Some sources, including a USA Today article today, are speculating this possibility. Opinions on why new car prices may be falling ?
If cars and trucks start to pile up on lots dealers will be willing to deal down the price and manufacturers might offer rebates to simulate sales.
Dealers have been adding additional dealer profit onto new cars for a while now. If those go away, sale prices will drop.
But as the article suggests, this is a guess.
I’m wondering why that might happen? Are Americans postponing buying new cars for some reason? It seems like if you need a new car , you have no choice but to buy one.
Don’t you watch the news? Inflation has increased prices on everything more than wages have increased. Costs more to eat, fill up your tank, rents and every other expense people have.
Credit card balances have risen, savings have decreased and people are tapping their IRAs for emergencies. Interest rates are at levels I haven’t seen since the 1980s. Makes car loans and leases very expensive. When money gets tight, people make their older cars last a bit longer and don’t buy as many new ones.
Take a guess. Are people postponing buying new cars? I’d say. Big price jumps, higher interest costs, supply issues, etc. lots of reasons not to buy. Need versus want. Likely not often need to buy and can be postponed.
Then you have 40+% of folks living paycheck to paycheck, ramping up credit card debt, and wages not keeping up. We have been there before and it can takes years to unravel again. Not to mention a labor shortage of qualified employees, and millions just choosing not to work. So yeah lots of issues.
Then I just read a cbs journalist is concerned about a major black swan event in 24. So all bets would be off. And emp attack, or 9/11 event, and who knows? With close to 2 million potential terrorists circulating within our borders anything is possible.
I keep hearing on the news that wages have been growing faster than inflation during most of 2023, although during the main pandemic I think the news said then that inflation was growing faster than wages. Maybe the effect of that on the consumer’s buying decision is delayed.
IMHO the reason new car prices may be dropping is b/c cars have become overly complex and this complexity adds to the price of the car, and has a even more deleterious effect on the repair prices. Cars owners are getting swamped by the repair prices on cars they purchased 3+ years ago.
Or, for people like me, they might decide to buy a new vehicle simply because they want the new, enhanced electronic features, or they simply want to reward themselves.
As my late mother used to say, “There are no pockets in burial shrouds”, so I choose to buy whatever I want at this stage of my life, rather than avoiding new technology simply to avoid spending a few bucks.
But, if you choose to differ… Vive la differance.
Your theory seems good providing you are certain you have enough money on hand to last to the very end (not to be overly depressing …lol). Many older folks may have enough to make ends meet now, but are uncertain if their resources will handle their long term care issues in the future.
I wouldn’t say I don’t like new tech, just not much for cars. I purchased an LED bulb for a desk lamp the other day, produces great color for reading, and only consumes 5 W, rather than 40 for the older type of bulb. And it seems the LED bulb manufacturers have figured out how to make them so they don’t cause as much radio interference.
I agree with your philosophy 100%. Ive calculated that my wife and I have enough to last us until I die (~5 years) as long as we stay in this house. If i were to develop a condition that required my placement in a nursing home I would take advantage of New Jersey’s new Medical Assistance In Dying act.
I’ve had nursing home insurance for about 20 years. Higher priced now but reasonably affordable then. I bought for both of us. Only pays for a few years but that is the average stay.
If you are poor, no problem. If you are rich, no problem. But if you are just comfortable they can bankrupt you.
@George_San_Jose1 What new car are you buying in 2024?
I do think new car prices will come down somewhat, for the simple reason that everyone who wanted a new car, and could afford the higher prices, has already bought one. Therefore, in order to keep moving product, the manufacturers will need to offer lower-cost vehicles going forward. This, of course, makes no difference for me, because new vehicles manufactured after the mid-2000’s contain features which I find unacceptable.
One of the reasons car shortages existed was chip shortages, which I think have cleared up. Higher inventories = discounts.
When my parents got to the stage of needing nursing home care, I realized that this type of insurance would be a very good idea for me. I had my parents’ Elder Law Attorney review the policy that was available through the teachers union, and she agreed that it was a good policy.
Naturally, the cost has increased over the 20 years or so that I’ve had the policy, but even now the annual premium is less than what one month in a nursing home would cost.
My goal for 2024 is to man-up, & determine if I’m brave enough to try out my previously purchased but never used MIG welder.
& I have an eye on a 73 VW Beetle … lol … biggest obstacle, ugly orange color. oh, and the seller is refusing to sell it …
Sounds like you’ll have a fun 2024
It’s quite possible the owner of the 1973 Super Beetle will eventually be worn down by your persistent offers to buy the car
Wages have outpaced inflation over the last 12 months (4.6% to 3.1%) and every month of 2023 except January (6.1% to 6.4%).
The federal funds rate was higher through most of 1995-2000 than it is today. 30-year mortgage rates were higher through most of that time as well.
But haven’t erased the 18.6% inflation from 2020 to 2022.
The average consumer cares little what the fed fund rate is. They only care what what their monthly payment is. While it is true that mortgage rates were higher in 1995-2000, it doesn’t compensate for the fact that mortgage interest rates have doubled in the last year slowing home sales.
And car loans, which is the point of this discussion, have almost doubled in the last 2 years.
If we look at the consumer confidence index, it was 101.0 in February 2020 and is 61.3 as of November 2023. If consumers are not confident in the state of the economy they won’t spend.
Percentage comparisons can be kind of misleading. A person making a meager amount of money to begin with gets a decent raise that represents a fairly large percentage increase. The person making a lot more money gets a smaller percentage but ends up with way more cash to spend. Meanwhile, the cost of goods is the same for everybody. The gas price goes up from $2.59 to $3.49 is far more impactful to the lower wage earner that got a higher percentage increase…
Don’t get me wrong but I think there are severe economic problems ahead if the current trends are not arrested. However our first mortgage in 1976 was 8 3/4 %. Of course not on a half million dollar house as today. 18% car loan reduced to 7% on the next car. And something like 2% wage increases. So yeah we made it but it was not fun for 20 years. We have not learned much from history, what expands or contracts the general well being of the populace.