Car Prices Are Dropping
Car prices are dropping, so is now the best time to buy? That’s what we’re going to find out.
changing car market dynamics
The car market is changing, and we are finally starting to see signs of price drops, in some cases, significant price drops for a number of car brands, both on the new and used car market.
I’m going to share which cars are seeing the largest price drops that you might want to think twice about, or you might be able to score an amazing deal on, depending on how you look at it.
I’m also going to share which cars are not dropping in price whatsoever.
No major crash noticeable price softening
So first off, let’s make it clear that there is no major car market crash.
But there is a softening of prices, a slow return of negotiating and incentives, and more and more dealers are backing off on the terrible sales tactics that were common during the shortage, such as market adjustment fees or forcing buyers to pay for all kinds of expensive add-ons.
And if you’re shopping for a car and you encounter a dealership that’s trying to do any of these tactics, just walk away and shop elsewhere.
They don’t deserve your business, and there’s absolutely no reason why you should be overpaying for a new car anymore.
Electric Cars: Leading the Price Drop
I think the biggest and most obvious examples of this softening prices can be seen with electric cars, especially Tesla.
Tesla prices have dropped significantly from their highs of 2022, both for new and used models.
Now, just to be clear, the electric car market is still growing. It’s just not growing as fast as it was before or at the rate that many car manufacturers expected.
Tesla responded to this change by dropping their prices by thousands of dollars, particularly on new inventory that’s just been sitting on lots.
It is now fairly easy to find brand new Tesla Model Ys in inventory across the US that are in the $30,000 to $40,000 price range after the tax credit has been applied.
These prices are around $10,000 to $12,000 lower than what consumers paid for the exact same vehicle back in 2022, and prices have dropped by about half this much in Canada.
Now, although I’m no Tesla evangelist, I have to admit, if you We’re going to get into a brand new Model Y for the mid $30,000 range, a vehicle that has this much technology that’s this spacious and with this much performance for around the same price as a mid-range RAV4 or a CRV that’s really not too bad of a deal.
You can find similar deals on the Tesla Model 3, although not quite as good because Tesla just introduced a refreshed version for 2024.
And these price drops on the new models also led to drops on used Tesla prices. You can now find relatively lightly used Tesla Model Ys and Model Threes for reasonable prices, often in the $20,000 to $30,000 range.
It’s pretty clear that the electric car market has reached a saturation point where the early EV adopters have already got their cars, and now automakers are having a tougher time trying to convince the rest of the market to jump on board with the higher prices that they’ve been trying to charge and it’s not just Tesla.
Other automakers are doing the exact same thing. Ford has famously slashed prices on its electric F150 Lightning and the Maki electric crossover in an attempt to move piling up inventory.
They recently cut prices on the Lightning by up to $5,500, plus introduced a retail bonus cash incentive of up to $12,500 in certain regions.
Ford also cut prices on the Maki by up to $8,100 in the US and $13,000 in Canada.
Both models also qualify for the point of sale tax credit of $7,500 in the US and EV rebates in Canada, which means that you can potentially save over $20,000 off the original price.
Truck Market: Oversaturated and Overpriced
And no surprise, Ford cut back on their production and even delayed the release of future EV models because of the slower than expected demand.
General Motors is doing the the exact same and plan on delaying a number of EV models because of uncertain market conditions at this time.
Gm has introduced similar cuts on their Chevy Blazer EV, which is an all-electric SUV that has had a really tough start.
Gm has already slashed the price by up to $6,000 in both Canada and the US. With the tax credit or rebates, that means you can save between $10,000 to $15,000 off the original price.
Financing Considerations
They’ve even refunded early buyers of the Blazer by the same amount who paid the original higher price.
And Nissan has introduced similar price cuts on the Aria electric crossover, slashing the original price by up to $6,000.
And the Aria is eligible for the same EV rebates in Canada. But because the Aria is made in Japan, it does not qualify for the tax credit in the US.
In the case of EVs that are not eligible for the credit, such as those made by Nissan, Subaru, Kia, Hyundai, and a few other automakers, they are using a loophole to apply the full amount of the credit through leasing.
In the US, it’s now fairly easy to come across some amazing lease deals on brand new electric vehicles, often between 250 to $350 per month, sometimes with zero money down.
And that’s because the automakers are able to use the tax credit as a discount off the purchase price when leasing.
