U.S. Car Sales Hit Big Bump in the Road

Car salespeople across the country probably said “look at this beauty” about as many times in 2022 as they did the year before and the year before that.

Even so, here’s the bottom line (Wall Street Journal, Jan. 4):

U.S. Auto Sales in 2022 Worst in Over a Decade

Some of those who “flip” cars didn’t do so well either. Indeed, you might call it a crash.

Here’s a chart and commentary from the November Elliott Wave Financial Forecast:

The flipping fallout extends beyond the housing market. The chart shows what happened to flippers of the second-most valuable household asset, cars. Shares in Carvana Co., an online used car dealer that bought up hundreds of thousands of cars in the final months of the bull market, are now down 97% from an August 2021 peak. Most of Carvana’s purchases were financed with $3.2 billion in borrowed money. The company’s rise accompanied a boom in used car prices, but it didn’t take much in the way of a reversal to decimate Carvana’s valuation. The Manheim Used Vehicle Price Index peaked with the Dow Industrials in January. As we keep saying, the stock market decline is steadily working its way into the pores of the economy.

Carvana’s stock price is now even lower than it was when the November Elliott Wave Financial Forecast published.