🚀 January 3: High Notes and Hard Hits

The Gist

💸 Big Payments, Bigger Loans
Edmunds data shows that nearly 1 in 5 new-car shoppers committed to monthly payments over $1,000 in Q4. Even with slight drops in interest rates, affordability remains a hot topic as loan sizes hit record highs and 0% financing becomes nearly extinct.

🔥 Carvana Under Fire
Hindenburg Research just dropped a bombshell report accusing Carvana of shady accounting, lax underwriting, and insider stock deals. Carvana denies the claims, but shares dipped 1.9% as dealers watch closely—could this spell trouble for the online-only model?

📉 Tesla’s Sales Slip
After 12 years of growth, Tesla posted its first annual sales decline in 2024, despite a Q4 push with 0% financing and free charging. With a 1.1% drop year-over-year, competition heats up as legacy automakers roll out new EVs.

🎵 Subaru’s Smooth Finish
While Tesla stumbles, Subaru shines. The automaker ended 2024 with 29 consecutive months of growth, including a 7.1% rise in December sales. Stars like the Crosstrek and Solterra hit record highs, positioning Subaru as a steady winner.

Fuel for Thought

• 💰 High Prices, Higher Payments

• 🔥 Carvana Under Fire

  • The Report in a Nutshell

  • Carvana Fights Back

  • What Dealers Should Know

• 📉 Tesla’s First Sales Drop in Over a Decade

  • Q4 at a Glance

  • Competition and Challenges

• 🎵 Subaru Finishes 2024 on a High Note

  • Stars of the Show

BUSINESS

💰 High Prices, Higher Payments

Big loans, shrinking margins, and buyers stretched thin—welcome to the new normal, folks.

According to Edmunds, nearly 1 in 5 new-car shoppers signed up for $1,000+ monthly payments in Q4 2024.

Even with interest rates on a slight decline, affordability remains a key concern for both buyers and dealers.

Key Findings

Big Loans, Bigger Payments

• A record 18.9% of buyers took on monthly payments north of $1,000.

• The average loan size hit an all-time high at $42,113, up from $40,713 in Q3.

0% Financing? Practically Extinct

• Only 2.4% of buyers snagged 0% finance deals in Q4, down from 3% in Q3. Even for those few, qualifying required excellent credit, making it inaccessible for most shoppers.

Interest Rates Ease, But Still High

• The average APR on new loans dropped slightly to 6.8%, a welcome decline from 7.1% in Q3.

• For longer loan terms (67+ months), the average APR fell to 7.8%, a notable improvement after consistently hovering above 8% for over a year.

🔥 Carvana Under Fire

After a year of stock surges and whispers of a turnaround, short-selling firm Hindenburg Research has dropped a bombshell report accusing Carvana of financial misconduct, questionable accounting, and cozy insider deals.

The Report in a Nutshell

Hindenburg’s investigation, spanning four months, involved 49 interviews with former Carvana employees, industry experts, and related parties.

• $800M in Loan Sales to a Mystery Buyer: Hindenburg claims Carvana sold 18% of its loans in Q2 and 16% in Q3 to an undisclosed “related party,” raising red flags about transparency.

• “Father-Son Grift” Allegations: The report highlights stock sales by Ernest Garcia II, father of CEO Ernie Garcia III, implying insider profit-taking while Carvana’s financials appear artificially inflated.

• SEC Investigation?: According to Hindenburg, Carvana might be under investigation by the SEC, though Carvana has neither confirmed nor denied this. The SEC has also declined to comment.

• Loan Approvals for All: Hindenburg alleges Carvana approved 100% of loan applicants, leading to concerns about lax underwriting practices that could hurt long-term financial stability.

Carvana Fights Back

Carvana wasted no time firing back, labeling the report “intentionally misleading and inaccurate.” The company emphasized its transparency, claiming it has been “one of the most heavily researched public companies” since its IPO.

“We plan to stay focused on executing our plan for another great year in 2025,” Carvana stated, dismissing the report as yet another attack from short sellers seeking to profit from a stock decline.

Despite the denial, Carvana shares fell 1.9%, closing at $199.56, down from $260.13 a month earlier.

What Dealers Should Know

For dealers, Carvana’s turmoil raises questions about the future of online-only used car models and the long-term viability of businesses that rely heavily on subprime financing.

• Loan Quality Matters: Hindenburg’s claims about lax underwriting highlight a key risk for used car sales—approving loans without proper checks can lead to increased defaults, hurting both retailers and lenders.

• Competition vs. Caution: While traditional dealers have faced pressure from Carvana’s convenience-driven model, its struggles could signal an opportunity to emphasize trust, service, and quality control in the buying process.

Join the conversation and share your thoughts on LinkedIn here.

📉 Tesla’s First Sales Drop in Over a Decade

After 12 years of consistent growth, Tesla reported its first annual sales decline in 2024, despite a 2.3% boost in Q4.

Tesla sold 1.79M vehicles, a 1.1% dip from 1.81M in 2023.

Aggressive 0% financing, free charging, and discounted leases helped, but it wasn’t enough to overcome their sluggish start to the year.

Q4 at a Glance

• Q4 Deliveries: 495,570 vehicles, short of Wall Street’s 498,000 estimate.

• Full-Year Sales: 1.79M units, down 1.1% year-over-year.

• Average Selling Price: Expected to dip below $41,000, the lowest in four years.

Competition and Challenges

Tesla’s aging model lineup and a surge in EV competition are key factors in its sales decline. Without fresh models or affordable options, Tesla risks losing ground.

•  Tesla narrowly edged out rival BYD, which sold 1.77M EVs after a 41% sales increase.

• The Model Y, launched in 2020, remains Tesla’s newest major model.

• The Cybertruck, while highly anticipated, has had limited appeal and production remains slow.

• Nearly all of Tesla’s Q4 sales came from its lower-cost Models 3 and Y, with only 23,640 units of higher-end models sold.

🎵 Subaru Finishes 2024 on a High Note

While Tesla navigates its sales slump, Subaru of America wrapped up 2024 with a much brighter story.

The automaker reported a 7.1% jump in December sales, delivering 61,871 vehicles, compared to 57,764 in December 2023.

Even more impressive? The automaker celebrated 29 consecutive months of sales growth, ending the year with 667,725 units sold, marking a 5.6% increase over 2023.

Stars of the Show

Subaru’s solid performance was driven in part by two standout models:

• Crosstrek: Achieved its best December ever and set a new annual sales record.

• Solterra: Subaru’s first fully electric vehicle made its mark, also posting its best year ever since its launch.