The latest note from Morgan Stanley analyst Adam Jonas does anything to instill confidence in an auto industry that, as we have been noting, has been part and parcel to a tidal wave of rising consumer debt.
The note, released Tuesday morning, notes that"auto loan delinquencies have moved through pre-COVID and GFC highs, yet US auto demand remains extremely resilient on an adjusted basis".
But the"mixed messages" come in when one looks at pricing, Jonas says."Recent conversations with dealers have suggested demand for new and used vehicles remains strong despite rising interest rates, deteriorating credit metrics and a pull-back in financial institution willingness to lend," he writes.
Jonas asks how much longer consumers can handle the sky-high prices for vehicles, and notes that while auto pricing remains firm, housing is falling. Generally, we'd expect autos to fall Jonas writes:"Initially lower housing starts was offset by median prices that climbed through Nov 2022, but since the pricing peak, median home prices have fallen 14% through January, resulting in the value of housing being down 21% through January from its peak.
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