CarEdge Live Nov 25, 2025

The Car Market RESET Is About To Get SO MUCH WORSE | Episode 969

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Term

average new car transaction price

The average new car transaction price is how much people usually pay for a new car. It helps you see how much cars are costing these days.

Term

average listing price for new cars

The average listing price for new cars is what sellers usually ask for when they put a new car up for sale. It shows how much new cars are generally worth.

Term

10% rule

The 10% rule is a way to decide how much money you should spend on a car each month. It says you shouldn't spend more than 10% of your monthly income on car payments.

Term

MSRP

MSRP is the price that the car maker suggests you should pay for a car. It's a starting point for how much you might expect to pay when buying a new vehicle.

Car

Ford F150

The Ford F-150 is a big truck that many people use for work and everyday driving. It's known for being tough and reliable, making it a favorite among truck buyers.

Term

10% roll

A '10% roll' is a way to think about how much of your income you can spend on something, like a car. It means taking 10% of a number to help decide if you can afford it.

Term

sticker price

The sticker price is the price you see on a car when you go to buy it. It's what the manufacturer thinks the car should cost.

Term

new car market

The new car market is where you buy cars that have just been made and are brand new. It's different from buying used cars that have been owned before.

Term

used car market

The used car market is where you buy cars that someone else has owned before. They usually cost less than new cars.

Concept

negotiation

Negotiation is when you talk to the seller to try to get a better price for the car. It's like bargaining to see if you can pay less.

Concept

new car inventory

New car inventory is the number of new cars that dealerships have available to sell. When there are a lot of new cars, buyers can often get better deals because dealerships want to sell them.

Concept

negotiability

Negotiability means how much you can talk about the price of a car with the seller. If there are many cars available, you might be able to get a better price by negotiating.

Concept

leverage for customers

Leverage for customers means that buyers have more power to ask for better prices or deals when buying a car, especially when there are many cars available to choose from.

Car

Honda CR-V

The Honda CR-V is a type of SUV that's great for families. It's known for being reliable and having a lot of space inside for passengers and cargo.

Car

Ram 2500

The Ram 2500 is a strong truck designed for heavy loads and tough jobs. It's often used for towing trailers and carrying heavy items.

Term

financing

Financing means getting a loan to buy a car. You pay back the loan over time, usually with extra money added for interest.

Term

interest

Interest is the extra money you pay when you borrow money. When you finance a car, you pay back the loan plus some extra for the lender's service.

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All right, Dad.

The car market reset is about to get so much worse.

And I got a few data points to show that.

First, from Car Dealership Guy News,

used car prices are falling fast over on CDG.

They're talking about what that means

for inventory and appraisals,

but that's putting some downward pressure

on the car market over at Cox Automotive, Dad.

November, U.S. new vehicle sales,

to not use new vehicle sales,

are expected to decline 8% year over year

as higher prices and slowing EV sales hit the market.

And then, Dad, we've got auto loan rejection surge

as Gen Z faces growing credit strain.

Those are the three topics.

Plus we've got a couple of really bad car deals

we're gonna review today as well.

A little bit of a public service announcement,

but those are the three topics

that I think we can tie together

to help frame that the car market

and the reset in the car market

is only just getting started.

I do have a question, a brief question.

Do we have any type of vaccine

or shot for that credit strain?

I'm sorry.

It's YouTube, man.

You know, some people are gonna run wild with that,

but that what's going on here,

what's going on here in the car market,

let's dig in pretty, pretty please.

Yes.

Use car price is crashing.

You've got new vehicle sales down,

almost double digits, 8% year over year.

And we've got more and more people

getting rejected for auto loans now.

So we've always talked about how access to credit

is what keeps the lights on in this dance club.

You know, I think the people keep dancing to the music

because well, the credit that is available.

It seems like the music stopped, the lights are out.

Like if people cannot get approved for auto loans

and now we've got Gen Z showing even more weakness

in their credit availability,

what happens as the boomers age out, stop buying cars?

I mean, there's a really precipitous downward spiral

potential here for the car market.

Well, it's what happens when the people with money

take themselves out of the car market,

which I think as we expect to see month,

year over year month sales decline in November

by about 8%.

I think that might be the indication

that it's finally starting to happen.

Even the people with money are saying,

I'm mad as hell and I'm not gonna take it anymore.

They are, people are sick and tired of the pricing

of these vehicles that we see.

And I think as you piss off a larger portion

of potential buyers because of these high prices,

you are really limiting yourself to a handful of people

that will still be out there looking to buy cars.

And Generation Z, was that who it was?

Or millennials, whoever that was?

