Today I go over when the car market will most likely hit a bottom!
Car prices have pretty much been doing this for like the last two years and now they’re starting to kind of do this a little bit and we have to figure out like is it going to be here is it going to be here or like somewhere there like that’s what we’re going to discuss in today’s video so anyways as always my name is ben hardy and if you want to save time money the
Next time you purchase a car link to my carbine guide in the description down below and if you want to see more content like this then i recommend you subscribe because i post content every single day let’s get into it now this is a pretty loaded question to answer when will the car market hit its bottom and it’s actually really important for us to be able to find
This out because during the 08 financial crisis when you know housing prices tanks car prices also tanked and there were a lot of really cool deals to be had you know during that whole situation and then just a little bit after that situation i mean i remember you know watching youtube videos back then and seeing people go out and purchase like super expensive
High-end cars for next to nothing because again the market tanks so much and with the market decline we’re experiencing today we could be in a pretty similar situation where you might be able to pick up a really cool car at a fraction of the price and so let’s talk about what would actually push the market to hit a bottom now the first signal that the car market
Has hit a bottom is when interest rates stop going up and they level off or start to decline and it doesn’t look like this is going to happen anytime soon everything that the federal reserve is saying and what economists are saying is that well interest rates are going to keep going up over the next few years and that’s just the world that we live in now and so
What that means is it’s probably by you know 2025 potentially even 2026 we’re going to see interest rates that could be even double of what we have today and so that means that car affordability is going to be a lot lower and contrary to what you will see in youtube comments the average person does not pay cash for a car the average person finances a car and so if
Car interest rates increase car affordability decreases and if car interest rates decrease car affordability increases and so once we hit that peak in terms of interest rates and things like i said start to level off or start to decline that’s when the car market will most likely be at its bottom because affordability with cars will be at the bottom now the next
Thing that needs to happen is for manufacturing to ramp up enough to actually meet demand and so you know the video that i posted earlier today was talking about brands where you know inventories are starting to build up and brands where inventory still is non-existent and so until there is enough inventory to actually meet demand we’re not going to see the bottom
Of the car market because certain brands are being propped up by a lack of inventory i mean a really good example right now is pretty much any of the japanese brands or a lot of the german luxury brands so like if we look at toyota for example they are still sold out on most of their product yes they’re starting to have some inventory a little bit not a lot but
They’re pretty much sold out and so until we start to see toyota dealers stack up with inventory and people start to you know not buy we’re going to have the market being you know propped up because of that and again again same thing with like those german luxury cars those are that’s another set of brands that basically are you know propping up the car market and
So as soon as we see demand destruction across the board where demand is being met and you know this could happen a number of different ways either you know manufacturing catches up and there are enough vehicles to meet demand or interest rates get so high that nobody can buy cars and so then that’s what actually brings down demand is not because you know people
Don’t want to buy cars but because they just cannot afford cars because of how high the car payments are and so either way until demand is met which it is not currently met we are not going to see the bottom of the car market something else that we need to discuss is actually electric vehicles we have a huge push from our government to go towards fully electric
Vehicles and this is going to do a lot of weird things to the market because again this is a whole new way of powering vehicles and so long-term reliability definitely questionable uh sustainability from the standpoint of being able to produce enough resources to produce enough of these electric cars also questionable and so because of how questionable the whole
Like ev car thing is that means that ev cars could actually potentially tank the market in a very interesting way because what could potentially happen is automakers focus way too much on evs which some automakers are and again i’ll make a dedicated video to this and because they’re focusing so much on evs and not building regular internal combustion engine cars
Then you have demand not being met in one segment but then potentially too much demand in another segment and so the car market could do this weird like flip-floppy thing where one second it tanks a lot because again they’re building too many evs and not enough people are buying them but then demand is increasing on the internal combustion engine side of things and
They’re not meeting that and so then that kind of like props up a different part of the car market really confusing situation and that just shows you like how big the car market is in the u.s that like a portion of the car market could be sky high and another portion can be like literally at the bottom and that’s something that we’ll kind of discuss a little bit
