A growing share of car owners are underwater on their auto loans, reports the car-buying resource Edmunds. Must Read According to a second quarter report, 26.6% of trade-ins toward new-car purchases had negative equity, up from 26.1% in Q1 2025 and 23.9% in Q2 2024 [1]. This is the highest share Edmunds has reported in four years, meaning a growing number of people are dragging additional debt into a new car purchase, putting them at risk of being underwater on their next purchase. That can create a deb ...

Car shoppers are facing affordability challenges in the market for new vehicles despite average down payments dipping to nearly the lowest level in four years, according to a new report. An analysis by Edmunds found that the average down payment for new car purchases fell to $6,020 in the third quarter of 2025. That's the lowest level since the fourth quarter of 2021 and is down from $6,433 in the second quarter of 2025 and $6,619 in the third quarter of 2024 – but the affordability of new vehicles remains ...

Economic Overview - Global financial markets are experiencing mixed sentiment due to a combination of economic data releases, central bank expectations, and corporate developments across Europe and Asia [2] - European economic indicators show divergent trends, with German consumer confidence slightly improving while the IFO Business Climate Index indicates deterioration [3][8] European Economic Indicators - German GfK Consumer Confidence for October improved to -22.3, better than the estimated -23.3, suggesting cautious stabilization in consumer sentiment [3][8] - Norway's unemployment rate rose to 4.7% in August from 4.6%, indicating slight labor market challenges [4][8] - Sweden's Producer Price Index (PPI) showed a year-over-year decline of -0.7%, highlighting persistent deflationary pressures in the industrial sector [4][8] Asian Market Developments - Japan's retail sector showed improvement, with nationwide department store sales increasing by 2.6% year-over-year in August, contrasting with a decline in Tokyo sales [5][8] - The Bank of Japan (BoJ) is facing uncertainty regarding its rate-hike trajectory, with some analysts anticipating an October rate hike amid mixed signals [6] Currency and Commodity Markets - The GBP/USD pair increased, trading above 1.3450, driven by expectations of Federal Reserve rate cuts [7][8] - Oil prices dipped from recent highs due to profit-taking and supply-demand uncertainties, while gold prices continued to rise amid safe-haven demand [9][8] Technology Sector Innovations - Taiwan Semiconductor Manufacturing Company (TSM) introduced AI-designed chips aimed at significantly improving energy efficiency by approximately 10 times [10] - BYD Company Limited reported a tripling of new car registrations in the EU in August, surpassing Tesla for the second consecutive month, indicating aggressive market expansion [11]

Core Insights - Chinese EV maker BYD sold three times as many new cars in the European Union last month compared to August 2024, indicating significant growth in market presence [1] - BYD has surpassed U.S. competitor Tesla for the second consecutive month in terms of sales in the European market, highlighting a shift in competitive dynamics [1] Company Performance - BYD's sales performance in the European Union reflects a strong demand for its electric vehicles, contributing to its competitive edge over Tesla [1] - The data from the European auto lobby ACEA underscores BYD's rapid expansion and increasing market share in a key region for electric vehicle sales [1] Industry Trends - The competitive landscape in the electric vehicle market is evolving, with Chinese manufacturers like BYD gaining traction against established players like Tesla [1] - The growth of BYD in Europe may signal a broader trend of increasing acceptance and demand for Chinese EVs in Western markets [1]

Group 1 - AutoNation, Inc. (NYSE: AN) has shown strong performance over the past year, with shares gaining over 20% [1] - Despite uncertainties around new car sales due to auto tariffs, enduring service demand and ongoing capital returns have supported AutoNation's results [1] - The company has over fifteen years of experience making contrarian bets based on macro views and stock-specific turnaround stories to achieve outsized returns with a favorable risk/reward profile [1]

Shares of AutoNation (NYSE: AN ) have been a strong performer over the past year, gaining over 20%. While auto tariffs have created meaningful uncertainty around new car sales, enduring service demand and ongoing capital returns have continued to support AN’s results. Additionally, the impact ofOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific ...

Group 1 - The Federal Reserve's decision to lower benchmark interest rates to a range of 4% to 4.25% has positively impacted the auto industry, leading to increased share prices for major car manufacturers [1] - General Motors and Ford Motor shares rose by 1.7% and 2% respectively following the Fed's announcement, indicating a favorable market response to the rate cut [1] - Lower interest rates are expected to stimulate new car sales, benefiting the automotive sector overall [1] Group 2 - Tesla stock experienced a slight decline of 0.1% after previously rising for six consecutive sessions, during which it gained approximately 22% [2]

