Raphael Stevens

A growing number of Americans with auto loans owe more than their vehicles are worth, according to a report Tuesday from Edmunds.com.
The average amount owed on upside-down loans climbed to an all-time high of $6,458 during the third quarter, according to the company.
Upside-down car loans are not necessarily dire on their own, but a growing number of consumers being underwater is another indication of pressure on American consumers.

Cars sit in a Chevrolet dealership’s lot in Chicago on June 20, 2024.
Scott Olson | Getty Images News | Getty Images

DETROIT — A growing number of Americans with auto loans owe more than their vehicles are worth, according to a report Tuesday from Edmunds.com.
The auto data and consumer research company reports the average amount owed on so-called upside-down loans climbed to an all-time high of $6,458 during the third quarter. That compares to $6,255 in the prior quarter and $5,808 a year earlier.

Arrows pointing outwards

Upside-down car loans are not necessarily dire on their own, but a growing number of consumers being underwater is another indication of pressure on American consumers.
A sign of that strain came last month, when the Federal Reserve reported delinquency rates on auto loans rose substantially above pre-Covid pandemic levels to end 2023. They had fallen to historical lows during the global health crisis.
“Consumers owing a grand or two more than their cars are worth isn’t the end of the world, but seeing such a notable share of individuals affected at the $10,000 or even $15,000 level is nothing short of alarming,” Jessica Caldwell, Edmunds’ head of insights, said in a release.
Edmunds reports more than 1 in 5 consumers with negative equity owe more than $10,000 on their auto loans. That includes 22% of vehicle owners with negative equity who owed $10,000 or more, while 7.5% have negative equity of more than $15,000.

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Consumers can counter upside-down car loans by holding onto the vehicles for longer periods. They also should ensure regular maintenance is done to avoid additional drops in value and costs, according to Edmunds.

“With prices and interest rates being as high as they are, it’s critical for consumers to think beyond the monthly payment and be honest with themselves about their ownership habits,” Ivan Drury, Edmunds’ director of insights, said. “A seven-year auto loan is a one-way ticket to negative equity if you know you’re not the type of person to keep a vehicle for that long.”
The current situation with upside-down loans is largely a result of consumers who purchased new vehicles in 2021 and 2022 amid a lack of inventory due to the Covid-19 pandemic and parts shortages. Many then paid full price or more, with their vehicles depreciating faster than expected as the auto industry and inventories normalized.

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A futuristic 24/7 robo-parking operation unfolds across a 13-level garage and employs five car lifts, dozens of lasers and hundreds of bar codes embedded in the floors. 
Residents who pull into one of the building’s five drive-up bays save the precious time of hunting for a spot.
Automated parking is a growing trend in high-end real estate from New York to Miami. Better-utilized space for parking could mean a developer needs fewer floors devoted to vehicles — freeing up square footage for residences.

Hidden inside a 46-story luxury condominium building in Miami is a massive garage where dozens of busy robots whisk cars to and from parking spots.
The futuristic 24/7 operation unfolds across a 13-level garage and employs five car lifts, dozens of lasers and hundreds of bar codes embedded in the floors. Residents who pull into one of the building’s five drive-up bays save the precious time of hunting for a spot, instead handing their vehicles off to robo-valets who park the cars for them.

Five bays equipped with self-serve kiosks provide entry and exit to the building’s automated parking garage.
Ginger Monteleone

This all goes down inside the Brickell House, home to roughly 375 condo residences and the largest and tallest automated parking system of its kind, according to ParkPlus, the company that built it. 
Automated parking is a growing trend in high-end real estate where buildings from New York to Miami now come equipped with kiosks, car lifts and car-parking robots. A coveted spot inside some luxury Manhattan condos can start at $300,000. Meanwhile, a real estate agent representing a five-bedroom penthouse at Brickell House told CNBC the $15 million asking price includes five parking spots in the sci-fi-like structure.

One of five car lifts inside the automated parking system.
Ginger Monteleone

These modern parking amenities are part of the so-called smart parking market, which includes a wide range of solutions from automated parking to digital payment systems. According to Grand View Research, the global smart parking market was valued at $6.5 billion in 2021 and is projected to reach $30.16 billion by 2030, with a major share of that market in North America.
A representative at ParkPlus told CNBC that U.S. demand for cutting-edge automated systems, like the one at Brickell House, is mostly being driven by luxury residential projects in higher-density urban metros, while car dealerships, hospitals, hotels, parking facilities, private car collectors and private residences often opt for mechanical systems that are typically less advanced.

