When will car prices go down? This is a question that many people ask, and there are a few factors that contribute to the answer. Here’s what you need to know about when to expect lower prices on your favorite models.
The cost of cars has reached a record since the COVID-19 pandemic started. In November 2021, an average used car was priced 41 percent more than before the pandemic.
Fortunately, car prices could be back to normal by the end of this year. A money expert, Clark Howard, says the conditions are expected to improve gradually through 2022.
The article below will provide an in-depth look at the present used and new car market and indications of when car prices will decrease.
“Whether you go to the new car lot where you’ll find nothing or the used car lot where you’ll find shocking prices, it is the worst time to buy a vehicle since 1946.”
Fortunately, the problem with chip shortage is beginning to improve gradually, and prices for cars are expected to rise at the very least at the close of 2022 or in 2023.
Here, there are additional details about what price ranges are likely to fall for new and pre-owned vehicles.
When Will Used Car Prices Go Down?
A used car is usually a great way to save money over buying a new one. However, Clark states that right now isn’t the best time to look for an affordable bargain.
“We find ourselves where the scarcity of used and new vehicles is so acute that the price of used vehicles across the globe is breaking records. In the U.S., the typically used car pre-pandemic costs $17,000. Currently, it is less than $30,000, based on the most current data from the industry.”
When do used car prices begin to decrease? Although it’s hard to tell with certainty, Clark expects used car prices to decrease slowly through the year.
KPMG, One of the Big Four accounting firms, released a study about used car prices. The study concluded that it’s hard to know how long it will take for the market to begin to stabilize. In the research, KPMG examined four scenarios to determine when demand and supply are back to an equilibrium.
In all four scenarios, the automobile market returns to its equilibrium between October 2022 and October 2023. Three scenarios align with Clark’s forecast that prices would slowly improve through 2022. That implies that we’ll probably find lower prices on used vehicles later in 2022, particularly in the fourth quarter.
If you currently own a car that you want to offer for sale, Clark recommends that you make it happen sooner instead of later to secure the most value. If you’re planning to purchase a second-hand vehicle, you should wait the maximum time up to 2022. If you’re able to wait until next year’s beginning, you’re more likely to score bargains (or at the very least a fair price).
When Will New Car Prices Go Down?
The current trend in new automobile prices has coincided with prices for used cars. Due to the shortage of semiconductors and other reasons, the production of new cars has been slowing considerably. With fewer cars on the market and no demand increase, rates have started increasing.
According to a recent study by KPMG, U.S. dealer inventories dropped to record lows by the end of July 2021. new car prices were soaring past MSRPs. It is expected that the market will settle down, and prices will begin to fall as automakers become in a position to manufacture a normal quantity of new cars.
However, Clark states that this isn’t likely to happen in a flash, and the availability of new cars is extremely low.
“If you drive through new car dealerships, you’ll find that there aren’t any new cars in those areas. The new cars being produced are already being sold before they take them off the production line when they receive the chip required by the vehicle.”
Fortunately, the shortage of semiconductor chips is now working itself out. As the production of new cars gets back on track, we’ll begin to see a reduction in the cost of new and used vehicles.
Based on Clark’s forecasts and the latest industry data, This could start in 2022, and the market could begin to normalize towards the end of the year or at the beginning of next year.
- Read also: Are used car prices dropping in 2023?
It’s an extremely bad time to purchase cars. However, the market conditions will be improving throughout the year.
“The vehicle market won’t just all in one day be healthy, but the conditions will gradually improve through 2022,” Clark says. Clark. “The extreme distortions in the used vehicle market will ease before the new vehicle market comes fully into equilibrium, but those ultra spiked used car prices will ease gradually through the year, and the new car prices will be normalized by either the fourth quarter of this year or the first quarter of 2023.”
The longer you have to purchase a vehicle this year, the more advantageous it is. If you must purchase a car right now, take the time to review Clark’s advice on whether to purchase either a brand new or used vehicle on the market today.