Is the car price dropping now in the USA?

Is the car price dropping now in the USA?

At the time of writing (May 2022), the short answer is somewhat yes. But there are more things to consider. US is plagued by inflation, and the stock market is fragile. So, market forces are more at play than simply supply and demand. Car prices hit an all-time high in 2021 because of the fallout from the pandemic. In fact, according to this source, car prices rose in 2021 by 41% over 2019. Experts on CNN and CBS expect car prices to plummet to normal in the Q3 of 2022.

If you want to read more in detail, factors like chip shortage play a role here too. The good news is that the chip shortage getting better. As a side-effect and car prices would normalize soon in the latter part of 2020 too.

Economists are directing toward optimism but KPMG said that it is unpredictable. Though this study was from 2021, the following two infographics draw a good picture of the past and forecast into the future.

New and used Vehicles indices 1990-2011 US

Estimated Cumulative new and shortage

Source: https://advisory.kpmg.us/articles/2021/used-car-prices-could-crash.html

In summary, the consensus seems to point towards price normalization in early 2023.

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