Mark Levin in Florida has one word to describe his recent two-month search for a car: “disgusting.”
The Palm Beach-area resident started car shopping in December in hopes of getting good prices on lots of new cars at the end of the year.
There was no bargaining. Instead, they heard the expression “MSRP plus” all too often: prices anywhere from $2,000 to $5,000 off the sticker price.
Levine turned to the used car market, finally driving a used dark gray 2020 Mercedes E Class with 6,300 miles in February, feeling okay about paying less than $50,000 for it.
Some compromises were made: The car had all the safety features the family wanted, but its lightweight interior, potentially showing a bit more dirt, was a bit worrying. But “the positives outweigh the negatives,” he said.
“It was really challenging, and it was draining for me,” Levine said. “I really didn’t think it was going to be this hard.”
still ‘too much’
The spike in wholesale prices of used cars in February has put retail buyers of used cars on notice, as tax-return scrutiny heats up the market.
Jessica Caldwell with Edmonds said used car prices peaked around April 2022, and are trending down a bit.
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The supply of new vehicles hit by chip shortages and other supply-chain problems has improved in the two years since the start of the pandemic. The shortage of new cars had pushed buyers like Levine towards used cars.
Still, there’s the question that from a historical perspective, used car prices are “still too high,” she said.
According to Edmunds, the average price of a used car this year was $28,106, up 38% from the January 2020 average of $20,409.
This compares to an average of $48,000 for a new car.
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This rally in the wholesale market for used cars in February will trickle down to retail prices in a few weeks, and is also showing some worrying signs for inflation.
Dealers typically acquire vehicles from auctions and it takes approximately four to six weeks for vehicles to be ready for sale, including shipping the vehicles as well as the time it takes to fix and clean them is included.
“Retail inventories of used cars are declining faster than we expected,” said Chris Frey, senior manager of economic and industry insight at Cox Automotive.
“I would say that if they stay low, it will soon stabilize,” Frey said.
Prices may moderate towards the end of April or thereafter, as inventory of new cars builds back up. While some shortages are still troubling auto makers, the situation is far better than last year.
Rivian Automotive Inc. rivn,
Last week reported mixed quarterly results and announced weak production guidance, pinning it on manufacturing snags.
Used car prices fell from July to January, in part because inflation eased from its peak in June.
Cars in general have become more expensive as they get bigger and loaded with infotainment, safety and autonomous-driving features.
American buyers have for years turned to SUVs and pickup trucks, which tend to be more expensive than sedans. Rising prices are only hitting as deals and zero-percent incentives have all but dried up.
Edmonds’ Caldwell said some relative deals for new vehicles have come back. “Not zero percent (interest rate), but 4% for 60 months, which is at least something.”
As for Levine, he’s about to buy another car, this time for one of his sons, replacing his 9-year-old vehicle with a new one. “I want to get more security features for that,” Levine said.
As far as returning to car shopping again, “I don’t want to, but it’s part of a challenge right now. The car we have now is on borrowed time.
Credit: www.marketwatch.com /