No, Gen Z.

Yeah, I mean, who has the money to be able,

the average new car transaction price

is once again approaching $50,000.

The average listing price for new cars

is over $50,000.

If you use my 10% rule as to what you can afford,

my 10% rule is 10% of your gross monthly income

can go towards a car,

including insurance, your car payment,

maintenance, and fuel costs.

So if you are an average person

making $5,000 a month,

using that 10% rule, you can spend 500 bucks.

Now, I have seen comments when I have said this

in the past, they said, well, who could,

that's crazy, nobody could afford to buy a car.

That's the point, okay?

That is the exact point that I'm trying to make,

that everything is priced so high

that the average person really can't afford

to buy a car and we're starting to see it

in the sales decline.

Yeah, that's exactly what we're seeing, yep.

And I don't know, not the quibble

with the CDG car dealership guy.

But I don't know, I don't think we've seen

a precipitous decline in retail used car prices.

Oh, I am certain that used car managers

are doing everything in their power

to steal every trade in they can.

By saying, oh, well, the auctions,

the values are going down a little more

than a percent a week.

But we haven't seen that reflected

on the retail side of things yet.

We actually have, Dad.

Prices are down 10% on the retail side

since late summer.

Now, that usually takes a significantly longer period

of time to come down.

So we have seen used car prices come down a little,

but it is more on the wholesale side

to your point than it is on the retail.

And to be clear here, there's still 40% higher

where they were in 2019.

So used car prices are still quite inflated

relative to where they had been

if there wasn't a chip shortage

and a global supply chain crisis.

But I think you're hitting the nail on the head, Dad.

I posted a short the other day.

If you're not following us over on Instagram,

you absolutely should.

It's my car edge.

There it is right there, my car edge.

Look at some of these comments, Dad,

from Dan O'Hearn, can't be the 10% rule.

This isn't 1996 anymore and 38 people like that.

And then you come over to TikTok,

which also has a slightly younger demographic over here.

And you can see right here,

this isn't a realistic approach

when media new cars are $50,000

and the average gross income is $46,000.

And I think that is exactly your point

is this is actually the way to do it.

And we are finally starting to see

some material cracks on the new car market

and the used car market to a degree as well.

And 8% decline year over year is a big deal.

And we're actually talking about guys,

1.27 million vehicles sold.

That's down month over month and down year over year.

This number, the industry likes to see that number

like significantly higher, 1.5, 1.6, 1.7, 1.8.

Heck, there have been some months

where we've seen it close to 2 million.

So this is down significantly.

And I think when you pair it

with some of these other articles we're seeing

around auto loan rejections,

the credit strain for younger shoppers,

it's a pretty clear picture of what's going on here.

Then you read the comments on our videos.

It's a clear picture of what's going on here.

People can't afford these things.

They don't want to get overpaid for them.

They don't want to go through the hassle

and they're taking themselves out of the market.

Yeah, I mean, what it says to me,

and I know that there are any number of people

out there who will reject the concept of my 10% rule.

I get that.

But what it really says to me

is that everything is way overpriced.

Wages have not kept up with prices.

And so therefore, if you base what you can buy

on my 10% rule, if you wanted a new car,

you probably needed an $18,000 to $20,000 new car.

And guess what?

They don't exist.

And guess what?

Well, that's not a nice enough or a well enough

equipped car for me to want to buy it.

So a lot of people out there are thinking,

well, that should be 20% or 25%.

Well, I don't know how to break it to you,

but, you know, rents haven't gone down.

The cost of homes hasn't gone down.

The cost of food hasn't gone down.

So if you're going to say that 20 to 25%

of your income, your gross income,

should go towards your car,

you're out of your flipping mind.

You need somewhere to live now.

Yes, you can live in your car under a bridge

down by the river.

Absolutely you can.

Okay?

You might find it a little hard washing your clothes,

you know, in the winter months

when it's a little chilly out there.

But, you know, come on, let's deal in reality.

And the reality is that things,

incomes haven't kept up with inflation,

with the rising cost of things.

And people are trying to rationalize

why it would be okay to allocate more than they should

for the car that they think they need

that they don't really need

because they can do with something less expensive.

For sure, that's part of it.

And it's also the manufacturers

have just continued to increase their MSRP's

and ultimately there has been enough demand.

And again, what we're talking about today

is the reset is going to get so much worse

because we are starting to see the cracks in that foundation.

We've been seeing it for a while now.

But again, the big headline this morning for me

was the fact that we have an 8% decline year over year

in new vehicle sales.

I'll pull that back up on the screen again.

