The warning signs are no longer subtle. The US car market is buckling under the weight of inflated prices, rising interest rates, and a flood of unsold inventory. Dealership lots are packed. Repossession rates are climbing. Buyers are walking away. The crash isn’t coming. It’s already rolling.
In July 2025, the average negative equity on vehicles hit $7,200. One in five car owners owes $10,000 more than their car is worth. That’s not a niche problem. That’s systemic. Monthly payments on new vehicles now average $760. Used cars are worse, with interest rates pushing 11.4%. One in six borrowers is locked into payments over $1,000 a month. That’s not sustainable.
Inventory is piling up. Ram trucks are sitting for over 200 days. Toyota Tundras are gathering dust. Dealers are slashing $8,000 to $12,000 off sticker prices just to move units. Wholesale values have dropped 18% in recent months. Auction houses are seeing cars go unsold. The overflow is spilling into parking garages and private lots. Manufacturers are cutting production. Nissan just announced 9,000 job cuts and a 70% drop in projected profits. Stellantis stock is down 50% in six months.
The panic buying wave that started in March is fading. Supply dipped sharply, but demand didn’t hold. Buyers are tapped out. Trade-in values are collapsing. The average MSRP is up 42% since 2019. A Toyota Tacoma SR5 that once sold for $30,000 now lists closer to $43,000. That’s sticker shock with no relief.
EVs aren’t immune. The shift from gas to electric was rushed. Battery tech is lagging. Charging infrastructure is uneven. Chinese automakers are accelerating while Western brands stall. Jaguar, Mazda, Chrysler, Cadillac, and others are on watch lists. Canoo and Fisker are already gone. Ford and Nissan are cutting back. VW and Stellantis are bleeding.
Tariffs are adding pressure. The 25% import tax on new vehicles has triggered panic shopping. Buyers are scooping up inventory before prices spike further. But the surge is temporary. Once the pre-tariff supply dries up, the slowdown will deepen.
Buyers now hold the leverage. Dealers are desperate to clear flooring costs. Discounts are everywhere. If you’re in the market, negotiate hard. But don’t expect stability. The market won’t settle until at least 2027. Until then, used cars with high reliability ratings are the safest bet.
Sources
https://www.jcwhitney.com/garage/weathering-the-car-market-crash-of-2025/
https://theautowire.com/2025/04/16/people-are-panic-buying-new-and-used-cars/