Lexus, Toyota, Audi & Honda Are SCREWING The Car Market | Episode 1054
About this episode
Ray and Zach dig into Cox Automotive “days supply” data, arguing that Lexus, Toyota, Audi, and Honda appear to be artificially constraining inventory to protect pricing power—despite year-over-year sales declines. They challenge the math, compare prior months, and even cross-check dealer listings via CarEdge to suggest the reported days-supply figures don’t match what’s sitting on lots. The discussion then shifts to affordability: JD Power and Edmunds data on 84-month financing, negative equity, and how payment-focused buyers get trapped in a cycle. They also celebrate Car and Driver testing CarEdge AI.
Lexus
"Today's show, Dad. Lexus, Toyota, Audi, and Honda. They're screwing the car market."
Lexus is Toyota’s luxury brand. It’s basically Toyota, but aimed at people who want nicer features and a more premium feel.
Lexus is Toyota’s luxury brand, known for reliability-focused engineering and a more upscale ownership experience. In market discussions, Lexus often represents how mainstream brands compete for higher-income buyers without sacrificing Toyota-like durability.
Toyota
"Today's show, Dad. Lexus, Toyota, Audi, and Honda. They're screwing the car market."
Toyota is a huge car company that sells a lot of vehicles worldwide. When people talk about Toyota affecting the car market, they mean its pricing and supply decisions can change what other brands and buyers experience.
Toyota is one of the largest global automakers and a major driver of pricing, incentives, and supply decisions. When hosts say Toyota is “screwing the car market,” they’re usually pointing to how Toyota’s inventory, demand, and pricing strategy affects what buyers pay.
Honda
"Today's show, Dad. Lexus, Toyota, Audi, and Honda. They're screwing the car market."
Honda makes a lot of popular everyday cars. If it’s part of a segment about the car market, it usually means its pricing and availability are affecting what buyers pay.
Honda is a major mainstream automaker known for high-volume models and strong resale value. When Honda is grouped with other brands in a “car market” segment, the discussion typically relates to how Honda’s supply, demand, and pricing/incentives influence transaction prices.
Audi
"Today's show, Dad. Lexus, Toyota, Audi, and Honda. They're screwing the car market."
Audi is a luxury car brand from Germany. In a car-market discussion, it’s often included because its pricing and sales trends reflect what’s happening in the premium market.
Audi is a German luxury automaker that competes heavily in the premium segment with brands like BMW and Mercedes-Benz. In market-data episodes, Audi’s sales performance and incentive strategy can be used as evidence of broader pricing and availability trends.
new car side of things
"what's going on on the new car side of things. So we're going to break that down in just a moment before we do a friendly reminder."
They’re talking about what’s happening with brand-new cars—like how many are available and how pricing is behaving. Used cars can be a different story, so they’re separating the two.
The hosts are focusing on the “new car” market—pricing, inventory, and sales conditions for vehicles that are currently being sold. This is distinct from used-car market dynamics, which can move differently.
caredge.com
"Today's show is brought to you by caredge.com. Save $2,487 on your next car. We'll do the work."
CarEdge is a website that helps people shop for cars and try to get better deals. The ad is basically saying they’ll help you find and evaluate options without as much effort from you.
CarEdge (caredge.com) is a car-shopping service that positions itself around helping consumers find deals and understand pricing. In the context of this episode, it’s tied to the show’s promise of savings and “doing the work” for buyers.
inventory levels stay relatively flat
"We have actually seen inventory levels stay relatively flat. They're down or they're up, actually, just a little bit month over month. But day's supply has gone down to 79 days..."
If inventory stays about the same but day’s supply drops, it means cars are moving faster than before. That usually points to stronger demand or slower replenishment.
“Inventory levels stay relatively flat” means the total number of vehicles available doesn’t change much over time. When day’s supply still falls despite flat inventory, it suggests demand is increasing or sales velocity is rising faster than supply.
inventory withholding from dealers
"These are the brands, Dad, that are withholding inventory from their dealers the most or, conversely, selling out of cars left and right, and they just can't replace them."
Withholding inventory means the brand isn’t sending as many cars to dealer lots as they could. That can make cars sell out faster and make it harder for shoppers to find the exact car they want.
“Withholding inventory from their dealers” implies the manufacturer limits how many vehicles it allocates to dealer lots. This can create artificial scarcity—dealers sell quickly, but can’t replenish inventory—often affecting pricing power and customer availability.
sales year over year are down
"Now, what gives me confidence that they're not selling out of cars left and right and can't replace them is we looked at all the sales data. And sales year over year are down at all of these brands."
“Sales year over year are down” compares sales in the current period to the same period in the previous year. If sales are down across brands, it can indicate demand softness even while day’s supply suggests inventory is tight—helping explain why the hosts are skeptical about a pure “sell-out” story.
day's supply
"However, Dad, their day's supply keeps creeping lower. Can you explain to us what day's supply is? Explain to us what these numbers mean? ... Well, that's the number of days it would take to sell the remaining inventory on hand based on the current daily sales rate. So that's a measure of how quickly dealers are selling cars."
