In theory, prices can come down when interest rates rise. However, in reality, this is not likely to happen until rates get ahead of inflation. Today, that would mean 12%-15% Fed funds rate in order to meaningfully fight high inflation. The Fed doesn't have to cojones to do that, so we're stuck in perpetual high inflation environment.
Yes, some borrowers will struggle to make payments when their rate adjusts higher and will default. However, in reality, many of those cars will not be repossessed. Those that are repossessed are typically in sorry shape (poor maintenance or sabotage) and end up as scrap. So, no real help on the supply side. Prices keep climbing.