Prices in the auto market for new and used cars have risen steadily since the beginning of the pandemic. To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
After years of shortages and soaring prices, the auto market is getting back to normal — slowly. Inventories of new vehicles for sale are still nowhere near their pre-pandemic average. But availability is improving, giving car shoppers a better selection and a shot at a halfway decent deal.
New car sales will hit 15.5 million this year, up from 13.8 million in 2022 and the most since COVID-19, but still 9% lower than 2019’s 17 million. Demand is robust, even with prices up 20% from before the pandemic for the same model vehicle with comparable features. Despite interest rates rising from about 4.5% on loans to buyers with good credit to 7% or more, and monthly payments for loans on new cars that now average $725, sales are rising. Crimped vehicle production during the pandemic led to lots of elderly cars that need replacing now.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
It’s not just consumers who are shopping. Fleet operators are back in the market, too. Sales to rental agencies and other commercial buyers are back to 18% of total sales. Rental agency fleets shrank during the pandemic and need restocking.
If you’re in the market, here are some things to keep in mind, per Ivan Drury, senior manager of insights at Edmunds.com: You’ll have some more leeway to negotiate. But finding deals won’t be easy. Offers like attractive financing, price breaks or favorable trade-ins vary by dealership, more so than usual. So, it pays to shop around, especially when trading in an old car. If you don’t like the offer from the dealer selling you a new car, don’t be afraid to pass and get other quotes. Salespeople expect it now — they’ll still be eager to sell to you.
Be practical about what you need vs. what you want. You’ll get a better price if you stick to models that don’t have every new feature or haven’t been redesigned for a while. Dealers may be more eager to move those cars. It also helps to be open to multiple brands. Some, such as Toyota, Honda, Subaru, Kia and BMW, are still short on inventory relative to the industry average, giving buyers scant room to negotiate.
Breaks on financing are out there. But read the fine print. Offers of low rates often require accepting a three- or four-year loan, which saves you interest but means that you’ll have a higher monthly payment. Sometimes, slightly higher interest rates are available on longer-term loans. But you’ll have to ask. Dealers don’t trumpet them.
The hottest segments now: compact and medium-size trucks. Don’t expect any breaks on pricing there. Ford’s Maverick small pickup is so popular, it’s sold out for the 2023 model year, for instance. Toyota’s Tacoma remains as in demand as ever.
If you’re shopping used, expect prices there to stay elevated, for years. A lack of inventory jacked up prices during the pandemic, and it’ll take time for enough new cars to sell and hit the used market — bad news for bargain hunters.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Read more
-
Why Uber Stock Is Volatile After GM's Cruise AnnouncementUber stock is swinging this week following news that General Motors is restructuring its Cruise unit. Here's what you need to know.
-
UnitedHealth Stock Falls as Lawmakers Eye Insurers, PBMsUnitedHealth stock is continuing to fall Thursday after the introduction of bipartisan legislation targeting PBMs and healthcare giants. Here's what to know.
-
Don't Sleep on Japan's Economic TransformationThe Letter After almost three lost decades, Japan — one of the world's biggest economies — is finally showing signs of life.
-
Start-ups Trying to (Profitably) Solve the World’s Hardest ProblemsThe Letter More investors are interested in companies working on breakthrough science to tackle huge societal challenges. The field of deep tech has major tailwinds, too.
-
Will lower mortgage rates bring relief to the housing market?The Kiplinger Letter As mortgage rates slowly come down here's what to expect in the housing market over the next year or so.
-
The Big Questions for AR’s FutureThe Letter As Meta shows off a flashy AR prototype, Microsoft quietly stops supporting its own AR headset. The two companies highlight the promise and peril of AR.
-
China's Economy Faces Darkening OutlookThe Letter What the slowdown in China means for U.S. businesses.
-
Should We Worry About the Slowing U.S. EconomyThe Letter With the labor market cooling off and financial markets turning jittery, just how healthy is the economy right now?
-
Kiplinger Special: How Businesses Should Budget for 2025Kiplinger Forecasts From fuel to AI software subscriptions, here's what you can expect to pay next year.
-
Intel Braces for an Even Tougher Road AheadThe Kiplinger Letter Amid a long, costly turnaround, Intel resets expectations again. Its new woes raise questions about U.S. industrial policy and global chip competition.