“Day’s supply” tells you how long it would take dealers to sell all the cars they currently have on the lot, assuming sales keep happening at the same daily rate. If it’s low, it usually means cars are selling faster than they’re piling up, which can help keep prices from dropping.
“Day’s supply” is an inventory metric that estimates how many days it would take to sell the current remaining stock at the current daily sales pace. A lower day’s supply generally suggests tighter inventory, which can support pricing because dealers have fewer cars sitting unsold.
sales were down
"And here's what I don't believe. Sales were down in January, February, and March... Now, we know sales for the industry were down in the month of March."
“Sales were down” means fewer cars were sold than before. If that happens while there are still lots of cars available, dealers may need to offer better deals to move inventory.
“Sales were down” refers to a decline in vehicle unit sales over a period (here, January through March and specifically March). When sales fall while inventory rises, it can indicate weaker demand, which often leads to more incentives or pricing pressure.
inventory increase
"That being said, we saw inventory increase by 40,000 vehicles. So there are 40,000 more new cars for sale nationwide right now, yet the day's supply dropped by 13 days."
Inventory just means how many cars are sitting on lots or available to sell. If there are more cars than usual, dealers may have to compete more, which can make deals easier to find.
Inventory increase means there are more vehicles available for sale than before. In a market context, more inventory can increase competition among dealers and potentially improve pricing power for buyers.
how negotiable a car is
"The thing that we look at and the thing that all consumers should look at to try and understand how negotiable a car is. Not necessarily if it's a fair deal"
“Negotiable” means how much you can bargain on price. If lots of cars are available and they’re not selling fast, dealers often have more reason to make deals.
“How negotiable a car is” refers to how much room there is to negotiate price and terms. Market signals like inventory, days supply, and brand sales trends can influence whether dealers need to discount to sell.
inventory turning over
"is day's supply of inventory because it tells you how fast the inventory is turning over."
Inventory turnover is how fast cars sell off the lot. If turnover is slow, the brand or dealers may need to discount or change supply to avoid having too many cars sitting around.
“Inventory turning over” describes how quickly cars move from lots into customers’ hands. When turnover slows, it often leads to incentives, price pressure, and more aggressive dealer or manufacturer actions to manage supply.
withheld inventory
"it is 100% because they have withheld inventory. That's the only thing they could possibly do."
The idea is that a company holds back cars instead of sending them to dealers. If there are fewer cars available, prices can stay higher—but it can also make the market data look misleading.
“Withheld inventory” refers to the idea that a manufacturer limits shipments to dealers to keep supply artificially tight. In theory, that can support pricing and reduce discounting, but it can also distort inventory metrics and market signals.
sales were off 20%
"And their sales are in the toilet. Their sales were off 20%. So we're going to spend a lot of time on this"
They’re saying sales dropped by about 20%. If sales fall while inventory stays high, it usually means cars aren’t moving as fast and the brand may need to change strategy.
A “20%” sales decline is being used as evidence that the brand’s market position is weakening. In combination with inventory-days data, it suggests slower demand and potential pressure to adjust supply or incentives.
Infinity
"Chevrolet with an 84, Infinity 83, Honda 59 Toyota 41, and Lexus at 38."
This is likely Infiniti, another brand in the comparison. They’re using the same inventory-days idea to see how quickly each brand’s cars are moving.
“Infinity” appears to be a transcription error for Infiniti, which is also part of the inventory-days comparison. Infiniti’s listed value is used to benchmark inventory vs sales pace against other brands.
Chevrolet
"This is saying that Audi had an 85 days supply Chevrolet with an 84, Infinity 83, Honda 59 Toyota 41, and Lexus at 38."
Chevrolet is mentioned as one of several brands being compared using the same inventory metric. It helps show which brands have more cars sitting around versus selling quickly.
Chevrolet is included in a comparison list of brands by “days supply of inventory.” This kind of cross-brand comparison helps illustrate which brands have faster or slower sales relative to their inventory levels.
dealer inventory
"the only thing that can rationalize this for me, Dad, is that the manufacturers have stopped sending vehicles to their dealers as inventory."
Dealer inventory is just the cars dealers have on their lots. If the factory sends fewer cars, the lots can get emptier and it can look like the market is “tight” even if demand is similar.
Dealer inventory refers to the number of vehicles sitting at dealerships ready to be sold. When manufacturers reduce shipments, days supply can fall even if overall market demand hasn’t changed.
inventory vs sales pace
"there are more new cars in inventory today than there were a month ago. It could be that brands like Stellantis' brands... are over flooding their dealers with inventory."
They’re noticing something that doesn’t line up: some brands look like they have less stock, but overall there are more cars available than last month. That can happen when sales speed changes or when factories change how many cars they send out.
The hosts point out a seeming contradiction: days supply drops for some brands, yet the total number of new cars in inventory is higher than a month ago. That highlights how inventory metrics can be affected by both supply (shipments) and sales pace (how quickly cars sell).
Stellantis
"It could be that brands like Stellantis' brands, like Chrysler, Dodge, Jeep, Ram, some of those brands, are over flooding their dealers with inventory."
Stellantis is the big company that owns several car brands. The hosts are suggesting that some of those brands may be sending too many cars to dealers, which can affect pricing and availability.
