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When do you expect used car prices to drop?

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But recently, with high interest ratesAnd the Recession fears escalateslowing the supply of new cars in the United States Return to normal levelsone time hot red The used car market is starting to cool down.

Thursday , Consumer Price Index (CPI) It showed used car and truck prices fell 1.1% in September, the third consecutive month of decline. Experts said that while prices were still more than 7% higher than a year ago, last month luck who – which The used car ride in the wilderness is about to end.

“After a rapid rise in both retail and wholesale prices, we are close to what I like to call the ‘first tranche of the ballpark’ and prices are going down,” David Paris, director of market intelligence at JD Power Valuation Services, said.

But what does this mean for potential buyers? luck Talk to industry experts about how the used car market got to where it is today, and where prices could go from here.

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Wild used car rides

When the pandemic first hit the United States in March 2020, automakers across the country were forced to shutter factories and lay off Tens of thousands of workers.

As a result, inventory of new cars sank heavilyThis forced many Americans to enter the used car market. And even after the epidemic restrictions began to fade in 2021, and automakers reopened their factories, continuously Supply chain delays And the Semiconductor shortage New car production kept much lower pre-pandemic levelsforcing more consumers to buy used cars.

“We’ve never seen new car stock go back to what it was before the pandemic and that’s still true to this day,” said Evan Drury, director of insights at Edmunds.com. luck. “So what led to that? The emergence of the only other alternative good: the used car. When new car inventory levels fell, used values ​​began to jump.”

The surge in demand for used cars during the pandemic has driven the average used-car transaction price on Edmunds.com, a platform for automotive insights and sales, from about $20,000 in early 2020 to more than $31,000 by April of this year. .

“I would say that riding in the wilderness is an understatement for people who have seen their cars valued while driving them, or while sitting in their driveways and getting cobwebs during the pandemic,” Drury said. “We’re talking about things that were defying logic and standard market conditions.”

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Edmunds.com

But Drury and fellow auto industry analysts believe used-car prices are now at their peak, and the frenzy caused by the pandemic is finally coming to an end.

Don’t expect an accident. This is back to normal

While many consumers hope used car prices will drop to pre-pandemic levels, Charlie Chesbrough, chief economist at Cox Automotive, said, luck This is not possible.

“We’re starting to see prices go down,” he said.. “But it’s very difficult to see car prices collapse in this market, because there is still a whole host of transportation need.”

Chesbro also noted that there will be fewer used cars available to consumers over the coming years for several main reasons, which should keep prices high.

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First, he explained that dealers have rented far fewer new cars since the pandemic began, and because a high percentage of dealers of new leased vehicles end up as used stock when their leases expire, this has led to a significant decrease in the supply of used cars on the market.

Second, Chesebrough noted that used cars are now a source of income for the millions of Americans who work in shared delivery services, making them less likely to sell their cars, again reducing supply.

Finally, he argued, fewer Americans would be able to buy expensive new cars if the US economy entered a recession, which should also increase competition in the used car market.

شون أوكونيل يتحدث مع ديفيد موشينسكي مبيعات السيارات الجديدة في سميثتاون <a href ="https://fortune.com/company/toyota-tsusho" الهدف ="_فارغ"> Toyota </a> in Smithtown, New York on April 19, 2022. ” src=”data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP // yH5BAEAAAAAAAAAAAAABAAEAAAIBRAA7″ decoding=”async” data-nimg=”responsive” style=”position:absolute;top:0; left:0;bottom:0;right:0;box-sizing:border-box;padding:0;border:none;margin:auto;display:block;width:0;height:0;min-width:100% ;max-width:100%;min-height:100%;max-height:100%;object-fit:cover;background-size:cover;background-position:0% 0%;filter:blur(20px); background-image:url("data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAADULEQVR42mO8fv1mPQAIHAMIsIR6agAAAABJRU5ErkJggg==")”/><noscript><img alt= Toyota in Smithtown, New York on April 19, 2022. ” src =”https://content.fortune.com/wp-content/uploads/2022/10/car-dealership.jpg?w=1440&q=75″ decoding=”async” data-nimg=”responsive” style=”position” :absolute;top:0;left:0;bottom:0;right:0;box-sizing:border-box;padding:0;border:none;margin:auto;display:block;width:0;height:0 ;min-width:100%;max- width:100%;min-height:100%;max-height:100%;object-fit:cover” loading=”lazy”/>

Conrad William Jr/Newsday RM via Getty Images

Evan Drury of Edmunds.com also points out that many consumers are choosing to buy their cars at the end of their leases, rather than turn them over and enter the competitive used car market.

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“Usually about 20% of consumers buy the lease rather than hand it over,” he said. “Now, we’ve heard some reports that 90% of consumers are buying. Ford put that number up, and it blew my mind.”

