Youtube has plenty of "experts" saying the car market is in trouble.
Seems production is up, and the chip shortage is ending. New car inventory is doubled from a year ago.
Used car prices are falling every month at the wholesale level. Interest rates are climbing, foreclosures on used cars are climbing too, and banks are reducing loan allocations for used cars.
Stimulus money is over, and inflation will cause more defaults on loans. So used cars prices will crash, and new cars will be tougher for more people to buy, given higher interest, and lower trade value.
Anyway this "story" is a popular topic on youtube now. So, if it is true, cars should be cheaper by spring. Many are saying new car incentives will be very soon.
Local Chevy dealer has a nice 2015 Tacoma for sale. It is listed for 30K. MSRP 8 years ago was 26,355. Aged like a fine wine.
If new cars are going to be hard to buy, it doesn't make sense that used cars will crash. Used cars went up like a rocket because you couldn't buy new.
Plus, used car availability is tied to new car availability on both ends.
If new cars aren't within reach, people don't trade, that limits the used car supply. If a guy actually needing another can't buy new, he buys used instead. Pulling from the already limited supply.
Eventually, it works it's way down the price scale, with traditional new buyers buying off the top, pushing the people who might buy there to move down a tier.
That happened last time.
Used selling for more than new, clear down to the $2500 car suddenly costing $4000.
High interest will affect used cars more than new.
You can more easily get, and get better rates, on new car loans.
This won't stop used car purchases, but it may push people down the price scale.
A new dealer told us 2 months ago he was seeing a big uptick in people stopping in to sell a car. Most, trying to get out of a loan that inflation had suddenly made burdensome. Unfortunately for them, many had bought the cars at inflated prices and not payed them down much. Now, they are trying to get out when the market is down. 2 years of payments, and they are still way upside down.
I guess im looking out farther?
My ideas kick in as your scenario plays out.
If we are both right, a guy running a car he likes but doesn't think he wants to keep for more than a year or two might want to trade up sooner.