Stellantis is a major automaker formed from the merger of Fiat Chrysler Automobiles (FCA) and PSA Group. In the transcript, it’s used as the umbrella for multiple brands that could be influencing how many cars are delivered to dealers.
Chrysler
"It could be that brands like Stellantis' brands, like Chrysler, Dodge, Jeep, Ram, some of those brands, are over flooding their dealers with inventory."
Chrysler is a car brand owned by Stellantis. The hosts are using it as an example of a brand that might be sending too many cars to dealerships.
Chrysler is one of the brands mentioned as part of Stellantis. The discussion frames Chrysler (along with other Stellantis brands) as potentially contributing to dealer overstock, which can distort inventory metrics like days supply.
Dodge Ram
"... Stellantis' brands, like Chrysler, Dodge, Jeep, Ram, some of those brands, are over flooding their d..."
The Dodge Ram is a large pickup truck made for work and everyday driving. People use it for hauling cargo, towing trailers, and carrying gear. It may be mentioned in a podcast when talking about how the company that makes it organizes its different truck and car brands.
The Dodge Ram is a full-size pickup truck line from Stellantis (the company behind brands like Chrysler, Dodge, Jeep, and Ram). It’s often discussed because it’s a major part of the brand’s lineup and a key seller in the truck market, so changes in strategy, production, or product planning can be noticeable. In podcast talk, it may come up when discussing how large automaker groups manage multiple brands and their product direction.
Jeep
"like Chrysler, Dodge, Jeep, Ram, some of those brands, are over flooding their dealers with inventory."
Jeep is a car brand known for SUVs and off-road vehicles. Here, it’s mentioned as one of the brands that could be sending too many cars to dealers.
Jeep is included in the list of Stellantis brands that might be affecting dealer inventory levels. If Jeep (and similar brands) ship more cars than dealers can sell quickly, it can change market-wide inventory readings.
artificially constraining supply
"they're giving to their dealers artificially constraining supply so that they can retain their pricing power and reduce the negotiability of their new cars."
“Artificially constraining supply” refers to limiting how many cars reach dealers (or reach the market) even when demand exists. The goal is often to keep inventory low so the brand can maintain pricing power and reduce discounting.
pricing power
"so that they can retain their pricing power and reduce the negotiability of their new cars."
“Pricing power” is the ability of a manufacturer or dealer network to sell cars at higher prices without losing too many sales. It’s strongest when supply is tight and demand remains steady, limiting how much buyers can push for discounts.
allocations
"Yes, I would suggest that Audi dealers have turned down allocations and asked Audi to withhold sending them cars."
Allocations are how many cars a brand decides to send to each dealership. If a dealer gets fewer cars than it wants, there’s less inventory on the lot, and prices tend to stay higher because buyers have fewer options.
In auto retail, “allocations” are the limited number of vehicles a manufacturer assigns to each dealer. When dealers receive fewer allocations, they can’t stock as many cars, which can tighten supply and affect pricing and negotiation.
day supply of cars
"And then suddenly your day supply has improved from 85 day supply of cars to 47. And the dealers still don't have any leverage"
“Day supply” is basically how many days the cars on dealer lots would last if sales keep happening at the same rate. A big change in that number can mean inventory is getting tighter—or that the numbers being reported may not reflect reality.
“Day supply” is an inventory metric that estimates how many days the current dealer stock would last at the current sales pace. If day supply drops sharply, it usually means inventory is tighter or sales are stronger than before; if it changes too abruptly, it can suggest reporting or supply-chain manipulation.
withholding inventory from their dealer partners
"The only thing that can rationalize it is that the manufacturers are intentionally withholding inventory from their dealer partners. The dealers get to choose if they want to take inventory or not."
They’re saying the car companies might hold back cars from dealerships on purpose. If dealers don’t have cars to sell, they can’t bargain as much on price.
The hosts suggest manufacturers may intentionally limit how many cars they send to dealers. This can reduce dealer “leverage” because dealers can’t discount or negotiate aggressively when they don’t have enough inventory to sell.
dealer allocation
"But then they threaten things like, well, if you want future allocation, you need to take these vehicles."
Car companies don’t always send every dealer the same number of cars. If a dealer doesn’t take what they’re offered, they may get fewer cars later, which can make cars harder to find.
“Allocation” is how automakers decide how many vehicles each dealer gets to sell in a given period. When dealers refuse vehicles, it can affect their future allotments and create artificial scarcity in the market.
Toyota RAV4
"But Toyota sales are off because of the new RAV4. They don't have them yet. They don't have so many of them."
They’re blaming Toyota’s lower sales on the new RAV4 not being available yet. When a car is getting updated, there can be a gap where dealers don’t have enough of the new ones to sell.
The hosts attribute Toyota’s weaker sales to the rollout timing of a “new RAV4.” When a model is being refreshed, dealers may have fewer units available while the new generation ramps up, which can temporarily depress sales even if demand remains.
Kia
"Kia was at 89. Now what is Kia at 75?"
Kia is one of the car brands they’re talking about while discussing dealer inventory and pricing. They’re using Kia’s numbers to support their point about how the market is behaving.
