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According toKelley Blue Book, the average new car price was $47,401 in January of this year.
Highinterest ratesdont help the cause either.
Used car loan interest rates average at a staggering 11.93%.
But the automotive industry is as much influenced by the law ofsupply and demandas anything else.
Historically, when there is a recession, people start buying less especially large purchases.
And, when demand decreases, prices decrease as well.
Consider the Great Recession of 2008 as an example.
During that time, new vehicle sales fell by almost 40%.
In 2020, sales also fell, though only for the first few months of the year.
That said, they did drop by about 15% compared to the previous year.
When demand once again increased, supply couldnt quite keep up.
This combined with high inflation and gas prices at the time led to higher prices.
It also priced many U.S. consumers out of the market for a time.
Sitting on inventory is expensive.
Every month, the dealer pays interest on each vehicle that is not sold.
They lose cash flow when vehicles are not sold.
A recession means higher interest rates and lower car sales, said Fix.
As Fix pointed out, this can impact both dealers and car manufacturers.
And if inventory starts to dip, prices could remain high.
Those who have a lease might want to consider keeping the car for the long term.
Instead, she suggested makingextra loan payments if possible or refinancing for a lower interest rate.
In either case, she said that holding on to your vehicle longer is likely the best option.
Whatever else, know that everyones situation is different.
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