U.S. car sales being threatened by low used-car prices

March has been a hard month for automakers, dealerships and car sellers because the car sales records reached last year couldn’t be repeated in 2017 again. The interest rates are rising but the used-vehicle prices are falling down.

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Industrywide deliveries lowered to an adjusted annual pace of 16.6 million vehicles, falling short of analysts’ expectations of 17.2 million. In that report we highlighted the risks to the industry from rising rates, rising negative equity in vehicle loans and used vehicle-price deflation. This could lead to deteriorating affordability, delayed trade-in cycles, consumer shifts from new to used, diminishing credit availability and deteriorating mix/pricing.

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