Later in the video but this is definitely something that is a little bit of a curveball in this situation because we haven’t dealt with this before during the 08 financial crisis yeah there were some manufacturers that were building evs but there wasn’t nearly as big of a push as what we have today and so there’s a lot of uncertainty associated with this segment
Of cars and so we’re just gonna have to see how it plays out like you know what production actually ends up being and what the take rate is with customers like are people actually going to transition over to evs or are they going to be overproduced and people aren’t going to want to purchase them because they just don’t want to make the transition they just don’t
You know trust the technology again there’s a there’s a lot of uncertainty there now the next thing that will signal the bottom of the car market is the unemployment rate because if the unemployment rate absolutely skyrockets because we go into a recession well car values will tank because you know if people can barely afford to live then they’re not going to be
Worried about purchasing cars they’re going to be worried about just putting food on the table and so that is something else that needs to be closely monitored is hey what’s the unemployment rate because right now it’s relatively low in terms of historical standards but you know again if we go into recession it could absolutely skyrocket and if you just go and
Look at the news then you can see that there’s a lot of tech companies that are looking to lay off a bunch of people and there are other companies that are looking at potentially laying off people and so there’s there’s quite a bit of doom and gloom out there but again it’s it’s a very interesting situation because then there are other industries that are still
Trying to hire so for example dealerships are trying to hire sales staff right now they’re trying to hire people to work in the service department like every single position like dealers are super understaffed right now and so like it just depends on the industry and so what i see potentially happening is because we have some industries that have tons of demand in
Other industries where the demand is dying then you just might see a shift in the workforce where people just choose to work within different industries where they can actually make money and so again really complex situation i’m frankly not qualified to comment on the situation but i did want to bring it up in today’s video because if unemployment skyrockets then
That means that car values will skyrocket but downwards well now i have to get out my crystal ball and give you guys my guess as to when the car market will actually bottom out and well just to quickly tell you i think it’s probably going to be 2024 or potentially 2025 i know that’s kind of a big range but let me just give you my reasoning obviously i mentioned
All the things in today’s video but here’s the deal right now the market is being propped up by a number of factors first off we have a bunch of wealthy buyers that are still purchasing vehicles especially from luxury automakers because again they made tons of money during covet and yes they’ve lost a lot of money this year but they still have a bunch of money to
Spend and so again they’re popping up the luxury side of the market and then you have the japanese brands which are actually propping up the non-luxury side of the market now the reason that this is happening this is just my assumption is because japanese brands are typically viewed as safe like vehicles to purchase because they’re generally more reliable than
You know other automakers and the reason why reliability is so important to people right now is everyone thinks that we’re going to go into a recession and so people are like okay i need good reliable transportation that’s going to last me the next 10 20 years so i can weather this economic storm whatever’s happening and so that’s why there’s so much demand with
Those manufacturers and so or at least again why i think there’s so much demand from what i’ve seen and so until the demand dies with high-end buyers and with these japanese automakers the car market really isn’t going to bottom out but i do see demand slowing on both fronts right now and so what i see kind of playing out is throughout the course of 2023 sales are
Going to continue to decline profits are going to continue to decline for automakers and for dealerships but again 2023 is probably not going to be the bottom but it will most likely be worse than 2020 too because 2022 actually had a pretty decent uh sales quarter for the first quarter of the year and then things started to decline whereas 2023 i think it’s just
Going to be all just downhill from where we’re at now and so yeah it’s going to be pretty rough and then that’s why i think that 2024 2025 will probably see the bottom because again with all of what the federal reserve is saying and what economists are saying that’s probably when peak interest rates will hit and then we’ll start to decline and so again that’s
When demand will most likely be at its lowest and so then car prices will most likely be at their lowest and so then that’s when deals will probably be at their best but again i need to say that nobody can predict what’s going to happen within the car market but based on everything that’s playing out right now that is looking like the most plausible case until i
Get more information but with that being said that’s going to sum things up for today’s video i want you guys to let me know when you think the car market is going to hit a bottom or if you think it’s ever going to hit a bottom do you think that this is just like a slow little downturn and then things are gonna you know just all of a sudden just rise back up or
Whatever let me know and with that being said again subscribe if you want to see more content like this i’ll see you
Transcribed from video
Here's When The Car Market Will Bottom Out By The Ben Hardy Show