Kia is being used as an example in the episode’s market-metrics discussion, with the hosts citing changes in its inventory day supply. The brand mention matters because it’s part of the argument about which automakers are seeing tighter (or looser) dealer supply.
day supply of inventory
"Every single brand on this list that for the most part is showing a significant decline in the day supply of inventory, which again is the primary and leading indicator for negotiability."
It’s basically a way to measure how “full” car lots are compared to how fast cars are selling. If there are fewer days of cars sitting on lots, dealers usually have less reason to discount, so prices can stay higher.
“Day supply of inventory” is a market metric that estimates how many days it would take to sell the current dealer inventory at the current sales pace. When day supply drops, it usually signals tighter supply, which can reduce discounts and increase negotiating leverage for sellers.
negotiability
"which again is the primary and leading indicator for negotiability. And so the only thing I can point my finger at is the manufacturer and the dealers corroborating here to withhold supply so that they have more pricing power."
“Negotiability” is how much you can realistically bargain on the price. If lots are tight and cars are selling quickly, dealers tend to be less willing to move on price.
In car-market talk, “negotiability” refers to how much room buyers have to bargain on price. Metrics like day supply, sales rate, and inventory levels influence whether dealers feel pressured to discount or can hold firm.
withhold supply
"And so the only thing I can point my finger at is the manufacturer and the dealers corroborating here to withhold supply so that they have more pricing power."
It means keeping cars from showing up in big numbers on dealer lots. If fewer cars are available, it can make prices harder to negotiate downward.
“Withhold supply” refers to limiting how many vehicles reach dealer lots (or how quickly they arrive) to affect market tightness. The claim is that reduced supply can support higher prices and improve dealer/manufacturer leverage.
Subaru
"We know Subaru sales were off. We know how the sales are off."
They mention Subaru to point out that sales weren’t strong. The hosts are using that as evidence in their debate about whether the inventory and pricing indicators are telling the truth.
Subaru is referenced to support the claim that sales have been weaker (“Subaru sales were off”). In this context, it’s used to argue that the inventory/day-supply math doesn’t match what you’d expect from sales trends.
inventory day supply vs sales rate
"We know inventory as a whole has gone up yet industry as a whole day supply has gone down based on a sales rate that is lower than what it was last year."
This segment contrasts inventory levels with the sales pace (“sales rate”). Even if inventory rises, day supply can fall if cars are selling more slowly than before—because the calculation depends on how quickly inventory is moving.
45 day supply
"where they only have a 45 day supply now, you'll see that these things have been sitting for hundreds of days."
Dealers and analysts use “days of supply” to guess how long the current stock will last. If it’s more days, it usually means cars are not selling as fast and you may see more deals.
“45 day supply” is a market metric that estimates how long current inventory would last at the current sales pace. If supply is low, dealers tend to sell through faster; if it’s high, cars sit longer and discounts become more likely.
Audi A6
"Here's an A6 that's been there 176 days."
The Audi A6 is a luxury car model from Audi. Here it’s mentioned because one particular A6 has been sitting on the lot for a very long time, which can affect what kind of deal you might get.
The Audi A6 is a mid-size luxury sedan (or wagon in some markets) known for comfort and technology. In this segment, it’s used as an example of a specific car sitting in inventory for a long time, which can indicate weaker demand or pricing pressure.
transparency score
"On every dealer page, obviously they get a transparency score, but we also have some inventory data."
A “transparency score” is a dealer-rating metric tied to how clearly and consistently a dealership presents information online (often including pricing, vehicle details, and disclosures). Higher transparency can make it easier for shoppers to compare offers and may correlate with smoother sales processes.
new and used vehicles
"So you can see here the median days listed as 50 days. That's across new and used vehicles."
New and used cars don’t always sell at the same pace. Here, they’re mixing both together when they talk about the median days listed, so it’s a combined picture of turnover.
Separating or combining “new and used vehicles” matters because their pricing and sales cycles can differ. In this segment, the median days listed is calculated across both categories, which can affect how you interpret dealer turnover.
inventory distribution (30 to 90 days old; 90+ days old)
"Let's look at their distribution down here. Most of their inventory is 30 to 90 days old... I mean, they've got a significant amount. 25% of it is 90 days or older."
Looking at the “distribution” of inventory age (e.g., how much is 30–90 days old vs. 90+ days old) helps diagnose whether a dealer’s stock is fresh or aging. A larger share of older inventory can indicate pricing pressure, slower demand, or mismatched vehicle selection.
Cox Automotive
"This comes from Cox Automotive. Okay. This data that we look at every month is from Cox Automotive."
Cox Automotive is a company that tracks car-market data. The hosts are saying the inventory timing numbers they’re using come from Cox’s reporting.
Cox Automotive is a data and analytics company widely used in the automotive industry for market and inventory reporting. In this segment, the hosts cite Cox Automotive as the source for the monthly inventory metrics they’re discussing.
negative equity cycle
"The rise of 84-month financing and the new negative equity cycle. JD Power put out a ton of great research last week, Dad, and I thought we could dig into it here today. A few of the key points... about a third of used vehicle trade-ins have negative equity."
Negative equity is when you owe more on your current car than it’s worth. A “cycle” means this problem keeps happening when you trade in and finance the difference again, making it harder to get ahead.
