Analysts warn of possible drop in used car prices in late 2022
A new report from Automotive News suggests that the current surge in used vehicle prices will stop at the end of 2022 and early 2023.
Using data and analysis from consulting firm KPMG, it is predicted that average used car prices will drop by around 20-30% as part of a return to a normal relationship with consumers. new car prices. Of course, that depends on the vehicle supply, which KPMG estimates will break even around October 2022 and through 2023.
Although it will take until the end of 2022 for the supply of new cars to catch up with demand, KPMG believes that used car prices will begin their downward trend before then. This could happen because KPMG predicts that the market will anticipate a greater supply of new cars and reduce used car prices to accompany it.
The decline which analysts believe is coming is going to be brutal. Used car prices have increased by around 42% on average compared to January 2020 prices at this time. It’s a giant move, and if it comes back down, it will have a huge impact. Those who have paid for used cars at Covid supply prices will have massively overpaid for the new value of their cars and will see their investments plummet quickly. It will hurt.
Other much less alarmist analysts are cited 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 hit the pre-pandemic supply until 2025. That said, Cox is still on. Notice that the peak used car prices will arrive between January and April 2022 and then slowly decline thereafter.
Even KPMG offers alternative scenarios to its main prediction. One suggests that inflation continues, causing prices to stay high indefinitely. And the other raises the possibility that the Federal Reserve’s response to inflation could cause some kind of kickback effect and totally stifle consumer demand.