MIAMI (NewsNation) — For those in the market looking to buy a new car, experts suggest pumping the brakes on any sales for at least a few months as analysts predict prices may plummet.
Car prices are at a record high right now, meaning more Americans are being priced out of the market.
A combination of inflation, global chip supply shortages and production costs are squeezing out everyday Americans. That’s making car-buying a much more exclusive club.
The average price of a new car in the United States hit $48,000 in March of this year, according to Kelley Blue Book. That’s about $12,000 higher than it was just five years ago. What’s straining shoppers’ budgets even more is rising mostly payments amid interest rate hikes from the Federal Reserve, making new cars harder to afford.
Research from Edmunds shows the average monthly payment for a new ride hit a record high of $730 in the first quarter of this year, about $80 higher than it was a year ago.
However, some analysts are now predicting a surplus of vehicles will lead to a price war, resulting in prices going down.
According to a recent UBS report, global car production is projected to exceed sales by 6% this year. That would leave an excess of five million vehicles that analysts said will lead to price cuts in order to get them sold off lots.
“And of course, anything that happens in the physical world like production in a factory, it’s going to take some time to catch up. So now what we’re seeing is there’s actually more new cars available than used cars, it used to be flipped-flopped,” Brian Moody, executive editor for Autotrader, said.
Americans hoping to save some money on a new car should wait until the latter half of 2023 to buy, especially since automakers are already preparing for those price wars.
“So right now, if you can be a little bit patient, my suggestion would be just to wait,” financial expert JB Brown said. “Because if you wait it out, and you get closer toward the end of 2023, yes, some of the manufacturer incentives and rebates will just be right there on the table.”
Ryan Bass and Devan Markham contributed to this report.