Subject: Re: KMX
My view is that the whole used vehicle market is in for rough times owing to high interest rates and a predatory subprime lending environment that smells much like the one in housing that caused so much damage. Even if KMX as a company is not a direct party to the predation, it seems vulnerable to collateral damage (so to speak). So I'm steering clear.

With a 25 year old trying to replace his very old car and seeing 17% interest on a 'new' old car loan, I understand this sentiment. It could be tempting to try to buy an actual new car with the significantly lower loan rates and lower ongoing repair needs, though that would require the maturity to get a car he can afford to get him to work and back, rather than one that suits his off work needs and wants. And of course, insurance will skyrocket on a new car vs a car that doesn't require collision insurance. Don't know that will happen. (Luckily for Youngest, Bank Of Mom and Dad will float him a loan at the going rate of a 5 year CD/Treasury, which has the result of his getting a more reliable car while requiring responsibility without extorsion rates.)

With article after article on car manufacturers limiting or discontinuing the more affordable models of their cars, focusing on the more profitable, there may become an increasing desire to buy gently used cars as the new car affordability decreases. This would bode well for KMX. New car manufacturers and dealers like the low inventory triggered by chip shortages, noting that they are more profitable selling fewer cars at higher prices, carrying less overhead that periodically needs to be discounted to sell. Will they continue the reduced inventory strategy when chips are not an issue? https://www.kbb.com/car-news/a... If so, this will increase at least short term demand for used cars, though long term supply issues, so is that a plus or a minus for KMX?

And regarding that predatory lending, which is secured by the vehicle, if those vehicles decline in value by 20% as has been suggested in a previous post, how many will simply walk away from that car payment, just as people walked away from their mortgages when their homes went underwater in value? Surely that will have to impact KMX, if only in the value of the collateral for the loans they issue.

FWIW,

IP