Skip to main content

Some See a Ongoing Rise in Used Car Values, Some Big Lenders Disagree

DETROIT––Not everyone agrees with those analysts who are forecasting used car values and demand for loans will continue to rise in 2021. In fact, Ally Financial said last week that it is embedding a potential 15% to 20% cumulative decline in used-auto values by the end of 2023 into its assumptions, the Wall Street Journal reported.


“It is natural for lenders and investors to anticipate the end of the current used-vehicle boom, and valuations of banks with big auto-finance businesses seem to partly reflect that,” the Journal reported. “Lenders such as Ally and Capital One Financial are trading at forward price-to-earnings valuations that are relatively low compared with where they normally trade versus S&P 500 banks overall, according to FactSet data.”

The Journal report noted that industry-tracker Cox Automotive has forecast that the Manheim index of used-car prices will be a mere 3% lower by this December than it was in December 2021.

“Perhaps a price decline could accelerate quickly the following year,” the Journal stated. “For the time being, though, things like the supply-chain snarls for chips that are making new cars take longer to build still appear to be a factor. Ally said that, although it is forecasting cautiously, ‘recent trends indicate ongoing resilience’ in used values.”

Tight Inventory

Despite high used-car prices, strong demand and tight inventory at auto dealers, the Journal reported that Ally and Huntington Bancshares both noted upticks in dealer credit utilization in their quarterly updates, “indicative of needing to finance inventory that isn’t instantly moving off the showroom floor. More new cars on lots might lead to fewer buyers winding up in the used-car market.”

Both General Motors and Ford Motor have also steered a way into the used car market via online platforms, the Journal added.

62% of Leases Bought Out


“That same trend of scarce inventory has also likely played a role in more vehicles being bought out at the end of leases—meaning that a lease financing provider isn’t able to take an off-lease car and sell it into the hot market,” the Journal added. “Ally reported that 62% of leases were bought out in 2021, compared with a figure typically closer to 30%, muting lenders’ upside to rising used values to a degree. Falling used-car prices would reduce the gains on selling cars, but they also could lead to more cars winding up in lenders’ hands in the first place.”


Comments

Popular posts from this blog

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 

Vought: ‘We’re Closing Down The CFPB’ — White House Budget Chief Says Agency Will Shut Down Within Months

  10/16/2025 09:03 am         WASHINGTON—White House Budget Director Russell Vought said Wednesday he plans to shut down the CFPB, PYMNTS reported. Russell Vought Speaking on  The Charlie Kirk Show , Vought said only a handful of employees remain at the CFPB’s Washington headquarters “while we close down the agency,” adding that he expects the process to be completed “within the next two or three months.” Vought’s remarks come amid a series of legal challenges targeting the Administration’s attempts to scale back or dismantle the CFPB. The Administration is currently facing lawsuits from a CFPB labor union and consumer advocacy groups, which argue that Trump lacks the authority to dismiss most of the Bureau’s staff or eliminate the agency altogether. On Wednesday, Vought repeated long-standing Republican criticisms that the CFPB has exceeded its authority and imposed unfair burdens on smaller financial institutions, PYMNTS noted. “All they want to do is wea...

AI Meets Retail: Walmart Lets Shoppers Buy Directly Through ChatGPT Using Sparky Instant Checkout

  10/15/2025 07:10 pm         BENTONVILLE, Ark.— Walmart is teaming up with OpenAI to introduce Sparky AI-driven shopping experiences that let customers and Sam’s Club members complete purchases directly through ChatGPT using its new Instant Checkout feature, PYMNTS reported. The collaboration broadens Walmart’s use of artificial intelligence across its retail ecosystem and underscores a wider industry move toward conversational, predictive commerce. Through the integration, shoppers can plan meals, restock household essentials, or discover new products simply by chatting with ChatGPT—while Walmart manages the entire transaction process seamlessly in the background, PYMNTS explained. “For many years now, eCommerce shopping experiences have consisted of a search bar and a long list of item responses,” Doug McMillon, president and CEO of Walmart Inc., stated in the PYMNTS report. “That is about to change. There is a native AI experience coming that is multi-media...

New from AutoLink

New from AutoLink

Understanding the Fed’s Balance Sheet

Chair Jerome H. Powell Monetary policy is more effective when the public understands what the Federal Reserve does and why. With that in mind, I hope to enhance understanding of one of the more arcane and technical aspects of monetary policy: the Federal Reserve's balance sheet. A colleague recently compared this topic to a trip to the dentist, but that comparison may be unfair—to dentists. 1 Today, I will discuss the essential role our balance sheet played during the pandemic, along with some lessons learned. I will then review our ample reserves implementation framework and the progress we have made toward normalizing the size of our balance sheet. I will conclude with some brief remarks on the economic outlook. Background on the Fed's Balance Sheet One of the primary purposes of a central bank is to provide the monetary foundation for the financial system and the broader economy. This foundation is made of central bank liabilities. On the Fed's balance sheet, the liabili...