It will certainly have some impact on new vehicles which almost all are floor planned and dealers (not Toyota or Honda) are starting to turn down slow moving (many are EVs) units on allocation. The impact on used inventory will be limited due to the fact most franchised dealers do not floor plan Used Units, this is where they tuck most of their cash.
Unfortunately, the bigger impact high interest rates have on used vehicles are the lack of ability to trade for vehicles due to the current purchase being a much higher rate/payment than the one they currently own. That combined with the fact there were far fewer 20/21/22/23 models and many of those that were sold will not be in an positive equity situation to trade is not going to help the supply side.
Higher interest rates will and has slowed inflation in the automotive industry, but because there are still plenty of supply challenges to offset the lower demand it isn’t going to be a quick crash, just a proper right sizing of used values which had to occur at some point.
All being said, all these things will not have a tremendous future impact on the low volume end of the era 200 series, the fat has already been trimmed which brings the market to about where it is today and close to where it should have been. Just your typical historical depreciation rate from here forward, which is somewhat more on Land Cruisers compared to 4Runners and Tacomas. Cruisers were never a vehicle you can buy and drive (really low mileage will be a somewhat exception) for free for a year or three, other than during the Covid/Penultimate Bubble.
Similar to the housing market, automakers will buy down and make new models slightly more affordable. Used cars will depreciate either fast or slow determined by the macro in 24/25. I believe there was minimal fat trimming in LCs. Toyota had 18-20k LC 2016+. Any LC HE 20/21 with sub 5-10k miles will likely command a premium, while those with 15k+ miles will correct further then depreciate. People may claim they'll keep a car for 20 years, but two decades is a significant period, and life changes during that time.
Something to note on BaT: since last month, some of these LCs aren't changing hands even when marked as sold. This is when we saw interest rates advancing. I'm waiting for the Carfax of these to update. The 1-3 month mark is usually the cutoff when temporary registration expires, and the legality of registering a vehicle comes into play. I will update those when they do.
LC VIN# JTMCY7AJ8M4105406 (see attached) sold, the lien was paid, but then there's no further information. It could be sitting in a warehouse with a new owner, the same owner who still possesses it, or it may have been shipped overseas. It probably would have been serviced by now and if anyone has more info, that would be greatly appreciated.
Whether we agree or disagree, it doesn't matter; everything is just opinions. As far as my views, during this economic cycle, individuals may wonder why they've lost their jobs, yet the economy is firing on all eight cylinders. Additionally, the government manipulates inflation calculations to fit a particular narrative. Hedonic adjustment is a mockery, given its highly subjective nature, much like PCE. The media also follows and promotes the same narrative. For example, market is assigning a 10% chance of a 25 basis points rate cut in January 2024. Not going to happen unless something breaks bad. Unfortunately, we are not at a restrictive level when it comes to interest rates; we are barely at the long-run average. I'm in the camp that believes the long end of the yield curve will continue to advance. Life is becoming more expensive, and people may run out of money if they haven't already. Look at revolving credit. The future is uncertain, but with the government's substantial spending, we may be entering a new regime that diverges from the previous 40 years (excluding the three-year shift already in progress). The worst case is decades long grind.
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