A view from above one of the garage’s 13-story car lifts.
Ginger Monteleone

Inside the world’s largest robo-parking system

The Brickell House garage, which is off-limits to humans, is controlled by 29 robots also known as automated guidance vehicles, or AGVs for short. 

The AGVs are essentially free roaming, self-charging, robo-parkers that use vision systems, lifts and lasers to precisely park and retrieve cars. They’re 12 feet long and 4 feet wide, with a steel platform that sits just 10 inches above the floor.
Hidden underneath each of the powerful machines, which can carry cars up to 6,000 pounds, are eight wheels, bright flashing lights and an electronic eye that can read bar codes embedded in the floors for guidance. 

One of the systems 29 robo-parkers aka automated guidance vehicles (AGV).
Ginger Monteleone

The nimble robots slide under a vehicle and appear to effortlessly carry it across floors and in and out of car lifts. They abide by a calculated division of labor: Some AGVs only move cars on and off the lifts, others are tasked with shuffling cars across floors and into spots. A vehicle that enters or exits the system might be handled by as many as three AGVs passing the car from one robo-colleague to another. 
And since there is no human that has to get in or out of the vehicle the parking can be very precise, squeezing vehicles into spots with just 2 inches between them.

An AGV prepares to park a Ferrari inside the Brickell House’s automated parking system.
Ginger Monteleone

During CNBC’s visit to the ParkPlus system, our team rigged a Ferrari 488 Spider with cameras and recorded the automated retrieval process. It traveled from the ninth level of the garage to a ground-floor bay in under four minutes.
According to ParkPlus, critical to the system’s operation and risk mitigation is rigorous testing: The robots have demonstrated they can move 15 vehicles in and out of the garage in rapid succession for 40 hours straight without a single hiccup.

The ROI of robo-parking 

The cost of an automated system like the one at Brickell House varies widely depending on the building, but Peter Manis, president of ParkPlus Florida, said the range is generally $20,000 to $80,000 per spot.
That cost is on top of what a developer has already spent to construct the building’s garage levels. Manis declined to reveal the exact price of the system installed at Brickell House, but a parking capacity of the garage’s size at Manis’ estimated cost range puts the pricing anywhere from $8 million and $32 million.

An automated guidance vehicle or AGV carries a Ferrari through the PARKPLUS parking system.
Ginger Monteleone

One of the main motivations for a building developer to pump millions into the automation of its parking garage is the system’s ability to maximize precious square footage. Manis told CNBC that in some cases an automated system can optimize square footage by up to three times better than an old-school garage.  
“You don’t have driving ramps, you don’t have turning, you don’t have two different lanes and you can squeeze them right next to each other,” said Manis.
Better-utilized space for parking could mean a developer needs fewer floors devoted to vehicles — freeing up square footage for residences and potentially boosting apartment sales.

Two of the system’s AGVs work together to retrieve a Mercedes from the automated parking system and deliver it to a car lift.
Ginger Monteleone

High-tech parking and multimillon-dollar headaches

With any new technology, there are naturally some early-stage pain points.
Billionaire Palmer Luckey, who founded the virtual reality company Oculus VR and military weapons maker Anduril Industries, filed a lawsuit earlier this year saying he got stuck inside his private garage elevator. 
Luckey bought and converted a Newport Beach, California, mansion into a multi-level garage equipped with an elevator and scissor lifts for his car collection. In the suit filed against Luckey’s builder and subcontractor, the billionaire said the elevator “repeatedly stopped its vertical motion without warning and trapped its occupants inside.”
According to the filing, the mansion-turned-garage is now unusable and Luckey incurred “millions of dollars in damages, with a precise amount that will be proven at trial.” 

