Car Prices to Ease in 2023
Report shows used models in particular to fall as new-car inventory improves.
Prices dealerships pay for models at auctions hit a high in January and fell throughout this year.
IMAGE: Getty Images/welcomia
Used-car prices are projected to continue falling in 2023 as new-vehicle inventory rises and the market cools off.
A J.P. Morgan report predicts that prices will drop 10% to 20% over the coming year after likely peaking this past January. New-car prices are projected to decrease 2.5% to 5%.
The report by the data analytics firm cites the Manheim Used Vehicle Value Index, which shows that the prices dealerships pay for models at auctions hit a high in January and fell throughout this year.
“There are some glimmers of normalization, with prices finally easing somewhat, though conditions remain far from normal,” said J.P. Morgan Lead Automotive Equity Research Analyst Ryan Brinkman. “Looking ahead, we expect much less moderation in new vehicle prices than in used vehicle prices.”
Both new and used car prices soared during the pandemic as supply-chain scarcities, particularly for chips, shrank new-car inventories. Some used models’ value appreciated and they sold for more than their MSRP when new.
The report said that the average new-vehicle price in the U.S. was elevated 6.3% year-over-year in September. Average used-vehicle prices were up 42.5% that same month compared to February 2020, just before the pandemic emerged in the U.S.
Lower prices may be offset next year, though, by rising interest rates, which increase loan amounts, and by falling consumer confidence.
Originally posted on Auto Dealer Today
More Auto Finance
Dealerships Are Paying the Price for Extended Car Loans
Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.
Read More →
Trade-Ins in Negative Equity Reach New Heights
As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.
Read More →
Auto Credit Plentiful
June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →