction these things go to repo with these $30,000 deficiencies for people paying over MSRP. So now I believe that this is going to be the force that’s going to correct a lot of the headaches that we see right now. Okay.

Adam Taggart 12:16
So lots of things wrapped up into that. So you know, when you look at the market today versus you know, two years ago, two years ago, you had, at least in the new car market, you had restricted supply, right from the supply chain issues, you had a lot of demand, right, you had people that were were buying, you know, with those hot money in their pockets. And you had really loose lending standards. I mean, I remember the first time you’re on this program, it really did kind of sound like if you could fogger me or they would find a way to get you into a car right? Now, it’s almost the opposite of all those factors, right? You got to tight lending standards, you got no inventory problems anymore, and the consumers in a in a, you know, substantially worse place. afford it? Well. Ability to buy wise, and affordability hasn’t come down that much still. So the affordability issue is still pretty big, right? So you would expect in this environment that you would you would start to see an increase in defaults, which you were you have been the last couple of times we’ve talked about, I remember you were nervous. One of the things that caught your eye was was not only were defaults on on the low end of the quality scale going up. But you had seen a doubling that was from a very small percentage, but a doubling of prime borrowers defaulting. Have those trends continued since we last saw you.

Lucky Lopez 13:42
Yeah, they’ve actually gotten worse. Prime customer is I believe, now at 4.9% hovering almost a 5%, which is double than the 2021 and 2022. So it’s starting to get up there. The one thing that’s that I’ve seen, it’s really scaring me is I’ve talked to a number of banks, and a lot of their How do I say it, a lot of their management is starting to figure out ways to work out some sort of programs, like a forbearance. Now, a lot of these people we talked about bought these cars, and literally didn’t make a payment for a whole year they called in claim the whole pandemic thing. Well, now they’re starting to make these payments, and the banks are noticing that people simply can’t afford them. So a lot of the numbers that they’re they’re seeing in the news and what And a lot of these other companies are saying are literally they’re not correct. They’re They’re backed a little bit from I said about a year behind in data. But one thing that that they started talking about is they’re actually working out programs where they could put payments from the front of the loan to the bag. So this way, they could give people a fresh start. So they don’t have negative credit. They could just start back over. And so instead of rebuilding a car, which traditionally most banks they just want to get their collateral and get it out of the customer’s hands and sell it. They’re taking such big losses at the auction that they decided to make up these new programs where they would add on months to the end of these auto loans and give customers a break or breathing room to get back on track. Now, this is the first time I’ve ever seen this done by any bank, like they’re, that’s how scared they are, is they’re so afraid that if they don’t do this, they’re gonna have record high defaults. And if they do, the banks that give them the money, like Wells Fargo, Bank of America, or some of these other hedge funds are not going to continue to give them money because their their books are going to be so in shambles, because what their actual portfolio is worth to what it’s actually like truly worth is going to be, you know, the significant number of heart. And as I talk to these banks, they’re really, really scared one local bank here in Nevada, they literally just hired 400 collection agents, and they’re running out one of these companies that just went out of business, this telemarketing company and literally, they’re just going to fill a full of collection agents, they know that the worst is coming. We’ve only seen the tip of the spear, they think it’s just going to go all the way downhill. They’ve already started collecting several investors to have money on the side. So they can keep lending just in case if like Wells Fargo or Bank of America pull their lines. It’s it’s pretty significant. Like I said, the credit crunch is finally here. And before I get into that, if you have any questions, I’d like to talk about how now the credit crunch is affecting the dealers as well.

Adam Taggart 16:18
Go for it. I got plenty of questions, but you finish. Okay.

Lucky Lopez 16:22
So you know, we’ve been talking about like I said, the credit news tightening around the consumer, they’re, they’re not going to have as many abilities to fund Well, little by little Capital One Nexcare, capital and AFC. These are the three largest what’s called flooring lines or lines of credit that US dealers use to purchase cars. Most dealers that you meet use cars and even franchise cars don’t actually own their inventory. A lot of those are purchased on credit lines. Now traditionally, you know, we only tried to buy a certain amount but during the pandemic, they were giving low interest rates, they’re extending payments, they’re good extending credit, they were just giving everybody and their grandma three lines to buy as many cars as they can because cars of course Cox automotive ones next gear, which owns Manheim, which owns autotrader, Kelley Blue Book, blah, blah, blah. So it behooves them to basically sell more cars at their auction brings up Kelley Blue Book brings up MMR, more money for the dealerships and for them themselves. But the problem that we’re having now is, Capital One is pulling out of the flooring lines, as well, as I heard, I heard rumors, I haven’t, I haven’t seen it yet. But ally is starting to pull out of the flooring line as well. So that’s gonna leave next gear and AFC, which are the two biggest ones left over. Now here’s the problem with these flooring lines, they’re on an adjustable rate. So just like an adjustable mortgage, stuff like that it goes up every time the points take up. Now people think that dealers are getting really low prices are really low interest when it comes to these things. It’s the complete opposite. We’re talking anywhere three to seven points over prime is what your average foreign line is, even if you have good credit, I had a $2 million line and I was paying four points over prime. And then this was I think back then I was paying maybe seven to 10%. Now I’ve seen dealers paying anywhere from eight to 22% interest on that. Oh

