Since the pandemic, there’s been a lot of ups and downs in the car market. From prices to inventories, it’s been a roller coaster ride, whether you’re in the new or used car market. The big question when we buy cars is whether there is any end in sight. Will the car market ever go back to the way it was, or are we looking at a new normal?

What Happened to The Car Market During the Pandemic?

Car prices skyrocketed throughout the pandemic mostly because of the global chip shortage that created havoc on inventory levels in 2020 and 2021 when the world shut down. People couldn’t get new cars, so they turned to used cars when they needed a vehicle. This increased used car demand well beyond the available supply, driving up used car prices to unprecedented levels.

What’s Happening to Car Prices Now?

After a few years of sticker prices heading toward astronomical levels, new and used car prices are dropping. But the cost of cars will probably not go as low as we are all hoping, and definitely not as low as it was before Covid. Changing economic conditions will help lower the price of a car, but the increasing cost of the goods needed to build a car will keep them higher than expected.
Some of the factors that have an effect on car prices include overall inventory, interest rates, and inflation concerns. The rising interest rates make it more expensive to borrow money, and buyers are concerned about inflation, making them less willing to put large amounts of money into big-ticket items such as new cars.

New Car Market Prices Are Down

The good news when we buy cars is new car prices are no longer increasing. This is partly due to the increased supply. Manufacturers are no longer facing the supply chain issues that were problematic during the pandemic. Lower demand for new cars is also helping to reduce prices. Dealers want to move their inventory, so they are lowering their prices.

Used Car Market Prices Are Down Too

So, the predicted sharp drop in used car prices didn’t happen as expected, but there has been a significant price decline. If you’re looking for used car prices similar to those before the pandemic, you probably won’t see it though. While there was a drop in used car prices, rising interest rates and inflation fears are starting to drive the price back up. Buyers who would normally buy a shiny new car are keeping money in their pockets by buying used instead of new ones until they feel more confident about a recession.

So What is the New Normal?

There is still reason to have hope when we buy cars is there is a light at the end of the tunnel. The car market is more consumer-friendly than it was just a year ago. Buyers have more choices in both the new and used car markets. So, as long as you keep an open mind and do your research, you can find an affordable vehicle.