We can only conclude that purchasing an automobile in 2022 was an interesting experience. It's possible that you put off buying a new or used automobile until the market was more hospitable due to historically low inventory and higher than typical pricing. When will that be? If you're in the market for a car right now or plan to buy one in 2023, you undoubtedly have a few (or a lot) questions about what the coming year might hold.
1. Consumer concerns over the economy are likely to continue, which may affect buying decisions.
Since its peak in mid-2022, the Consumer Price Index (CPI) of the BLS has been declining. However, consumers continue to experience financial anguish and general worry. Consumer items are becoming more expensive, and attitudes toward short-term circumstances are still pessimistic. Even though items like fuel prices have decreased, daily household expenses are still very much on people's minds. This state of affairs is likely to persist long into 2023. As a result, customers could be less inclined to acquire expensive items like cars.
2. New car prices are unlikely to change, however, incentives and discounts may return.
According to trends, manufacturers' suggested retail prices (MSRP) for new cars will not change. They rarely drop significantly, and moving forward, EVs will be used more frequently in the mix (the current batch being more expensive than comparable ICE vehicles.) However, transaction prices that take into account dealer market adjustments and discounts can go down. Although incentives have not yet changed, the number of market adjustments (increases over MSRP) has begun to decline.
3. New vehicle inventory will continue to bounce back, however, used vehicle inventory may not recover as quickly.
Inventory of new cars is steadily increasing. The days of 3–4 million units lying on lots may never return, but inventory is growing. On the other side, used inventory has not had the same recovery. In the past, half of the Used sales were of late-model cars. The pool of available used automobiles has shrunk as a result of the recent decline in new vehicle production, which could put some long-term pressure on prices.
Unless and until owners are encouraged to trade in their cars, or unless and until purchasers are ready to take older cars, it is unlikely that the used inventory will increase. The good news is that recovered inventories ought to, in theory, assist in bringing the supply/demand ratio back to normal levels and ease some of the pressure keeping prices high.
4. New vehicles are staying on lots longer, meaning consumers may have more time to find the vehicle they want.
With inventory starting to reappear, new cars are already remaining on the lots a little bit longer than they have over the previous 1.5 years. The typical car lingered on a lot for around three weeks at the height of the inventory scarcity. Popular cars like the Toyota RAV4 or the Subaru Crosstrek would sell out in eight days or less. The typical duration today is more like four weeks.
Therefore, traffic is flowing more slowly. This should make it easier for potential purchasers to locate vehicles before another consumer grabs them. Although shoppers may have more time to shop, they may spend less time in stores overall.
5. As inventory recovers, some buyers will return to the market.
The bulk of in-market shoppers (scheduled purchases or car leases within a year) need purchasers (54%).
The most common justification given by respondents (21%) for saying they are shopping is because their present car is too old or requires maintenance. 17% more people claim that their household needs have changed.
More discretionary buyers might return to the market as the supply of new vehicles recovers, but rising borrowing rates will probably offset that. The most affluent consumers, who can either pay cash or for whom increased monthly payments don't present a hardship, will likely be the first discretionary buyers to return, according to our predictions.
6. More consumers than ever are considering EVs.
EVs have been the industry's favorite, experiencing unprecedented growth in 2022, with a 56% year-over-year increase in November 2022. Longer term, the EV market share has tripled in the past two years due to the introduction of new models that cater to various market segments. While Tesla has been the undisputed market leader for a while, traditional automakers are quickly narrowing the distance. For 2022, Ford and Chevrolet will emerge as the (non-Tesla) winners.
According to a recent poll, 59% of respondents claimed they are "somewhat" or "very inclined" to buy an electric vehicle (EV) for their future vehicle. In spite of drastically lower fuel prices, it is up from 52% in the spring.