Adam Taggart 18:09
22%. Hey, Lucky real quick, keep going. But just Can you define what a flooring line is? For viewers that aren’t familiar with that term?

Lucky Lopez 18:17
Yeah, so a flooring line is a line of credit that dealers use to purchase cars at the auction. Also, like if you were a customer and you came in, he traded in your car, I would use that line to pay off your car with the bank. So unfortunately, a lot of dealers don’t actually have money, they there, it’s all credit. They’re literally shuffling around money in numbers. That’s that’s literally 90% of dealerships that are operating on a shoestring budget. And this is why I believe that this is the second domino to fall with the car business where you have the credit crunch. But as these dealers start losing their lines of credit, like they’ve already announced that their Capital One is pulling out. So I know a few dealers locally that have you know, a million $2 million of lines of credit with these vendors. Now just imagine you could call Hey, you have 90 days to pay off your million dollar line of credit. What are they going to do? They have to sell the cars so that’s one more thing that’s hopefully it’s going to push dealers to lower prices. But the even more I guess insane thing that to add insult to injury is now we’re at an all time high when it comes to interest. So every new company that that basically that they have to get a new vendor line or something, how do I say this rarely, now that they’ve lost Capital One, they have to go shop for a new flooring line, a new line of credit and whoever is going to give that new line of credit is going to tax the hell out of them with high interest. So now it’s gonna become even more unaffordable for dealers to hold cars, which is should be that’s the way we are interest rates are so high is because it’s Senate for us to get rid of the cars to get them off our our dealership lot and to sell to consumers. So it’s kind of a win win for everybody. But I believe this is one other nudge that’s going to start pushing people and getting rid of these cars. Now. The big thing that I’m really worried about is if next year in a CCed are closing down a lot of independence because the franchise guys, they have tons of money, they have millions dollars in the bank, they have backers. That’s no big deal. But I honestly believe that death of the used car dealership is not too far along. A lot of my friends. Right now they’re overpaying for cars trying to compete with franchise dealers. And they simply can’t, when you’re a franchise store, you have the ability of all this money, cheap, cheap money to borrow for your flooring lines. But then also, when we sell a car, a lot of people don’t know this, if you have, let’s say your subprime borrower, the bank is going to charge me two or $3,000 fee to sell you that car. So if I sell you a $30,000 car, they’re going to charge me $3,500 to do it. So your loan still 35 but I’m only getting whatever 2650 For my actual check, or 2750. And unfortunately, franchise stores, they don’t have that they can just push that deal through. On top of that they can lend 161 70% of LTV. Now the credit crunches on a lot of us ran our independent stores can only go maybe 110 120. So we can’t give you the same deals and the same rates as some of these big franchise stores. So little by little, these independent dealers are being squeezed from both ends, not only from the consumer side, but the credit side. And so I think that this is one of the Domino, hopefully that’s going to fall, that’s going to make a lot of dealers lower the prices on cars. Okay.

Adam Taggart 21:22
And that could be good in the near term. I am curious, though, you know, we’ve seen this happen in many, many other industries where the the smaller independents just increasingly gets squeezed out and the concentration just gets bigger and bigger in the hands of the few big folks who kind of run the industry like a cartel? Yeah, what does it look like if there was a washout? Or a die off of these, these more smaller and independent players here? Does that end up in a system that offers less choice and competition and pricing benefits to the consumer?

