Analysts warn of a possible fall in used car prices at the end of 2022
A new report from Automotive News suggests that the current used vehicle price boom will die out in late 2022 and early 2023.
Using data and analysis from consultancy KPMG, average used car prices are expected to fall by around 20-30% as part of a return to a normal relationship with car prices. new. Of course, this depends on the supply of vehicles, which KPMG predicts will break even around October 2022 and into 2023.
Even if it takes until late 2022 for new car supply to catch up with demand, KPMG believes used car prices will begin their downward trend by then. This could happen because KPMG predicts that the market will anticipate a greater supply of new cars and reduce used car prices accordingly.
The drop which, according to analysts, will be brutal. Used car prices are up about 42% on average from January 2020 prices right now. It’s a giant swing, and if it comes back down, it will have a huge impact. Those who paid for used cars at Covid supply prices will have massively overpaid the new value of their cars and will see their investments plummet rapidly. It will hurt.
Other much less alarmist analysts are quoted in Automotive News’ report. For example, Cox Automotive believes that used car prices will decline at a much more manageable rate, as it does not believe we will reach pre-pandemic supply until 2025. That said, Cox is still notice that the peak used car prices will arrive between January and April 2022, then slowly decline thereafter.
Even KPMG offers alternative scenarios to its main prediction. One suggests that inflation is continuing, causing prices to stay high indefinitely. And the other raises the possibility that the Federal Reserve’s response to inflation could cause some sort of feedback effect and completely stifle consumer demand.