Car Market Demand Is Eroding

This is a good thing for shoppers, if you can afford a new vehicle.

During the craziness of the covid pandemic a unique situation arose where buyers were so desperate they paid ever-increasing prices for both new and used vehicles. Books could and probably will be written delving into the many factors which helped drive car inflation, but the reality is those days are now behind us despite automakers, dealerships, and their allies in the media trying to convince us otherwise.

Do you have any of these risky driving habits?

The evidence of car prices eroding is out there, for those who want to see it. One comes via LMC Automotive, which points out that the growing recession is helping to eat into demand for new vehicles. At the same time, production numbers for new vehicles are steadily growing despite efforts by some OEMs to keep those down.

As I’ve pointed out before, LMC says all it takes is for some automakers to move to scoop up more market share by increasing production. We’ve already seen some overtures in that direction, so while GM and others try keeping supply low so they can maintain wide profit margins, eventually they’ll have to cave as competitors begin eating their lunch on overall volume. After all, even Ferrari and Lamborghini are concerned with sales volume.

LMC predicts the increase in vehicle supply and falling demand will intersect no sooner than the latter part of this year. The timing is, of course, debatable and subject to intervening factors which might be impossible to predict. That said, it looks almost inevitable that things will return to “normal” in the car market.