Lucky Lopez 21:56
100% I keep telling people that competition is healthy you want as many used car dealers in your area as possible. A lot of people I know they they hate us they don’t like us, I totally understand most dealers are jerks and idiots but they are a vital part of your I guess your your economy. Most people don’t know this, but majority of your sales tax, if you collect sales tax in your states come from used car dealers, you can shop at the mall all day long, and you’re only gonna get maybe 100 $200 in sales tax, where if you buy a $90,000 truck for me, we’re going to whack you at a point. You know what a here in Vegas 8.25% sales tax. So four or $5,000 Go straight out the door to the government, what helps feeds our state. So that’s one thing. The second thing is we want competitive pricing. When it’s small, independent dealers, they’re more I wouldn’t say desperate, but they’re more likely to get rid of an expensive truck on their lock compared to somebody like a big franchise store, you know, where they have the capital to sit on it, and they have the capital to basically force somebody to overpay. What I mean by this is, if I bought the truck for $30,000, and it’s only worth 30, my bank will only give me $30,000 To lend on it where these franchise stores can force maybe 50 $60,000 of financed amount on that $30,000 car, and they will find a bank that will push that negative equity or that bad debt into the consumers hands and then get it off the dealer’s hands so they can walk away free and clear. And this is something I keep telling people we want to have independent dealers going around and not only independence, the one thing I’m really scared of, is the death of the mom and pops franchise stores. You know, I’m not sure what what’s what state are you guys based out of our city.

Adam Taggart 23:38
I’m in California, I’m out by Santa Rosa is the biggest city near me.

Lucky Lopez 23:42
Okay, I guarantee you if you go to your main town, you’re gonna see some like Bob Smith’s Ford. It’s been there for seven years, his grandfather owned it now it’s ran by the grandkids, blah, blah, blah. Little by little these franchise stores are being bought up by auto groups like auto nation Penske, Lithia. And little by little they’re becoming I call them zombie entities. They’re literally just eating up the market share. They don’t care about building anything with the community. They’re not working with anybody. Their whole goal is to basically just push out cars at a certain value amount and then take all the fun out of it. Like don’t get me wrong, car Max is great. But when it comes to buying a new car, a lot of these people all my father bought from you, My mother bought from you, my sister bought from you. Now we’re coming back to buy a car from you. There was some sort of like local and social economy now with these big franchise stores. They’re killing all of that. I’ve been to four out of nations stores because I’ve just been shopping for a car myself. And you know, I asked them hey, the car has been on the lot for 180 days. I’ll buy it for this much. No, we don’t lower our prices. This is our price non negotiable. And they would not budge a single bit. It was ridiculous. I do and then I tell him I have financing. I have a check. Oh, that’s fine. We still want to run your credit. We want to do this. It’s you to negotiate with some of these corporate stores that are on light that is almost impossible. So I believe we’re heading towards a trend where we’re going to start to see the death of a lot of these not only small independents, but some of these locally owned locally ran businesses. And they’re going to slowly start turning into these donations, these Lithia as these Sonic auto groups that are just soulless zombie dealerships that are just going to kind of just, hey, here’s the price if you want it great. If not, we have enough money, we’ll sit here and wait until somebody else changes their mind,

Adam Taggart 25:28
sort of the Walmart ification. Of of car dealerships.

Lucky Lopez 25:33
Yeah, and people don’t think it’s that bad. But just those groups loan overs also, we own over 16,000 dealerships across the United States. And it’s growing every single month, they’re buying not one not two at a time, we’re they’re buying handfuls at a time. So don’t be surprised a little by little, you’re gonna see these companies take over your local area.

Adam Taggart 25:53
All right. Okay, topic, I’m sure we’ll be talking about more and more, as you appear on this program, getting back the dynamics of what’s driving would probably most viewers care about at the end of the day, which is just hey, what’s going to happen to the price of the car I either want to buy or the car I want to sell soon. What I’ve heard you say is, look, consumers are you know, beginning to tap out on the pricing of the there’s a big affordability issue still in the car market, consumers beginning to tap out. Banks are really restricting their their the loans they’re giving out. Now, dealers are freaking out, because the banks don’t want to get caught with holding a bunch of cars, right, that get defaulted on that they’ve got a repo right, and they don’t want to be owning these fleets of cars. But it sounds like you think they’re probably you’re gonna do that the dealers don’t want the banks to be in that situation, because the banks will then start flooding the market with these cars that and auctions and whatnot. And then you also mentioned the number is the dealers lose their financing from the banks, more and more dealers are going to struggle and perhaps be in a position where they get forced to liquidate, like you said, right, whether their lender calls him up and says, I’m getting rid of your floor line, and you get to pay me back in 90 days or whatever. So there are all these things that sound like they could be conspiring here to reduce the number of people that are showing up to buy cars anyways, but also pushing a lot of discounted inventory onto the market even much more so than we’ve started to see now. So if I’ve summarized that correctly, certainly seems like knew that car prices are going to have a lot of downward pressure on them going forward. I’m curious if that’s true and be in the used car market. You know, as we talked about earlier, there’s sort of a flood of people that that were going to buy new that are now buying used. And that’s been pushing up, used car prices since the start of this year. Do you see that hitting some sort of maximum at some point, as you get more and more discounted inventory, just sort of, you know, getting flooded everywhere. Plus, maybe we get into recession. We haven’t even talked about that possibility yet. So I guess my question is, do you see this rise and use car prices as short lived? Or are there more sort of secular things that are going to keep supporting the used car market going forward?

