If you’ve been considering the purchase a vehicle, but waiting on prices to come down, your patience is starting to pay off.
Used car prices fell 5% over the last two months bringing the average used car price down more than $1,000 in December, the first substantial drop in more than two years. Tesla’s been getting rid of its Model 3 vehicles at prices 17% lower than they were in September, too.
“We’re still a long way from ‘normal’ but there are clear signs the elevated prices of the past two-plus years are coming to an end,” said Karl Brauer, executive analyst at iSeeCars.com. “It was easy to predict, given the macroeconomic factors we’ve seen over the past six months. With everything from inflation to interest rates hitting peak numbers, there was no way the upward pressure on car values could continue. The next big question is: how far and how fast will car prices fall?”
Who’s got the most affordable cars?
Over at Cars.com, its analysts decided to see how much the major automakers are taking the consumer’s quest for affordability to heart. What they found is that the car-buying market is chock full of cost-conscious consumers ready to buy.
Cars.com’s first-ever Affordability Report suggests that Kia, Chevy, and Ford offer the most affordable new cars for 2023, with Chevy leading the pack when it comes to trade-in value. Chevy was also recently found to be a brand that provides the best value.
Median Category Price
2023 Kia Rio S with Technology Package
2023 Chevy Trailblazer LS with Driver Confidence Package
Small Pickup Truck
2023 Ford Maverick XL with Co-Pilot 360 Package
2023 Chevy Bolt EV 1LT with Driver Confidence Package
What things should consumers concern themselves with?
ConsumerAffairs spoke with Jane Ulitskaya, Cars.com's editor to find out what things consumers need to focus on when they’re on their car shopping journey. Her bottom line? Budget, current interest rates, warranty options, and whether you have a car you are trading in.
“Take a hard look at your budget and compare how different vehicles you’re considering would impact your monthly budget, Ulitskaya said.
“Shoppers need also to consider how much money they want to put down and how long they will need to save for the down payment. According to a recent survey from Cars.com, two-thirds of new and used shoppers aim to save between three and 12 months for a vehicle and plan to save 10-\% to 25% of the final price before purchasing.”
Interest rates are a factor
Ulitskaya emphasized that consumers should spend some serious time thinking about interest rates, simply because they’ve jumped so much in the last year and the run-off of that is that a buyer could be looking at a higher monthly payment and pay more over the course of the auto loan.
Maintenance is another factor, but one that’s a softer concern for new cars than it is for used ones. Ulitskaya said there are three automakers who have gone all-out to beat the competition in the warranty arena: Hyundai, Genesis, and Kia which all offer 10-year powertrain and 5-year or 60,000 miles bumper-to-bumper warranties, much longer than those of other brands.
As far as trading in a car, Ulitskaya suggests shopping around with various dealers and getting offers in writing. “What most shoppers don’t think about is that you don’t have to sell to the same dealership you are buying your next car,” she said, noting that a brand dealership may be willing to pay more to keep the vehicle in the “family.”