This comes from the industry conglomerate Cox Automotive.

This is a damning headline for the auto industry.

And to be one thing,

if it was the new car market getting a little shaky

and the used car market was totally fine,

but the used car market is starting to see

some cracks in its foundation as well.

Dad, we actually have an ask to our community today.

We've got our quarterly, or excuse me,

we're doing a monthly, our car edge car buying survey.

It's caredge.com slash CCBI.

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How long can this go on, Deb?

How long can these manufacturers continue

to just have a, what's it called, a case-shaped economy

where they're really just tailoring what they produce

for those that are affluent and can afford it?

How long does this go on?

Or do you think we are starting to see a reversion

back to where the auto industry used to be

where it was accessible to the masses?

How long can it go on?

I don't know.

Hey, if there's another 8% decline in sales

year over year in December,

and then another 8% in January,

at some point somebody who has been asleep at the wheel

for years is suddenly going to say,

I think we got a problem here.

Houston, we've got a problem.

Well, let me actually, can I share one more data point

with you to see how this frame's you're thinking?

Yes.

What do you think?

Actually, you know what I'm just gonna share.

The New York Fed has shown that auto rate applications

have been rejected at a double the rate

in the most recent month that we have data.

So 15.2% of those that who applied for auto loans

in October were rejected.

That's double where we've been earlier this year.

So I actually wanna add that data point

to the conversation.

Okay, what do you think that says?

I'll tell you what I think it says to me.

What do I think that says?

I think that says that this reset's real,

that it's not going to be sustained on BS

and approving people for things that they can't afford.

Well, I think it says that you have people

who need to buy cars that don't have the means to buy cars.

15% that's what it says to me.

Yes, so if double the number of people

who have applied for auto loans are getting turned down,

that means the quality of the shoppers out there

is considerably less than what the manufacturers

would have hoped for.

So that says to me,

you are running out of customers as a manufacturer

and as a dealer.

So how do you bring those customers back?

Well, you better figure out ways

to start offering less expensive cars.

You have, I don't know,

I can remember two or three years ago

and say you can't keep narrowing your customer base.

At a certain point, you have to broaden your customer base.

That you need a larger swath of the American public

to be able to afford to buy your products.

And I think if there was a doubling

of the rejection rate last month in October,

that is beginning to show the manufacturers

you need to figure out a way to make your vehicles

more affordable for a bigger portion of the population.

That it's not going to be sustainable

to just sell cars to 10 to 12% of the population.

You need to be able to sell cars.

I don't know, 30%, 40%, 50%.

You know, when we were in Dearborn

and we went to the Ford factory

and we watched the film about the history of Ford.

Yeah.

What was the thing that Henry Ford had in mind

when they started building cars

to make them affordable for the masses?

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Ooh, you know what?

Because Henry Ford's whole thing was he wanted his employees

to have an affordable vehicle.

Shall we do a little live experiment, Dad?

You game for this?

I'm always game.

All right, here we go.

We're going to the Google machine.

What is the average salary

for a Ford employee?

Drum roll, please.

Okay, 126.

Wow.

Ford pays folks well.

Well, you didn't ask for factory workers.

But I'm looking at overall.

Everyone that they pay and you've got here, you know,

production workers around $50,000 a year.

So it's a wide range.

Yes.

It's a wide range.

Let's now do another tab.

Give me a second here.

What is the average MSRP of a Ford vehicle?

Let's do the F-150.

Bum, bum, bum.

Average use price $50,000.

We know, Dad, that for new F-150s,

the average MSRP is closer to $60,000, $65,000.

Yes.

Yeah, you can see here used ones are approximately $50,000.

So let's say it's $60,000.

Let's use your 10% roll for a second here.

Okay.

If I'm a production worker at Ford,

making $48,000 a year,

I cannot afford a $60,000 truck.

No, even if you were a production worker

at Ford making $60,000 a year,

which is $5,000 a month,

you couldn't afford...

I mean, and Henry Ford's concept was,

I want the people that are putting these things together

that are building them to be able to afford to buy one.

Now, he wasn't saying he wanted them

to be able to afford to buy one

because he was paying them too much.

No, he wanted to keep the costs down low enough

so that they could build the cars cheaply enough

and pay their workers cheaply enough.

But if they could still afford to buy the product

that they were building today,

they couldn't afford to buy a used one.

Yeah.

And that is malfeasance

at the highest levels of the manufacturing of automobiles

where they have decided,

these C-suite people have decided

the hell with us common folk,

we don't need you,

we don't want you,

we're not going to cater to you.

You figure it out on your own.

