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The Car Market COLLAPSE IS HERE

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Right now, the auto industry is flashing

some major warning signs on the US

economy and where things are at right

now. It's basically a real car market

crash that we are facing, which seems to

be right in line with the housing

market. Actually, this it's so

interesting the parallels that the car

market have with the housing market. I

mean, the similarities are quite

stunning. We're seeing automakers being

squeezed by tariffs right now. We have

seen a subprime auto lender collapse and

a lot of car dealerships are warning

that consumers are pulling back. Like

for example, CarMax chief executive Bill

Nash, he told analysts that the consumer

has been distressed for a little while

and I think there's some angst. No,

really. He also said that consumers with

better credit profiles seem to be

sitting on the sidelines, which is kind

of a little hint that people who are

smart with money right now are kind of

just sitting on the sidelines with

everything, not just with buying a car,

but with investing, with buying real

estate, you name it. People who are

smart with their cash are sitting back

and taking a wait andsee approach to see

where this economy goes in the next 12

to 24 months. because a lot of people

probably think that things are going to

continue to get worse and that is a very

safe bet considering the direction

things are going right now. Ford said

this week that it's offering lower

interest rates to buyers with the

weakest acceptable credit histories as

it tries to sell their unsold F-150

pickup trucks. Honda said it was

scrapping an electric Acura SUV after

just one model year and other brands are

offering steep discounts on EVs to

capture buyers before a federal tax

credit expires next week. Triricolor,

which is a subprime auto lender and car

dealer owner, they all of a sudden filed

for bankruptcy liquidation earlier this

month because of government

investigations and because of alleged

fraud. And this company, what they used

to do is they used to offer financing to

customers who didn't have any credit

history or they didn't have a social

security number. And they operated 65

dealerships nationwide. So pretty big

company actually. Sounds like they

catered highly to the illegal

immigration crowd and businesses

suddenly dried up. First Brands, which

is a major auto parts supplier, they

make things like oil filters and

windshield wipers. They're preparing to

file for bankruptcy protection and they

have more than $6 billion dollar with a

B in outstanding debt right now. CarMax

is also having problems. They have about

250 dealerships nationwide and their

profits have been sinking recently,

particularly in their finance department

because of increased delinquencies.

Apparently, a lot of the loans that were

written back in 2022 and 2023 by CarMax

are going delinquent, and they're seeing

some major losses. And this made their

stock price go down by double digits

recently. And funny enough, a lot of

people have been racing out there to buy

electric vehicles before the tax credit

is over at the end of the month here in

September because people are trying to

get that $7,500 tax credit. But you got

to remember that that trend is going to

be temporary because once this tax

credit is over in a few days from now,

no one's going to be rushing out to buy

those electric vehicles anymore. And by

the way, today I am in Belarin Keys

walking down uh Montego Key Street, I

think it is. And you guys can see looks

like a pretty middle-ass neighborhood,

right? Well, guess what? These houses

are like 1.6 $1.7 million. No joke. And

it just looks like an average

neighborhood now, doesn't it? But

there's been so many people out there

buying these EV vehicles in September

that they think that September electric

vehicle sales are going to be up 28%

year-over-year. But it's going to be a

temporary thing October the numbers are

going to be down back to where they were

probably even below normal levels as so

many people are rushing out to buy the

cars now. And let's face it, high

vehicle prices and high interest rates

are already having a major impact on

people that are facing high food prices,

high rent prices, high gas prices, and

are feeling less secure in their job and

worried about being laid off right now.

To make matters worse, new vehicle

prices are up 2.9% since last year at an

average of almost $46,000

for a brand new car. And as you know,

that's basically the base model. You go

to any car dealership these days looking

to buy a nice brand new vehicle, that's

the base model. As you upgrade and as

you get more bells and whistles, you're

going to be looking more like 60 to 70k

range for a lot of different vehicles

though. And the car industry as a whole

from supply chain all the way to the

dealership lots are experiencing

trouble. The German company Bosch, they

are the world's largest auto supplier.

