VW’s high-stakes reset, CPO sales struggle, prime auto loan delinquencies raise alarm

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50% of used car shoppers want to keep their next purchase < $15K:

But they'll have to make some compromises...

Back in 2019 — $15K got you a 5-year-old car. Today — the same used vehicle age is averaging $25K.

The problem? Used car supply is still constrained, keeping prices elevated…

And to stay within budget, buyers are now looking at 9-year-old cars — which are going for an avg. of $14,805.

Bottom line: Used car prices are slowly course-correcting (down 22% from the 2022 peak), but we're still far from pre-pandemic levels.

(Data source: Edmunds / Kiplinger)

1. Lack of supply is crunching certified pre-owned car sales

Used vehicle sales dropped 9% in Sept., with 1.4 million units sold, but the spotlight is on certified pre-owned (CPO) sales, which plummeted 22.4% from Aug. and 20.8% year-over-year.

Dealers are struggling to stock CPO inventory due to a shortage of late-model used vehicles—a ripple effect from COVID-era production slowdowns and chip shortages that slashed new car sales and leases three years ago.

Fewer off-lease returns plus an uptick in vehicles with open recalls (which can’t be certified) have further tightened the CPO supply.

Automakers like Toyota and Honda are expanding their programs to certify older cars, but dealers will need to make a strong push to hit the year-end forecast of 2.6 million CPO units … (Go deeper: 3 min. read)

2. Volkswagen’s high-stakes reset: factory closures, layoffs, and wage cuts

Volkswagen is shutting down three factories in Germany for the first time ever, scrambling to stay afloat as sales slump in China and the EV race heats up.

Global deliveries fell 7% in Q3, with China down 15%, pushing VW into cost-cutting mode—wage freezes, pay cuts, and 4 billion euros in savings are all on the table.

The goal? Boost profits from 4% to 6.5% by 2026, but between workforce backlash and mixed strategy signals, the road ahead looks anything but smooth … (Go deeper: 3 min. read)

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3. Prime borrowers stumble as auto loan delinquencies rise

Auto loan delinquencies continue to rise, but the twist is who’s missing payments — prime borrowers with solid credit are slipping more than before the pandemic, while subprime delinquencies are easing back toward “normal” levels.

With inflation, rising interest rates, and higher living costs, even financially stable borrowers are feeling the strain.

While many are just managing to avoid default, cracks are showing in the segment — a troubling sign for lenders who once saw this group as safe bets … (Go deeper: 2 min. read)

• Is Jaguar taking a cat nap, or Is the brand in real trouble?

• Cox Automotive forecast: October new-vehicle sales steady.

• UAW holding strike authorization vote for GM Indiana truck plant.

• China again warns EU against separate talks with EV makers.

• Elon Musk’s Tweet on Tesla union push ruled protected speech by U.S. appeals court.

Thanks for reading everyone.

— CDG