The last few years has been a tough time for automotive shoppers. Between COVID causing supply chain issues, decreasing incomes and used vehicle scarcity, car shopping has become more painful than ever.
While the new car market and the used car market are different from each other, we saw in the past two years how one can impact the other.
When new vehicle shipments ground to a halt from parts outages, labor issues and shipping backlogs, the used car market went into an out-of-control boom. Cars that were two to three years old were selling near their new retail price, and in some cases even higher.
Negotiations on price were futile and all the power was in the hands of the sellers. New cars, if you could even find the model you were looking for, were selling for thousands over retail, and sometimes even double for highly sought-after models. The sticker price became the starting bid.
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This situation damaged the credibility of some dealers, which spawned scathing social media posts by enthusiasts and even some policy change from automobile manufacturers.
In 2022, the market started to change for the better. The Manheim Used Vehicle Index recorded a 14.9% drop in used car prices overall. This was the largest drop since the index was started in 1995. While this is a welcoming statistic for a used car buyer, it still is not enough to make up for the high it came from.
As new cars continue to roll into dealers, prices will drop more. It will be a slow decline so patience is key if you can wait the market out.
New vehicle manufacturers are already dropping their prices to lure potential customers back to the lots. Even Tesla and Ford are dropping prices on their battery only models, with Ford sending refund checks to customers that recently bought their Mustang Mach E and F150 Lightning models.
The days of selling new cars over MSRP are quickly coming to an end.
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The biggest expectation I have from the past three years is that automotive manufacturers will change their strategies to better deal with supply chain issues in the future. It was painfully obvious that they were not prepared for a disruption like this. Unfortunately for car buyers, we will probably be paying a steeper price than usual for the next year or so because of that.
My advice for car buyers is to wait for the right car at the right price. If you must buy now and are going to keep the car for over five years, a new car will be your best bet, even at a higher price. When the used car market falls to a more realistic level, it might make sense to buy a car one or two years old to save some money. Do your research, shop around, and think over your purchase before you sign.
I’ll see you on the road!
Taylor Bryant is an automotives instructor for Augusta Technical College.