Palmer Luckey billionaire founder of Oculus VR and Anduril Industries

In response, the builder’s attorney told CNBC his client has filed a cross complaint arguing the elevator and lifts were the responsibility of the specialized subcontractor, who Palmer personally approved to build the lifts. Meanwhile, the subcontractor filed a motion to strike the lawsuits claims and did not respond to CNBC’s request for comment.
Back in Miami, Brickell House has had its own headline-making parking nightmare. In 2016, long before the new AGV system was installed, the condo association filed a complaint against the building’s developer over a parking system it claimed never functioned properly. Residents’ cars were reportedly trapped in the system, which had been installed by a now-bankrupt parking company, and the garage was eventually shut down, leaving the building with no on-site parking for years, according to the lawsuit. 
“The failure of the [previous] system was the Achilles heel of our industry,” said Paul Bates, ParkPlus group president.
A jury awarded the condo association more than $40 million in damages, according to court documents. It remains one of the largest construction defect verdicts in Florida history.
The condominium association, which declined to discuss past litigation with CNBC, also reportedly received a $32 million insurance settlement over the system.
For Bates, the new ParkPlus system at Brickell House, installed beginning in 2022, helped close a dark chapter in automated parking.
“Brickell House, and these familiar concerns, have pushed the industry to innovate, improve system reliability, and focus on risk mitigation,” Bates said. More

Walgreens reported fiscal fourth-quarter sales and profit that beat Wall Street’s expectations, reflecting the company’s efforts to slash costs.
The retail drugstore chain also said it plans to close roughly 1,200 stores over the next three years, which includes 500 closures in fiscal 2025 alone.
The results cap a rocky fiscal 2024 for Walgreens, which is grappling with pharmacy reimbursement pressure, softer consumer spending and challenges related to its push into primary care.

A sign sits in front of a Walgreens store on November 10, 2023 in Wheeling, Illinois. 
Scott Olson | Getty Images

Walgreens on Tuesday reported fiscal fourth-quarter sales and adjusted profit that beat Wall Street’s expectations, as the company slashes costs in an attempt to steer itself out of a rough spot.
The retail drugstore chain also said it plans to close roughly 1,200 stores over the next three years, which includes 500 in fiscal 2025 alone. The company said those closures will be “immediately accretive” to its adjusted earnings and free cash flow.

Walgreens has around 8,700 locations in the U.S., a quarter of which it says are unprofitable. 
Those closures will give Walgreens a “healthier store base” and “will enable us to respond to shifts in consumer behavior and buying preferences,” the company’s CEO Tim Wentworth said during an earnings call on Tuesday. He added that Walgreens aims to employ the majority of the workforce affected by the closures, though it is unclear how many employees stand to lose their jobs.
The company’s shares jumped about 3% in premarket trading.
The results cap a rocky fiscal 2024 for Walgreens, which is grappling with pharmacy reimbursement pressure, softer consumer spending and challenges related to its push into primary care, among other issues. The company on Tuesday said it surpassed its target of cutting $1 billion in costs during fiscal 2024, which included shuttering underperforming stores, laying off employees and using artificial intelligence to make its supply chain more efficient, among other efforts. 
Most of the benefits of the cost cuts came in the company’s U.S. retail pharmacy segment, Walgreens CFO Manmohan Mahajan said during the call.

In June, Walgreens said it intends to close a “significant” number of its underperforming stores by 2027. Tuesday’s announcement appears to be the company’s first exact estimate of how many locations it will shutter.
Here’s what Walgreens reported for the three-month period ended Aug. 31 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 39 cents adjusted vs. 36 cents expected
Revenue: $37.55 billion vs. $35.76 billion expected

Walgreens booked sales of $37.55 billion for the quarter, up 6% from the same period a year ago. 
The company reported a net loss of $3 billion, or $3.48 per share, for the fiscal fourth quarter. That reflects a so-called valuation allowance meant to reduce the company’s deferred tax assets mainly related to opioid settlements. 
It compares with a net loss of $180 million, or 21 cents per share, for the year-earlier period.

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Excluding certain items, adjusted earnings were 39 cents per share for the quarter. 
The fourth-quarter and full fiscal-year results “reflected our disciplined execution on cost management, working capital initiatives and capex reduction,” Wentworth, who stepped into the role nearly a year ago, said in a release.
The company’s guidance for fiscal 2025 was in line with analysts’ expectations. Walgreens expects growth in its U.S. health-care and international segments, which will be offset by a decline in its retail pharmacy segment. 
The company is engaged in a “multi-year process of reframing our relationship” with pharmacy benefit managers, which negotiate drug rebates on behalf of health plans and reimburse pharmacies for prescription drugs, Wentworth said during the call. Walgreens hopes that will help improve margins in its pharmacy business. 
Walgreens anticipates adjusted earnings per share of $1.40 to $1.80 in the coming fiscal year. Analysts project an adjusted profit of $1.75 per share, according to LSEG. 
The company also sees revenue for the year at $147 billion to $151 billion. Wall Street analysts estimate sales of $147.3 billion. 

