With the automotive world such as it is now, tariffs and high interest rates, does anyone else see used-car prices going the same route as it did back during the pandemic?
Just curious, seeing how WE are the used-car ,experts... ;)
(...no politics, of course...)
If new car prices go up, so will used car prices.
In reply to stan :
Right now I'm seeing the opposite; I've been eyeballing 10-15 year old pick ups and I see dealers cutting prices.
I think the interest rates are hurting prices.
It seems so, but there is also a seasonality effect. People get their tax returns and often go car shopping. It seems that loan interest rates on cars might be dropping a bit, I know mortgages are and CD rates too. But I also have a feeling that tariff fears could be driving it too.
My personal opinion:
These are unprecedented times. There have been similar eras with similar issues, but not at this level, not at this combination, and the world hasnt been as interconnected as it currently is.
As a result, anyone that claims to know what is going on (including me) is just blowing smoke.
If things dont change, I do see a lot of Americans out of work/hurting for money and that causing major issues for a lot of markets.
I believe the following data points to be true. I ahven't taken the time to verify any of them and like all of the internet, i'm going to use these three pieces of anecdotal evidence as gospel.
Used car prices won't go up and hopefully new cars will start to bring back lower priced entry level models that extend the value prop by removing luxury features.
In reply to ClearWaterMS :
You don't think that $4-5k adding to new invoices would deter potential new car shoppers? It's not matter of fact that is just what is predicted and chips are still far away from being built in Ohio.
In reply to Mr_Asa :
People are out of work NOW and a lot of people in education and medical were laid off late last year in anticipation of change.
The thing with having people out of work, is that no matter what the market prices are, it depresses wages. More people competing for the same job. Doesn't matter if the price of a car stays the same if you lose your job because they can hire someone else willing to do it for 20% less.
Speaking entirely from a neutral yet automotive obsessed viewpoint, we could see a return to selling small cars again, and vehicles without an extra 20k in geegaws that even the people buying them don't want.
trigun7469 said:In reply to ClearWaterMS :
You don't think that $4-5k adding to new invoices would deter potential new car shoppers? It's not matter of fact that is just what is predicted and chips are still far away from being built in Ohio.
used car prices will go up when consumer confidence is strong and interest rates are low. right now I believe we are in the inverse; consumer confidence is waning and interest rates are still high.
During the pandemic,everyone was overflowing with cash, with no need to finance, used cars were a great idea up to the point where they were not because seller greed caught up.
Used car loans have always been been the deal. Realer for used cars. That is intentional. If I have the cash it is usually the correct answer. I don't think there are enough buyers out there with cash to drive the market up.
trigun7469 said:and chips are still far away from being built in Ohio.
Apparently the statute that was the catalyst for that might get axed. So they may never be built there.
Pete. (l33t FS) said:In reply to Mr_Asa :
People are out of work NOW and a lot of people in education and medical were laid off late last year in anticipation of change.
And it is probably gonna get worse, unfortunately
The used car market here is all over the place, and still hasn't recovered. I see a lot marked down, two to three times in many cases, indicating that they're not selling, yet others are still asking crazy high prices. And some things are just stupid. Spark prices are insane, and often two the three times what they would have been traditionally. Dealers are still asking over original MSRP on five year old Sparks.
Tariffs. I wonder who's gonna get the worse end of that stick?
Mr_Asa said:<snip>
As a result, anyone that claims to know what is going on (including me) is just blowing smoke.
Probably the most true thing to be said. If I had a dollar for every millionaire/billionaire pUnDiT on tv whose predictions were completely wrong, I'd be a wealthy man.
Remember the Bear Stearns cheerleaders just days prior to its total collapse?
All reports from the inside seem to be used cars will start going back up, because supply is still down. Less new sold in 2020/2021 means less used hit the market now.
With money getting tight, more people are in the market for used vs new, so more demand, less supply, here we go again.
Used cars and new cars are somewhat interchangeable products so increases in new car prices driven by government interference in the market will shift buyers on the margin away from new cars and towards used. That increases demand and will put upward pressure on the price of used cars.
Of course, that's balanced against the other economic factors -- tariffs make the economy less efficient and will hurt it overall, and higher interest rates will have a similar effect. On average people will have less disposable income and will likely defer car purchases more than they would have otherwise, which will put downward pressure on the price of used cars.