Lucky Lopez 28:15
No, I believe this was just a temporary spike from the end of 2022. Till now we’ve seen prices declined anywhere from two to 5% weekly. They were actually going down but I knew that there was going to be a small spike during tax season. Traditionally, this is a great time for dealers to sell inventory to get some big down payment because people are getting their tax returns. So that caused a temporary spike due to dealers going out to the auction once again. I thought that the the economy learned, you know, it’s like what is it it never repeats, but it rhymes. So I was like, watch dealers literally go to the auctions and overpay for cars all over again. It was like the pandemic, they were complaining they couldn’t sell anything. Customers didn’t have down payments. And as soon as they heard the word tax season, they went out and bought all this inventory to fill up their lats and thinking the tax season is going to be great, which we talked about. It’s not one of my telling people, it’s not going to save the auto industry, it’s going to go the exact opposite way. And unfortunately it did. Right after that every news outlet people are getting, you know, 30% Less 50% Less 60% Less on your taxes. So now dealers are stuck with these overpriced units. They can’t do anything up. And now that we’re seeing not only dealers start to come down in price, the lending restrictions coming in. But we’re starting to see customers actually starting to walk away from their cars. This is something I haven’t really, I talked a little bit about in our last thing. Remember in the elite recession, people sort of walk away from their houses because what are you thinking? Yeah, and so I’ve actually heard, and I’m not even joking about this when we were at an automotive conference here in Vegas. People are talking about doing short sales with cars. It blew my mind I never thought in a million years I would hear people talk about this. And the first brand they bought up were dodge they had these cars Easy cars that were 30 $40,000 over MSRP. They had a few companies in there that were financing strictly Hyundai’s. And I don’t know if you know what that palisaded Tellarite are very popular SUVs with Kia and Hyundai. They were selling them for $30,000 over MSRP. Wow, you can buy a brand new one under MSRP at certain dealerships. So imagine going to a dealership to service your car. And you know, most Americans every two to three years, they purchase a vehicle. So imagine coming in, you bought your car, and let’s say 2020, here we are 2023, you’re ready to trade it in your car’s got 30,000 miles, the car is worth 60, you pay 90 Because you’re an idiot and you paid $30,000 over MSRP. Now you’re going in, they’re telling you your car’s worth 40, but your 30 or $40,000, upside down and negative equity. So they’re actually starting to see more and more of these people literally going out buying another car. And then as soon as they get that other car on their credit, they just left the other one go. Because why are you going to pay $80,000 for a car that you can literally go to the dealership brand new and buy it for 60k. And I believe we’re going to start to see this trend more often. And now banks are starting to worry about this. So the whole jingle mail thing of coming back, I believe we’re not that far away. So that’s another reason why I believe that the market is going to something’s gotta give either they keep lowering prices, the interest rates are gonna get higher, or these banks have to do something creative to offset their risk. Now, I really want the banks to just repo the cars and get them back there and take a loss. But right now banks, banks will not take a loss unless they absolutely have to. So right now, they’re going to cry and scream that it’s so bad praying to God that the government is going to jump in and come in. But we talked about last time in your program, you do not want the government to jump in, because once they do, they’re going to start regulating auto loans and everybody that we know can’t afford their cars, whether due to income, debt to income ratio, whatever it is. So I’m praying to God that these banks just taken into shorts, they learned their lesson, don’t over lend let the market correct itself because even a lot of the one of the videos that popped up on my YouTube channel, but we still talked about, I think how we met is, you know, we go to the auctions all the time, there’s 1000s, I’m not joking 1000s of cars all across pretty much every major city sitting and holding lots. And when they’re when they rebuild these cars, they don’t flood the floors, because they know they’ll drop the market, they take a handful they run up at the auction and take another handful they run up at the auction for them. It’s better to offset the depreciation of the car with running with the auctions slowly, the dumping them all at once. And so banks are starting to learn this. The repo companies that I know, they’re buying acres and acres of storage lots just for this thing, because they believe it’s another 2008 2009 recession, where they’re gonna have all these people walking away from their cars. Now, this is only the auto loan stuff that are public information, you can tell by Here Pay Here lots are literally people just doing their keys walking away. I work with a lot of payday loan companies here in Vegas and satellite companies record amounts of defaults. They’ve never seen it this high, it’s almost triple what they normally see. Wow, okay, they can’t afford it. They’re just they bought these cars cash. And we’re talking like new cars, I just picked up a 2022 Mazda six only had like 10,000 miles, they paid cash for it during the pandemic. But then, you know, as the few months went around the money, all the stimulus went away, they had to go get a title loan on the car for $10,000. At God, I don’t even know what it is like Twitter, some percent interest, but they’re paying like $700 a month for this car, they simply can’t afford and they don’t qualify for traditional financing. So these people are taking these cars to the payday loan stores to try to get some money out of them. And it’s just, it’s just bad, bad, bad. So everything culminating to seems like there’s enough downward pressure on the market to lower car prices in the future. But for some reason, I feel like there’s always some sort of event that props up the market and keeps it from falling. I literally thought last year was the end of it. And we’d see a steady decline like rapidly. But now it just feels like it’s a slow steady correction.

