- You should always be informed about current market trends and experts’ opinions in order to time your car purchase.
- New car and used car prices are decreasing, but the car market is still not a straightforward path.
- You should consider various factors when in the market for a new car, such as supply and demand, production costs, or economic conditions.
- All experts agree on one thing – owning a car nowadays has become a luxury.
The soaring prices nowadays will make you think twice before buying a car. But with cars being such a necessity, the question on everyone’s mind is, “when will car prices drop?”. It seems that market conditions are finally looking up, with 2023 potentially being a lucky year for anyone interested in a new ride.
Despite this promising news, we still live in times of economic recovery, meaning the car market is still unpredictable. From supply chain disruptions to higher production costs, fluctuating prices can make your decision even harder.
That’s why timing your purchase is important. You’ll be able to save money and even get the best deal possible. That said, let’s get familiar with current market trends and experts’ opinions on when car prices will drop, so you’ll be on the road in no time!
The Current State of The Car Market
Undoubtedly, the automobile manufacturing market has been hit hard by several challenges in recent years. However, three years have passed since we faced COVID-19, and car prices still aren’t back to normal.
According to Kelley Blue Book, the new vehicle transaction price is still $48,763, and before the pandemic, it stood at $37,876. The thing is, new car prices aren’t the only ones struggling; used cars have also gotten expensive.
The automotive industry is continuously evolving though and striving to adapt to meet the needs and preferences of customers. Looking back at 2021 automotive trends, it’s obvious that many of these have continued shaping the automotive business landscape.
We’re currently witnessing a significant increase in electric vehicle adoption worldwide, meaning automakers must make adjustments to meet the demand for EVs. While this can mean a limited production capacity, it can still result in a positive outcome in the long term – an improved supply of electric vehicles.
There’s no denying that COVID-19 had a significant impact on the car market. Lockdowns and restrictions have led to a decline in car sales, and auto manufacturers are still going through a tough challenge. However, there’s still a bright stop in this dark cloud – the luxury car market is experiencing an unexpected success.
Overall, car prices are step-by-step getting back to normal. We can see this by the below-listed numbers in terms of sales numbers in March 2023.
- Chevrolet Silverado sales went up 8.8%
- Nissan Rogue is up 38.6%
- Ford F-Series is up 34.5%
- BMW Motorrad is up 1.1%
- Tesla Model Y is up 31.7%
While the new car prices are seeing gradual improvements, it’s still not a straightforward path – there’re still some bumps in the road. This has caused a high demand for used cars and raised the question – when will used car prices drop?
Let’s take a look at how used car prices have stood in the last 90 days.
- Alfa Romeo is down 1.13%
- Aston Martin is down 1.45%
- BMW is up 2.20%
- Ferrari is down 0.50%
- Audi is up 1.32%
When we look at these numbers, it’s obvious that both new and used cars are struggling to keep up the pace. According to J.P. Morgan Research, used car prices are expected to decline by 10%, while new car prices are expected to decline by 2.5% to 5%.
Factors that Affect Car Prices
Whether you’re looking to purchase a new or used vehicle, several factors affect their prices. Sure, the make and model of a car play a huge role in determining their price, but there are some key factors you need to consider to be better informed on why car prices fluctuate and when to buy a car.
Supply and Demand
Supply and demand play a significant role in determining car prices. For example, when the demand for a car increases but its supply is low, the price of that car will increase, and vice versa. This means that SUVs and MINI are more likely to be expensive because of their high demand.
Additionally, seasonal trends can also contribute to determining the value of your car, as prices always tend to increase during peak seasons such as summer and decrease during winter.
Production Costs
It’s no secret that automobile manufacturers will cost more if the production costs increase. These include the materials used, labor, rent, and other overhead. At the end of the day, they need to do so to cover the expenses of making those cars. Nonetheless, if production costs decrease over time, car prices may drop.
