Car Market Update: Prices Fall to 2 Year Lows (More Downside Ahead)

Car Market Update: Prices Fall to 2 Year Lows (More Downside Ahead)

in today’s video we’re covering Vehicles
so I’m going to give you a new car
market updates a used car market updates
we’re going to cover electric vehicles
and also gasoline prices because I don’t
know if you heard but President Biden
and the White House they’re talking
about taking more oil out of our
strategic Reserve to bring down gasoline
prices so let’s start with the new car
market so this is a chart of new vehicle
average transaction prices so basically
new car prices this is coming from Cox
Automotive this is for the past 12
years take a look and you know I’ll be
the first to admit that this looks awful
you thanks to
inflation recently prices have been
coming down as you can see again I
totally agree with you that the damage
has already been done but prices are at
a 2-year low I know that when I when I
say that that sounds like a joke you
know after looking at this chart but hey
you know it could be worse right so I’m
just trying to be optimistic
here okay so why are car prices coming
down so it’s for a variety of reasons
I’m going to give you three reasons why
reason number one is that the Federal
Reserve stopped printing a ton of money
back in 2022 they realized that
inflation was getting out of control
reason number two less people can afford
to buy new cars because of higher prices
and higher interest rates so there’s
less demand and reason number three more
inventory is building up so there’s more
Supply so here are the new vehicle stats
average list price at $ 47,2
40 total new vehicle inventory is at
2.77 million this is up 46% compared to
12 months ago so that means that there’s
just so much more Supply right now
compared to last year and day supply
stands at 72 12 months ago this was at
55 so let’s take a look at the new
vehicle inventory the green bar is the
average 72 days Supply so look at how
much inventory Chrysler Jeep and Lincoln
have so if you’re if you’re trying to
buy one of their vehicles you can push
harder for discounts or incentives
because they really need to move
inventory right now but take a look at
the inventory levels of Honda Lexus and
Toyota so those with that it’s a
different story so I would still try to
push but if they barely budge this is
the reason why okay now with that being
said and after you seeing that you know
that right now there’s much more
inventory compared to last year and for
that reason dealerships are offering
larger incentives to move
inventory so this is coming from Cox
Automotive the Blue Line represents the
average discount last month it was at
5.9% of the vehicle price
now it’s jumped up to here the red
circle at 6.6% in just one month so Cox
hasn’t updated this chart yet but that’s
quite the jump in just one month but you
know what I’ll tell you this there’s
still room for improvements because take
a look at where it was pre pandemic it
was in the 8% to 10% range right so it’s
nice to see it bounce from 2% to its
current
6.6% but the discounts are still weak
compared to the
Past okay so incentives are slowly going
back up and prices have slowly come down
therefore vehicle affordability is
getting better however it’s still less
affordable compared to prepandemic okay
so if I had to summarize the new car
markets then I would tell you this are
new cars still expensive and the answer
is yes of course are they more
unaffordable compared to pre pandemic
the answer is yes but it’s slowly
getting better because of falling prices
and bigger incentives because of rising
Supply so that’s the situation and let’s
look at the used car
markets so here’s the overview for used
vehicles average list price of
$2,540 this is down 4% compared to 12
months
ago average mileage on a listed used
vehicle is at 69,00 232
miles inventory stands at 2.22 million
and day supply is at 44 okay now I have
to give you quick clarification on the
supply situation it’s so important that
you understand this because there’s
month over month and year over year so
here’s the supply
situation a month ago the day supply was
at 53 the supply since then so a month
ago has fallen to
44 but this is normal this is because of
it’s thanks to tax refund money this is
known as the spring surge so this is
expected but if you compare the
situation the supply situation to a year
ago the supply is up
6% so if you want prices to come down
then this is still good because supply
has gone up so here’s the three-year
price chart for used vehicles as you can
see from its peak in 2022 it’s slowly
grinding down but it’s the same story
used vehicle prices are still much more
expensive compared to pre- pandemic and
I will tell you this a little bit of
good
news so prices on used vehicles are
expected to keep on declining so here’s
what’s looking good dealers pay
wholesale prices at auction to buy used
vehicles and the wholesale prices are
still falling so if they pay less to get
their inventory to get to get the used
cars then they can afford to sell sell
them for Less so that’s still looking
good and inventory is still going up not
as sharply as new cars but it’s you know
it’s still looking better now let me
tell you about the situation with
electric vehicles so EVS before we move
on to gasoline
prices so more EVS are being sold in the
US however the growth rate is falling
rapidly so here’s something I want to
show you something that’s very
concerning the first quarter is January
February and March right in q1 of
2022 EV sales increased by 81%
year-over-year so that’s some rapid
growth in q1 of
2023 EV sales increase by 46%
year-over-year so it went down by 46%
that’s still very impressive in q1 of
2024 so this year EV sales increased by
2.6% year-over-year so the growth rate
is still positive but it’s stalled
dramatically however growth is growth
and the EV Market is still growing Cox
Automotive is forecasting that 2024 is
going to be a record year for Ev
sales that’s because new models will hit
the market EVS will have higher
incentives and there’s going to be more
EV
infrastructure and it also helps that EV
prices are still in Decline
year-over-year EV prices are down by
99.7%
okay now let’s talk about gasoline
prices if you’ve noticed which I’m
guessing that most people have gasoline
prices have been going back up because
the price of oil has been going back up
but the White House is making us more
promises so they’re saying they got this
they said that they will make sure gas
remains affordable heading into summer
okay so basically if gasoline prices
keep going up then the plan is to take
more oil out of our strategic Reserve to
keep gasoline prices
down I want to point something out to
you I don’t know what your opinion is on
this but I’m going to give you
mine this strategic Reserve it’s really
supposed to be used for emergencies and
we’re talking about if we’re at war or
if there’s a crisis or oil embargo so
Bas an emergency
right I would say not because of an
election you I’m just being honest here
I mean this is this plan to me it’s just
so wrong and it’s so obvious on why
they’re prepping to do
this I’m just going to be
straightforward even if you support
Biden you know that this is wrong you
know that we shouldn’t be doing this
like let’s be honest here but this is
just my
opinion this is how much oil we have in
our strategic reserve it took our
country about 40 years to stockpile this
amount again this is for
emergencies and look out look at how
much President Biden has drained it in
the past few years he undid about 30
years of work just like that and he
wants to take more
out the problem with oil I would say is
that we can’t print it like we print
dollars and if an emergency happens I
guess we’re going to be in a little bit
of trouble here so listen the national
average for gasoline is about 360 to 370
a gallon right now so trust me I know I
know that much more expensive in the
west coast and the Northeast even in
Illinois I know it’s pretty bad in
Hawaii and Alaska as well JP Morgan is
estimating that if the national average
hits $4 a gallon then that’s when the
that’s when the administration is going
to start taking more oil out of the
reserve the White House did not give
exact figures of what the plan is but
it’s around that price point that people
are expecting the White House to take
action so that’s your car market update
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