Adam Taggart 33:53
Yeah. And I remember when we talked the first time, you would thought that q2 2023 was going to be like the right time to buy a car, you get the best deals. It seems like that’s been pushed out for a lot of the reasons that you’ve mentioned here. I’m guessing, as you said, you see it less now that there’s going to be a capitulation and movement in the market and prices all of a sudden just drop hard. Sounds like you’re seeing it more of just sort of a slow grind downwards. Is that true? Correct? Yeah. So let me ask you this in terms of what you think should happen. And you know what, we’ll have you back on the program again, and again, lucky to give us updates. So you can tell us what actually is happening along the way. But in terms of what you think should happen. If somebody is in the market for, let’s say buying a car at some point in the next year. Where do you think prices should go down to based upon all the major issues we’ve been talking about here?

Lucky Lopez 34:50
Well, the good news is is I believe that consumers will get better pricing. But the downfall is is the financing part is probably going to be the biggest hiccup so even though You save 510 $1,000 if interest rates go up another two to 3%, you’re still going to pay that on the back end. So the affordability problem is still there. I think that now that more manufacturers are actually starting to offer rebates, and kind of give some of these cars away. I think that’s a great incentive. I do see people towards the end of the year getting a much better deal because as these banks start to really tighten down on that lending, all these captive banks that these manufacturers have, like, put a financial GM Financial stuff like that, they’re going to be so desperate to move cars that I believe not only are they going to give you cars at or under MSRP, but they’re probably going to give you low single digit interest to capture that business to get that car off their dealerships floor. And we’re almost going to get back to where we were in 2019. Now people thought we’re nuts for saying this. There’s no way it’s going to happen. But you can literally I’m not even joking, you can drive by any Dodge Jeep dealership. They’re full of cars. I’ve seen Nissan’s piling up. Mazda, Mazda just came out of the blue of the woodworks, actually the third of those cars, he talks about the 2000 cars that are under 5k That third of all Mostess Mazda has the cheapest affordable economy car, the Mazda two hatchback. I mean, it’s a nice little car for the money, and it’s the only thing you can buy, it’s 25 grand, wherever thought that you can’t even buy anything, like I went to go look at motorcycles the other day, I knew motorcycles $20,000 So it’s It blows my mind. So as we move forward this economy, I think that’s the only way you’re gonna get a deal is one to buy a new car, which is seems ridiculous. And to to get a captive lender that will give you special financing, hopefully single digit interest and give you 72. And just don’t do it for months. I know a lot of people are doing this just to afford the payment. But stay away from that. So I’d say hopefully at the end of this year, even myself, that’s what I’m looking to buy as well. That’s probably what we’re gonna be going into.

Adam Taggart 36:53
Okay, from a from an MSRP standpoint, just putting the financing element aside for a second that just asked me to prognosticate here, no one’s gonna hold on to this. But percentage wise, what do you think? How much better a deal could you get then end of the year versus now if things go the way that you think they should? And percent 20%, more or less,

