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MORGAN STANLEY: We Could See The 'Largest Decline In Used Car Prices...

Morgan Stanley analyst Adam Jonas is out with a note about August U.S. new car sales, and he's concerned.

The gist is that he thinks incentives and generous financing terms are pulling forward consumer demand from the future. That's how we blew away expectations for the annual sales pace in August: 17.5 million versus 16.5 million.

That is an eye-popping number, especially when you consider that an annual sales pace of 17 million was the historic high point for the U.S. market, more than a decade ago. But then again, using incentives and financing to pull demand forward is nothing new in the car business. Although some justified red flags have been raised about subprime auto loans and leasing terms, particularly when the financing stretches beyond the usual maximum of five years.

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