If you’ve been watching the vehicle market, you know that car prices have been dropping on some models, just like money expert Clark Howard predicted. Here’s why:
“The vehicle market has been going through a slow, steady healing process,” Clark says. “The number of vehicles on dealer lots has gone from basically nothing to — for some vehicles — extreme over-inventory,” Clark says.
That has led to lower prices on used vehicles, which are averaging around $34,000.
What wasn’t in the forecast though is a recent development that may soon reverse the lowering price trend for vehicles in the near term: an auto strike.
Yes, labor woes are afoot in Detroit and elsewhere as the United Autoworkers of America (UAW) union continues to talk with Detroit automakers to resolve a widening strike at key Midwestern auto plants.
Why May Car Prices Increase?
Clark says you’re likely to hear a lot of commentary about how it’s going to cost us more because of whatever large settlement that Ford Motor Co., Stellantis NV and General Motors Co. reach with the labor unions.
But the good news, regardless of what the pundits are saying, is that labor woes don’t and won’t dictate car prices, says Clark.
“The reality is about what happens to the stockholders of those companies,” Clark says, referring to the traditional Big 3 Detroit automakers. “If they’re not cost-competitive, the market is so hyper-competitive that people will just go buy another brand.”
What Should a Car Shopper Do Right Now?
Faced with the prospect of car prices possibly going up in the short term, but decreasing over the long term, a vehicle shopper may be wondering what to do right now. Clark suggests you stand pat if you can.
“Keep driving what you’re driving, because the reality is, we almost always tire out of a vehicle, way before it’s tired out,” Clark says. “Being happy with what you’ve got is a better idea than getting something new or new-to-you used because the pricing cost of both the purchase and the money you borrow to buy that vehicle will eat up your monthly budget.”
Want to keep your car on the road? Check out our simple vehicle maintenance schedule.
Final Thoughts
As the auto strike continues, there’s a very real possibility that vehicle prices will temporarily increase as a result. Clark says this is because the automakers want to tie vehicle prices with labor costs.
“But ultimately the labor costs mean nothing to what you and I pay because the free market will set the value for different brands and models,” Clark says. “All that really matters is what you and I say as customers.”
What more vehicle advice? Read our guide to find how how much your car is worth.
