About this episodeDoug DeMuro analyzes the post-2021 car market correction, noting that enthusiast vehicles are depreciating as …AI summary
Doug DeMuro analyzes the post-2021 car market correction, noting that enthusiast vehicles are depreciating as supply normalizes and interest rates rise, with EVs experiencing the steepest value drops due to removed subsidies. He shares personal strategies for managing high-value collections, emphasizing rigorous seller vetting, maintaining detailed service records to preserve value, and avoiding the financial pitfalls of negative equity. The conversation also covers practical advice for car buying, including the enduring value of manual transmissions and the importance of buying used to minimize depreciation.
Key takeaways 6
Market Correction: The peak of the car market craziness was end of 2021; currently, supply and demand have caught up for most automakers, causing used car prices to drop as new cars become cheaper and financing becomes more expensive.
EV Depreciation: Electric vehicles have depreciated faster than any other segment because the secondary market lacks the government incentives that propped up the primary market. Examples include Rivian dropping from $135k to under $50k and Lucid Air selling for half price.
Investment Strategy: Flipping cars for quick profit is no longer realistic; true investment-grade vehicles require long-term holding. The Ford GT is cited as a 'bond strategy' because it is affordable to maintain while slowly appreciating.
Manual Transmission Value: Manual transmissions significantly increase resale value (e.g., a manual Ferrari can sell for 3-4x an automatic), yet manufacturers rarely offer them due to development costs and speed perceptions.
Seller Vetting: When buying enthusiast cars, 'buying the seller' is critical. DeMuro advises reading seller comments on auction sites, checking for proper grammar (e.g., 'should of' indicates poor maintenance), and verifying service history over relying solely on pre-purchase inspections.
Negative Equity Management: Owners with negative equity from the 2021-2022 peak should generally keep paying the loan and wait it out, or sell the car to pay off the balance and buy something cheaper, rather than rolling negative equity into a new loan.
Notable quotes 5AI-generated: wording and quote attribution may be wrong. Use the play link to verify.
“End of 21 was the absolute peak of the craziness... It's like well that's the normal state of the market for 60 years. You bought a car, a new car especially, you couldn't flip it and suddenly make 10 grand.”
▶ 0:42DeMuro explains that the recent period of massive car appreciation was an anomaly caused by pandemic supply chain issues and cheap money, and values are returning to historical norms.
“I think the only way right now to truly make money on a lot of these cars is to hold... The days of flipping a year later is not realistic.”
▶ 0:42Advice for investors regarding the current market conditions where quick flips are no longer profitable.
“You're buying the seller... If the seller uses the word 'should of' and he spells it should space o f of, guy's not changing his oil.”
▶ 1:20:34A practical tip for identifying negligent sellers on auction platforms by analyzing their communication style.
“The demand for EVs is heavily subsidized by the government incentives and the demand is just not as strong as the government wishes that it was... The secondary Market doesn't have incentives and so that's where you see the actual value of these cars.”
▶ 11:42Explanation for why EV prices are crashing in the used market compared to gas vehicles.
“I often think about this if I was just somebody who didn't care about cars what a great burden that would be lifted off of me... I see Priuses and I'm like I wish I could just have that handling is just Next Level precise.”
▶ 0:00DeMuro's humorous admission that non-enthusiast cars like the Prius offer a stress-free ownership experience he envies.
