Yahoo Finance Why Car Prices Are Declining More Than They Have in a Decade — Should You Buy?
There’s a lot of news about the economy, as of late, with inflation and prices on the rise, which continue to put a strain on the average consumer’s pocket book. However, there is a bit of hope on the horizon: car prices have actually been on the decline for nearly ten years and that means that it’s a wonderful time to go shopping for a new automobile.
Try This: 10 Cars That Outlast the Average Vehicle
For You: How To Get $340 Per Year in Cash Back on Gas and Other Things You Already Buy
“With the trends in the market right now, it’s a strategic time to buy a new car,” said James White, auto repair expert with Amazing Moves. “The conditions are really favoring the buyer and with proper homework and negotiation, one can get a deal that fits their financial goals. It’s a time when smart shopping could really pay off.”
There’s a few reasons why the cost of vehicles is going down, meaning that if you are smart in what you are looking to buy, now might be the perfect time to get in on a new car if it makes sense for you to do so financially.
Here’s what’s leading to this booming buyers market in terms of automobiles and why it might be the right conditions to buy a new car for less than you would’ve a decade ago.
Supply Is Up
For a while, the global auto industry was experiencing a shortage of vehicles to put up for sale on lots, in garages and online. Now, the supply has been re-upped and dealerships are trying to push out inventory to make room for restocking.
“This was a major problem during the pandemic which is why car prices have been so high over the past few years,” said Ben Michael, director of auto at Michael & Associates. “Now, those supply issues are largely fixed, so that helps bring prices down.”
Much of the past couple of years has been a roller-coaster ride for the auto industry with the supply chain issues having pushed up the cost of cars to unusual levels, White said.
“It was observed that there are some disruptions in the supply chain which is now passing through the system and as is always the case, this has led to a reduction in prices, which is very much appreciated,” he said.
White pointed out that “chip crises are easing since the establishment’s production lines have [stabilized], giving credence to the fact that they have met the accumulated market demands.”
“Now it looks more perfect because they are equal in the sense that the market brings together sellers and buyers,” he said.
Be Aware: 10 New Cars To Avoid Buying in 2024
Shifting To Electric
Gas is going to soon be in the rearview mirror, with most consumers setting their sights on the road ahead with electric vehicles.
“Increasing traction towards electric vehicles in the world turning towards sustainability has resulted in traditional combustion vehicle assets starting to show a faster decline in value,” White said. “Given manufacturers’ increased efforts towards mass production of EVs, they have mainly started providing several offers on some existing models to help clear out inventory.”
Michael agreed when he said “…the demand for electric vehicles has increased and there are even some laws that will go into effect in the near future regarding the manufacturing of EVs, so that has caused non-EV’s to decline in value to a degree.”
Global Economics
Many economic factors affect automobile pricing, not just domestically, but aboard. In the last decade, the reconfiguration of policies, trade and transitions of government have impacted the economy on a world wide scale, bringing car prices down in the process.
“With the decline in purchasing power due to inflation, softening demand for new cars put price pressure,” White said, pointing out how the market gets more competitive, dealers are willing to bargain and discount more.
“Spending more time in your car of course may signal that it is time to drive a bigger car or a brand new one but if you have had your current car for a relatively short time and you got it cheap,” he said.
Better Financing Options
Going to buy a car is different from buying a loaf of bread. Similar to a house, most people need to get a loan in order to pay for the car and with that comes financing terms. Today, those conditions have eased up a bit, making the ability to secure a loan to purchase a car much more accessible and less costly.
“Interest rates are the all-important factor in deciding on a car purchase nowadays,” White said. “While interest rates have risen, auto makers fight this by giving ultra-low APRs and extremely tantalizing lease deals. This makes financing a new car more accessible and affordable for consumers.”
Post Covid Markdown
In the early part of 2020, the cost of cars was going up — way up — as people around the world were locking down.
Along with inventory, higher interest rates on car and auto loans, Jamie Mitri, manager of Cumberland Hill Auto Sales and Service said “…the pricing of vehicles during Covid-19 pandemic skyrocketed and since most of the world has reopened, those prices have come down.”
“…I would say it is a good time to buy a used or new car this summer as auto inventory increases and the market continues to recover from Covid,” Mitiri said.
Time To Buy?
Look at your finances, your budget and your needs. If they all seem to sync up and you feel comfortable enough to purchase a new vehicle, you might want to start shopping. Just make sure to bring one final ace up your sleeve to seal the deal: cash.
“The automotive market of today is a pretty unique opportunity for the consumer, given that an individual has enough cash on-hand to purchase a car outright,” White said.
“The price level has come down compared to the previous decade, so perhaps there is truth in the statement that it is high time to get a new car,” White said. “Lower than before prices along with better inventory coupled with competitive financing options are pitcher options for buyers.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Why Car Prices Are Declining More Than They Have in a Decade — Should You Buy?
