A Key Inflation Pressure Is Easing: Used Car Prices From These Firms Are The First To Crack

TrueCar Inc. TRUE recently took a look at industry-wide vehicle sales. The findings confirmed the company's prediction that the industry may be turning the corner.

According to TrueCar's August analysis, incentives for purchasing new vehicles have risen for the second consecutive month.

"We're seeing consecutive month over month increases for incentives, while average transaction prices are softening," said industry analyst Zack Krelle. "Inventory is also slowly growing, and sales are improving slightly."

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This indicates a shift away from the former trend of pushing used cars onto consumers at elevated costs, which underlined this year's record-high inflation, toward more dealers and manufacturers pushing new vehicles on consumers with higher incentives.

July’s CPI report showed that inflationary pressures on used cars and trucks dropped 0.4%, marking its first reverse since April. Pressures on new vehicles increased 0.6% — with the total change on a 12 month basis at 6.6%, and 10.4% respectively.

Used car sales for Aug. are expected to reach 3 million, down 17% from a year ago and up 4% from July.

Semi-Conductors

The semiconductor shortage, which hurt both the new and used vehicle markets, received a boost when President Joe Biden signed the CHIPS and Science Act of 2022. The measure appropriates $54.2 billion to promote domestic research and chip manufacturing — one of the largest investments in tackling the chip shortage.

With the shortage on the cusp of being in the rear view, and more incentives being provided for new cars, manufacturers can ramp up production on new vehicles. As a result, the prices of used-cars offered by Vroom Inc VRM, Carvana Co CVNA, CarMax, Inc CMX, and Asbury Automotive Group, Inc. ABG are expected to come down in the future.

This would be a boon for consumers. In terms of price category, used-vehicles under $10,000 have been in the lowest supply.

Image: Pixabay