Yahoo Finance's Pras Subramanian discusses the state of the auto market as luxury car sales boom and used car prices see a large decline after the run-up during the pandemic.

Video Transcript

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- 2022 saw Wall Street suffer through its worst year since 2008. Virtually every economist is calling for some form of recession in 2023. So it only makes sense that the priciest cars on the planet, see Rolls-Royce, Bentley, and Lamborghini are seeing their best years on record. Senior autos reporter Prahalad Subramanian here with this rather interesting trend shows two separate economies. Hey, Pras. What's going on here?

PRAS SUBRAMANIAN: Yeah, Dave, call it a tale of two markets really, right. You have this high end luxury market doing well here in 2022 while the market or the economy slows down. Start out with Lamborghini, deliveries up 10% last year, topping 9,200 cars. Lamborghini CEO told us earlier this year that they're selling more cars they can act then they can actually make. That how strong the market is. Bentley, their VW portfolio made another record breaking year, third year in a row of record sales up 4% and 15,000-ish cars. CEO Adrian Hallmark told us that he's never seen spending patterns like this before with the luxury consumer.

And finally, Rolls-Royce yesterday, we heard from them. They had a record breaking year, 6,000 cars produced. Their clients are actually getting younger and more wealthier. And actually at 42 years old, average age, that's younger than many drivers.

- Wow, that, I feel very, very behind the eight ball here. A lot of people in their early 30s are able to afford those types of cars. So Pras, that's an extremely high end of this market here. Let's talk about the other end, and that's used cars. Because we certainly have seen prices pull back quite a bit last year. How big of a drop have we seen, and what does that mean that we'll likely see this year?

PRAS SUBRAMANIAN: So yeah, we had that 2021 saw a huge rise in used cars. And used cars typically entry level cars people that are looking for affordable wheels, those went up so high. And then finally, we see here the Manheim used car vehicle value index showing that in December, the actual index came down almost 15% year over year. That's the biggest decline in the history of the index. So we're seeing that market really correct.

Jonathan Smoke, the head economist at Cox, which owns Manheim said that they're seeing unprecedented declines here. But this also followed huge gains. We'll see equilibrium hit the market in moderation this year. But I honestly, I feel like we could see this market go even lower as the economy may slow down as the Fed continues tightening and things like that.

- All right, moving over to the EV space, Pras, Wall Street Journal reporting several executives leaving Rivian in recent months. What's behind the departures?

PRAS SUBRAMANIAN: Yeah, a report to Stephanie about this, two major departures here Randy Frank, VP of Body and Interior Engineering along with Steve Gawronski, the VP in charge of parts and purchasing both apparently gone at the beginning of this year. Also gone, to the head of strategy and general counsel. We reached out to Rivian just now to get comment, haven't heard back from them yet. But you know, I want to know if Rivian missed just missed their production forecast for 2022 of 25,000 cars after they struggled to get enough parts to make vehicles. So there you go with some of these departures following that year of production.

- Stock up about 80% in the last year. So certainly it's been a really challenging road here for Rivian. Pras, thanks so much.