According to this article used car values are set to drop substantially. If you can hold off, wait awhile and save some money...

https://jalopnik.com/used-car-values...rop-1848251627

 

We all know this is coming so condolences to all those that have paid thousands over MSRP for their recent purchases

 

Also condolences to those who could've sold but didn't, and missed out. lol. a Ford dealer offered me 46k for my car which places me at 10k equity. but nothing really i want to get but maybe another ES or an NX hybrid. so i just said forget it. i'll just enjoy the ES

 

What's scary is the rate of buyers rolling over negative equity into new loans hasn't decreased in 2021. Which means there's a financial reckoning coming for a lot of folks.

 

Shame on the lenders that never learn their lessons.

 

For me the used car values allowed me to buy a $50,000 car and only finance 35,000. Yes I paid MSRP for the new car but received $4000 more than I paid for my trade-in ithat was three years old. Any other year they would’ve barely paid off my trade-in, instead I had about $12,000 equity…lol

 

I sold my 2017 ES350 to Carvana in June for a price that was $5000 more than what they had offered me for the car a few months earlier. Since that time, I've been monitoring Carvana prices for the 2017 ES and for a few other cars. In the past two weeks or so, I've noticed that prices have actually gone up by another $1000 or so compared to where they had been for the last few months. It may well be the case that prices will be dropping soon, but I don't think it is happening yet, and I don't expect to see it happen until the chip shortage is over and manufacturers are able to supply dealers with new car inventory at levels that used to be the norm.

 

"KPMG estimated vehicle supply and demand would achieve equilibrium sometime between October 2022 and 2023, but used-vehicle prices would begin to fall before that point." No one really knows when the used car prices start to come back down to earth but it isn't cooling down right now. We are living through some strange time line so if things change then this is out the window. They will have to feed their model new data and come up with different prediction.

 

I'm not convinced they're right. This seems to be somewhat of an article of conventional wisdom. Ultimately it depends on two assumptions:

1) The chip shortage, supply chain snafus, and COVID factory stoppages will end soon.
2) Incomes will be healthy enough that people can buy new instead of used cars.

I don't see either of those happening anytime soon. Strapped people who can only afford used cars will continue to put pressure on used prices, and a continued pinch in new car supplies will fail to relieve that pressure, in my opinion. These are not normal times, but that doesn't mean a year or two from now will be, either.

 

If anything factory stoppage in some part of the world will probably get worse before it gets better due to the new variant. I am waiting for a new product to arrive and I just got a notification that it has been pushed back due to a new lock down currently in effect for Dong Guan (a manufacturing city next to Shenzhen and Hong Kong) where our vendor source some of the parts.

 

New vehicle availability is still severely constrained, and there are huge empty parking lots for rental cars at virtually every rental car facility.

IMO, this shortage (new and used) isn't ending anytime soon, LOTS of pent up demand out there that has to be satisfied before things START to return to normal.

 

Anyone who thinks that the car pricing situation or the economy in general is going to return to "normal" before we have some success in controlling COVID is living in a fantasy world.

I'm now thinking of the situation with professional sports as being a sort of "canary in the coal mine". With the NBA, NHL, and NFL canceling numerous games or, in the case of the NHL, suspending all play, teams are having numerous outbreaks among their players. And, if players are getting infected, I have to wonder what is happening with fans in the stands. Considering that large numbers of people, many of whom are not vaccinated, are gathered in close proximity for 3 hours or more, and many of them are not wearing masks or wearing them properly, I have to wonder about how many of those people are getting infected during every game.

And, if basketball, hockey, and football teams can't safely play games, it is unrealistic to think that auto assembly lines, other manufacturing facilities, and other businesses are going to be able to return to normal operations. Sadly, just about everything related to experiencing a return to "normal life" is dependent on getting the COVID situation under control.

 

Those are good points. Plus as people return to work and their daily lives after the holidays after gatherings etc. there will most likely be further spreading etc. Things won't return to normal anytime soon and car prices etc. will continue to be volatile. I've been checking offers from CarMax, Carvana and Vroom on one of our cars since the end of July and they've gone up $3,000-$4,500 since then.

 

Used values are a bubble. I bought my 2020 ES cash in late summer 2020 for 10k off MSRP, 47K car. This is after rebates and dealer discount. Selling high and buying high isn't great unless you really need a vehicle.

If you're leasing none of these car makers are allowing 3rd party buyouts, which is nonsense. If you have an extra car, sell it now before prices drop.

 

COVID and its effect on supply chain won't be the only thing in 2022. I think geopolitics is going to throw another monkey wrench into the mix. I am going to take a wild guess that Putin will invade Ukraine in early Q1 with his 100k Russian troops amassing at Ukraine's doorsteps right now and his bff, Xi Jinping, of China will probably invade Taiwan shortly thereafter. Either case it is going to spook the markets.