Core Insights - U.S. auto retailers Carvana Inc. and Sonic Automotive are pursuing different business models, with Carvana focusing on a digital-first approach and Sonic combining traditional dealerships with online capabilities [1] Carvana Overview - Carvana is the second-largest used car retailer in the U.S. with a market share of only 1.5%, indicating significant growth potential in a fragmented market [2] - Retail units sold in Q2 2025 increased by 41%, with adjusted EBITDA rising 70% year over year to $601 million, and projected adjusted EBITDA for the full year is between $2 billion and $2.2 billion, up from $1.38 billion last year [3][6] - Efficiency improvements have been a key driver of Carvana's performance, including reduced costs through insourcing, staffing optimization, and the acquisition of ADESA's U.S. operations, which enhanced auction capabilities [4] - Despite a long-term debt of $5.3 billion and a debt-to-capital ratio of 0.72, Carvana's strong sales momentum and operational efficiency present a compelling investment case [5] Sonic Automotive Overview - Sonic Automotive operates a diverse network of dealerships selling both new and used vehicles, with high-margin parts, services, and finance/insurance divisions contributing nearly 75% of gross profit [7] - The EchoPark segment, focusing on used car sales, reported adjusted EBITDA of $27.6 million in 2024, with a record income of $11.7 million and a 128% year-over-year increase in adjusted EBITDA to $16.4 million [8] - Sonic's acquisition of four Jaguar and Land Rover dealerships is expected to add approximately $500 million in annual revenues, enhancing its luxury brand offerings [9] - The company has raised its dividend seven times in the past five years, with the latest increase of 9% to 38 cents per share, although it also faces balance sheet challenges with long-term debt of $1.47 billion [10] Comparative Analysis - Year-to-date, Carvana shares have increased by 78%, outperforming Sonic Automotive [11] - Carvana's forward sales multiple is 3.51, significantly above its five-year median of 1.95, while Sonic's forward sales multiple is 0.19 compared to its median of 0.14 [13] - Carvana's high valuations reflect strong growth expectations and improving profitability, while Sonic offers stability through diversified revenues [15] Conclusion - Carvana presents a high growth potential driven by digital adoption in car buying, despite its heavy debt load [16] - Sonic Automotive provides stability through diversified revenue streams and dealership scale, but also carries leverage risks [16] - Overall, Carvana is viewed as better positioned for growth due to strong unit growth and rising profitability, while Sonic offers balance and steady dividends [17]

Financial Data and Key Metrics Changes - Total revenue for FY 2025 was just under $2.5 billion, slightly ahead of FY 2024, driven by a decline in the new car market but mitigated by strong performance in used cars, finance and insurance, and service [3][19] - EBITDA was just over $110 million, with underlying profit before tax of $22.3 million, in line with guidance [3][19] - Net debt decreased to $46.7 million, down $14 million from the previous year, with a net debt to property ratio of 20% [4][27] Business Line Data and Key Metrics Changes - Used vehicle sales increased by 14% to 9,702 units, offsetting declines in new car sales [20] - Service and parts revenue grew to $422 million, up 4% from the previous year [20] - New car margins decreased by 0.8 percentage points from 16.9% to 16.1%, but margins in other service lines remained favorable [22][25] Market Data and Key Metrics Changes - The new car market remains highly competitive with an influx of new brands, leading to margin pressures [9][29] - Chinese brands now represent around 20% of the company's brand portfolio, with significant consumer acceptance noted [6][70] Company Strategy and Development Direction - The company aims to be Australia's most valued automotive group, focusing on innovation, customer centricity, organic growth, and acquisitions [12][13] - Emphasis on improving efficiencies through technology, including automation and AI, to enhance customer service and operational performance [15][18] - The strategy includes a balanced approach to managing used cars, service, parts, and finance to mitigate risks associated with new car market fluctuations [10][29] Management's Comments on Operating Environment and Future Outlook - Management noted that the automotive industry is undergoing significant transformation, with a focus on adapting to new vehicle emission standards and increasing competition [8][9] - The outlook for FY 2026 includes expectations for continued growth in higher-margin service lines and a stable new car market [29][30] - Management expressed confidence in the company's ability to grow earnings and maintain a strong performance culture [30][33] Other Important Information - The company successfully reduced new vehicle inventory from $382 million to $351 million, reflecting disciplined inventory management [5] - A fully frank final dividend of $0.04 per share was declared, bringing the total dividend for the year to $0.56 per share [27][28] Q&A Session Summary Question: What drove the stronger used car sales performance? - Management highlighted the focus on acquiring the right level of stock and maximizing opportunities in used car sales [37][38] Question: How much of the OpEx improvement came from lower commissions? - A significant portion of the OpEx reduction was attributed to lower commissions, with expectations for continued cost savings in FY 2026 [40][42] Question: What is the business performance outlook for the first seven weeks of FY 2026? - Management indicated that gross margins have remained stable at 16.1%, with a slight increase in overall market activity [43][44] Question: Have gross margins found a sustainable base? - Management confirmed that margins have stabilized and are expected to remain consistent into FY 2026 [48][49] Question: What is the outlook for new vehicle sales and OEM responses? - Management noted that several OEMs are releasing new models, which should positively impact sales, with stable order rates observed [56][60] Question: Can you provide details on the new Chinese brands onboarded? - The company currently represents brands such as LDV, MG, and GWM, with positive market reception noted [67][70]

Core Insights - Hertz is partnering with Amazon to enhance its used car sales through Amazon Autos, allowing customers to search, finance, and purchase pre-owned vehicles online [2][3] - The collaboration is part of Hertz's broader transformation strategy aimed at improving customer experience through technology-focused partnerships [2][3] Company Strategy - Hertz aims to reimagine the car-buying experience by providing convenience and confidence to customers, whether they shop online or in-person [3] - The partnership with Amazon makes Hertz the first fleet dealer on Amazon Autos, enabling customers to browse Hertz's inventory and complete purchases online [3] Market Context - Amazon Autos recently began offering used vehicles, starting with Hyundai dealers in Los Angeles, and plans to expand to other brands and cities [4] - The automotive market is facing pressures from tariffs, leading to a slowdown in consumer purchases and potential production declines to balance supply [6] Analyst Perspective - Analysts view Amazon's move as a new lead generation channel for car dealers, with minimal risk of disintermediation due to franchise regulations and the complexities of used car sourcing [5] - There is skepticism regarding dealers listing their inventory without assurances of finance and insurance commissions [5]