Episode #1285: Today we unpack record negative equity making deals harder to pencil, service and parts lanes regaining momentum as dealers look for profit stability, and a surprising $56B productivity hit caused by generational friction and AI adoption inside modern sales teams.

A growing number of buyers are rolling serious negative equity into their next vehicle purchase, creating real challenges for dealers trying to structure deals as lingering pandemic-era pricing continues to ripple through the market.

Edmunds reports the average negative equity on trade-ins reached a record $7,214 in Q4, more than $1,000 higher than pre-pandemic 2019 levels.
29% of new-vehicle buyers with a trade-in are underwater, up four percentage points from a year ago.
Nearly 27% of underwater buyers carried at least $10,000 in negative equity, making deal structuring increasingly difficult for dealerships.
Brian Maas of the California New Car Dealers Association summed it up: “At some point… even the most creative dealer can’t figure out a way to help their customer get into a new car.”
Our very own Chris Reeves did a deep dive in this morning’s ASOTU daily email on how dealers can talk to customers about negative equity and real ownership cost.

After a surprising dip late last year, dealer sentiment around service lanes bounced back in Q1 according to Cox Automotive, even as new-vehicle sales expectations remain flat.

The Cox Automotive Dealer Sentiment Index for fixed operations rose to 63 in Q1, up from 61 in Q4.
While improved, the score still trails mid-2025 levels of 65 and 66, showing the service business hasn’t fully returned to peak optimism.
Dealer expectations for future fixed ops opportunities jumped to 69, up five points from last quarter’s low.
With Cox forecasting flat new-vehicle sales around 16 million in 2026, service lanes may become even more critical for dealer profitability.

A new report says generational tension inside sales teams isn’t just awkward—it’s expensive. A report from SalesLoft and Clari estimates generational conflict between Boomers, Gen X, and Gen Z is costing companies about $56 billion a year in lost productivity as AI adoption reshapes how teams work.

Nearly 39% of Gen Z sales reps say they’d rather be managed by AI than a human, while some Boomers say they’d prefer AI over working with Gen Z colleagues.
The tension is pushing talent out: 28% of Gen Z reps are job hunting to avoid Boomers, while 19% of Boomers are considering early retirement due to frustrations with Gen Z.

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Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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