How much will cars cost in 2023? The seven most important predictions
The spike in car prices is behind us, but that doesn’t mean prices will start to fall over the next 12 months. – If there is no significant weakening of the zloty, i.e. we do not see the dollar and the euro at PLN 5 each, the increase in the prices of new cars should not exceed 10 percent in 2023. In segment B, C we are already after increases of 30 percent. Figuratively speaking, it is clear that the market does not accept the price of 100,000. PLN for a compact in the “naked” version. He also does not accept the installment for the car, which comes out with the current financing costs, especially in the segment of cars worth 100-250 thousand. zloty. Therefore, this rally up must stop, because we have already reached the ceiling. We are already seeing stabilization of prices in used cars and I expect this in 2023 also in new cars. In salons, the gradual return of the discount policy can be seen and this trend will continue – believes Michał Knitter, vice-president of Carsmile.
Much depends on macroeconomic developments and the further fate of the war in Ukraine. “Escalation is the risk of further weakening of the currency, and de-escalation is a move in the opposite direction. The exchange rate directly translates into the price of cars in Poland, and currently, further significant price increases would be deadly for the market after the increases that have already taken place. Apart from the war, KPO is also a very important factor. If Poland reaches an agreement with the EU, and if there are also signs of easing the conflict in the East, then the perception of our country by investors will improve, which will strengthen the zloty exchange rate, and at the same time optimism on the market will increase – he points out.
2. More orders in stock
The good news, however, is that vehicle availability will increase in 2023. In more and more cases, you won’t have to wait as long as before. – For about 2 months we have been observing an improvement in the availability of cars on the market. Waiting periods for vehicles commissioned for production, i.e. ordered according to individual configuration, have slightly shortened, while a significant increase in the number of cars available “off the shelf” can be seen. We selected 160 models in various equipment versions (a total of approx. 800 types of cars)which have just such a status, which means that it is possible to collect them in January. However, the market situation is still nervous and unpredictable, but signals about the easing of the zero covid policy in China should be conducive to gradual stabilization. Filling dealerships will result in the fact that we will see, at least in a reduced form, a sale of the 2022 vintage – emphasizes Michał Knitter.
3. Lower sales, dealers on the line
While the industry has still not recovered from the pandemic crisis, instead of rebounding, it is likely to continue to weaken. According to Knitter, smaller amounts in Poles’ wallets will cool down the enthusiasm for buying cars. — There are some estimates that the total monthly burden on household budgets with various “installments” increased by up to 100% during the year. At the same time, not all borrowers, especially those with large debts, were aware of this so far, because they used credit holidays. Let us also remember that the perceived inflation is also higher than the official level of 17-18 percent. Meanwhile, the largest number of new cars leased or rented are bought by 30-40-year-olds, i.e. people who simultaneously repay large mortgage loans, which are most affected by the increase in WIBOR due to the long repayment period, he estimates.
The rest of the article under the video:
And that means tough times for car dealers. — I expect that the sales of passenger cars and vans up to 3.5 t in 2023 will amount to approx. 450,000. against approx. 480 thousand. in 2022, which would mean a decrease of 5-10 percent. It will be a difficult year for the dealer industry, because fleet orders remaining at a high level will not compensate for the loss of profitability related to the reduction in the number of individual customers in showrooms. Therefore, dealers will need sales support, e.g. from online platforms.
In my opinion, Q1 will be the weakest, because then many issues related to the scale of the crisis and the real situation of households should be “clarified”. Credit holidays in their current form will end, when you can suspend two installments in a quarter (only one will be allowed). Poles will see what their actual burdens are on account of various credits, loans or leasing and how much is left in their wallets, he says.
Although the end of the year “in the black” is very unlikely, it does not rule out such a scenario either.
— I would be surprised if 2023 brought an increase in sales of new cars, although the situation on the market and in the economy has been completely unpredictable for two years, so it is hard to exclude such a scenario completely, but I would not give it a probability greater than 20 percent. Purely theorizing, if the second half of 2023 brought stabilization of inflationand the crisis turned out to be quite mild, or if, as a result of a certain combination of market circumstances (prices, exchange rate), we had an increase in re-export, then in the second half of the year we can see a certain upward movement in sales statistics – he says.
4. Workshops will win
According to the expert, 2023 can be called the “year of workshops”. — I expect that in 2023 car owners will repair and renovate rather than replace them. Therefore, it will be the year of car workshops – says. What explains this prediction? – In the current structure of purchasing new cars by an individual customer, whether with or without a company, a large increase in purchases for cash can be seen. This is related to high inflation and an attempt to escape its consequences. In 2022, such transactions were additionally stimulated by the unavailability of cars. The strength of this phenomenon, i.e. cash purchases, will weaken along with the easing of inflation and the “depletion” of savings of entrepreneurs and consumers – he argues.
5. Saving niche
In this situation, you will benefit who make money on used cars. And it’s not just about sales anymore. — The year 2023 will bring a large supply of relatively new used cars, post-contract cars, “returning” from rental or flexible leasing. This will result in the development of new services such as used car rental. Such cars are significantly cheaper, thanks to which the installment is lower, and the rental period is shorter (e.g. a year or two instead of 3 years), thanks to which it is easier to decide on such an option in uncertain times. In addition, such vehicles are available immediately – says Michał Knitter.
6. No good news for leasing, but still going strong
If anyone expected a decrease in leasing installments, they will most likely be disappointed. — Changes being discussed now, i.e. 25-50 bps, either down or upshould not have a significant impact on the market at the current levels of car installments. In the basic scenario, I expect the WIBOR rate to remain, and thus the cost of financing cars in leasing, rental or credit at a level similar to the current one, i.e. around 7-7.5 percent. (WIBOR). Of course, there is some political risk that if inflation starts to fall in the long half of the year, and the recession is not deep, then the MPC will surprise the market with a rate cut. However, I hope that the situation where Hungary was locatedwill be a lesson for Poland that it is impossible to lower, print or promise without dangerous consequences – he believes.
High installments however, they will not translate into a decline in the popularity of leasing. – With current car prices and interest rates, leasing will remain the main form of financing the purchase of new cars. The worse the situation on the market, the greater the sense of uncertainty among buyers, the greater the need on the part of customers for the products offered to them to be flexible, even protective, enabling, for example, resignation from the contract and withdrawal from the purchase of the vehicle in the event of a sudden deterioration of the financial situation. Unfortunately, this is not a common way of thinking among representatives of the leasing industry, but I believe that it will change – he assesses.
7. Electrics will grow, but not exponentially
The crisis will not stop the growing electricity needs. Although 2023 will not yet be the year of the green revolution in Polish transport. – I expect a further increase in sales of electric cars and reaching a share of 5-7 percent. in the total number of new vehicle registrations in 2023. The demand for zero-emission cars is steadily increasing, which can be seen in the search results on the platform, as well as in sales data, he assesses.
— In 2022, we already had one such month when the number one in our sales was an electric car. In 2022, EV purchases were additionally supported by the economic factor, i.e. the lower cost of charging an electric car at home than the price of refueling a car with a traditional drive. For a greater growth of the EV market, it is necessary to significantly increase the infrastructure, and this will happen in 2 years. The development of the market will be supported by subsidies and the improving availability of cars – sums up Michał Knitter.
#cars #cost #important #predictions