At the same time, negative equity values are hitting new record highs while auto insurance rates have soared the most since the mid-1970s. While gas prices at the pump are elevated, the environment to operate a vehicle is probably one of the worst ever. Just listen to Gen-Z and millennial users on X bitch and moan about $1,000 monthly car payments and other absurd costs associated with driving.

The Manheim Used Vehicle Value Index fell to 198.4 in April, a 14% drop from one year ago. This is the index's lowest print since the first quarter of 2021. As for the bear market, the index is down 23% from the high and quickly falling - there could be air pockets given the rapid upward moves three years ago - and that demand has been suppressed given a high-interest rate environment. 

All vehicle segments of the Manheim Used Vehicle Value Index experienced seasonally adjusted prices that were down double digits year over year in April. Luxury was the only segment that was not hit the hardest, down just 12.9%. The worst-performing segment was compact cars, down 17.6% compared with last year, followed by midsize cars, down 16.8%, and pickups, down 15.2%. EVs were down 17.5%.

This is a significant worry for millions of Americans who bought cars during the pandemic mania, which basically involved spending free money provided by the Federal Reserve, only now discovering that their loans are plunging into underwater territory. 

According to a recent Edmunds note, 20% of new vehicle sales involving a trade-in had negative equity during the October-through-December period—the highest level since 2021. 

Negative equity values soared to a new record high of $6,064 during the period, a massive 46% increase from late 2021.