In Europe, Volvo and Mercedes-Benz remain bullish on pricing, citing healthy order books. Still, analysts expect that easier access to parts and stretched wallets will eventually bring auto prices back down. With energy, food and borrowing costs on the rise, consumers will think twice about splurging on a new set of wheels.
For much of the past three years, car prices knew one direction: upward.
This was simple economics: There was far more demand for new vehicles than manufacturers could meet due to pandemic-related disruptions. As chips, wire harnesses and other components in short supply flow more freely again, a slow but inevitable march to normalization has begun.
Tesla and Ford were among the manufacturers making noteworthy cuts the last couple months, with the latter predicting new-vehicle pricing will fall 5% in the US this year. Elon Musk embellished a bit Wednesday when he suggested Tesla had made minor adjustments(1) to the cost of its models and described affordability as a limiting factor for the company.
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