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that represents the common folk,

caredge.com.

We got the biggest promo of the year, baby.

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as you do navigate a difficult car buying process.

Then one more thing here.

I want to look at just Gen Z.

Yes.

Consumers age out.

Yeah.

Stop purchasing new vehicles.

These automakers have to look for the next generation

of consumers for shoppers.

Gen Z's average FICO score drop

three points to 676,

the largest year over year decrease

among any age group since 2020.

And what is the generation Z age group?

Gen Z age range.

Give me a second here.

Thanks.

Someone who right now is 13 to 28 years old.

Well, yeah, them 13 year olds.

They don't have very good credit scores yet.

Sure.

But dad, early 20s to late 20s,

we're talking about a group that's starting to earn money,

starting their careers.

Yes.

This group is struggling from a credit perspective.

And ultimately that impacts what APR you're going to get

or the likelihood that you get approved for that loan.

And we know that the industry is already seeing

more people get denied for auto loans

with these insanely high prices.

It's a little bit of a one-two punch.

Yeah, which they set themselves,

the manufacturer set themselves up for it.

Now, the good news is...

Good news.

Let's hear it.

Yeah, the good news for those nice Gen Z folks

is that there will be a subprime lender out there

that's going to look at you and go,

you're worth taking a shot on.

You know, you're just the start of your career.

You're going to make more money.

And we want you to drive around in that nicer car.

So we'll help you out.

Now, okay, so your interest rate is going to be 24.99%.

But think of the impression you're going to make

when you drive up to your job interview

in that nice newer car.

That's good news.

Good news indeed.

Now, let's go to the chat for a couple of minutes here

and then we've got some pretty damning car deal.

I don't know, a damning car deal to look at.

Yes.

First here from Scott.

Thank you, Scott.

Thank you for your contribution.

I think Pops is right on with his 10% roll.

I'd like to hear a solution for us buyers.

Do we low ball?

Do we wait until the sticker price is lower?

Unfortunately, Dad, this is at least my thinking here.

Right now, it's about as good as it's going to get

in terms of the new car market.

And even for the used car market, probably,

because there was such a significant decrease

in the number of new vehicles produced for so many years there.

So it is, I think, a matter of negotiation.

You know, you don't expect to see really low prices.

You're going to have to put in work to get the lower prices.

Absolutely.

And as we said probably two years ago or three years ago,

as a large group of consumers, if you just stop buying cars,

okay, and we had what was the website,

stopbuyingcars.com or whatever that was.

If you stop buying cars, perhaps as the cars start

to build up an inventory,

the manufacturers will get the hint.

Which, to be clear, is exactly what's happening right now,

which is influencing my answer.

New car inventory is the highest level it's been

in the past 18 months.

We've seen significant increases in negotiability

and leverage for customers.

So if you want to buy a vehicle or if you need

to buy a vehicle, now is definitely the time to do it.

And it's not if you want to buy a vehicle

or you need to buy a vehicle that you have

more leverage today.

It's still not affordable for folks.

That's the real problem.

I completely agree.

And a lot of people watch this show and a lot of people

go to caredge.com because they need to buy a car

or they want to buy a car.

Might as well at least help them get the best deal

and have the best experience.

From Rich, thank you for the kind contribution.

Rich, Zach, quote boomers age out sounds so final.

How about mellow out excluding Ray?

It does sound final, but it's also reality.

When we age out, we're gone.

It's just that simple.

And it's 74 and a half and it'll be today.

It's exactly 74 and a half today for me.

Today's your half birthday.

I realize I'm on the last stages of my life.

Do I want it to end like tomorrow?

Hell no.

But yeah, I'm going to age out and damn it,

my kids are probably going to inherit more money

than I want them to.

I haven't spent enough of it yet, but it is final.

And maybe we shouldn't try and mellow it out.

You're funny, man.

You're really freaking funny.

Sam Flaventer, you're so funny, dad.

All right, let's keep going to the chat here,

and then we're going to look at that crazy car deal

from Luna Cheekweese 06.

Hopefully I did not butcher that too much.

In the final stages of my vehicle purchase

with the assistive car edge concierge,

can't wait to take delivery of my new Honda CR-V.

Love hearing that.

We've got another one here, dad, from Eduardo Hernandez 932.

Hi, I just want to thank you guys.

I got car edge pro and went through a lot of your videos

and managed to reduce the price well below MSRP,

increase my trading amount and get the finance rate I wanted.

Love, love, keep that.

And we've got here from Rich.

One of car edge's greatest benefits is how much of your time

you save using them.

Love these comments.

Thank you guys for the kind words.

