‘Auto makers are building more expensive vehicles’: Why you should not buy a new car in 2023

Dan Smith

There are always good reasons why most people don't buy new cars. Such purchases can set you back years as high monthly payments delay building the savings and investments you'll need later.

After two years of shortages, empty new car lots and high prices, you might expect 2023 to be the year dealers are generous. Think again.
Analysts Mizuho Americas, led by Vijay Rakesh, said on Dec. 19, "High interest rates, energy prices and funding rates impacting affordability will create a challenging automotive end-market globally towards 2023. expected,” he said.

Michelle Krebs, executive analyst at Cox Automotive, said while vehicle inventories are rising, Toyota TM -0.71% 7203, -0.39% and Honda HMC, -0.87% 7267, -0.20% New car sales are still low. One reason for the higher prices is that "new car buyers tend to be wealthier, so automakers are making more expensive cars."

Thomas King, president of data and analytics at JD Power, said this month, "Inventory conditions improved slightly in the fourth quarter, but supply is well below levels to meet consumer demand for new vehicles.

“New car transaction prices continue to rise, but at a slower pace than earlier this year. The average price in December will be $46,382, up 2.5% from a year ago,” he added. rice field.

The Cox Automotive/Moody's Analytics Vehicle Affordability Index hit a new low in November, with the median income needed to buy a new mini car at 43.3 weeks. Rising interest rates are driving some borrowers with lower credit ratings out of the market, Krebs said.

"The average new car price in December hits a record $46,382, up 2.5% from a year ago. — Thomas King, President of Data and Analytics at JD Power

In the longer run, better quality and durability is bad for everyone, says Burt Hurvich, executive vice president of New York public relations firm Mount & Nadler and a self-described car enthusiast and collector. said it was an idea. To buy a new car, even high-end buyers.

He suggests buying certified pre-owned vehicles from direct dealers. If you want to buy a used Ford car or something like that, go to a Ford dealer. He gave an example where he or his family bought his two-year-old low-mileage car at a savings of over 50% on his new car price.

Taking this idea a step further, Hurvich emphasizes the importance of human relationships if you want to keep maintenance and repair costs down. The added complexity makes it difficult for individual mechanics to purchase diagnostic equipment, so they are more likely to go to the dealer for service on modern cars. To keep repair costs down, he says, "It's important to build trust with your dealer's service people, and they'll do more for you than anyone else." he says.

Krebs points out that in today's car market, it can be difficult to find the latest model used cars at attractive prices.

All this means that the car market can take another year to settle down, so you should wait to buy your next new or used car if you can.Keep your new car for a few more years Or it may cost much less to repair.

If you have to dive in, "you have to compromise," Harvitch says.

“If you have to buy a car, you have to expand your research,” says Kebs. “Be more flexible with brands and vehicles.” She added that buyers who had been sticking to SUVs are considering cars again because of high gas prices. Ford F, -1.41%, General Motors GM, -1.51% Stellantis NV STLA, -0.36% Unit Chrysler has shunned cars in favor of SUVs and pickup trucks.

All of this means another difficult year for car buyers. Can you wait? Is your old car running well? Should we really make this big financial move in 2023? availability makes purchasing easier.

Also read: Only buy shares of the strongest companies to make money in 2023, including the 'cash flow kings', says this 5-star fund manager