Will US car prices drop in 2023? This is 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.

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.

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.