They said that they are going to be

cutting 13,000 jobs this week, which is

3% of its workforce. That is huge, guys.

That's a lot of people losing a job

right now. And apparently in September,

a lot of auto dealers have been pulling

out all the stops in order to get

vehicles sold. But none of that has

really been enough to get the consumer

off the sideline, which is a very

similar trend that we're seeing in the

housing market. Everybody thought once

the Fed started cutting interest rates,

then mortgage rates were going to

plummet and be back down in the fives

and all the buyers are going to be

rushing back. But in fact, what we're

seeing is the opposite. We're seeing an

even larger pullback and we are seeing

mortgage interest rates start to go back

up. And so this traditional economy, the

way things used to work, don't work like

that anymore. A Fed rate cut no longer

means that interest rates on loans are

going to go down. Why? because inflation

is too large of a problem and all of the

Treasury investors know it. But here's

the numbers when it comes to auto sales.

Okay, the seasonally adjusted annual

rate slipped to 14.6 million vehicles,

down from 15.1 million in August. So

that is a big decline in just one month.

New vehicle sales, they are off 2.4%

month overmonth with SUVs and trucks

seeing the sharpest declines. and the

used market, we're seeing the demand

fall even faster with dealers reporting

longer lot times and steeper price cuts

to get these vehicles sold. And this is

all while these dealerships have the

highest incentive levels that they have

had since early 2023 and it still wasn't

enough to get people out there to buy.

My guess is most people don't have the

money and the ones that do are hanging

on to it. That's exactly what we're

seeing happen right now. And that's

especially true if you need a loan to

buy a new or used vehicle because right

now the average auto loan rate is near

9% for new vehicles and above 13% for

used vehicles according to bank rate.

That is huge, guys. And it's no wonder

that CarMax is seeing so many

delinquencies go up from 2022 and 2023

loans because the New York Fed reports

serious auto delinquencies at their

highest level since 2010. People have

signed up for these massive car payments

at big interest rates, sometimes even

refinancing car loan just like they do

with houses in order to try to play some

financial shenanigans, whatever. Then

they end up in this situation where they

can't afford the car. We got to let it

go. Got to go delinquent. Average

monthly payments are still above $750

for brand new vehicles, which is kind of

like an impossible payment for somebody

who is trying to pay the mortgage, the

taxes, and insurance, and all the other

costs of life. The big three automakers

here in the US, GM, Ford, and Stalantis,

they all reported modest declines in

sales recently. only EV sales have been

doing good, which is ironic because for

a while the EV sales are what was not

doing good. But because everybody wants

to get that tax credit before it

expires, these things are actually

selling like hotcakes. Toyota and Honda

are seeing even bigger drops than the

American automakers in sales. Tesla is

saying that their deliveries have slowed

after a summer surge despite aggressive

price cuts. And the luxury segment is

holding up pretty good as higher income

buyers remain more insulated from

financing costs because it's clearly if

money is no object then you really don't

care how much the car costs or what the

payment is going to be because you're

likely just going to pay cash and be

done with it. And the thing is when the

auto industry is slowing down, what we

have to realize is this has major

implications across other parts of the

economy. Similarly to when real estate

sales slow down, real estate agents

don't make money. Lenders don't make

money. The contractors don't make money.