A “negative equity cycle” happens when many buyers roll old loan debt into a new purchase. If trade-in values fall faster than loan balances, people can repeatedly carry “underwater” equity, which worsens affordability and increases default risk.
84-month financing
"The rise of 84-month financing and the new negative equity cycle. JD Power put out a ton of great research last week, Dad, and I thought we could dig into it here today."
This is when you finance a car for about 7 years instead of a shorter time. It can make the monthly payment feel smaller, but you usually pay more interest overall and you can get stuck with a loan balance that’s bigger than the car’s value.
“84-month financing” means spreading a car loan over 84 months (7 years). Longer terms can lower the monthly payment, but they also increase total interest paid and can make it easier to end up owing more than the car is worth.
JD Power
"JD Power put out a ton of great research last week, Dad, and I thought we could dig into it here today. A few of the key points. 84-month financing is now almost 13% of all new loan originations."
J.D. Power is a company that does research about cars and consumer behavior. Here, the host is using their study to back up the points about how common long car loans are.
J.D. Power is a well-known research and analytics firm that publishes automotive and consumer studies. In this segment, the host references J.D. Power research to support claims about financing trends and affordability.
loan originations
"A few of the key points. 84-month financing is now almost 13% of all new loan originations. The average monthly payment on new vehicle loans is $806, and about a third of used vehicle trade-ins have negative equity,"
Loan originations are basically new car loans that get started. If a certain percentage of those loans are 84 months, it means long-term financing is becoming pretty common.
“Loan originations” refers to the number of new auto loans being created (i.e., new financing contracts). Saying 84-month financing is “almost 13% of all new loan originations” means a significant share of new car buyers are choosing (or being offered) very long terms.
extended loan terms
"Well, the thing that really caught my attention is the continuation of extending loan terms... what is a 12.8% of all loans today are beyond 84 months and longer..."
Instead of paying off a car loan in a shorter time, you pay it over more years. That usually makes the monthly payment smaller, but you can end up paying more overall and it can be tough to sell or trade the car later.
Extended loan terms mean stretching an auto loan beyond the typical repayment window, often into 6–7 years or more. Longer terms lower the monthly payment, but they increase total interest paid and can make it harder to get out of the loan without owing more than the car is worth.
trade it out
"I think it was like 40 some percent of those who get into 72 and 84 month loans are actually looking to trade it out of those in three and a half to four and a half years."
“Trade it out” means getting rid of your current car and getting a new one. If you do it before you’ve paid down the loan much, you may still owe a lot compared to what the car is worth.
“Trade it out” refers to swapping vehicles—usually trading in the current car to get into a new one. When people trade early in a long loan (like around 3.5–4.5 years into a 6–7 year loan), they may still have significant loan balance and can trigger or worsen negative equity.
leases
"I know people are going to scream when I say this, but those people should be in leases and not loans."
Leases are contracts where you pay to use a vehicle for a set term rather than fully owning it. The speaker argues that, for people who want to get out after a few years, leasing can better match the time horizon and reduce the risk of being stuck with negative equity when trading.
upside down on that car loan
"So what's the average amount that those people are then upside down on that car loan? $7,183."
“Upside down” means you owe more money on the car than it’s worth right now. If you try to switch cars, you may need to pay extra out of pocket to cover the gap.
Being “upside down” on a car loan means the loan balance is greater than the vehicle’s current market value. This situation makes it difficult to trade in or refinance without bringing cash to cover the difference.
rolling negative equity into a new loan
"And when you roll in the negative equity to your car loan, the average amount then takes that car loan payment up to $932."
Rolling negative equity means you don’t pay off the gap when you switch cars—you add it to the new loan. That makes the new loan bigger, so your payment can go up and the problem can repeat.
“Rolling” negative equity means adding the upside-down amount from your current car into the financing for your next car. This effectively carries the loss forward, which can increase the new loan balance and monthly payment, reinforcing a cycle of affordability strain.
84 month car loan
"it's over 44% of those who took out an 84 month car loan are trying to get out of that within three to four years."
An 84-month loan is a car loan stretched out to about 7 years. It can make the monthly payment look smaller, but you usually pay more interest overall and it can be harder to get out of the loan early.
An 84-month auto loan is a long-term financing structure (7 years). Longer terms can lower the monthly payment, but they also increase total interest paid and can make it more likely the borrower will still be “stuck” with the loan when they want to switch cars.
loan term length
"It's interesting, the longer the loan term is, the more likely someone is to try and get out of that vehicle into a new vehicle."
Loan term length refers to how many months/years you spread the payments over (e.g., 84 months vs shorter terms). The host argues that longer terms increase the chance borrowers will want to exit the vehicle sooner, which can worsen the affordability cycle.
roll into the next purchase
"And they just want to roll into the next purchase and to the next purchase and to the next purchase. And well, at a certain point, the bank is going to say, no, we're not willing to finance 40% air."
Rolling into the next purchase is when you don’t pay off your old car loan before getting a new one. Instead, the leftover debt gets added to the new loan, which can make the new car deal much more expensive.