We also need to consider recent innovations in technology, as they can also impact production costs. This applies especially to luxury cars because of their state-of-the-art features and raw materials.
Economic Conditions
Economic conditions are probably the most valuable factor that can affect car prices, as well as sales. For example, during times of economic growth, people earn more; therefore, they can spend more on items such as cars.
Moreover, when interest rates are low, buyers tend to borrow money for car purchases more often, as it’s more affordable. This will potentially lead to higher demand for cars, therefore, higher prices.
Model Year
Next, we have the model year of a car as an important factor to consider. This refers to the year when a specific car model was produced. To put it in a nutshell, when a manufacturer releases a new model, the old model’s price will decrease as a result.
This is the true meaning behind the words timing your purchase. You can secure a better bargain on a high-quality vehicle by taking advantage of car prices dropping due to a new model’s release.
Brand and Reputation
As a customer, you’ll also buy a car from a well-established brand instead of a lesser-known one. However, this means you’re likely to spend more, as cars produced by respected brands often have a higher price.
This is mostly because of the brand’s reputation. Since vehicle purchases are shifting online, customers will almost always do thorough research before buying a car. So, it’s only natural they’ll find more positive reviews for a reputable car brand.
Geography
Last but not least, the country or region where a car is sold also plays an important role in deciding its price. This is mostly due to the differences in supply, demand, taxes, and regulations. For example, you can expect a car to be more expensive if it’s sold in a country or region with higher taxes.
Additionally, different countries and regions may have different safety features and emission standards, which can lead to changes in production costs.
Predicting Market Trends
Predicting market trends is an important aspect for every business, not just for the automobile industry. Not only can it help manufacturers make informed decisions about pricing, inventory, and marketing, but it can also help you make a well-thought-out purchase.
Let’s take a look at some of the ways to predict market trends, as well as get you familiar with more car-buying hacks for savvy customers.
Analysis of Historical Data and Trends
Car companies are always trying to develop the best car models that are both fuel-efficient and high-performing. They’re achieving this by using data analytics tools to test out different combinations or components. By closely following market trends, data scientists and engineers can improve their production and development processes.
If we take a look back, we’ll see that car prices have always been an item of fluctuation. The 1950s and 1960s were times when cars were considered luxurious, with sky-high prices. However, the 1970s and 1980s brought an increase in oil prices, awakening the need for more fuel-efficient vehicles, which resulted in a decrease in car prices.
So, if we take these things into account when will car prices drop again?
Manufacturers are starting to recover from supply chain disruptions, but there’s also an increase in the inventory of new cars. This means that prices are likely to drop, but we can’t expect this to happen overnight. What matters is – we’re possibly on a good track.
Expert Opinions and Predictions
For a clearer picture and better understanding, let’s explore some experts’ opinions and predictions, answering the question ‘’when will car prices drop’’.
The fact that the cost of purchasing a vehicle has increased significantly in recent years is undeniable. In fact, according to Patrick Roosenberg, a director at J.D. Power, the cost of buying a vehicle is no longer in the range of $20.000 to $30.000 but has increased to $50.000 to $60.000. So, if you’re in the market for a new car, expect to make a much larger financial commitment than before.
If you’re used to waiting for discounts and rebates, that is no longer the case. According to Jessica Caldwell, an executive at Edmunds, people are now buying the full sticker price for vehicles, and they’re selling out as soon as they arrive at dealerships.
According to research from J.P. Morgan, production costs can be approximately 24% lower in 2023 compared to 2022. While this is good news for the automotive industry, an increase in demand for new cars isn’t guaranteed, as the interest rate for new vehicle loans increased to 6.79% in January 2023.
So, what’s in store for used vehicles, are used car prices dropping?
Clark Howard, a money expert, predicts that used car prices will gradually improve throughout 2023. So, basically, the longer you wait, the more likely you are to cut a better deal on a used car.
If we take a look at the used vehicle index, we’ll see that prices have continued to drop significantly since 2022. With used car prices going down, you might find a good deal on a used car during 2023.
