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Shout out to all the people selling cars on this President’s Day! Today, we’re talking about the rising challenges of negative equity on trade-ins hitting an average of $6800 and the used car supply drying up. Plus, we’ll look at a dealer who’s hitting new records by focusing on customer retention.

• The average negative equity on new-vehicle trade-ins reached a record high in Q4 2024, increasing by nearly $800 compared to the previous year, according to Edmunds.
  • The average amount owed on underwater trade-ins was $6,838 in Q4 2024, up from $6,054 in Q4 2023.
  • While 25% of trade-ins had negative equity—up from 20% a year earlier—it remained lower than the 33% recorded in Q4 2019, (avg of $5,658 in amount owed)
  • Edmunds reported that 25% of negative-equity trade-ins had at least $10,000 rolled over, and 8.5% owed at least $15,000.
  • Mark Pregmon, general manager of consumer lending at USAA, stated that the concern is "not the frequency, it’s the severity" of negative equity amounts.

• A combination of pandemic-era supply chain disruptions, fewer lease returns, and rising interest rates has created a long-term supply squeeze on used cars. Analysts predict these conditions will persist for at least two more years, keeping the used-car market competitive and expensive.
  • Used-car prices increased 2.2% from December to January, while new-car prices remained flat, contributing to overall inflation concerns.
  • The number of three-year leases ending in 2024 is expected to drop 23%, reaching a decade low and significantly reducing the supply of off-lease vehicles—typically a major source of used-car inventory.
  • With used-car prices still high and financing costs rising, many car owners are opting to repair their current vehicles rather than upgrade. “They are spending more money on repairs, but their monthly payments are less,” said Tom Maoli, owner of Celebrity Motor Car.
  • New-car supply has improved to 63 days, while used-car inventory has tightened to 48 days, keeping preowned prices high.

• At Damian Lillard Toyota in McMinnville, Oregon, dealer principal Brian Sanders has built a business model focused entirely on customer retention rather than maximizing short-term profits. Since taking over the underperforming store in 2020, Sanders has led it to the highest Toyota Loyalty Engagement percentage in the country, proving that prioritizing long-term relationships can drive success.
  • The dealership takes lower profits upfront, betting on customer loyalty to generate long-term value. “We don’t need to maximize every deal — we maximize every customer,” said Sanders.
  • In 2019, the store sold 351 new Toyotas with a 63% sales efficiency. By 2023-2024, sales soared past 1,500 units, with efficiency reaching 220%—well beyond industry norms.
  • The dealership only sells vehic

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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