Posted on 12/23/2021 10:57:20 AM PST by blam
Another month, another record (see prior records: here & here). New data shows used car prices continued to soar in the first half of December, suggesting inflation has been anything but transitory.
The Manheim Index, the most recognized wholesale used-vehicle price index by financial and economic analysts, reported that the wholesale used car index rose 3.1% in the first 15 days of December compared to November. The overall index has jumped a mindboggling 48.9% from December 2020.
“On a year-over-year basis, all major market segments saw seasonally adjusted price gains through the first 15 days of December. Pickups had the smallest year-over-year gains, vans had the largest at 63.3%, and both non-luxury car segments outpaced the overall industry in seasonally adjusted price growth. Compared to November, SUVs and vans had the smallest growth in the first half of December, while compact cars had the largest gain,” the report said.
Heading into the new year, Goldman Sachs chief economist Jan Hatzius provided clients with an outlook on the automobile market. He expects “further increases in new and used car prices during the first quarter of 2022, but outlines “new car prices peak in Q2 (vs. Q1 previously) and used car prices peak in Q1 (vs. December 2021 previously).”
Hatzius said cooling down auto markets will be a challenging task. Port congestion remains a significant problem and has only marginally improved in recent months. He said new outbreaks of the Omicron variant is a major risk to foreign automotive and semiconductor factories could derail the rebound in car production.
KPMG global head of automotive Gary Silberg is in similar agreeance with Hatzius and believes a turning point in vehicle prices is nearing. He told Automotive News that vehicle supply and demand would achieve equilibrium sometime between October 2022 and 2023, but used-vehicle prices would begin to fall before that point.
“In every scenario, we expect the market to anticipate the turnaround in the new-car supply situation ahead of time and begin repricing used cars before new-car lots are full and used-car demand returns to normal.
“In other words, a 20 to 30 percent plunge in used-vehicle prices is in the cards,” KPMG wrote in a note.
Relief for car shoppers is coming, but it might be in the second half of 2022, and don’t expect prices to return to pre-2019 levels.
values are indeed going up.
people expectations for their money are also going up.
ya, a 150K shytbox was 1000 bucks last year.
This year its 1500....
same goes with the higher end cars. I put my old F150 on my lot. I paid 23K for it with 73K on it.
it books for 20K with 190 on it and it’s been popular (it won’t be here for new years but I listed it for 16,500.
Hmmmmmm................. what happened in January 2021 that would cause such a huge upswing?....................... It’s a mystery........................
Stolen elections have consequences.
They wouldn’t be thieves if they didn’t steal your money too!
Car sales are an advance indicator of where the economy is headed months down the road.
this is what Scotty Kilmer preached a year ago...
I have a neighbor who owns a Jeep Cherokee 08, and it’s been sitting there for 5 years due to some massive repairs he didnt want to spend money on. Before COVID, the “highest’ he got was $500 due to damage also to the front. He offered it on Craigslist “not salvage” and it’s $5000 which is ridiculous.
i have the impression that any car already built and sold will be more desirable, then any car coming out of the factory with all those government imposed nanny devices.
I do not agree with the conclusion in this article.
We will NOT see a dramatic drop in used car prices because:
Inflation is making our money worth less...and
New cars are ridiculously expensive and too complex.
Complexity means more things can and WILL fail on these new vehicles.
The manufacturers are now building vehicles so complicated you MUST take them to a dealer for repairs. Those dealer repairs cost a fortune.
The search for used cars will probably continue to be about simplicity and good mileage.
Car prices will come down, just like real estate values when the fed jumps the interest rates up
Which will happen
I am so screwed.
We all are
Or if they force all new cars to be electric
A Gasoline car with a 100k miles still has lots of value, while an electric car with 70K has little value other than scrap because at that point you will soon have to replace the battery, which won't be worth it as for the price you just might as well just buy a new car.
So the poor who currently rely on buying the cheap 100K+ mile used cars will soon be screwed as they won't be able to afford a new electric car and remaining gasoline cars become more & more expensive.
My 20 year old car is pretty much worth what I paid for it 10 years ago. Still runs good, I may get it tagged as a classic in 5 years so I can quit with the emissions testing and just do safety.
Used car prices are a direct result of the scarcity of new cars which is caused by the scarcity of computer chips necessary in the production of the cars.
I am very friendly with the owner of the largest Toyota dealer in the Northeast and his inventory of new cars totals 34. In normal times he carries over 700 cars on his lot. And because Toyota awards its dealers cars based on a “turn to earn” basis he has more than any dealer in his area.
His used cars are bringing huge profits due to the extreme demand by customers unable to buy new, Most of their vehicles come from the auction and are off lease cars with very low mileage due to the lack of a need to drive any distance to shop in this area (Northern NJ, Bergen County). The average off lease (36 month) car has around 30,000 miles on it and many have less.
Me too and my car is a 2003 Buick Century with 75,000 miles. Yes...I’m the little old lady they talk about.
Good post.
What is happening to sales people? That’s usually a commission job.
With few cars to sell they must be hurting badly.
Gotta think they’ll skyrocket as implementation of OEM blow&go adds more unwanted crap to new cars.
Nobody in the industry is looking at that system.
It will be camera based with eye ball analysis.
Not always a bad thing.
Consumers are confident and spending in my area of Florida. Nobody sits around all day thinking about inflation when their home has 100k-200k+ in recently acquired equity. And near everybody wants a new truck/car. That will create a ton of demand.
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