Part 7/11:
CarMax, the largest used-car retailer in the U.S., recently reported a disastrous quarter, with stock plunging roughly 50% year-to-date and a $1,000 drop in vehicle values in just one month. For smaller dealers, such rapid depreciation could be devastating, especially when many vehicles are already underwater—average negative equity stands at $6,900, with a quarter of trade-ins owing over $10,000 more than their worth.
This negative equity cycle traps consumers, discourages trade-ins, and stalls sales, perpetuating the downward spiral of vehicle values and dealership revenues.