The cost of living is rising. With inflation, prices for just about everything is more expensive. What about cars? Visit local car dealerships and find out.
The automotive industry in America is one of the most lucrative businesses in the country. Unlike many European countries, most American states sell a ton of cars every year. Most places, cities even, are not as walkable as some would like, and America’s infrastructure is to blame for that one. But many people enjoy owning cars, and there is a passionate car culture in America that is like none other in the world. When it comes to cars and inflation, they play each other in a way that really hurts the consumer. When inflation gets higher, the price of cars goes up. And when the price of cars goes up, inflation gets higher. What are consumers supposed to do in this vicious cycle?
Cause and Effect
When Covid-19 shut most of the world down in 2021, inflation increased and the price of products, houses, cars, and property started going up. But there was a bigger issue. With many manufacturing plants shut down around the world, there was a computer chip shortage, an integral part of a car’s makeup, and this slowed down production. With slow production came low supply, and with low supply came high demand, and with high demand came higher prices.
Now, in 2023, consumers are ready for inflation to cool down and for car prices to fall. But car dealerships are not quick to lower their prices. Why? Car dealerships are still coming out of the massive supply shortage, and prices will reflect this shortage for some time. Until this shortage is truly over, and car dealerships can offer consumers the options they are used to, inflation will most likely stay rising. This is one reason why used cars have had a boom in sales over the last 3 years, subsequently raising the price of used cars, too.
Buy Used
If you are a consumer who needs a car now, maybe you’ll find some relief in the used car market. Many car dealerships have started offering used cars in order to offset their inventory shortages. Not only will these cars be cheaper, but they will help balance inflation over time. That said, at this current moment in time, used cars are more expensive than they should be.
Buy Electric
Many consumers have opted to buy electric cars during this period of inflation and high-priced cars. With tax breaks and other incentives, buying an electric car has never been more enticing. Plus, brands such as Tesla, Ford, and Hyundai are making massive breakthroughs with their EVs.
Wait to Buy Anything
If you can afford to wait, it will be in your best interest to do so. Car prices will go down eventually. In fact, some experts believe prices will fall throughout the rest of 2023. If you can wait, car dealerships will have cheaper prices soon.
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