2023 will hopefully be the year of new beginnings after all the problems of the last two. This includes looking forward to the future of the auto market, which has suffered heavy blows in the previous few years due to shortages, EV and emissions law changes, and the rapidly-fluctuating prices of used cars.
How the Used Car Market is Looking Heading Into the New Year
Financial experts like Forbes and TransUnion have weighed in with their predictions for the used car market in 2023, with some good news and some bad.
The Good News: Inventory Recovery and Stabilizing Prices on Used Cars
Automakers are finally recovering from the microchip shortages from the beginning of 2020. The shortage led to nearly two years of reduced new vehicle inventory. With new inventory finally back in stock, used vehicle numbers and values are returning to normal.
This means that more cars will be available in general, prices will go down a bit as supply starts to match demand once again, and, hopefully, the market can recover. And signs of that are already happening, according to financial institutions.
Signs of Recovery
According to TransUnion, auto loans and leases for new and used cars should increase by nearly 5% next year—from 27.5 million in 2022 to just under 29 million by the end of 2023. The lease and loan increase in 2023 would bring numbers back above 2019’s, which were 28 million before shortage issues began.
In addition, Forbes has reported that prices for used cars will fall in 2023. Vehicles older than three years have had price drops as high as 15% since the beginning of 2022, and prices for all used cars could go down as much as 20% throughout 2023.
So if all this good is happening, what could be so bad?
The Bad News: Pricing Out People with Less Than Ideal Credit
TransUnion discussed affordability in the same Consumer Credit Forecast that mentioned auto loans, and the outlook is grim for consumers with subpar credit.
During the vehicle shortage, dealerships prioritized consumers with good credit scores and high incomes. These shoppers typically could absorb the increased price of available new and used cars. With interest rates still high and the auto market recovering slowly, subpar credit consumers are still being priced out of formerly affordable vehicles.
Based on current financial projections, there’s no sign of this changing in 2023, meaning many low-income Americans will have as much trouble getting a car next year as they have the last two.
Now is a Good Time to Start Shopping for Used Cars
For anyone that’s been waiting for used cars to become more affordable before buying, 2023 may just be your chance! But next year will be more of the same for many others unless something unexpected happens in the next few months.
Check back for more updates on used cars in the New Year, so you’ll know when it’s the best time to buy!
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