Will Car Prices Come Down in 2023?

The car market has had a challenging few years as a result of the pandemic, global chip shortage, Brexit and now the cost-of-living crisis. With so many external factors at play, it is hard to know what the impact has been as well as what the outlook is for the year ahead. This post will tell you all that you need to know.

Car Market in 2022

It was hoped at this time last year that 2022 would be a better year for the car market and that a recovery would take place following COVID-19. While it has been a better year compared to 2021 (a very low bar), UK car registrations were down 8.8% in November compared to pre-Covid-levels with many looking to lease instead. While supply issues have been a major factor in recent times, now demand is starting to cool off as a result of the cost-of-living crisis.

External Factors at Play

There have been a number of external factors at play that have hampered the car market in the last few years. The pandemic caused serious issues with dealerships having to close for long periods of time, plus the global chip shortage created significant supply issues causing the cost of both used and new cars to skyrocket with low supply and high demand. 2022 has been another challenging year with the chip shortage still an issue, Russia’s invasion of Ukraine, lockdowns in China and now the cost-of-living crisis.

Outlook for 2023

So, what is the outlook for 2023 and could this be a good time to buy a car? It is hard to predict what will happen when there are a handful of external factors at play, but experts predict that 2023 will be a more stable year (compared to the last few). Car prices are already starting to come down due to lower demand from the cost-of-living crisis, plus supply chain issues are gradually resolving which should improve supply.

While supply and demand levels should normalise in 2023, there will still be other issues that could affect consumers. Inflation will continue to be a major problem in 2023 and it is predicted that it will not start to come down until the second half of the year, so consumers may still struggle to afford a new car. Additionally, high-interest rates could put off consumers from taking out a loan or buying a car on finance.

The car market has been rocked by a number of external factors over the last few years, which has disrupted the normal supply and demand balance. As a result of this, car sales have plummeted, and it is a working time for the market. It is hoped that the situation will start to stabilise in 2023, which should make this a better year to buy a new car compared to the last few years.