Which one will be a larger effect than the other? I dunno, we'll have to wait and see! I expect it will vary somewhat on the particular types of used cars (import vs domestic, high vs low end vehicles)
NOHOME said:During the pandemic,everyone was overflowing with cash, with no need to finance, used cars were a great idea up to the point where they were not because seller greed caught up.
Used car loans have always been been the deal. Realer for used cars. That is intentional. If I have the cash it is usually the correct answer. I don't think there are enough buyers out there with cash to drive the market up.
During the pandemic, production slowed to a crawl, so the only people who had money were outbidding each other for the available products. Not just cars, but bicycles, computer equipment (right at a time when people were turning to online gaming for their hobbies), etc.
It didn't help that places like Carvana were buying used cars for more than new cars were selling for. I remember people buying new cars, driving them for a little, then selling to Carvana for a profit. That really screwed up the automotive markets.
Mr_Asa said:Pete. (l33t FS) said:In reply to Mr_Asa :
People are out of work NOW and a lot of people in education and medical were laid off late last year in anticipation of change.
And it is probably gonna get worse, unfortunately
Ironically, in a few cases, the people laid off decided to be stay at home moms or dads because their previous income was close enough to babysitter costs that they decided, screw it, I'll just stay home.
That's better for the kids, but now that's two incomes gone - the parent, and the babysitter lost business.
Steve_Jones said:All reports from the inside seem to be used cars will start going back up, because supply is still down. Less new sold in 2020/2021 means less used hit the market now.
With money getting tight, more people are in the market for used vs new, so more demand, less supply, here we go again.
That also depends on if you want a 5 year old SUV or a 30 year old enthusiast car. Someone looking for an Escape isn't going to a cross shop Nissan Z31s.
Okay, someone who isn't on GRM isn't going to cross shop a newer Escape and an old 300ZX.
(Don't remind me that Z31s are way over 30 years old)
In reply to Coniglio Rampante :
You can bet against Cramer and usually make money. Guy is a fool
Peabody said:Tariffs. I wonder who's gonna get the worse end of that stick?
The working class.
adam525i said:Peabody said:Tariffs. I wonder who's gonna get the worse end of that stick?
The working class.
Weird automotive trivia: a lot of European countries' displacement taxes had a start in trying to keep cheap American cars like Model Ts from nuking their fledgling auto industries. Especially the Model T.
People in the US complain about the chicken tax, do people in Italy complain that automakers would make special 2l versions of cars that were 2.2-2.5l elsewhere? (Also, I WANT one of the Audi 2.0 five cylinder cranks, but gosh it's hard to find Italian market engine parts)
Steve_Jones said:All reports from the inside seem to be used cars will start going back up, because supply is still down. Less new sold in 2020/2021 means less used hit the market now.
With money getting tight, more people are in the market for used vs new, so more demand, less supply, here we go again.
Yup. Though all the real last of the severe supply issue cars should be coming off lease soon. 2023's will start rolling off soon. Right now a ton of people are upside down on equity due to terrible deals they made during covid. Interests rates spiked and banks were happy to let them roll negative equity into new loans since it meant moving them from a 2% loan to a 8% loan. That starting happening in 2022. We are going have a ton of people starting about now that will have a even worse negative equity and banks won't refinance it this time around since the rate is the same. I think we're already starting to see new car demand crash due to that and job insecurity. People who would normally would be buying new cars are going to be stuck. If you sell if you need to come up with a lump sum, which isn't happening. If you crash you're probably going to reenter the market at a lower price point, but probably older, not an off lease car. Depressed new car prices, probably lower demand overall, lower off lease availability. I'd guess the market for slightly older cars goes up? low off lease supply would balance depressed new car demand. More people overall are probably looking for cheap in the 5-10 year old range?
In reply to theruleslawyer :
Another interesting thing is that at my previous job, we had people spending 10-12k on maintenance and repairs on their old cars because they went to look at new cars and found that the only offerings were SUVs, that they didn't want, and everything needed a 6 week training course to learn how to use the radio and HVAC controls. So they'd rather shove money at a 97 Century or whatever than buy something new that they don't want.
One person wanted to replace his Ridgeline. He found that a new one was over $1000 a month. Even used newer ones were crazy. So he updated all of the maintenance then had a body shop replace the rockers.
There is a large untapped market for simple vehicles that are also not Sherman tanks. It will probably stay untapped until people get fed up with $60k vehicles en masse.
I'm voting with my dollars. Saturday I have an appointment to buy a yet sight-unseen Prius for $1000-$500.
This will be a repair flip.
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