Will US car prices drop in 2023? This is what the experts say
The US auto market continues to change, with prospective car buyers wondering if car prices will drop this year. Here’s what the experts say.
The US auto market continues to evolve. In February, JP Morgan noted that after new car prices reached an all-time high in December 2022, they were likely to remain above pre-pandemic levels, but with a slight drop within the year. Some factors that have developed since that period indicate that this will indeed be the case.
Will US car prices drop in 2023? This is what the experts say
According to GOBankingRates, some analysts predict that in the aftermath of the pandemic, an oversupply of vehicles will lead to a price war that will send car prices plummeting.
A recent UBS report estimates that global car production will outsell sales by 6% this year, leaving a five million-plus vehicle glut that will require price cuts to sell excess units (via Yahoo Finance). Those slashes in price tags are expected to take place in the second half of 2023, and automakers are already preparing to cut their prices.
According to experts, family car manufacturers are more likely to see a price cut, while electric vehicles could also take a big price hit.
Car prices are about to drop, an oversupply of vehicles will lead to manufacturers slashing prices. There are too many cars and not enough buyers.
— Andrew Lokenauth (@FluentInFinance) June 27, 2023
UBS reports that the production of cars is outpacing sales by 6%, this leaves about 5 million cars just sitting around, unsold. To…
The price of used cars continues to fall
Meanwhile, there is already evidence that used car prices have softened. Major segments of the auto market posted seasonally adjusted prices that were lower year-over-year, as well as monthly declines in the first half of June, according to the latest Manheim Used Vehicle Value Index.
Wholesale used vehicle prices (on a seasonally, mileage, and combination adjusted basis) decreased 3.2% since May in the first 15 days of June. The index Manheim’s mid-month used car value fell to 217.3, down 9.4% from the full month of June 2022.
Used vehicle prices falling off a cliff? Will be massive for June CPI data if the Manheim index is confirmed given used autos were one of the biggest upside drivers to May's Core CPI pic.twitter.com/zhwoNHfdhv
— Newsquawk (@Newsquawk) June 19, 2023
Additionally, the unadjusted price change in the first half of June decreased 2.6% compared to May, while the unadjusted price decreased 9.1% year-over-year.
The main segments, with the exception of sports cars, experienced price declines compared to May, with losses ranging from 1.9% to 4.7%. Sports cars had an increase of 0.6% since May.