EV price cuts to tax refunds: 5 reasons you can buy a car again

SIMONE DEL ROSARIO

IF YOU’VE BEEN IN NEED OF A CAR THE PAST TWO YEARS, YOU KNOW THE MARKET’S BEEN ABSOLUTELY NUTS. PANDEMIC-INDUCED SUPPLY CHAIN ISSUES EMPTIED LOTS PUSHING PRICES THROUGH THE ROOF. BUT WE’VE GOT THE REASONS NOW IS FINALLY THE TIME TO BUY IN THIS WEEK’S FIVE FOR FRIDAY.

IN JANUARY, TESLA CUT PRICES OF ITS NEW CARS BY AS MUCH AS 20% OVERNIGHT. JUST A FEW WEEKS LATER, FORD FOLLOWED SUIT, SLASHING THE PRICE OF ITS MUSTANG MACH E. THE CUTS MAKE SOME MODELS ELIGIBLE FOR THAT $7,500 EV TAX CREDIT, BUT THE WHOLE THING MAKES WAY FOR THE GREAT E-V PRICE WARS, WHICH’LL MAKE IT EASIER TO GET INTO A USED MODEL TOO.

WITH A STEADIER SUPPLY AND DECLINING DEMAND, PRICES CAN ONLY GO DOWN (WE HOPE). AFTER JUMPING MORE THAN 37% IN 2021, USED CAR PRICES HAD A BIT OF A HANGOVER AND FINALLY FELL NEARLY 9% LAST YEAR. JP MORGAN SAYS PRICES “LIKELY PEAKED” IN 2022, WITH MORE ROOM TO COME DOWN. BUT IT’S ALL RELATIVE, THE $27,000 AVERAGE PRICE IS STILL 10 GS ABOVE WHAT IT WAS 3 AND A HALF YEARS AGO.

CARVANA AND CARMAX ARE FEELING THOSE FALLING PRICES TOO. STOCK PRICES FOR THE USED CAR GIANTS WIPED OUT LAST YEAR AND THE INDUSTRY’S STILL FACING WEAK DEMAND. THIS SAD STATE OF AFFAIRS COULD BE A BOON FOR YOU AS THEY’RE FORCED TO UNLOAD INVENTORY AT LESS THAN THEY PAID. MAYBE CARVANA SHOULDN’T HAVE BEEN PAYING MORE FOR 7 YEAR OLD CARS THAN THEY WERE WORTH NEW.

PRETTY SOON YOU’RE GONNA HAVE THAT TAX REFUND CHECK BURNING A HOLE IN YOUR POCKET AND DEALERS KNOW IT. IF YOU WANNA BUY – ACT FAST ‘CAUSE THE FIRST FEW MONTHS OF THE YEAR COULD SEE A SLIGHT RISE IN PRICE DUE TO THOSE CHECKS COMING IN. BUT, THEY’LL HIT YA WITH SOME INCENTIVES TO GET YOU IN THE DOOR SO DEALERS CAN OFFLOAD SOME OF LAST YEAR’S INVENTORY. TWITTER-FAMOUS CARDEALERSHIPGUY SAYS A BIG DIP IS COMING AFTER THAT.

PART OF BUYING A NEW CAR IS THE THRILL OF NEGOTIATION, AND THAT’S BACK BABY. BUYERS HAD WAY LESS SWAY AT THE DEALERSHIP DURING THE SURGE. IN JANUARY OF LAST YEAR, 80% OF BUYERS WERE PAYING OVER STICKER PRICE FOR NEW CARS. BUT BY THE END OF 2022, THEY WERE PAYING $300 LESS THAN MSRP. BUT AGAIN, DON’T GET OUT YOUR WACKY INFLATABLE TUBE GUY YET, IT’S STILL A FAR CRY FROM THE 2600 UNDER STICKER PRICE BUYERS WERE GETTING BACK IN 2019.

MORAL OF THE STORY: IT AIN’T AS GOOD AS IT ONCE WAS, BUT IT’S BETTER THAN IT’S BEEN THE LAST TWO YEARS. THAT’S FIVE FOR FRIDAY, I’M SIMONE DEL ROSARIO. IT’S JUST BUSINESS.