The Biggest Car Market Crash Of Our Lifetime Has Begun And Auto Prices Are Set To Plummet 88%
Over the past three years, we’ve seen the development biggest car price bubble in history, and now we’re about to witness the biggest car price crash in our lifetime, according to the experts. With a flood of supply hitting the market at a time consumer demand is rapidly cooling off, elevated prices are unsustainable, and that is true for both new and used cars. The collapse has already begun. In fact, today, we listed some models that have already faced massive price declines so far in 2023 and compiled some revealing data and some brutally honest forecasts about the auto market crisis that is now unfolding all around us.
In such an environment where buyers are being priced out of the market en masse, a crash is due, the question is merely when, analysts warned. We can already notice that a significant correction has started to unfold. But we’re being told that the collapse that is ahead will be unlike anything we’ve ever seen – even worse than what happened during the auto market crisis of 2008.
Easing supply chain pressures are helping to rebalance supply. But the thing is that we’re moving from a situation of no supply at all to a flood of inventory. That means the values of many vehicles are plummeting faster than anyone anticipated. A recent report from UBS estimates that global car production will exceed sales by 6% this year, leaving an excess of 5 million vehicles that will require price cuts to get sold off of lots, Yahoo Finance reported. The biggest example of this is Tesla’s latest price cuts for its new cars. The Model X lost over $14,000, or 23% of its value since the beginning of the year. The brand’s used car prices are falling too. For instance, used Model 3s seem to be taking the brunt of the ongoing downward trend, with their average price falling by $11,275 from $51,251 to $39,976 last month, according to iSeeCars.com.
Similarly, in 2022, the average price of a used Infiniti QX80 came in at $52,874. One year later, however, the big Infiniti SUV's average price on the used car market is down nearly $12,000 to a reported average of $41,094 in April, a 22.3% plunge. Other popular models that are about to experience major reductions in price include the new Nissan Frontier, which now costs around $39,833 and is expected to drop to $27,146 by the end of 2023. Volatility will be even higher in the used car market. Researchers forecast that a three-year-old Toyota Camry that is selling today for $27,404 is going to cost $16,548 before year’s end.
For all the people who bought one of these used models in recent months, the outlook going forward won’t bring them any relief. While the corrections that occurred up until now are quite remarkable, it’s important to note that used vehicle values increased by a whopping 88% since 2020, so they should brace for some pretty brutal declines in car values in the coming months.
All asset bubbles are bursting, with stocks and housing leading the downward march. Now, signs of a car market crash continue to emerge while unpredictable volatile outside factors threaten to make things even uglier, especially if we fall even deeper into a recession. The safe bet would be to continue to protect ourselves during the storm, and let the tsunami pass before proceeding.