Lucky Lopez 37:17
I think it’s going to be a higher percentage rate, I’d say probably 20%. The reason is, is you know, we kind of touched on this back in the day, I remember when the recession happened, nobody wanted to talk about it, everything was fine. But once I heard on the news, that people started talking about a recession, they publicly announced it, then I watched everything drop, we’re kind of here already last two months, they’re talking about recession, I’ve heard them use the auto crisis, which is hilarious makes me laugh. I’m starting to I’m starting to hear this stuff. And I’m starting to see the trend. And you’ll see dealers all across the United States starting to walk back their prices. Now there are a lot of dealerships that are holding over MSRP. Now if you’re trying to buy a Corvette or something like that, something where they know that it’s going to be a more financially secure customer, they’re not going to give you a discount, they’re gonna try to still sell above MSRP until enough people walk away. But if you’re looking for a regular car, nothing, that’s a rare oddball model, you should be able to get a great deal. And one thing I also want to tell your viewers and people that are car shopping, is don’t be afraid to call multiple dealers. I don’t understand the mentality of the shopper. But when I’m looking for a deal I call multiple dealers and multiple states I throw dozens of offers. You know, the worst thing I can tell you is no. I’ve seen people literally like go to one dealership and like in California, hey, this dealership in Riverside? They don’t want to give me a deal on my truck. They want $10,000 of SRP. Okay, well, why don’t you go to San Diego, there’s one right there that you can get at MSRP save 10 grand, they won’t drive or fly to 300 miles to go get a deal to save $10,000 That blows my mind. So I tell people now start calling multiple states, different things. If you’re looking for a convertible, not even gonna like call the east coast in the wintertime. If you’re looking for a four by four truck, try to do something here in the desert or somewhere in the that’s not really that doesn’t have snow and everything else. Think kind of outside the box and look for the better deals because I promise you a lot of these franchise dealers are so worried about the future that they’re pushing out these inventory to keep their allocations coming in. Because we’ve heard whispers of manufacturers like Ford, Honda, Chevy, Toyota are going to punish dealers for selling over MSRP. They’re going to take their allocations away, which is how many cars they’re allowed to get. So if this truly comes to fruition, a lot of these dealers that have been screwing the consumers are really going to reap what they sow, they’re not going to get as many units as they traditionally would. And all the dealers that have decided to sell under MSRP to give customers a good deal are going to reap the benefits and they’re going to get more allocations for more affordable cars. And it’s going to kind of balance the scales again. So

Adam Taggart 39:54
Wow. So there’s going to be pressure from the manufacturers on the dealers to actually sell below MSRP Yeah, wow. Yeah, different world. So it sounds like what you’re saying, to be sort of a savvy buyer. And a lot of this just makes common sense. But is is, you know, talk to multiple dealerships. And it sounds like you’re saying, you know, obviously do your homework but but call sounds like I think I heard you say kind of like call with an offer, right? Like, hey, I’m looking for this car. Here’s what I’m willing to pay willing to take it yes or no, let me know. And it sounds like you’re saying the trend is your friend here where increasingly more and more of these dealers are going to be coming under pressure just to move the product, right. And this is similar to, you know, frequent Wealthion. viewers will know Lance Roberts is one of Wealthion. ‘s endorsed financial advisors. He sold his house about eight months ago or so, in anticipation of lower housing prices. He lives in Houston, Texas, and he has been spending, excuse me, he’s been spending the time since basically doing what you’ve just said, he’s got his target area, and he’s been finding homes that he was willing to buy, but he’s putting in. I don’t wanna say lowball offers. But but but you know, market offers. Yeah, exactly. Yeah, correct offers and they look lowball to, you know, people that are been looking at yesterday’s prices, or even some of today’s existing prices. But all he needed was one to say, Yep, I’ll take it. And he got a seller that finally said, Yep, I’ll take it, you know, give me my personal situation and just need to move the house. So he succeeded exactly using the strategy that you’re talking about here. Alright, so one thing that I’m really curious about is you said Mazda is where the majority of those the few 1000 cars that were available, knew under 25,000? You know, it kind of blew my mind. And I think many people’s minds a few years ago, when when Ford came out and said, you know, we’re not making cars anymore, right? We’re just, we’re just all trucks and SUVs from now. And it’s kind of crazy to think that Ford doesn’t actually make sedans anymore. So as people are looking for more affordable cars to drive, you know, de facto trucks and SUVs are more expensive than a traditional economy sedan, then you kind of have to you do have to go into the used car market. Right. So you have a you have a dwindling supply, I guess, is what I’m saying of economic cars. And right now, people are competing for them, and they’re competing for an aging fleet of used sedans. I’m curious, do you see at some point here, the manufacturers ever going back to manufacturing more sedan model more economically affordable cars? Or is this a new world where they’re really just trying to go for the new unit they can sell for the most price? Yeah, I

