Is there still a car shortage in 2022? (2023)

FAQs

Will the car shortage get better in 2022? ›

While the worst of the car inventory crisis might be behind us, automotive analysts project that chip shortages and other limiting factors will curtail production till 2023. Car sales is expected to surge in the second half of 2022 and may rebound to pre-covid levels, for better volumes in 2023 and 2024.

Furthermore, rising interest rates have cooled down the car market. In this context, new car shortage is easing and supply is improving; thus, consumers should expect further price reductions in 2023.

Americans planning to shop for a new car in 2023 might find slightly better prices than during the past two years, though auto industry analysts say it is likely better to wait until the fall. Since mid-2021, car buyers have been frustrated by rising prices, skimpy selection and long waits for deliveries.

“The good news is, we forecast that after 2022, a year of declining auto originations, largely hampered by lack of inventory, we expect originations to grow 4.6%,” in 2023, said Satyan Merchant, senior vice president and auto business leader at Chicago-based TransUnion.

As new-car production improves, demand for used cars will ease up and prices will continue to fall in the new year. The firm estimates that used-car prices will drop 10%-20% in 2023; new cars, on the other hand, are predicted to see a modest decrease of just 2.5%-5%.

You're likely to find cars for sale at dealerships during a microchip shortage — but inventory may be low, and you could run into some difficulty getting the exact car you want if it's a newer model. Don't count on much of a discount, if any.

The chip shortage has pummeled the global auto industry for years, depressing dealership inventory levels and driving up new and used vehicle prices. But experts from AutoForecast Solutions say that by the end of 2022, the semiconductor shortage won't be nearly as bad as it was last year.

“We're going to get a lot more semiconductor capacity in the second half of 2022 – we're nearing the end of the supply crunch. However, capacity still needs to be qualified for use in the automotive industry.

Used car prices have likely peaked, but new car prices are set to remain elevated through end-2022. In 2023, prices are expected to decline by 2.5% to 5% for new cars and by 10% to 20% for used cars.

Will car prices go back down? ›

Car shoppers have faced sky-high prices for more than a year in part because of high demand and tight inventory. But 2023 may finally bring some relief. As demand stabilizes and inventory improves, prices are expected to ease.

When it comes to purchasing a new or used automobile in the next few months, experts say the longer you can wait, the better. Americans who have postponed purchasing a car for the past two years are finally getting some good news.

The issues causing the shortage aren't going away any time soon. Current word is that it will be at least 2 to 3 years before things return to 'normal'.

Real recovery for automotive supply chains is still three to five years down the road, Barnett predicts. And investments in beefing up supply won't begin to impact production significantly until 2023 at the earliest.

Global ramifications

But Ford wasn't the only automaker to stumble. Volkswagen fell short of planned production by around 1.15 million vehicles, GM and Toyota were both out about 1.1 million and Stellantis came up short by around 1 million units.

Pre-pandemic inventory levels are unlikely to return any time soon if ever, automotive experts say. Before the pandemic, roughly 3.5 million new cars sat on dealer lots. In August, there were about 1.2 million, according to Cox. The anticipated sweet spot is somewhere in between.

End of the year, month and model year. In terms of the best time of the year, October, November and December are safe bets. Car dealerships have sales quotas, which typically break down into yearly, quarterly and monthly sales goals. All three goals begin to come together late in the year.

Big production cuts during the pandemic and a big decline in new vehicle leasing since 2020 mean there are just fewer of them, which will keep prices high. Meanwhile, Ryan adds, the supply of new vehicles began rapidly improving in September, and he expects that to continue in 2023.

After one year, your car will probably be worth about 20% less than what you bought it for. AFTER FIVE YEARS: After that steep first-year dip, that new car will depreciate by 15–25% every year until it hits the five-year mark. So, after five years, that new car will lose around 60% of its value.

Cars.com data show new-car inventory is tracking with this trend. There were approximately 1.4 million new vehicles among Cars.com dealers in November — up 31% compared to May 2022 and 40% higher than November 2021.

How much will car prices drop in 2023? ›

If you're hoping for big used car value drops, you might fall more in line with J.P. Morgan Research. The analytical wing of the investment banking firm expects used car prices to fall by 10 to 20 percent on the whole through 2023.

As a result, through the end of 2022 and into 2023, chip supplies are expected to be in surplus in many chip nodes, which analysts expect will be absorbed through much of 2023 by customers.

Used vehicle prices are expected to come down further this year amid rising interest rates and improved availability of new cars and trucks, according to Cox Automotive. The firm expects wholesale used vehicle prices to end the year down 4.3% from December 2022.

Best time to buy a new car

During the end of each quarter – in March, June, September and December - dealers are keen to hit their target and earn bonuses, which means negotiating can be easier and they might even be offering deals.

Used cars offer buyers value and savings, which are attractive benefits to drivers who may not have a big budget, but still want to drive a quality vehicle. You'll probably save money. No doubt about it, most used cars sell for significantly less than a new car with the same make and model.

The average price for new cars increased significantly to $49,507 in December 2022, according to Kelley Blue Book. It's up $2,297 over the average price in December 2021.

Will car prices drop in 2022? ›

Average prices were up 42.5% in September 2022 vs. February 2020. Used car prices have likely peaked, but new car prices are set to remain elevated through end-2022. In 2023, prices are expected to decline by 2.5% to 5% for new cars and by 10% to 20% for used cars.

A report by global management consulting firm, McKinsey and Company, suggests that the automotive component shortage will not be resolved until 2026 or as far out as 2030. Automotive OEMs heavily rely on 90nm chips.

New-car stock shortages to continue into 2023 as semiconductor crisis deepens – report. The sustained shortage of semiconductors continues to slam the brakes on vehicle assembly lines around the world. The latest estimates say 4 million cars have been wiped off production schedules this year.

However, available chips may not be the right type to satisfy all demand. Volkswagen believes that semiconductor supply is unlikely to meet auto industry demand until 2024. “We're going to get a lot more semiconductor capacity in the second half of 2022 – we're nearing the end of the supply crunch.