Chapters & Sections (101)▼
0:00Car Enthusiast Discusses Market and Collectionchapter4
0:00Car Enthusiast Discusses Market and Investment
1:52Conversation about Cars and Bids Business
3:17Car Market Prices Decrease After Turmoil
4:59Car Market Trends and Depreciation
7:36Managing Car Loans with Negative Equitychapter3
7:36Managing Car Loans with Negative Equity
9:45Tesla Model Y Purchase Decision
11:04Electric Vehicle Market Value Decline Discussion
12:19AI and Cloud Computing for Businesseschapter3
12:19AI and Cloud Computing Advancements
13:55Automakers Struggle with Inconsistent Incentives
15:38Capitalism vs EV Incentives for Auto Market
17:53Electric Cars vs Gas Cars Discussionchapter3
17:53Electric Cars vs Gas Cars Discussion
19:24Future of Transportation and Energy
20:45Long Road Trips in Electric Vehicles
22:18Long Distance Road Trip Planning and Preparationchapter3
22:18Long Distance Road Trip Planning and Preparation
24:15Car Enthusiast's Stereotypical Expectations
25:41Luxury Car Market Trends and Analysis
27:48Nostalgia for Classic Cars with Unique Featureschapter2
27:48Manual Transmission Cars and Their Appeal
29:31Ferrari Market Trends and Resale Value
32:05Ferrari's Pricing Strategy for Super High-End Carschapter3
32:05Ferrari's Pricing Strategy for Super High-End Cars
33:38Ramp Corporate Card and Spend Management
34:54Car Maintenance and Depreciation Discussion
37:14Mercedes Station Wagons and EV Convertibleschapter3
37:14Mercedes Station Wagons and Electric Convertibles
39:05Electric Cars Losing Value Discussion
40:23Luxury Car Resale and Maintenance Challenges
41:55Reliability vs Technology in Luxury Carschapter4
41:55Reliability vs Technology in Luxury Cars
43:47Manual Transmission Demand in Newer Cars
45:40Automakers Dropping Manual Transmissions
46:58Automaker Design Decisions and Missing Features
48:38Automaker Features and Design Preferenceschapter2
48:38Automotive Features and Design Preferences
50:57Government Control of Vehicle Speed and Location
53:32Tesla's Lack of Top Down Camerachapter4
53:32Tesla's Lack of Top Down Camera
55:32Steering Wheel Touch Sensing Technology
57:01Future of Autonomous Vehicles and Safety Concerns
58:16Investment Grade Vehicles and Market Trends
59:31Investing in Rare Cars for Long-Term Returnschapter3
59:31Investing in Rare Cars for Profit
1:00:58SLR Value Decrease Discussion
1:02:13Range Rover Investment and Bond Strategy
1:04:52Car Depreciation and Investment Grade Vehicleschapter3
1:04:52Car Depreciation and Investment Grade Vehicles
1:06:26Lamborghini Gallardo Discussion and Market Analysis
1:07:52Car Depreciation and Value Appreciation Discussion
1:09:34YouTubers' extravagant car purchases and financial riskschapter2
1:09:34YouTubers' Expensive Car Purchases and Financial Concerns
1:12:16Home Renovation Challenges and Financial Risks
1:13:44Concerns about Resale Value of Suburban Homeschapter3
1:13:44Concerns about Land Value and Property Resale
1:16:07Ford GT Parts and Collectors Market Analysis
1:17:26Leasing Cars for Business and Personal Use
1:19:41Buying a Dream Car with Limited Financingchapter2
1:19:41Buying a Dream Car with Limited Financing
1:21:13Buying a Used Car with Potential Issues
1:23:47Replica Cars vs Originals Discussionchapter8
1:23:47Replica Cars Discussion and Identification
1:26:04Countach Diablo Repair and Maintenance Discussion
1:27:26Fear of Parking a High-Value Car
1:29:06Car Insurance and Maintenance Costs Discussion
1:30:28Insurance Premium for Reviewed Luxury Cars
1:32:46Car Stereotypes and Overrated Luxury Vehicles
1:33:59Debunking Car Stereotypes and Enthusiast Expectations
1:35:12Car Ownership and Perception Discussion
1:36:36Challenges of Running a Businesschapter3
1:36:36Challenges of Running a Business
1:38:48Startup Launch and Early Growth Challenges
1:40:07Job Changes and Car Auction Strategies
1:44:15Ensuring Car Quality in Sight Unseen Purchaseschapter3
1:44:15Ensuring Car Quality in Sight Unseen Purchases
1:46:15Car Auction Scheduling Complexity
1:47:22Marketplace Challenges and Opportunities
1:49:10Challenges of Building a Successful Car Auction Websitechapter3
1:49:10Challenges of Building a Successful Car Auction Website
1:51:14Regrets of Not Having Kids Sooner
1:52:35Parenting and Marriage Advice
1:54:19Couple Shares Story of Gradual Relationship Developmentchapter3
1:54:19Couple Shares Story of Gradual Relationship Development
1:56:27Dating in Las Vegas and San Diego
1:58:05Relationship Expectations and Time Pressure
1:59:41Mentorship and Straight Shooting Advicechapter3
1:59:41Mentorship and Straight Shooting Advice
2:01:34Personal Growth and Business Success
2:02:51Balancing Work and Personal Life
2:05:11Weight Loss Journey and Healthy Eating Habitschapter2
2:05:11Weight Loss and Healthy Eating Habits
2:07:44Personal Habits and Interests Discussion
2:09:37Home Decor and Travel Enthusiast Interviewchapter5
2:09:37Home Decor and Travel Enthusiast Interview
2:11:26Importance of Traveling and Cultural Exchange
2:12:34Travel Agency Business Idea Discussion
2:14:20Discussing Bedtime Stories and Car Auctions
2:15:51Electric Car Discussion and Charging Issues
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