“Rolling” negative equity into a new purchase means adding the old loan’s unpaid balance (often from a trade-in) to the new financing amount. This can inflate the new loan balance and keep the customer trapped in a cycle of debt and depreciation.
bank is going to say no
"And well, at a certain point, the bank is going to say, no, we're not willing to finance 40% air. Because when banks go to 140% loan to value ratio... So start saving your money."
This describes lenders tightening approval criteria when deals become too risky—such as financing amounts that rely on inflated trade-in values or rolled-in debt. When lenders refuse these structures, buyers may be forced to bring cash or reduce the financed amount.
loan to value ratio
"no, we're not willing to finance 40% air. Because when banks go to 140% loan to value ratio, well, that 40%, there's nothing securing that other than the air that we breathe."
Loan-to-value ratio is basically how much of the car’s value the loan covers. If it’s very high, the lender is taking on more risk because the car might not be worth enough to cover the loan later.
Loan-to-value (LTV) ratio compares the loan amount to the vehicle’s value. Higher LTV means the lender is financing more of the car’s cost relative to its value, which increases risk—especially if the car’s value drops.
affordability crisis
"And I think it's illustrative of how bad the affordability crisis has actually gotten, which again, circle back to where we started today's show."
An affordability crisis refers to the situation where car prices, interest rates, and/or financing terms make monthly payments too expensive for many buyers. In this context, it’s tied to how lenders and dealers structure deals (like rolling negative equity) and how supply/demand affects pricing power.
market day supply
"It's all about market day supply. We sound like a broken record. Out the door price, market day supply. Hate to sound that way, but those are the two most important things to keep in mind when you're buying or leasing a newer used vehicle."
Market day supply is a way to describe how many cars are sitting on lots compared to how fast people are buying them. If there are fewer cars than buyers want, prices stay high; if there are lots of cars, deals get better.
Market day supply is a measure of how many days it would take to sell the current inventory at the current sales pace. Lower supply typically supports higher prices and weaker discounts, while higher supply can improve negotiating leverage for buyers.
out the door price
"Out the door price, market day supply. Hate to sound that way, but those are the two most important things to keep in mind when you're buying or leasing a newer used vehicle."
Out-the-door price is the full total you’ll pay, not just the sticker price. It usually includes taxes and fees, so it’s the number you should compare between deals.
Out-the-door (OTD) price is the total amount you pay to drive the car off the lot, including the vehicle price plus taxes, registration, and dealer fees. It’s important because advertised prices often exclude some of these costs, making the deal look cheaper than it really is.
new car sales go down because they've become unaffordable
"But why have we seen new car sales go down no matter what?... new car sales have gone down because they've become unaffordable."
This segment ties declining new car sales to affordability pressures rather than demand alone. It’s a market discussion about how higher prices, financing costs, and trade-in debt can reduce the number of buyers who can realistically purchase new vehicles.
Edmunds
"look at this chart from Edmunds that they put out every quarter with their negative equity update."
Edmunds is a car research website. They publish reports and charts about car-buying trends, including how often people are trading in cars that still have loan debt.
Edmunds is an automotive research and pricing site that publishes market data and analysis. In this segment, they’re referenced for a quarterly “negative equity update” chart used to track how much underwater debt buyers bring into new purchases.
trade-in with negative equity
"while we've seen negative equity amounts increase, the percentage of trade-ins that actually have negative equity have been below historic norms... one in three car shoppers, when they trade in their vehicle, bring negative equity."
This is about how many people are trading in a car that’s still worth less than they owe. If that’s common, a lot of buyers are carrying extra debt into their next purchase.
The share of trade-ins that are underwater matters because it shows how many buyers are effectively financing past debt. Even if the percentage is “only” a third, it can still drive higher monthly payments and longer payoff timelines across the market.
0-30% threshold (one in three shoppers) for negative equity trade-ins
"We're finally getting back to the above 30% threshold... where one in three car shoppers... bring negative equity."
They’re using a simple benchmark—about one in three buyers—to show how common it is to be underwater on a trade-in. If that number climbs, more people are starting their next loan with extra debt.
The “one in three” framing is a market-health indicator: it suggests a large portion of shoppers are carrying underwater trade-in debt. When that share rises, it can amplify affordability issues because more buyers roll debt into new loans.
monthly payment vs total cost of the car
"the vast majority of people are only concerned with what their monthly payment is, and they have no idea what that translated into... how much they're paying over the life of the loan with all the interest that's going to be paid."
People often shop by the monthly payment, but that doesn’t tell you the full story. The total cost depends on interest and how long you finance the car, so you can end up paying much more than you think.
Focusing only on the monthly payment can hide the true cost of a vehicle because loan terms and interest determine what you pay over time. Two deals with similar monthly payments can have very different total prices depending on down payment, interest rate, and loan length.
leasing
"I think leasing will become more and more popular, Dad, as people just continue to look for payment options that they can fit into."
Leasing is like renting a car for a few years. You pay for the car’s “use” during that time, and at the end you usually return it or buy it for a set price.
Leasing lets you pay for using a car for a set term (often a few years) instead of paying the full purchase price. Your monthly payment is usually based on the car’s expected depreciation plus interest, so it can feel “more affordable,” but you don’t build ownership equity the way you do with a loan.
84 months
"Thanks for this, Squeegee Kids. 84 months, 96 months. Forget Gacha Motors."
