Experts have mixed views on the future of negative-equity levels, but most agree that it largely will depend on used-vehicle values and the new-vehicle sales rate.
The factors that drive negative equity are interwoven, said Melinda Zabritski, Experian's senior director of automotive finance.
Declining used-vehicle values, for example, yield positive and negative results for consumers. "With declining values, the knee-jerk reaction is, 'Oh, it's great. It's going to make used vehicles more affordable.' But it impacts your trade-in," Zabritski said.
If the used-vehicle market becomes more appealing with low prices, manufacturers may respond by increasing incentives to make new vehicles more affordable, she said.