Lucky Lopez 42:50
hate to say it, it’s all about profit and all about stock prices, they gross far more and SUVs and trucks and they could sell them for a much higher price. Because it went the cost in the build a Ford Focus is the same price what it costs in the built in Ford Escape, but they can sell a Ford Escape for you know, eight to $12,000 more than a Ford Focus. So why would they waste their time. And you know, Ford dropped this news about three, four years ago saying that they were going to start walking away from the economy section. And that’s why I believe like companies like Mazda, especially Hyundai and Kia, I believe they’re going to eat up probably about 70% of that market share. But it’s very interesting, because I thought all like Honda Toyota, everybody would jump into this bandwagon and try to eat up that market share that Ford’s leaving there. But Honda and Toyota are kind of going with this thing. Well, why are we going to make more cars when we can make more profits. So we’re going to keep demand low, I mean, keep demand high, keep supply low, and keep our profits extremely high. But now people like Mazda are trying to ramp up production, you have people like Volkswagen that are coming out with all kinds of new electric models, Volkswagen is gonna have I think, by 2025, they’re gonna have 14 different electric models that are gonna get 14 electric models across the United States in the world that they’re going to have available, which is absolutely insane. So all these companies, I believe, are going to start eating up this market share, I want to see how fast Honda and Toyota pivot start making cars again. So it’s one of those things like, you know, they want to keep profits high. But eventually, if you lose so much market share, you know, they’re gonna have to do something. And unfortunately, I think that’s what we’re waiting for it to happen is just like, I think Ford, Chevy, all these manufacturers and same thing, we’re not going to build as much they’re trying to do a bill to direct model, which I think will fail where like a Tesla, like if you order a Tesla, they build it, if you don’t want to test it, they don’t build as more. Our business always ran with supply, you got to force people in there and get them to buy a car they can’t afford there. They they want to get excited for where you know, what is it consumer based economy, so if we can’t get them to purchase this stuff, and it’s not sitting on the showroom floor, I think that sales are going to drop tremendously. So it’s very interesting to see what’s going to happen next three to Five years in the car business.

Adam Taggart 45:01
Okay, well, looking forward to having you coming back on frequently to update us under solace that happens. All right, so I intuited from your feedback here that if somebody is in the market for a car right now that they should, they should take their time meaning patience is on their side here. And then employ the strategies we’ve talked about earlier, where we’re letting competition in the increased motivation of the dealers to move product work in their favor. If you’re somebody who’s been sort of thinking about selling a car, not necessarily trading, because then you have to think about buying at the same time, but let’s just say you have an extra car, you’re thinking about, you know, eventually selling? I’m guessing you would say probably sooner, the better. Is that true?

Lucky Lopez 45:46
Yeah, as as values are still high, I would do it, I mean, they are dropping two to 3%, you’re not going to notice it tremendously. But if you wait, just like I did, I waited six months on my RA and I lost $40,000 in value on my Oh, that’s on a $200,000 car. So when you when you start looking at some of these smaller cars, people like oh, it only dropped four or 500 bucks. But every month, it starts dropping four or $500, in six months, it’s gonna look pretty ugly. So that’s why I would get rid of what you have now. And especially if you’re a consumer that’s got a 22 or 25% interest rate, you need to refinance now, because your vehicle value is still somewhat high. If you try to refinance it a year from now, guess what’s going to happen, your vehicle value is going to be below what it’s actually what you owe on it, and no bank is going to refinance, you’re gonna be stuck with high interest and a lot of negative debt. So try to refinance that get lower interest. And then on top of that pay, you’re still your same car payment, so you can bring that deficit down to what you actually owe what the value is. So I think that’s the next follow up that’s happening. Because we see a lot of people with 22% interest loans, they can’t refinance it, because they owe more than what the car’s worth isn’t put zero down. So

Adam Taggart 46:54
that just hurts my head to hear 22% interest charge. All right, we’ll look like this has been wonderful. Before I ask you where folks can go to learn more about you, and follow your work. Is there anything else we haven’t talked about yet that you think is worth just putting in people’s minds before we wrap things up here?

Lucky Lopez 47:17
I mean, I think you hit the nail on the head with just being patient and making offers. And one thing that I kind of do is if you go to CarGurus, you can actually sort cars by how long they’ve been on the platform. So the oldest car there, don’t look at the prices, look on what cars the oldest and make your offer. Because more than likely, if the car’s been sitting there for 100 days, 200 days, you’re gonna get a deal. But if you’re trying to make a lowball offer on a car that’s been there for seven days, it’s not going to happen. So I would definitely look at time on market. That’s what US dealers really worry about. Because the more the longer it sits there, the more interest I pay, the more fees I pay with my credit lines, my flooring line. So it benefits them to get it off. So don’t be afraid to shoot those really great offers on cars that have been sitting on lots substantially longer and try to get pre approved first before going to the actual dealership, because some way or another, they’re going to try to add something on there. So I would just watch out for that. All right,

Adam Taggart 48:11
Lucky love the practical advice. Thanks so much for sharing all your expertise with our viewers here.