We are super busy this time of year,

but it's really rewarding to help so many people.

All right, dad, shall we turn our attention

to this insane video that you shared with me?

Antonio actually in our community shared with us.

Yes.

All righty.

Here it goes.

Get it up on the screen here.

I'm going to press play and then we can pause it.

Let's just explain the damn thing.

All right.

Wait a second.

It's almost there.

Total payments, $159,000, Ram 2025.

Okay, dad.

Okay.

What the heck is going on here?

So this is a deal that someone entered into on

allegedly a new Ram 2024-2500.

That's what it says up here.

New 2024 Ram 2500 with $6,037 miles on it.

Yeah.

No, it wasn't really new, new, okay?

They sold it as new.

Normally you don't put 6,000 miles on a demo,

but what the hell do I know?

And so this was a truck where the person financed

$112,000.

Call it $112,000.

That's the number you're seeing right here,

111,916.

Because that's just such a great rate for 84 months.

And this person's monthly payment,

he or she, I don't know, was $1,898.

Call it $1,900.

Now, this person thought that it made total sense

to buy a truck for $112,000 or finance,

$112,000 on a truck.

I don't know how much the truck was.

And payback over that seven-year term,

$47,548.76 in interest.

If this doesn't prove the fact that the vast majority

of the population out there is financially illiterate

nothing does.

There is no way in hell using a 10% rule,

a 20% rule, a 50% rule that anybody should sign up

for a monthly payment of $1,900 a month

and payback $47,000 worth of interest.

It's a ram pickup truck.

It might not last seven years without a major repair

that's needed once you were out of warranty.

It is, this is the type of financial suicide

that we see people entering into in this country.

And there is something wrong with our education system

that somehow we haven't made people realize

that stuff like this is stupid.

And you need, as a customer, you need to do better.

You need to know better.

You need to, I don't know, buy a used one for $40,000.

Not a new one where you're financing $112,000.

And if you scroll to the right a little bit,

the person puts zero down, zero, zero.

Okay, why would you do that?

What is it that you think you're accomplishing

when you do that?

It is, I just, we need to do better.

We need to educate better.

We need to do better.

We need to reach more people before they sign

for stuff like this.

This is just an indictment on how stupid we can be

in this country.

Sorry about that.

No, don't be sorry.

I mean, obviously a bad decision that this person made,

at least based on the information that we have.

It's a decision that we wouldn't validate someone making.

And it's a hell of a lucrative deal for the dealership.

That's for Dog on the chair.

Sure, they made plenty of money on this.

And again, this is, we talk about new car interest rates

are typically better than used car interest rates.

And look at that, you're still ahead and pulling.

Think about, just think about this for a second.

Let's just, I'm just going to spitball here.

And let's say the buy rate on this auto loan

to the dealership was 8.6%.

And so there was a 2% spread in the building to the rate.

And that 2% might have produced an extra $10,000 in interest.

Yeah.

And the dealership, the normal split between dealerships and banks

is the dealership gets 70% of that.

So if it was 10 grand, the dealership made $7,000

on the back end just on the interest portion.

And the bank will make an extra $3,000.

And the customer will have paid a total of an extra $10,000.

So it is, yeah, the dealership made,

and I think the correct terminology here is a poop ton

of money on this deal, probably front end and back end.

So folks, for those of you that don't like how often I promote what we do,

I do it because it's like a public service announcement.

People get taken advantage of every single day,

and there are new people that tune into Car Edge Live every single day.

If you know someone who's in the market to buy a car,

please send them our direction, caredge.com.

And in addition to that, we don't talk about it that often,

but on the insurance front,

a lot of people have an opportunity to save money there.

On the warranty front,

a lot of people have a lot of opportunities to save money there.

So please make your way back to caredge.com.

Take advantage of what we've built over the past five years,

and please know that we are always here to help.

We are back tomorrow with more Car Edge Live,

the day before Thanksgiving,

and then we're back on Friday, the day after Thanksgiving.

So please tune in over those next couple of days.

Dad, enjoy your afternoon,

and thanks as always for preaching to everyone here.

Yeah, you do the same young man.

Thank you, everybody, for being here.

We hope to see you all back here tomorrow.

Tell all your friends, damn it, to join us.

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0:00

30:37

The Car Market RESET Is About To Get SO MUCH WORSE | Episode 969

average new car transaction price

average listing price for new cars

10% rule

MSRP

Ford F150

10% roll

sticker price

new car market

used car market

negotiation

new car inventory

negotiability

leverage for customers

Honda CR-V

Ram 2500

financing

interest

About this episode

Original notes