There’s good news and bad news if you’ve been waiting for inflated used-car prices to fall before purchasing a set of wheels. Auto repair shop owners need to be fully prepared to manage such a workload because used cars are more popular than ever. And used cars break down more often. How can they prepare themselves to handle such work on a large scale? The answer is very simple! They need the best trailer and RV repair software in the USA.
This software will help them manage their database and keep track of all the cars being repaired in their repair shop.
First and foremost, the bad news is that used car prices will not drop overnight and will never return to 2019 levels.
In the last two years, used cars, especially those with many miles on them, have become increasingly expensive due to a continuing shortage of computer chips. The chip shortage has reduced the number of new cars automakers can manufacture and send to dealers.
It is predicted that used automobile costs will begin to fall in 2022. The obvious follow-up question is “when?”
The country’s largest supplier of used automobiles is Cox Automotive, which owns Kelley Blue Book, Autotrader, and Manheim Auctions. Let’s look at what the experts have to say to find out:
- According to Cox Automotive, prices for wholesale used cars are expected to peak between January and April of 2022.
- According to Black Book data, wholesale prices are “softening” as we reach the end of 2021, suggesting that prices are likely to decline in 2022.
- In October of 2022, used-vehicle prices could plunge by 20 to 30 percent, according to KPMG.
But as the prices drop, the workload for auto repair shops will rapidly increase because people would want to get their used cars repaired. They would want their second-hand cars to function smoothly and look as good as new.
It’s critical to realize that each used automobile sold in the United States has two prices: wholesale and retail prices. Dealers must pay for wholesale used vehicle prices for inventory, whereas retail used car prices are what we pay at the showroom.
Wholesale used car prices:
According to Black Book data, wholesale used automobile prices climbed by up to 50% in 2021, but retail prices have only increased by 35%. Wholesale and retail pricing has an intrinsic and clear link, and retail prices often track the change of the wholesale market.
Prices for wholesale used cars have been softening recently. According to Black Book:
“The softening trend continued this past week, with the overall market slowing the rate of increase, sales rates declining, and more segments reporting decreases in prices compared to the week prior.”
The wholesale used automobile industry looks to be leveling out. This is a positive indicator, but retail costs will most certainly continue to climb for the foreseeable future. This is due, in part, to dealers who purchased used automobiles at inflated wholesale rates and will keep them until they can find a retail consumer to acquire them.
As interest rates are so low right now, dealers are unlikely to be motivated by “turning” their inventory to reduce borrowing payments on the vehicle.
The best way to profit during this time is by keeping an eye out for the increase in pricing. And by keeping track of what you have in your inventory. Your trailer and RV repair software help you do exactly that.
Retail used car prices
While wholesale automobile costs are down, we predict retail used car prices to rise through the first quarter of 2022, especially during tax season. We also expect wholesale prices to rise (although more slowly) in the first quarter.
Credit is widely available to consumers. According to a recent Federal Reserve poll, several financial institutions have relaxed their lending rules.
As a result, we anticipate that customers will continue to have relatively simple access to finance for vehicle purchases. This will also keep retail used car prices high because dealers will find financing arrangements that get their consumers comfortable monthly payments.
It can become an easier task for the dealers if they simply use their auto repair software containing the best trailer and RV repair software properly.
Used automobile prices will continue to rise throughout the “spring selling season.” By the summer, we anticipate some evidence of price decreases in wholesale and retail used automobile pricing.
Prices may remain expensive if new vehicle manufacturing is impeded in 2022, but evidence points to automakers having overcome the worst of their production challenges.
Price drops on used cars will occur in the fall of 2022
As we study the automotive scene, it becomes evident that the fall of 2022 marks the most likely moment for used vehicle prices to decline in 2022. Historically, used cars depreciate the greatest in the fall and winter months.
This seasonality, together with increases in new car production and projected interest rate rises, could eventually put downward pressure on used car prices.
We cannot account for the possibility of government tax breaks for electric automobiles. While Congress has yet to enact legislation containing EV tax incentives for 2022, there is widespread anticipation that it will.
The proposed credits would dramatically increase consumer demand for new and used automobiles counterbalancing the downward impact on used car prices.
There are also many unanswered questions regarding modern automobile manufacture. While some manufacturers, like Toyota, have issued press statements indicating that they have overcome their production issues, only time will tell if this is the case.
According to Boston Consulting Group, new vehicle production will not satisfy demand until 2025. How much new car inventory will be available in 2022 remains unanswered.
If manufacturers cannot boost new car supply by 2022, used car prices may continue to rise. Our best prediction is that automakers will gradually enhance their new car supply during the year.
Conclusion
With everything mentioned above, it is predicted that the prices may fall for used cars during the fall of 2022. This can be a great advantage for auto repair shop owners if they decide to use this opportunity properly and stay updated with good auto repair shop software containing the best trailer and RV repair software in the USA.