Image Source: Pexels

We are in the midst of a “total loss” epidemic says “Car Dealership Guy” on Twitter. Pictures explain why.

Used Car and Truck Prices vs Maintenance and Repairs

CPI data, chart by Mish

Total Loss Epidemic

We are in the midst of a "total loss" epidemic.

More than *20%* of vehicles are now declared a write-off by insurers after examining claims.

That's around *five* times higher than in 1980.

But why?

One big reason is that the cost of vehicle repairs has increased by almost 50%…

— Car Dealership Guy (@GuyDealership) May 24, 2024

Car Dealership Guy Comments

We are in the midst of a “total loss” epidemic. More than *20%* of vehicles are now declared a write-off by insurers after examining claims. That’s around *five* times higher than in 1980. But why?

One big reason is that the cost of vehicle repairs has increased by almost 50% since the pandemic started—far exceeding inflation.

Another major driver: Declining used car prices. It may seem counterintuitive, but the rate at which used car prices have fallen over the past couple of years encourages salvaging instead of repair… And all that contributes to an increase in vehicle write-offs.

No wonder Copart’s stock price has gained 1,100% over the past decade…

Historical Context

If you get into a wreck and total your car, and all your insurance covers is the decreasing value of your car, what can you afford to buy?

Discretionary Spending Tumbles

Target CEO Brian Cornell said the results show “continued soft trends in discretionary categories.”

Target chart courtesy of StockCharts.Com annotations by Mish

On May 22, I commented Discretionary Spending Tumbles at Target, Shares Drop 10 Percent

We had an advance hint at Target weakness.

Are Consumers About to Throw in the Towel?

Data from the Commerce Department, chart by Mish.

On May 16, I commented Retail Sales Fall Flat, Are Consumers About to Throw in the Towel?

On a year-over-year basis, real retail sales have been negative 12 out of the last 15 months.

Real vs Nominal Advance Retail Sales Percent Change From Year Ago

The vaunted consumer is much less than portrayed.

Fed Consumer Survey

Let’s check out some charts from the latest Fed survey on how well people are doing financially. This data and a new chart by me tie everything I have said about the rent and the election together.

Data from Fed Economic Survey, Chart by Mish

Please consider Fed Consumer Survey: Are You Worse Off Than a Year Ago?

Are You Worse Off Financially Than a Year Ago?

Between 2022 and 2023 the numbers improved (lead chart). However, the numbers are a disaster compared to the peak in 2019.

Can You Handle a $400 Emergency?

Millennials and Zoomers are increasingly stressed since the end of 2021.

 All of the savings from three rounds of pandemic stimulus, rent abatements, and student debt cancellations have been wiped out by rising inflation.

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