You know, a lot of people that normally

rely on one sector of business moving

like in real estate don't get paid. They

make less money. Same is true for the

car market because when car sales are

slow, then manufacturing jobs take a

huge hit. Automakers employ roughly 1

million Americans and they could be

seeing layoffs pretty soon from all of

this. You also have credit stress

because the rise in delinquent auto

loans spill into banks and credit unions

being heavily exposed to subprime

borrowers and people start missing other

types of payments as well. And having

low auto sales is also a sign of a weak

economy because not only can people not

afford to buy these vehicles, but it

also shows that people who can afford it

are not confident in the future of the

economy. So, we better hold off and wait

and see what happens. And all the

experts are saying, listen, unless the

borrowing costs go down substantially or

wage growth goes up substantially, we're

probably not going to see a meaningful

recovery in the auto market anytime

soon. What does that remind you of? Oh

yeah, real estate. Obviously, I'm not an

expert in the car market, guys, but I

like reporting on these stories when

they come out because of the

similarities. It's almost the same

thing. And what it shows me and what I

like to remind you guys and myself of is

just how broken our system is now. Like

nothing actually works the way it was

designed to anymore because it has been

overheated, right? We have too much

money in the system. They have just

pumped up inflation to too high of a

number and wages cannot increase to keep

up with it. And one of my viewers, I

think Amanda is her name, she asked me

this in the comments the other day,

like, well, if everything is so

expensive, why can't companies just pay

people more to keep up with inflation?

And the answer is because they're not

going to be able to keep their profit

margins. A lot of these companies are

beholden to shareholders. And even if

they could magically increase their

wages to keep up with inflation for

people, well, now all of a sudden that's

going to put increased demand on

everything out there, all of the goods

and services, which means the price is

going to go up even more, essentially

creating more inflation. Now, the

increase in money supply is what really

creates the inflation. But when people

have more money in their pocket to

spend, then demand for everything goes

up. You can see it right now in the

story we just talked about with auto

sales. because people don't have the

money, the auto sales are low. But if

everybody was flushed with cash, we

would be seeing a repeat of 2021 and

2022 where people are going out there

paying above MSRP for brand new cars.

That's not happening anymore because

people don't have the money anymore. So,

I just want to make that point and make

it clear why we are in the situation

we're in. Now, speaking of the EV tax

credits, a lot of dealerships are having

some major anxiety over these EV tax

credits because they are going to be

expiring in a few days from now. And one

problem that a lot of these dealerships

have been running into recently is that

the IRS has been slow in the recent

weeks to approve and pay the federal tax

credits for electric vehicles. According

to a lot of dealerships and industry

analysts about midepptember the delays

started piling up and the dealerships

now are left with a tough choice which

number one they can either carry the

cost and keep offering the credit until

it officially expires or they can pull

back and risk losing the vehicle sale to

another dealership that's still willing

to kind of front the bill so to speak.

That's what these dealerships are doing.

One dealership owner said that we're

continuing to pay the tax credit, but

with a lot of anxiety. He says, "We're

out close to $100,000 right now, meaning

that's how much the IRS owes them in tax

credits, and they're hoping they're

going to be able to get this money

back." And these tax credits are pretty

big. That's why people have been rushing

out to buy these cars, because for a

used EV, you could get a $4,000 tax

credit. And for a brand new one, it

could be as high as $7,500

as an upfront rebate at the point of

sale. And a lot of these dealerships

have been offering that upfront rebate.

And they're the ones who are collecting

the tax credit from the IRS. So they

give you the discount upfront. So say

the car is 30 grand. They sell it to you

for 22,500.

They're the ones who have to chase down

the IRS and get that tax credit, not

you, the consumer. Other dealerships are

not taking the risk and they're saying,

you know what, we're not going to be

giving these tax credits anymore. We're

not getting paid. We're not going to be

the ones stuck with the bill. I kind of

don't blame them. You know, it's a very

risky bet that they're going to get this

money. You would think that they would

since the tax credit doesn't officially

expire until the end of the month, but

you never know. It's also creating a

problem because the dealerships are not

able to provide customers with official

time of sale reports that a lot of

customers need for their own tax filings

at the end of the year. And apparently,

ever since this program began, there's

never been any delays. But now all of a

sudden, there is now that the program's

coming to a close. So, there's a lot of

speculation about why this is. Some say

it could be backlogs at the IRS due to

staffing shortages and the huge increase

in the EV sales volume. That's probably

what it is most likely. But some people

speculate it could be a move by the

Trump administration to slow down EV

adoption. I doubt it. That sounds just

kind of like one of those political

stories. It sounds like they're probably

just backed up. Too much work, not

enough people to do it. And of course,

we got to get weekends and holidays and

all the government holidays off, too.

