The US auto market is experiencing significant deflationary pressure, with both new and used car prices falling sharply. Wholesale used car prices have dropped to their lowest levels since March 2021, down 24% from their peak and 22% from another measure, which is expected to lead to further declines in retail prices. Economists warn that this could trigger a deflationary spiral, where consumers delay purchases in anticipation of even lower prices, thereby reducing demand and increasing supply. Fundstrat analysts predict that new car prices could fall by as much as 16%, returning to pre-pandemic levels. This trend is also impacting car insurance prices, which are decreasing alongside vehicle prices. The deflationary trend in the auto market is seen as a significant signal to the Federal Reserve regarding the broader economic outlook, according to CoxAutomotive.
Big deflation happening in new car prices and car insurance. Great news for consumers and probably a signal to the Fed that the knife has started falling and they better catch it soon before it's going too fast. https://t.co/TDwmCQX4lc
FUNDSTRAT: β.. If new car prices fall back to the 50-year trend, this is a fall of -16% .. a huge decline and would bring prices back to pre-pandemic levels. β.. This is already happening with used car prices .. we expect used car prices to fall as much as an additional 24% ..β¦ https://t.co/pvVk6S501Z
Wholesale used car prices are now at their lowest levels since March 2021, down 24% from the peak. Should lead to continued declines in retail prices in the coming weeks. https://t.co/l5IYmkeySJ https://t.co/unQkMselYi
Wholesale used car prices are now at their lowest levels since March 2021, down 22% from the peak. Should lead to continued declines in retail prices in the coming weeks. https://t.co/l5IYmkf6Ih https://t.co/jO2qkSvEKh
US auto "market at inflection point because consumers expect prices will keep falling. Economists call this aΒ "deflationary spiral"...consumers delay purchases w/expectations of lower prices, which reduces demand, builds up supply & leads to the lower prices..." @CoxAutomotive