Growth across all three business units

Walgreens reported growth across its three business divisions in the fiscal fourth quarter. 
Sales from the company’s U.S. health-care unit jumped to $2.11 billion, up 7.1% compared with the same period a year ago. 
Analysts had expected sales of $2.10 billion, according to estimates compiled by StreetAccount.
That partly reflects growth in primary-care provider VillageMD and specialty pharmacy company Shields Health Solutions. Shields sales jumped 27.8% during the period, which the company attributed to growth within existing partnerships.
Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution requirements, often for patients with complex conditions such as cancer and rheumatoid arthritis.
Notably, Walgreens posted a steep net loss in the fiscal second quarter as it recorded a hefty nearly $6 billion charge related to the decline in value of its investment in VillageMD. In August, the company said in a securities filing it is considering a sale of the provider.

A sign advertises Covid vaccine shots at a Walgreens Pharmacy in Somerville, Massachusetts, on Aug. 14, 2023.
Brian Snyder | Reuters

Walgreens’ U.S. retail pharmacy segment generated $29.47 billion in sales in the fiscal fourth quarter, an increase of 6.5% from the same period last year. Analysts had expected sales of $28.09 billion, according to estimates compiled by StreetAccount.
That segment operates the company’s drugstores, which sell prescription and nonprescription drugs as well as health and wellness, beauty, personal care, and food products.  
Walgreens said pharmacy sales for the quarter rose 9.6% and comparable pharmacy sales increased 11.7% compared with the year-earlier period due to price inflation in brand medications, among other factors. 
Total prescriptions filled in the quarter including vaccines came to 302 million, a 1.7% increase from the same period a year ago. Notably, falling reimbursement rates for prescription drugs cut into pharmacy margins, the company said. 
Retail sales fell 3.5% from the prior-year quarter, and comparable retail sales declined 1.7%. The company cited a “challenging” retail environment, among other factors. 
Walgreens’ international unit, which operates more than 3,000 retail stores abroad, posted $5.97 billion in sales in the fiscal fourth quarter. That’s an increase of 3.2% from the year-ago period.
Analysts expected revenue of $5.81 billion for the period, according to StreetAccount. 
The company said sales from its U.K.-based drugstore chain, Boots, increased 2.3%. 

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Boeing said it could raise as much as $25 billion to shore up its balance sheet.
The company said in a separate filing that it has reached a $10 billion credit agreement with banks.
Boeing faces warnings from credit ratings agencies that it could lose its investment grade rating.

Striking Boeing workers and their supporters picket outside the Boeing Co. manufacturing facility in Renton, Washington, on Sept. 16, 2024.
Yehyun Kim | AFP | Getty Images

Boeing said Tuesday that it could raise as much as $25 billion in shares or debt over three years, a move to increase liquidity as the troubled manufacturer faces a more than monthlong machinist strike and problems throughout its aircraft programs.
“This universal shelf registration provides flexibility for the company to seek a variety of capital options as needed to support the company’s balance sheet over a three year period,” Boeing said in a statement.

Earlier, Boeing separately said in a filing that it has an agreement with a consortium of banks for a $10 billion credit agreement.
“The credit facility provides additional short term access to liquidity as we navigate through a challenging environment,” the company said in a statement. “The company has not drawn on this facility or its existing credit revolver.”
Boeing shares are down nearly 43% this year through Monday’s close.
Boeing is trying to shore up its balance sheet as it faces warnings from credit ratings agencies that it could lose its investment grade rating.
S&P Global Ratings, one of the agencies that warned about a downgrade, last week estimated that the machinist strike is costing Boeing more than $1 billion a month. The two sides have been at an impasse.

On Friday, Boeing’s new CEO Kelly Ortberg warned that the company plans to lay off about 17,000 employees, or 10% of its global workforce to cut costs.
“We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery,” he said, adding that Boeing needs to focus resources on “areas that are core to who we are.”
The announcement came alongside preliminary financial results, showing mounting losses and $5 billion in charges in Boeing’s defense and commercial airplane units.
On Oct. 23, Ortberg will hold his first quarterly investor call since becoming Boeing’s CEO in August. More