Kelly, Will New Car Prices Ever Drop?!
When making a purchase as big as a car, it’s totally understandable to wait for a price drop before heading to the dealership. I get asked all the time - “Kelly, when will new car prices drop?! “. While it used to be a simpler answer, these past few years have made finding the ideal family vehicle for the right price much more difficult. Now more than ever the question stands: when will car prices drop?
Before we dive in, have you heard that The Car Mom Auto Show is back?! Yes, an auto show for Women! The Car Mom Auto Show offers families the opportunity to browse over 20 different popular family vehicles in a hands-on, non-salesy environment. Attendees will enjoy VIP activations (meet Kelly!), shop local boutiques, food, fun, playground for the kids and take advantage of some Mom Time Off (MTO!)
Today on the blog, I’ll be breaking down what goes into the pricing of cars, current inventory updates, and when we’ll start to see car prices drop.
What Drives Car Prices?
Before we discuss the nitty-gritty of current car prices, it’s important to understand everything that goes into the ending price you sign on the line for at the lot.
It’s a common misconception that the cost to build a car is the only contributor to its final selling price. Although it’s an important step to consider, many other external factors work together to drive the price up or down.
There are 4 main factors that contribute to current prices of cars:
Inventory available
Trade-in value
Manufacturer incentives
Dealer discounts
Before supply chain issues caused shortages in the car market, inventory available really helped consumers find their dream car for the right price.
More cars on a lot allows for more room to shop around. This eventually creating competition between manufacturers and dealers for your business. Discounts, incentives, and trade-in deals were almost down to a science. Unfortunately, this is not the norm right now!
Why Are Cars So Expensive Right Now?
The main reason cars are so expensive right now is because of a worldwide microchip shortage. While they may be small, microchips are used in every piece of technology in the world- including crucial aspects of modern-day cars. All the safety, comfort, and ease of driving family vehicles comes from these tiny metal pieces.
Thankfully, the past year has allowed the car world to start going back to normal. Microchips, car parts, and even tires are all being produced at a consistent rate. This is great for helping drive car prices down!
You may be thinking: when will car prices drop then? There is still a huge game of catch-up going on after losing out on millions of cars produced in 2020. These “missing” vehicles make availability still difficult, so there is less room for negotiation or to opt for a used car instead. For some makes models inventory is so slim “market adjustments” have been added to vehicles. Pay attention to the inventory levels of the vehicle you are looking. If inventory is plentiful you should hopefully get to pay MSRP or below in current conditions. However is inventory is tight market adjustments may be added- although not ideal its important to pay attention to the overall value of a car. For example a new Toyota Sienna is one of the most sought after cars currently. They are in high demand and low inventory- so I would expect to pay some sort of “market adjustment” on it. However since they are so in demand I would expect them to hold their value well.
Current Inventory Available
If you’re feeling a bit deterred by the car buying process right now, current inventory gets more promising each month! Cox Automative data analysis tools run frequent checks on the most popular brands and their models available, making it really helpful to start planning ahead.
These brands have plenty of inventory available:
Buick
Chrysler
Ford
Infiniti
Jaguar
Jeep
Lincoln
Ram
These brands still lack their normal inventory levels:
BMW
Honda
Hyundai
Kia
Land Rover
Lexus
Subaru
Toyota
Fallen in love with a specific vehicle but are not sure when to purchase based on the current inventory? Let me help! I offer personal consultations for 1-on-1 advice when it comes to all of your car buying options inside my program How To Save At The Dealership.
Here’s my take…
When looking at car prices the last three years, right now (July 2023) isn’t a bad time to purchase a new car. Car prices are higher now than in 2019, yes, but I don’t see us getting back there anytime soon. It’s an unrealistic comparison and could keep you from getting the car you want when it’s available.
In fact. Inventory is rising and prices have dropped since the peak of the pandemic. If you know what car you want and have planned for this purchase, I wouldn’t hesitate to buy. You don’t need to fear that car prices are going to drop drastically as soon as you drive off the lot - that isn’t what I’m anticipating.
When it comes to the car buying process, only so many aspects are in our control.
What we can control as the buyer:
Where you shop
The make, model, and year that you’re purchasing
Who your salesperson is (yes, you SHOULD choose your salesperson ahead of time!)
Our market research - why is this car priced the way it is? Are other dealerships offering a similar price?
The value of your trade-in - getting top dollar is key.
What we can’t control as the buyer:
The price of the car (We can definitely negotiate, but the dealership makes the final call.)
Dealership incentives
If cost is your biggest concern when it comes to buying a car, it will help to be more flexible on the year, make and model of your vehicle. In the current market, it can be tough to find exactly what you’re looking for at all - let alone at a deal.
While we can’t control new car prices, we CAN make the most of your trade-in to help with that initial down payment. I teach you exactly how to get top dollar for your trade-in right here.
So… When Will Car Prices Drop?
We’ve already seen some really promising signs of price dropping from multiple brands, especially ones that specialize in trucks. Unfortunately, some of our most beloved Car Mom picks come from brands still under normal inventory levels- meaning car buying has turned into more of a waiting game.
The biggest piece of promising news is microchip production will finally catch up during summer 2023. This means car manufacturing can produce quicker, dealerships will hold onto inventory longer, and you can find a car price that feels more affordable.
For now, our biggest piece of advice is to remain patient and begin getting quotes for your current car’s trade-in value. Now more than ever, affordable and reliable used cars are in high demand over any luxury used vehicle.
Do you have a specific car you’re waiting on? Let me know in the comments!