It’s no secret that the market for both new and used cars has been unstable for the last few years. At times, new car inventory has struggled, while prices for used cars have seen record highs. If you’re in need of a new vehicle in 2023, the question becomes whether you should search for one in the new or used market.
New Vehicle Prices Are Still Higher Than Usual
Rising interest rates and chip shortages have contributed to new car shortages as well as higher prices on new cars. The average price for a new car increased in November 2022 to about $2,250 more than a year ago. The average price for a new car is nearly $50,000, which definitely has an impact on most people’s finances.
A variety of factors have contributed to the continued rise in prices for new cars. One reason is the chip shortage. Chip production still hasn’t returned to pre-pandemic levels, which is contributing to the lowered inventory for new cars. Low inventory often means that prices go up on remaining vehicles.
Many buyers are looking to replace their current cars, which is also part of why prices are still high. Competing with buyers willing to pay over MSRP for a new car can be challenging. High-interest rates are another factor that can make finding a good deal on a new car difficult.
Prices Are Fluctuating
Even though new car prices are higher than usual, in March, they fell below sticker for the first time in a while. At the same time, used car prices began to rise. In other words, dealers are more likely to make deals and advertise discounts than they were two years ago.
Prices remain historically high, but the good news is that they’re now in steady decline. Prices for used cars, however, are creeping up again. Limited inventory is likely to push them up further into the summer. What does this mean for your search? Let’s take a closer look at what to expect.
What To Expect
If you’re a new car shopper, you can still expect higher prices than a few years ago, but dealers now have enough supply to make deals and sell for under MSRP. If you’re in the market for a new truck, you’re in luck as manufacturers like Ford and GMC amassed a backlog of trucks that they now have to discount. On the other hand, Honda and Kia are still having trouble keeping popular models in stock, which means they’re selling at higher prices.
If you’re shopping for used cars, you can expect an average price of $26,213, but the prices are expected to go up from there. Used cars are also in short supply at many dealerships. It’s even more difficult to find used cars under $15,000. Dealers have the hardest time keeping these in stock.
The verdict? New car shoppers should hold out for more price drops in the latter half of 2023. User car shoppers should probably strike now while prices are still somewhat low. They’re expected to go up by summer.
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