This should also reduce the supply of used cars on the market over the coming years, Drury said.

David Paris of JD Power noted that before the pandemic, the used car market was already in a “golden age” due to a shift in consumer attitudes.

In the past, buying a used car was “frowned upon,” Paris argued, but over the past decade this has changed, resulting in a structural increase in demand for used vehicles in the United States.

“If you take a step back,” he said, “you really have to remember that, as we got into this whole wild situation, used vehicles and used vehicle operations, were really taking their stride.” “Before we entered the COVID market, this was the golden era for used cars.”

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Paris indicated that new car sales at franchisees are still about 20% lower than 2019 levels, while used car sales are up 5% over the same period.

“So we don’t think this is going to be a bubble bursting, with prices dropping very quickly,” he said, noting that the decline in new car sales will lead to fewer exchanges and a lower supply of used cars as well.

When do you find the best deals?

with both the new And the used car Prices have reached record levels this year, as many Americans are putting off buying a car.

But so far, with prices starting to fall, auto experts believe a lack of inventory means it makes sense for consumers to wait a little longer for a better deal.

“If I wait nine months or a year, we will definitely see more softening [used car] Prices,” said Evan Drury of Edmunds.com.

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But all analysts luck He spoke with also pointed out that it may take longer for the market to reach its lows.

“Over the next couple of years, we will see used car prices fall back to more normal levels. So by the time we get to 2025, that really is when used car prices will go down.”

Even when prices hit “trough”, they are unlikely to return to pre-pandemic levels. Both Paris and Drury argued that average used-car prices would drop at around $25,000 within two years. That’s nearly $5,000 above the 2019 average.

“In two years, [used car] On average, Drury said, prices could drop to the mid-20s. But I think we have a lot of people on the sidelines, and the values ​​will still be high. Right now, there really isn’t a supply chain that will suddenly deposit a lot of inventory in this used market and fix the situation.”

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Fauci warns that China risks a “wave of infections” after relaxing its coronavirus eradication policy

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Joe Biden’s chief medical adviser has warned that China’s reversal of a zero-Covid policy threatens to put pressure on the country’s health system and create conditions for new variants that could spread around the world.

Dr. Anthony Fauci urged Beijing to import Western Covid vaccines based on messenger RNA (mRNA) technology, which are more effective than Chinese-made vaccines, to increase the vaccination rate and boost overall immunity.

He said a wave of casualties would occur A large number of elderly people in China About 85 million people over the age of 60 have not received the third dose of the vaccine needed for strong protection against Omicron variants – and people with underlying health conditions are particularly challenging.

“If they don’t do things like launch and implement a proactive vaccination campaign, and open up, you’re going to have a wave of infections that will certainly be associated with some degree of disease severity,” Fauci said. The FT Global Boardroom event Wednesday.

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He added that any large wave of infections in China would give the coronavirus a chance to mutate into new types.

“When you have a big wave of transmissions of the virus, you give it a huge chance to mutate. When you give the virus a chance to mutate, that allows it to create potentially new variants. And once you have a completely new variant it can have an impact on the rest of the world.”

‘When you have a huge wave of virus transmissions, you give it a huge opportunity to turn around,’ Anthony Fauci told the FT Global Board of Directors © Abbie Coonan / FT

The risk of an uncontrolled wave of Covid infections across China creating conditions for new variants to flourish was “possible” but “very low,” Eric Topol, founder and director of the Scripps Research Translational Institute, said on Wednesday.

“The much bigger concern is that there will be countless deaths and morbidity unless there is an accelerated and much better vaccination rate, including more effective vaccines, in the population,” he said.

Fauci, who is stepping down from his position in the US government at the end of the year, added that he had not had contact with Chinese officials in a long time. He said Beijing’s strategy earlier in the pandemic had “some flaws” because it did not use lockdowns to vaccinate people.

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Beijing announced this week widespread relaxation President Xi Jinping’s controversial zero-COVID policy emerged as evidence of the economic damage caused by the pandemic’s restrictions emerged. But Wigram Capital Advisors, a macro advisory group focused on Asia, predicts that relatively low vaccination levels among China’s aging population could lead to million deaths If infection rates rise under relaxed restrictions.

Fauci echoed the advice issued Last week by Ashish Jha, the White House coronavirus coordinator, on how China should change its policy and import Western vaccines to tackle the virus. China said it would provide the BioNTech vaccine, but only to foreigners.

I would suggest they import western types [vaccines], particularly the highly effective mRNA vaccines used in most countries of the world. Unfortunately, the original Chinese vaccines were not as effective as some of the other vaccines.

Even in the United States, Fauci said, the number of deaths from Covid remains unacceptably high. He said cooler weather, increased social activity in the upcoming holiday season, and Omicron’s new BQ.1 and BQ.1.1 variants mean the pandemic is far from over.

