COLUMBUS, Ohio — This time of year is considered peak car shopping season, but inflation could affect how the number of cars leaving the lot. 

What You Need To Know

  • Interest rates for car financing are approximately 8% 

  • Total vehicle sales have been increasing slowly since 2020

  • Economic experts advise consumers wait for interest rates to drop before buying a car

It’s been a volatile year in the auto industry. From November to January is considered the peak car shopping season. Despite the United Auto Workers strike that occurred this fall, many dealerships have a solid inventory of 2023 models they are hoping to incentivize and sell. 

“Car manufacturers, though, who are selling the vehicles on car lots are going to look at that and say, ‘hey, we need to take similar steps as we have in years past to move these vehicles along during a traditionally otherwise slow season,’” said Jonthan Earnest, an economics professor at Case Western Reserve University. “Especially if people’s budgets are otherwise stretched.”

Many consumers are asking if the deals will be any good. Interest rates for financing are settling in around 8%, according to Federal Reserve Economic Data or FRED. Two years ago, rates sat at about 5%. Earnest said he doesn’t expect to see dealerships advertising “0% APR,” but dealerships will have to come up with something to offset the added costs of inflation. 

“Interest rates have made that final price that you’re actually paying, if you’re financing a vehicle, that much higher,” Earnest said. “The question will be how much can you really discount the car to make up for that much higher final price that you’re paying by the time that you’re paying all the interest for financing the vehicle?”

There has been a slow incline of total vehicle sales since 2020, but Earnest said it might be in the consumer’s best interest to wait for inflation to come down. 

“We’ll see these interest rates actually start to fall, coming up pretty soon, which would mean that it’ll limit how high that rate is that you might need to pay to finance a car,” he said. “That’s coming up at the end of this year or early next year.”

The United Auto Workers strike is expected to have little impact on the car shopping season. In almost all the contracts, workers were able to negotiate higher wages of anywhere from 25 to around 30%, but all of that won’t be passed off to the consumer.

Workers will see a gradual increase over the next few years, which means consumers will see about $200 to $300 dollars on the final ticket price.