The year 2023 could bring much-needed stability to the car market after the Covid-19 pandemic caused major and continuous disruptions. Although some supply chain issues are likely to persist, rising vehicle supply could mean less pressure on the prices of older used cars. Falling prices at the retail level, albeit slowly, may provide some relief to financially-stressed used car shoppers. However, rising interest rates are making auto loans and leases more costly, which could mean that buying a new car, where interest rates are lower, may be more cost-effective than buying a recent model used one.
Despite challenges, electric vehicle (EV) adoption is expected to grow, with Americans purchasing over 800,000 for the first time, representing a 65% increase from 2021. However, lingering supply chain issues and material sourcing are keeping new vehicle costs high, especially for EVs. Although there have been a few models with decreases in early 2023 – Tesla, Ford Mach-E. The chip shortage is another challenge affecting up to 3 million vehicles next year. Despite these issues, new models from established and new brands could make EVs more mainstream and manageable, particularly if gas prices continue to rise.
Used car prices are expected to fall in 2023, mainly for cars over four years old, with the most significant declines likely. After reaching absurd highs in early 2022, used vehicle prices have fallen and are expected to continue easing. The chip shortage is keeping new car prices high, and in the past two years, high new car prices have sent buyers flocking to used models. In 2023, analysts expect both new and used-vehicle prices to diverge.
The whole car market is being reshaped, as is how cars are ordered and sold. Four significant stories will likely shape the industry in 2023: the continued growth of EV adoption, changes in how consumers purchase cars, new supply chain challenges, and the evolution of smart cars. As the market shifts, car dealerships must adapt to meet the needs of consumers, particularly as more people seek to buy and sell cars online. The industry is also expected to grapple with new challenges related to supply chain issues and the development of smart cars, which are poised to revolutionize how people drive. With all these changes on the horizon, it’s sure to be an exciting year in the car market!