“84 months” means the loan is paid off over 7 years. It can make the monthly payment smaller, but you usually pay more money in interest over time.
“84 months” refers to an auto loan term of seven years. Longer terms can lower the monthly payment, but they typically increase total interest paid, meaning the car costs more overall.
96 months
"Thanks for this, Squeegee Kids. 84 months, 96 months. Forget Gacha Motors."
“96 months” means the loan lasts 8 years. Even if the payment looks manageable, the total cost is usually higher because you’re paying interest for longer.
“96 months” is a very long auto-loan term (8 years). These extended terms often increase the total interest cost and can leave borrowers owing more than the car is worth for longer, especially if the vehicle depreciates quickly.
loan term (60-month note)
"Yeah. And what was the other statistic in there? On a 60-month note, the average interest rate was like 4.9%."
A “60-month note” is a car loan you pay off in 5 years. The length of the loan affects how much interest you pay, so it changes the total cost.
A “60-month note” refers to a 5-year auto loan term. Comparing 60-month vs longer terms helps illustrate how payment structure and interest cost change with time, even when the buyer’s goal is affordability.
interest rate
"On a 60-month note, the average interest rate was like 4.9%. And on an 84-month note, that went up to what? Was it 8. something or 7.9 times?"
The interest rate is the “fee” the lender charges for letting you borrow money. Higher interest rates make the car cost more overall, even if the monthly payment seems similar.
The interest rate is the percentage cost of borrowing money on a car loan. Even a small change in rate can significantly affect total interest paid—especially with long loan terms like 60, 84, or 96 months.
chasing a comfortable payment
"I mean, you're paying so much more in interest, just because you're chasing what you think would be a comfortable payment when maybe what you should be chasing is a less expensive car."
This means people shop mainly for a monthly payment they can live with. But if you stretch the loan or pay a higher rate, the car can end up costing a lot more overall.
“Chasing a comfortable payment” is when buyers focus on lowering the monthly number rather than the total cost of the vehicle. Extending loan terms or accepting higher rates can reduce the payment but increase total interest and the overall price paid.
Car and Driver
"and they posted this in their magazine. This is in the May and June edition of Car and Driver. The battle bot in CarEdge is AI buying agent, Finagle, an amazing deal for us."
Car and Driver is a well-known car magazine. In this segment, they’re saying they tested the CarEdge AI tool and wrote about it in their magazine. That matters because it suggests the idea was checked by people who review cars for a living.
Car and Driver is a major automotive publication that tests vehicles and also publishes industry experiments and comparisons. Here, they’re described as testing the CarEdge AI buying agent and reporting results in their May/June issue. For listeners, it’s a credibility signal that the tool was evaluated by an established media outlet.
AI buying agent
"The battle bot in CarEdge is AI buying agent, Finagle, an amazing deal for us. So really, really appreciate the team over at Car and Driver testing out our AI."
An AI buying agent is like a digital helper that looks for car deals and talks to dealers for you. Instead of you calling around, it can compare prices and try to get a better offer. The goal is to make buying a car less time-consuming and potentially cheaper.
An AI buying agent is software that helps you search for a car and negotiate with dealers on your behalf. In this segment, the hosts describe it as a “battle bot” that shops multiple dealers and tries to secure a better deal. It’s essentially automating parts of the car-shopping and pricing-collection process.
shopping 40 different dealers
"They had 40 different dealers that they were shopping, Dad. And yeah, you can see here a few dealers, they named their agent Craig Funk."
Shopping lots of dealers means getting price quotes from many dealerships instead of just one. That helps you see what the car should cost and gives you leverage to negotiate. The more quotes you compare, the harder it is for a dealer to overcharge you.
“Shopping” multiple dealers is a strategy where you collect offers from many dealerships to understand the market price and negotiate from a stronger position. The mention of 40 dealers highlights how broad price comparison can be when using an automated agent. More data points can reduce the chance you’re stuck with a single dealer’s inflated pricing.
concierge car buying services
"Of course, we still have our concierge car buying services as well, but a huge shout out to Car and Driver for documenting their experience using our AI agent."
Concierge car buying is when someone helps you buy a car for you. Instead of you doing all the searching and negotiating, they handle a lot of the work. Here, they’re saying it’s still available alongside their AI tool.
Concierge car buying services typically mean a third party helps you find and purchase a vehicle, often including searching inventory, coordinating with dealers, and negotiating. In this segment, it’s mentioned as an alternative or complement to the AI buying agent. The concept is about outsourcing parts of the shopping/negotiation workflow.
paywall
"Meryl Lee was nice enough to send me the link to the article that was behind the paywall. And as much as I was interested in what they had to say, I wasn't signing up for Car and Driver."
A paywall means you can’t read the full article unless you subscribe or pay. The host is saying they had to use a link to get to the article, but it wasn’t free to view. It’s just about access, not the car-shopping concept itself.
A paywall is a subscription or access barrier that prevents full viewing of an article without payment. The host mentions the article was behind a paywall, implying the detailed results weren’t freely accessible. It’s relevant only as context for how listeners can read the referenced test.
WUSA9
"Dad, you and I had the privilege of doing an interview here in the local D.C. area at WUSA9. So there was a story on WUSA9."
