Edmunds Jessica Caldwell, shares the auto trends that are shifting into 2023

The automotive industry first encountered severe difficulties as a result of the 2020 pandemic’s ramifications. Jessica Caldwell, executive director of industry insights at Edmunds, joins us on today’s CBT Now to discuss the trends in the automotive industry she has observed and those that are likely to continue.

Over time, the automotive industry has changed considerably. This includes, among other things, rising interest rates, chip shortages, a slower consumer cool-off, higher pricing, and a fluctuating inventory. However, Caldwell notes, as the year draws to a close, the retail and fleet sides of the industry are both experiencing pent-up consumer demand. Essentially, the year is not ending the way it started.

Leasing buyouts are anticipated to be a key trend in 2022, but they also have seemed to suffer significantly, with percentages starting at 30% and decreasing to just 15%. However, leasing today primarily results in lengthier loan terms and higher customer interest rates. This means that the new normal is seeing longer loan terms with lower APRs, according to Caldwell. 

However, Caldwell adds that “depending on demand, it may lead the complete used car market to disappear.” Due to the historically high prices, anyone purchasing for their dealers is paying a significant price. The entire known entity is surfaced around the used-car market, lowering their prices, and as time goes on, so does the appreciation customers have for the used-car inventory at dealerships.

The overall dynamic for dealers will shift in the upcoming year, 2023. Since dealers are considering more inventory options, customers will have more selections to choose from. As a result, the markets will be more stable and balanced than it was at the start of 2022. 

Ultimately, Caldwell emphasizes that profitability is the goal. From a global perspective, the market is changing in terms of material, and it’s not cheap. The growing usage of EVs, the inflation reduction act, and the materials required to build some electrified models will make the future of the automotive industry exceedingly expensive.