Tools and Resources for Predicting Car Prices
As a consumer, you can also turn to different tools and resources to accurately estimate the real cost of car ownership. There is Kelley Blue Book which provides estimated values for new and used cars based on their model year, mileage, and condition.
Additionally, you can take a look at CarGurus and Autotrader for better insight into current pricing trends. If you want to track industry trends, then you should follow J.D. Power, as they provide regular updates on automotive industry data.
Timing Your Car Purchase
Overall, you can see that car prices are subject to fluctuations – all the more reasons why you should consider timing your car purchase. That said, let’s discuss the best and worst time to buy a car and help you save money.
What you should take into account is the time of the year, supply and demand, as well as the economic conditions. However, dealerships usually tend to negotiate prices and offer discounts at the end of every month or at the end of every year because they have sales quotas they need to meet. Holidays are also known as times of discounts, especially Black Friday.
When demand is high and supply is low, you should avoid buying a car at any cost, as dealerships won’t negotiate on price, and you may end up paying more. However, there are some strategies for negotiating a good deal on a car purchase with a focus on the question ‘’will car prices go down in 2023’’.
Firstly, you should set a budget for yourself and never aim for something you cannot afford. With that budget in mind, you should try shopping around different dealerships and compare prices. Secondly, you should always negotiate with confidence and never stutter when trying to bargain.
Lastly, be prepared for every outcome, as dealerships won’t always agree. Don’t fret though; walking away is not the worst thing in the world – there are thousands of other dealerships and cars out there.
Tips for Saving Money on Your Car Purchase
Besides many factors pointing to a potential decrease in prices, there is no guarantee on the questions ‘’When will new car prices drop?’’ and ‘’When will used car prices drop?’’. However, there are some tips you can follow in order to make a better decision and save money on your car purchase.
Buying Used VS. New Cars
First and foremost, buying a used car pays off much more than buying a brand-new one. That’s because they’re less expensive but can also experience a slower decrease in value compared to new ones. Even better, the used car market is showing a significant decrease.
On the other hand, a new car will have the latest high-end technology and features integrated, along with a manufacturer’s warranty. Experts at Edmunds predict that 10.8 million new cars will be sold in 2023.
Instead of waiting and wondering ‘’when will new car prices drop again’’, you should consider looking into used cars, as they’re more likely to continue dropping in the remaining year.
Financial Options and Interest Rates
When you’re in the market for a new car, it’s important to think about the financial options and interest rates involved. Keep in mind that the interest rate will determine how much you’re going to have to pay on the amount you’re borrowing.
Currently, the average interest rate is 6.07% for new cars and 10.26% for used cars. To put it in a nutshell, you have two options concerning financing a car – a loan or a lease.
Researching and Comparing Prices
Buying the first car that caught your eye might be tempting, but researching different vehicle models and comparing prices among different dealerships can help you get a better deal.
You can do this by checking online marketplaces to get an idea of what similar cars are selling in your region. Additionally, make sure you check the car’s condition, mileage, and additional features your desired car offers.
Other Cost-Saving Measures
When it comes to the question ‘’when will car prices drop’’, besides the above mentioned, there are some other cost-saving measures you can take. For example, you can monitor market trends and be timely informed of new sales and promotions. Most importantly, you should learn to wait for prices to drop, as this can help you balance cost-saving measures.
Conclusion
All in all, predicting when car prices will drop can be a challenging task, considering they’re an item of fluctuation. Many factors are worth considering, such as the economic conditions, model year, supply and demand, brand reputation, and geography.
Let’s be real, a car is a necessity, especially if you’re commuting to work and public transportation is limited in your region. However, you should carefully time your purchase in order to make a better purchase that fits your budget and lifestyle.
At the end of the day, waiting a little longer to get your dream car might be worth it if it means you’re making an informed car-buying decision and potentially saving money in the process.
