Now, some new cars already come with significantly higher markup prices than others, and consumers pay more regardless believing that the situation won’t get any better in the short term. According to automotive research firm Kelley Blue Book, that may very well be the case considering the Fed’s projected interest rate hikes. New car prices are reportedly at a record high already, and rising interest rates will likely turn them into “luxury goods” soon.
On the other hand, wholesale prices of used cars have dropped by over 10%, with retail prices expected to follow. However, interest rate hikes could possibly negate those effects as well, leading to worse car deals than before even in the used market.
It doesn’t help that credit flow is reportedly limited to “a smaller portion of the population” either. Even if diminishing consumer demand forces prices downwards, car shoppers will still have to contend with higher interest rates. This leaves shoppers with the dilemma of either buying now at higher prices while the interest rates are lower, or waiting for prices to drop later albeit at higher interest rates. Both options don’t sound much better than the other, but for car shoppers, choices are becoming as scarce as the supply of new vehicles.
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