A sharp slowdown in the prices of used cars in the US

New and used cars account for 7 percent. US inflation basket, until recently, however, accounted for as much as 1/3 of the increase in the local inflation. Now the prices of used cars in the US are falling due to the increasingly less affluent consumer wallets. In Poland, the prices of used cars continue to rise, but do not contribute to an increase in inflation.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Prices for used cars in the US

Soaring US used car prices fueled the surge in US inflation. The problems caused by broken supply chains for parts and cars themselves have given manufacturers and dealers a very rare pricing power. Now, however, this state of affairs is slowly changing, because Americans have less and less money in their wallets due to inflation. In addition, in addition to higher gasoline prices, American consumers also have to grapple with the delayed payment of the tax refund for 2021 this year.

According to data from Manheim, a global car wholesaler, the prices of US used cars fell 3,3 percent in March. compared to February, however, they are still 24,8 percent. higher than the year before. Last year, the same company recorded car price increases of more than 50%. y / y There are also big differences between the car categories. The least, because only by 10 percent. y / y, pickups became more expensive, while the most vans, by as much as 38 percent. y / y

Electric cars

Electric cars are also less affected by price braking. The declines are also visible in the results of companies from the automotive market. CarMax, the largest car retailer in the US, sold 2021 percent between December 2022 and February 5. fewer cars than a year ago, its financial costs related to bad car loans also increased. Similar demand problems also affect the new car market. Forecasts for global car production have been lowered due to lost demand and disruptions in supply chains (palladium, neon, wire harness) caused by the crisis in Ukraine, higher oil prices and the prospects of higher interest rates.

Chinese lockdowns also pose a risk of additional disruptions. However, more than 82 million cars are likely to be produced worldwide this year. This represents double-digit growth compared to 2021, with global demand reduced by around 10%. world production, for exactly the same reasons as the weakening of used car price growth. Obviously, the drops in demand are not evenly distributed, which can be seen, after the still high and unsatisfied demand for new cars in Poland.

The automotive market in Poland

In Poland, the CSO takes into account the increase in the prices of used cars only to a limited extent in its inflation calculations. It does not take into account transactions between individual consumers which account for a large part of the market. This is why, in official statistics, the prices of used cars in Poland during the pandemic increased only slightly. Although data from companies dealing with the market indicated that since its inception, the prices of used cars have also increased by as much as 50%.

Car makers are currently at their best times with the economic recovery on the one hand, with prices still high. Automakers are projected to see profit growth three times higher than the global average. These additional measures will help them in their capital-intensive turn towards electric cars. So it's worth taking a look eToro CopyPortfolio @AutoIndustry. As well as the wider automotive industry, from automotive retailers like CarMax to car financing companies like Ally to car rental companies like Avis.