US Car Owners Drowning In Debt: Underwater Crisis Deepens, Delinquency Rates Rise
Portfolio Pulse from Piero Cingari
The U.S. car loan market is facing a crisis with record levels of negative equity and delinquency rates. Edmunds.com reports that average negative equity hit a record $6,054 in November, the highest since April 2020. Auto loan debt is the third-largest consumer debt category at $1.595 trillion. Fitch Ratings indicates a record high delinquency rate for subprime auto loans at 6.11% in September 2023. The Manheim Used Vehicle Value Index shows a 5.8% year-over-year drop. High interest rates are burdening borrowers, especially those with poor credit. CarMax Inc. (NYSE:KMX) is in focus as its earnings report on Dec. 21, 2023, could reflect these market conditions, with an expected EPS of $0.43 and quarterly revenue of $6.3 billion.

December 18, 2023 | 10:33 pm
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CarMax Inc. is in the spotlight as its earnings report could reveal the impact of the auto loan market crisis on its business, with expectations of a 3% decline in EPS and a 4% drop in revenue.
The negative equity and delinquency rates in the auto loan market suggest a challenging environment for used car retailers like CarMax. The expected decline in EPS and revenue indicates that the market conditions may have adversely affected CarMax's performance, potentially leading to a negative short-term impact on its stock price.
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