Cars Holding Value Better Post-Pandemic

A recent CNBC article highlighted that cars aren't depreciating like they used to, a phenomenon attributed to a pandemic-induced market twist. Intrigued by this shift, we explored further, integrating insights from Kelly Blue Book to offer a comprehensive perspective crucial for our 2024 strategies.

• Slower Depreciation: Cars now retain 10% more value after three years, marking a significant shift from pandemic times due to production and supply chain disruptions. Experts predict this trend of value retention will continue.
• Price Trends: New car prices have dropped for three consecutive months, and used car prices are declining, signaling a buyer's market. However, the selection of used cars remains limited. The average new car price saw a 5% reduction last month, the first year-over-year decrease in a decade, highlighting a significant shift in pricing trends.
• Loan Rates & Affordability: Loan rates for new and used cars are decreasing, hinting at a buyer's market despite historically high rates. The average person now needs to work fewer weeks to afford a new car, indicating improved affordability.
• Long-term Market Effects: Despite the favorable conditions, the pandemic's long-term effects are expected to maintain higher-than-normal prices, particularly for affordable vehicles, due to tight supplies. Analysts anticipate used car prices will remain elevated for several years.

TL;DR: The automotive market is adapting with vehicles holding more value, favorable pricing and interest rates for buyers, and an overall positive shift. However, supply challenges and market adjustments due to the pandemic's long-term effects are expected to shape the landscape for years. These insights are crucial for strategizing in 2024.