So, yeah. Now, if you are a consumer and

you're trying to take advantage of these

EV tax credits before they expire, you

don't necessarily need the dealership to

give you that upfront rebate. You can

also claim the tax break on your own tax

return when you go to file your own

taxes and you can get that refund

yourself. You don't have to rely on them

for it. But obviously, a lot of people

want the money upfront right now. And if

you're financing the vehicle, then

obvious obviously you're going to have a

higher monthly payment if you have to

buy the vehicle without the tax credit

up front. So I would imagine for the

vast majority of people who are looking

to take advantage of this, they kind of

need that upfront tax credit in order to

even make this vehicle sale or lease

even possible to begin with. Without it,

they probably wouldn't be able to afford

it is my guess. For example, somebody

who buys a used EV might pay $80 to $100

more per month on a 5-year loan if

they're unable to get the $4,000 tax

credit right up front. So, that might

make the difference between qualifying

to buy the car and not qualifying. And

also, there's a mental game to it as

well. Like, if you're buying a car and

say you had in mind that you want a $400

a month payment, that's my maximum

budget. and you really don't want to go

over and without that credit now you're

paying $500 a month. Well, that might be

enough of a mental block for you to say,

"No, forget it. This is too high." So,

in a lot of ways, these dealerships are

kind of financing the customer's ability

to get a brand new or a used EV right

now. If they're paying this tax credit

up front, they're kind of just throwing

a Hail Mary and hoping that they are

going to get that money back. And we

know that these auto sales are already

having a major impact on the economy.

But really the next thing that is

brewing that I think is going to have an

even bigger impact is the student loan

delinquencies. Okay? Because according

to a new TransUnion survey of federal

student loan borrowers, they found out

that many would consider putting student

loan payments ahead of other bills like

credit cards and personal loans, but

mortgages and auto loan payments were

prioritized above all else, which makes

sense. People need a place to live.

People need their wheels to get to and

from work and pick up the kids from

school and all that. But now they're

starting to prioritize student loans

because your wages can be garnished if

you don't pay them. So now the credit

card companies and the personal loan

lenders are going to be starting to get

stiffed because people have to

prioritize those loans instead. And

let's not forget there are about 6

million student loan borrowers who are

delinquent right now who are already

looking at their wages being garnished.

Okay? And those delinquencies are

expected to continue to increase

throughout the rest of the year and into

next year. So that's a lot of people who

are going to be missing credit card

payments and personal loan payments. And

the proof is in the data because people

who are delinquent on their student

loans right now have seen delinquency

rates on all of their other types of

debt skyrocket between December of last

year and June of 2025, especially on the

credit cards and personal loans. And

obviously auto loan delinquencies and

mortgage delinquencies are up as well.

This may or may not have a correlation

with student loans. I don't know. And

people who are already starting to see

their wages being garnished can see up

to 15% of their disposable wages being

garnished from the federal government.

And they can withhold money from social

security benefits and tax refunds as

well. So these people who thought that

they were just never going to have to

pay and just refused to pay are finally

starting to feel the financial hardship

from those bad decisions. And let's not

forget since September of 2023, so for 2

years now, federal student loans have

been acrewing interest once again

because they were kind of on pause

during the pandemic and balances were

not going up. But for the last 2 years,

the balances have been going up,

especially if you haven't been making

any payments. And I know a lot of people

kind of put it on the back burner

thinking that Biden was going to forgive

their student loan debt and all of that,

but also sitting there and ignoring a

problem that you know that you have,

which is debt and money that you owe,

and just hoping it's going to magically

go away wasn't really the greatest plan

either. You know, people need to take

responsibility for their debts and

things that they sign up for. So, let me

know what you guys think about all this.

Do you think that the auto delinquencies

and the car sales being down and student

loan borrowers going delinquent and not

paying other bills are a warning sign

for the economy? Or do you think it's

just business as usual? You think

everything is just going to recover by

next year, the Fed's going to lower

interest rates, and all will be well?

Let me know what your opinion is about

this stuff. And if you enjoyed this

video, make sure you subscribe to the

channel. And if you don't want to wait

for my next video to come out, check out

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