Car prices are decelerating... slowly
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By Theunis Bates, Editor at LinkedIn News
Updated 3 hours ago
New and used car prices are finally starting to cool — but only slightly. The average price paid for a new car or truck in October was about $45,600, down from a record $46,173 in July. Improved inventory is helping buyers at dealership lots, but new auto prices are still 33% higher than before the pandemic. Meanwhile, the average used car sold for $31,000 last month, down about 1% from a May peak.
Industry analysts caution that it will be a long time before car prices return to pre-pandemic levels. Automakers don’t want to return to the days of excess inventory and big discounts, and the dropoff in new leases signed since 2020 has shrunk a key source of used vehicles.
Andrea Lisi• 2ndSenior Global Director | Commodity Trading | Complexity Economics | Quantitative Finance | Blockchain | Markets | Private Equity | Venture Capital | Fintech | Economist | CFA Lev III Candidate | 27K+ Followers6h • Edited • 6 hours agoFollow Considering that the US Consumer is very busy dealing with Food and Energy Inflation, it does not come to me as a surprise that the prices of discretionary items, like used and new cars, have started to come down. Said that prices will not ease anywhere near pre-Covid19 levels. Prices on new and used vehicles remain 30% to 50% above where they were when the pandemic erupted. The average used auto cost nearly $31,000 last month. The average new,$47,000. I think only affluent folks will be able to afford a new car during the next years. Not only mortgage rates have increased this year, but also interest rates on auto loans. Higher borrowing rates have compounded the problem. In January 2020, shortly before the pandemic hit, used-vehicle buyers paid an average annual interest rate of 8.4% but this month the average rate had reached 9.2%. According to the LA Times, higher prices and loan rates combined to push average monthly payments on a new vehicle above $700, millions of buyers have been priced out of the new-vehicle market and are now confined to used vehicles. The real estate market is de facto frozen, putting a lot of pressure on home builders. I fear the next bubble to pop will be in the Automotive Sector. Automakers will have to slash prices if they want to sell new cars, on the contrary, they will be buried with inventories. Please feel free to comment. I always value the opinion of my followers #economy #Finance #economics The Wall Street Journal #portfoliomanagement Bloomberg LP #interestrates #markets LinkedIn Auto prices finally begin to inch down from inflated highs latimes.com • 6 min read
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