“This is not a good formula for declaring that this is over,” Fauci added. “We still have to be on our guard.”

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Apple’s Tim Cook celebrates a new chip factory in Phoenix

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When Chinese factory supply Apple’s iPhone has been so riddled with the COVID-19 outbreak that it has shutdowns and staff strikeit directly affected global iPhone shipments.

some Estimates That iPhone production may decrease by up to 30% as a result of curbing the spread of the epidemic in China.

To reduce the risk of slowing down the production of its devices abroad, Apple decided to take matters into its own hands. Apple CEO Tim Cook confirmed on Tuesday that chips for Apple devices will now be made in the United States

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Apple silicon unlocks a new level of performance for our users. And soon many of these chips can be stamped “Made in America,” he wrote in the tweet.

A new plant in Arizona, operated by the contract chip maker, Cook said Taiwanese semiconductor industryIt will mark the beginning of a new era of advanced manufacturing in the United States.

This will be the first time in a decade that Apple will use US-made chips. The California-based company relies heavily on parts manufactured in Asian countries, In particular, China. Most of the chips that power Apple devices are Made in Taiwan.

The Apple CEO spoke at the TSMC factory under construction in Phoenix, along with President Joe Biden.

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“As many of you know, we work with TSMC to manufacture chips that help power our products around the world,” Cook said during the speech. to me bloomberg. “And we look forward to expanding this business in the coming years – as TSMC forms new and deeper roots in America.”

Apple plans to make silicon chips for most of its devices at its Phoenix plant. bloomberg mentioned. In the early years of manufacturing, the factory will produce fewer chips and use lower-quality technology than what Apple may require for its devices in 2024.

The company did not immediately respond luckComment request.

TSMC initially planned to spend $12 billion at our factory in Phoenix. Taiwanese company later increased Its investment amounts to nearly $40 billion, which it said is “the largest foreign direct investment in the history of the state of Arizona and one of the largest foreign direct investments in the history of the United States.”

The chip maker is said to be looking forward another plant Located in the United States as part of a larger effort to reduce reliance on Asia to make much of its chips.

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The plant is set in Arizona Opened in 2024.

The new Impact Report weekly newsletter will examine how ESG news and trends are shaping the roles and responsibilities of today’s CEOs – and how they can better overcome these challenges. Subscribe here.



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RXDX shows promising results in irritable bowel disease

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Prometheus Biological Sciences (RXDX) reported promising results for one of its drugs in two studies on inflammatory diseases on Wednesday, and RXDX stock rose by triple digits.




X



The company studied its drug, now called PRA023, in patients with ulcerative colitis and Crohn’s disease, which are two types of irritable bowel disease. More than a quarter of patients with ulcerative colitis and about half of the Crohn’s disease group entered remission after 12 weeks of treatment.

Gregory Renza, an analyst at RBC Capital Markets, said in a note to clients that the results exceeded Prometheus’ expectations. Now, Prometheus is planning to conduct its final-stage studies in 2023.

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“Netnet results exceeded our expectations,” he said. They provide “a major proof-of-concept in IBS, early validation of a biomarker strategy and a positive readout (ulcerative colitis dataset II) now set for the second quarter of 2023.”

In the morning work on stock market today, RXDX stock rose 181.6%, near 101.50. Stocks set a record opening.

RXDX Stock: Ligand Targeting

Prometheus is an antibody that binds to TL1A, an inflammation-related ligand. The company hypothesized that blocking this ligand — a molecule that binds to a receptor — would relieve symptoms in patients whose bodies make too much of it.

After 12 weeks, 26.5% of patients with ulcerative colitis had achieved remission, compared with 1.5% in the placebo group. RBC’s Renza said this “comfortably beats” Prometheus’ expectations of a 10%-15% improvement. The company attributes the placebo response to the severity of the patient group.

In testing for Crohn’s disease, 49.1% of patients entered remission and 26% had an endoscopic response. The latter means that doctors did not find inflammation in the patients’ intestines after treatment.

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PRA023 was positive for stock RXDX, Renza said, which also showed statistical significance for all secondary targets of the studies.

Thomas Smith, an analyst with SVB Securities, notes that the drug showed “a clear profile of safety/tolerance in both studies.” There were no serious side effects related to the treatment. He rates RXDX stock as an outperformer.

Overcoming recent negative pressure

It is important to note that the RXDX arrow has turned down on the data reading. News followed Pfizer (PFE) And the Spiritual sciences (ROIV) will set up a company to sell the TL1A-targeting antibody. Their drug is currently in mid-stage development for ulcerative colitis.

“We believe (Wednesday’s) positive reception could add to the negative pressure we saw last week from the development of the Pfizer/Roivant competitor,” said RBC’s Renza.

It has maintained its outperform rating on the stock.

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Follow Allison Gatlin on Twitter at @tweet.

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