Car prices could drop 20% this year. Here's where to expect the best deals first.
After years of high prices and low inventory, car buyers might finally see things go their way.
But shoppers still need to weigh their options if they want a deal, experts say.
Consider certain brands or vehicle types if you’re car shopping in 2023.
After struggling with astronomical prices and a shortage of vehicles, car buyers are finally seeing some relief.
Right now, supply chain crises are easing, bringing more inventory to dealership lots, while demand is stabilizing. As a result, JPMorgan says, used car prices could fall by as much as 20% in 2023, and new car prices could drop by 5%.
But shoppers will still need to hunt to find a deal. Industry car-buying experts shared a few tips for what segments and brands may offer the best — and earliest — deals in 2023.
(Hope you like minivans!)
Brands like Tesla, Volkswagen, and BMW are generally more expensive now than in the past, said Brian Moody, executive editor of Kelley Blue Book. But some of their competitors have backed off jacked-up prices.
"Looking for something like General Motors or maybe Hyundai, Mazda, Buick — some of those still have slight price increases, but just not as dramatic as some of the other ones," he said. Buicks, for example, are selling for roughly 2% below MSRP, Moody said.
TrueCar industry analyst Zack Krelle agreed, noting that domestic brands have had more success building up inventory.
"There are possibly some opportunities on the domestic brand side where they have slightly more inventory than some of the import brands," Krelle said. "The domestic brands have a 30-, 40-day supply, which is still very, very low compared to historic levels."
Stay away from SUVs
Not only does brand matter, but the type of vehicle a car-buyer is looking for does, too.
"There are some deals out there, if you happen to want a vehicle that is maybe lower in demand or if you're in a region that that particular vehicle doesn't sell as well as others," Krelle said.
Secondhand pickup trucks, minivans, convertibles, and coupes were all trading at below the average for used cars as of November, according to Karl Brauer, executive analyst at the car search engine iSeeCars.com.
"The biggest, fastest drop in prices in returning toward normal, pre-pandemic prices would probably be in those segments," Brauer said. More desirable SUVs will follow later on.
Pickup trucks, though popular in general, don't have great fuel economy, so prices have softened amid higher-than-normal gas prices, Brauer said. Coupes and convertibles are "fun cars" that shoppers stay away from when they're worried about inflation and economic turmoil.
Small cars, which haven't been historically sought-after and which may seem like an obvious road to a good deal, are now in high demand because of their relatively low purchase price and good gas mileage, experts say. Brauer expects that trend to continue into next year.
The pandemic may have turned the car market on its head. But the basic laws of supply and demand still hold true.
"Generally speaking, if you want to save money, I wouldn't be looking for the same thing everybody else is looking for," Moody said.
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