If you are looking for information about what used-car sales are expected to be like in 2023, there are several key factors to consider. One is that interest rates are going to be quite high, especially when compared to new cars. This will mean that the prices of both new and used cars are going to decline, though only slightly. The other key factor is that demand for luxury pre-owned cars is expected to drive growth in this market segment.
Prices will decline by 2.5% to 5% for new cars
In 2023, car prices are predicted to fall by 2.5% to 5%, according to the latest J.P. Morgan research. This is a significant drop and will mean more revenue opportunities for auto service departments and parts departments. Despite this, some experts are skeptical.
Car dealers will still have to face higher input costs, and fewer new models will be available to sell. However, many buyers will benefit from the drop in price. According to Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, “pent-up demand is real.”
The supply chain for the auto industry was hit hard by the global pandemic. Prices for new vehicles spiked, putting pressure on used cars. Disruptions to the supply chain created a supply shortage, which led to price increases for new cars.
This prompted the auto industry to consider ways to limit production. As a result, the used-vehicle wholesale price index has dropped 15% in the last two months.
Fortunately, these disruptions are expected to ease in the future. While the supply chain will continue to be shaky, the chip shortage will eventually resolve.
In 2023, new car sales should decline, while used car prices are projected to decrease even further. Traditionally, cheaper options have increased as consumers demand affordable vehicles.
Demand for pre-owned luxury cars will stimulate market growth
Demand for pre-owned luxury cars is rising rapidly in India. The used car market is expected to grow by 10-12% to 44 lakh units in 2022-23. This is a good news for consumers.
Demand for pre-owned cars is increasing because of the high prices of new cars. In addition, people are becoming more conscious of their financial stability.
People are also on the lookout for options that combine luxury, comfort, and safety. In particular, they are opting for cars that are designed for the urban setting.
As the population continues to expand, used car demand is soaring. This is primarily driven by tier one and two cities. Moreover, online retailing channels are rapidly expanding. Various retailers are focusing on advanced technologies and digital sales processes.
Despite the rising price of new cars, demand for pre-owned luxury cars is growing. Buying used cars is a less risky investment.
Luxury vehicle automakers have experienced a boost in their sales in China. They have expanded sales in Europe as well. But the price of new cars has risen as input costs continue to rise.
Prices for pre-owned cars have strengthened by 10-15% over the past two years. Nevertheless, there is a healthy supply of old cars in the entry-level segment.
Interest rates are almost always higher than new cars
If you are in the market for a new vehicle, you might want to check out interest rates and financing options. You could end up saving thousands of dollars. Getting a lower interest rate can be a real game changer.
The Federal Open Market Committee (FOMC) sets the benchmark interest rate that banks use to determine their loan rates. However, the benchmark isn’t the only thing that matters. Typically, banks use a combination of factors to set their rates. A strong financial background and educational background will often qualify you for a competitive rate.
In addition to the Fed’s benchmark rate, you’ll also find that car loan finance rates have gone up a bit over the past year. Interest rates for used cars have actually gone up more than for new vehicles.
The Federal Reserve has increased interest rates six times in the past twelve months. But these hikes haven’t had a huge impact on transaction prices. That doesn’t mean that you shouldn’t be concerned. It may be time to get yourself a new car sooner rather than later.
As of October, the average interest rate for used vehicles was 9.6%. By comparison, the average interest rate for a new car was 6.3%.