What this means is that you can basically lease a $50,000 electric vehicle for the same monthly payment as a $25,000 conventional economy car.
In many cases, this is the only way consumers are even interested in taking a look at some of these models.
In most cases, the slowdown in sales is mostly due to the really high prices, especially when it comes to electric vehicles.
Domestic and Luxury Vehicles: Price Drops
Most consumers just don’t have the $50,000 to $80,000 or whatever it is to purchase a vehicle like that.
And automakers Automakers are starting to realize this, and many are reducing their prices or introducing massive incentives as a result.
Otherwise, consumers are just not buying. A recent report from Isee cars confirms this, stating that electric vehicles are currently the slowest selling vehicle type, both on the new and used car markets.
Consumers need more affordable vehicles, and automakers need to wake up to that reality.
So it’ll come as no surprise that the other vehicle types that are dropping dropping in price are the ones that are just way too overpriced to begin with.
Market Dynamics: Not Dropping for All
The best example of this are trucks. The average selling price of a new full-size truck ranges from around $60,000 to $70,000, and that’s just unsustained sustainable.
Full-size trucks from all domestic brands are now piling on dealer lots, and you can find new trucks with massive discounts and incentives.
Some, such as with Ram, are up to 20% off the MSRP.
The problem is that because the prices increase so significantly, even with these huge discounts, the prices remain much higher than they were just a few years back, so they’re still having a tough time selling.
Recommendations for Buyers
Now, of course, the purchase price of a vehicle is one really important piece that you need to focus on if you want to get yourself an incredible deal.
But another really important piece that you need to consider is the cost of financing, if you plan to do so.
Before you go to the dealership, it’s a great idea to go to your own financial institution first so that you know your credit score and your financing options.
If the dealer is arranging financing for you, then make it clear that you do not want your credit check by multiple lenders, which can harm your credit score.
Carefully, review all the information on the credit application before it’s submitted.
You also need to know who the application was submitted to and know all the offered terms and rates.
Only when you’re happy with the interest rate, the terms of the financing, and everything that’s written on the contract, and you’ve read everything really carefully, only then should you sign.
Remember, when you sign a contract in Ontario, there is no cooling off period. So you need to make sure that you’ve read everything, then you’re happy with the deal before you sign.
let’s move on to the next major category that’s been experiencing a major drop, and that is domestic vehicles and some luxury vehicles.
Typically, this includes vehicles that have really high prices and lower than average desirability.
This includes a lot of Jeep models including the Grand Cherokee, the Wagoner, and even the Wrangler.
And most Alanis vehicles in general from Dodge, Chrysler, Maserati, and Alpha Romeo. If you’re seeing a pattern, you’d be right.
The vehicles that are seeing the largest price drops and piling on dealer, lots happen to be the least popular ones that consumers either can’t afford or they’re just not interested in buying.
Now, despite what many have probably been hoping for, car prices are certainly not dropping for every single vehicle type, not by a long shot.
The market remains extremely tight with low supply for certain brands, particularly Japanese and Korean brands such as Kia, Honda, and Toyota.
According to the Isee cars report, 12 out of the 20 fastest selling new vehicles are Toyotas with most of them being hybrids.
In fact, hybrid demand is through the roof, both on the new and used car market. Hybrids are the most popular vehicle category by quite a margin, and many popular hybrid models remain incredibly difficult to purchase often with really long waiting periods to order.
Consumers have spoken and hybrids are what most of them want. It’s the same story on the used market.
According to the Isee cars report, eight out of 20 fastest selling used cars are hybrids, which helps explain why hybrids really don’t lose much value over time.
As I said before, affordable options are limited and consumers seem to be more wary about spending their money on these increasingly expensive vehicles, which is why many are playing it safe and going with the most affordable new vehicles and going with brands like Toyota, which offer a lot of value, are known for being reliable and hold their value well over time.
And I believe that if you’re in the market To purchase a vehicle, buying a vehicle of one of these types or a hybrid vehicle is the safest move that you can make these types of vehicles hold their value extremely well.
So as long as you’re paying a fair price when buying it, you’ll be in fine shape if you need to sell it or trade it in down the road.
And as for the vehicles experiencing price volatility, well be careful with them and make sure that you are really getting yourself an incredible deal.
Otherwise, you could end up losing a lot more money down the road than you would expect. We’ll have to see what happens in the market over the next year.