WUSA9 is a local news channel in Washington, D.C. They’re just saying that’s where their interview aired.
WUSA9 is a local TV station in the Washington, D.C. area. The hosts mention it to explain where their interview and story were published, not as an automotive reference.
YouTube
"The journalist who did it, and they interviewed me and my dad, and they posted it on YouTube. I have an open question to the community because if you read the comments,"
YouTube is the website where the video was uploaded. They’re talking about the comments people left.
YouTube is the platform where the interview/story was posted. The hosts bring it up to discuss audience reaction and comment sentiment, which is relevant to how the show is perceived.
Doug DeMuro
"We just, I watched Doug DeMuro. I watched Red Line Reviews."
Doug DeMuro is a car reviewer on YouTube. People watch his videos to learn what a car is really like beyond just specs.
Doug DeMuro is a well-known automotive YouTuber who reviews cars with a focus on details, quirks, and ownership realities. In this segment, he’s mentioned as an early inspiration for the hosts’ channel.
Red Line Reviews
"I watched Doug DeMuro. I watched Red Line Reviews."
Red Line Reviews is another YouTube channel that talks about cars. The hosts are saying they watched it when they were younger.
Red Line Reviews is an automotive YouTube channel known for car reviews and comparisons. The hosts cite it as part of what inspired them to start their own channel.
Huvies Garage
"Who views Huvies Garage? Huvies Garage. Yeah, but you and I used to watch Huvies Garage videos together."
Huvies Garage is a car-focused YouTube channel. The hosts are talking about how creators’ content can shift and why that can upset viewers.
Huvies Garage is an automotive YouTube channel referenced here as something the hosts used to watch together. The discussion is about how some creators change over time and how that affects viewer trust.
money grabby
"It just feels a little like money grabby. I've seen that happen before."
They’re saying some creators start making videos more for profit than for helping viewers. When that happens, viewers can feel like the content isn’t as genuine.
“Money grabby” is the hosts’ critique that some automotive creators shift from helpful, consumer-focused content to content that’s more about monetization or attention. It’s essentially a commentary on how incentives can change what people produce and how audiences perceive it.
represent consumers and try and help you buy cars
"Like, all we do is represent consumers and try and help you buy cars. Like, it was just surprising to me."
This describes a consumer-first approach to automotive media: focusing on how to evaluate cars, understand trade-offs, and make better purchase decisions. It contrasts with the earlier critique that some channels drift into more self-serving or monetization-driven content.
educated customers
"The dealers that have to work with the educated customers that we've created for them, [1989.9s] they don't like it because it's harder for them to pull the wool over those customers' eyes."
An “educated customer” is someone who does their homework before buying. They know what the car should cost and what to ask, so the dealer can’t take advantage as easily.
“Educated customers” are buyers who understand pricing, incentives, trim differences, and how the buying process works before they talk to a dealer. In the transcript, the host frames this as making negotiations fairer because it’s harder for dealers to mislead shoppers.
pull the wool over those customers' eyes
"The dealers that have to work with the educated customers that we've created for them, [1989.9s] they don't like it because it's harder for them to pull the wool over those customers' eyes."
This phrase refers to deceptive or manipulative sales tactics—like steering buyers with misleading claims, hiding fees, or downplaying trade-in/financing details. The host uses it to contrast traditional dealer behavior with a more transparent, informed buying process.
genies out of the bottle
"I think the genies out of the bottle, customers are going to be more educated. [2014.7s] Garage does it."
It’s a saying that means once people learn something, you can’t un-teach it. Here, it implies car shoppers will keep getting better at researching and negotiating.
“Genies out of the bottle” is a metaphor for information becoming widely available and impossible to take back. In a car-buying context, it suggests that as customers learn more (through online research and content), dealers can’t rely on old playbooks.
80-20 rule
"We got the Pareto principle and we've got the Shevsk standard, the 80-20 rule and the 94-6 rule."
It means most results usually come from a smaller set of causes. Think of it like “most of the impact comes from a few things.”
The 80-20 rule is a popular shorthand for the Pareto principle: roughly 80% of effects come from 20% of causes. It’s often applied to automotive ownership topics like why certain maintenance items or driving behaviors dominate real-world results.
Pareto principle
"We got the Pareto principle and we've got the Shevsk standard, the 80-20 rule and the 94-6 rule."
It’s a way of saying that a few things usually cause most of the effects. For example, a small number of problems can create most of the headaches people talk about.
The Pareto principle (often called the 80/20 rule) says that a small portion of causes leads to a large portion of results. In car discussions, it’s commonly used to explain why a few issues (like certain failure modes or driving habits) account for most of the outcomes you notice.
94-6 rule
"We got the Pareto principle and we've got the Shevsk standard, the 80-20 rule and the 94-6 rule."
It’s a similar idea to the 80/20 rule, just with different numbers. It suggests a small group of causes can explain most of what you see.
The 94-6 rule is another Pareto-style breakdown that suggests a very small portion of factors accounts for most outcomes (here, 6% driving 94%). In automotive contexts, it can be used informally to describe how a minority of cars, drivers, or conditions create the majority of complaints or failures.
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