Lucky Lopez 48:17
Before I forget, there’s something I definitely want to bring up for you and your watchers and your viewers is banks right now are starting to go into critical thinking when it comes to covering their losses. And we see down the road, the death of Uber Postmates lifts all these other companies because there’s so many of these cars coming to repo with so many miles are losing millions of dollars every single month. Now, this is something that I’ve been dealing with for the last five years. Usually when we do an auto loan, the first thing that banks asked me is, are they doing any type of ride share delivery service or anything like that? And usually we say no, and as long as their income doesn’t say Lyft or Uber Postmates. They go ahead and let it through. Well, now they’re having so many losses, because there’s so many cars that are two, three years old, with 100,000 miles on there. So people are just racking up these miles collecting all the money from Uber and Lyft and putting their car on Turo is beating the hell out of it. And then once basically, they try to trade it in, they’re upside down in their car. They’re just walking away. Now, traditionally, if you use a car for commercial purposes, they will give you a shorter term 48 to 60 months, and it’ll be higher interest 10 to 12%. That’s to incentivize you to pay down the car faster to offset the risk of adding miles beating it up and stuff like that, that people are not doing that they’re going out buying these cars with zero down at four months, you know, whatever, back then at 4% interest, and they were just juicing these, these cars. And now it’s getting to the point where banks are trying to put into new writing where if you buy a new car and they catch you using it for Uber Lyft Postmates or Turo, they have the right to take your car back From you, which WoW is huge. And so people people are like, Oh, they can’t do that, yes, they can, they can protect their collateral. It’s just like if you don’t have insurance on the car, they can charge you an additional fee. Now, banks are going to do two things. They’re either going to charge you an additional insurance fee or binder to cover the risk for you using it as a rental car, or they’re just going to totally take your car away. I know several leasing companies actually are doing that right now. There’s luxury leasing partners that if they find out you’re doing any type of rental rideshare, or anything else, they just take your car from you. I know BMW financial was starting to put those things in place because they were financing a lot of these Rolls Royce ghosts, phantoms rates, and people were using these things on Turo rental cars, and just beating the hell out of putting 1000s of miles on them and just giving them back and you know, they’re eating $100,000 In deficiency from the negative equity, the miles they put on it and just beating the car up. And so I believe all these things are going to come to an end. And this is something that’s very big, because I know we haven’t talked about it. But this is just one more small thing that’s going to start affecting the economy, because now you have less people out there doing Uber doing left, so there’s more unemployed people. And as this starts to roll into, like the tech sector, now we’re talking even more layoffs, once Uber starts losing drivers, they’re gonna lay off more people Postmates a lot of people don’t notice. But Amazon hires a lot of third party independent companies to do deliveries as well. So this is going to trickle into the economic sector was just going to have more people losing their jobs, losing their money, and it’s just gonna spell doom and gloom for the car business. super interesting.

Adam Taggart 51:34
I hadn’t even thought about that, that knock on effect of what would happen to the industries that are dependent upon, you know, independent, you know, rideshare, or people that are providing basically their own vehicles. And of course, it makes a ton of sense. Like, if you’re a bank, you don’t want to get stiffed with a with a car where the guy just basically sort of Jingle mails the car back to you. And you’ve got a car that’s only a couple years old, but it has a tremendous amount of mileage on it. Right? So it’s much harder to sell versus other cars of the same model and make an age that weren’t beat on like that.

Lucky Lopez 52:09
Yeah, exactly. And so I think that people need to listen to this, if you hear this, you need to call your bank, let them know. If you have to pay additional fees, do it, refinance it, get it out of that bank, state and find a bank that actually will be okay with you doing that you may get a shorter term, you get higher interest, and also something they need to know about. You need to tell your insurance company, there are so many people driving people on Uber and Lyft that don’t have the correct insurance. If they get hit, somebody gets sued, injured, it’s just going to be bad. So the auto market like I said, just it has so many problems going on right now. I’m still shocked that like half the the the economy of the automotive industry is functioning, but I feel like something is going to happen that’s going to really change the market.

Adam Taggart 52:52
For folks that have really enjoyed this conversation and would like to learn more about you follow you and your work, where should they go?

Lucky Lopez 52:58
Um, you can follow me on Instagram at Lucky Lopez also on YouTube as well as lucky Lopez. And it’d be a huge favor. If you guys learn from this video and you enjoy me and Adams conversation, please comment below it means a lot actually read every single comment and I know out of those two and so I want to see if we can be our last video so I don’t interaction is probably one of the biggest things that people want. So I’ll try to answer as many questions in the comment section below if that’s okay, Adam,

Adam Taggart 53:24
that’s wonderful. I really appreciate that folks are gonna love it. I also love the competitive nature to beat at the previous video to like it’s it’s great. All right, Lucky. Well, look. Thanks so much, buddy. This has been wonderful. Like I said door’s always open here for you to come update us when you see something going on in the market that you think is notable. Really appreciate it folks. If you did, please comment below like like you said, And do us a favor support this video and this channel by hitting the like button, then clicking on the red subscribe button below, as well as that little bell icon right next to it. Lucky I can’t thank you enough, buddy, everybody else thanks so much for watching.

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