The COVID-19 pandemic caused car prices to soar between 2021 and 2022. In November 2021, an average car was 41% more expensive than before the pandemic. Prices are beginning to fall, fortunately. According to recent industry data, used car costs dropped by 24% between April 2022 and May 2022.
The good news is that car prices may return to normal in the coming year. Clark Howard, a money expert, says the situation will improve slowly throughout 2022.
This article will look at the current market for used and new cars and indicate when prices may drop.
Prices for New and Used Cars in 2022
The prices of used and new cars have risen to unprecedented heights since the pandemic struck the United States in 2012.
Many factors led to the current market for vehicles. Clark mentions the closing of factories early in the pandemic and the spread of COVID, which affected workers and slowed down assembly lines. Then there is the continuing shortage of computer chips. He claims that the result has been record high prices for new and used cars.
Clark recently stated that it was the worst time to purchase a vehicle since 1946, regardless of whether you choose to go to a used car lot with shockingly high prices or a new car lot. The vehicle market is stabilizing, and car prices will soon normalize by 2022 or 2023.
When will used car prices drop?
A used car can often be cheaper than buying a new one. Clark warns that you should not wait to find a deal. Even if you must make costly repairs to an older vehicle, you can get by not buying a car now.
When will used car prices drop? Clark predicts that used car prices will continue to fall throughout the year, although it is difficult to know.
Auto wholesaler Manheim published new data last month that revealed the used vehicle value index up to mid-July 2022. The graph shows prices starting to fall this year. We still have some way to go before the market stabilizes completely. The good news is that prices are moving in the right direction.
KPMG, one of the Big Four accounting firms, published a study on used car prices in late 2021. It concluded that it is difficult to predict when the market will stabilize completely. KPMG examined four scenarios that could lead to supply and demand returning to equilibrium in the study.
Each scenario shows that each system’s vehicle market will return to equilibrium between October 2022 and October 2023. Clark predicts that the market will slowly improve through 2022. This means that we will likely see lower prices for used cars in the fourth quarter of 2022.
Clark suggests you sell your used car as soon as possible to secure the best price. If you want to purchase a used vehicle, you should wait until 2022. You’ll likely find a deal if you wait until next year.
When will new car prices drop?
Trends in new car prices have been closely linked to used car prices. New car production has been slowed by factors such as the shortage of semiconductors and other factors. Prices began to rise as fewer cars were on the market, and there was no drop in demand.
KPMG’s study found that U.S. dealer inventories fell to an all-time low in July 2021 and that new car prices have soared beyond MSRPs. The market is expected to balance, and prices will drop once automakers can produce average amounts of new cars.
Clark claims that this won’t happen overnight and that the supply of new cars remains very limited.
The shortage of semiconductor chips is starting to improve. As new cars are produced, prices should drop for used and new vehicles.
When will car prices go down?
5 Tips to Buy a Used Car or a New One
You can save thousands of dollars by shopping for used or new vehicles. Although it might take you a bit longer to shop for a car, the savings could be thousands of dollars.
These are five tips by Clark Howard to help you buy a car on the current market.
- You can shop in a broader area than usual. Many people now travel hundreds of miles, or even thousands of miles, to purchase new cars. Different dealers have different ways of handling the shortage. You can buy a car at a dealer hundreds of miles away and then fly to the destination to pick it up. Clark suggests looking at all dealers within 500 miles of your desired car and visiting their websites to check for new inventory. You can then email several dealers to search for one that doesn’t mark up the MSRP. Clark used this strategy last year to save $23,500 by purchasing a vehicle from a dealer 90 minutes from his home.
- It would help if you didn’t spend more on a used vehicle than a new one. A new car may be cheaper than a used one. You won’t worry about the vehicle being in bad shape or having problems.
- Do not pay extra for convenience. Many dealerships have cars in stock with additional features you may not need. You don’t have to buy a car that is more expensive than you planned but has features you don’t need.
- It is possible to wait until a vehicle arrives before ordering. Clark waited six weeks last year for the car he called. Clark says that this was not unusual given the market conditions.
- Avoid buying right away if possible. Wait until prices drop before you buy a new or used vehicle. Clark says, “This is the right time to wait for the market to settle down.” Don’t buy a used car if you don’t need one.
