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Tag: iab-auto buying and selling

  • EPA proposes new tailpipe rules that could push EVs to make up two-thirds of new car sales in US by 2032 | CNN Politics

    EPA proposes new tailpipe rules that could push EVs to make up two-thirds of new car sales in US by 2032 | CNN Politics

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    CNN
     — 

    The Environmental Protection Agency on Wednesday proposed ambitious new car pollution rules that could require electric vehicles to account for up to two-thirds of new cars sold in the US by 2032, in what would be one of the Biden administration’s most aggressive climate-change policies yet.

    The tailpipe standards would also have the effect of cutting planet-warming pollution from cars in half. Transportation accounts for nearly 30% of all greenhouse gas emissions in the US, according to the EPA.

    EPA Administrator Michael Regan called the regulations “the strongest-ever federal pollution standards for cars and trucks.”

    Regan touted the proposed rules on “CNN News Central” on Wednesday, claiming they would bring down costs for consumers and slash planet-warming pollution.

    “This is a future for everyone, and we’re starting to see all of the auto industry move in this direction,” Regan told CNN’s Sara Sidner, saying strong auto emissions rules have been part of President Joe Biden’s “vision from day one.”

    EPA officials said that they are considering several different emissions proposals, which could result in anywhere from a 64% to 69% electric vehicle adoption rate by early next decade. If approved, the emissions standards would start model year 2027 vehicles.

    The agency anticipates the new rules would mean EVs could also make up nearly half of all new medium-duty vehicles, like delivery trucks, by model year 2032. Officials are also proposing stronger standards for heavy-duty vehicles, including dump trucks, public utility trucks, and transit and school buses.

    One expert told CNN the Biden administration’s proposal is a pivotal moment for the US auto industry and consumers.

    “It’s a pretty big deal,” said Thomas Boylan, a former Environmental Protection Agency official and the regulatory director for the EV trade group Zero Emission Transportation Association. “This is really going to set the tone for the rest of the decade and into the 2030s in terms of what this administration is looking for the auto industry to do when it comes to decarbonizing and ultimately electrifying.”

    Regan and White House National Climate Adviser Ali Zaidi hailed the proposed regulations as a major climate win that would also save American consumers money in the coming years.

    Zaidi said that in the Biden administration’s first few years, the number of EVs on US roads had already tripled, while the number of public charging stations had doubled. And Zaidi vowed more to come, with funding from Biden’s infrastructure law for a network of EV charging stations combined with consumer tax credits.

    “Whether you measure today’s announcements by the dollars saved, the gallons reduced, or the pollution that will no longer be pumped into the air, this is a win for the American people,” Zaidi said.

    Yet even as the administration is writing aggressive regulations to push the market toward EVs, a Gallup poll released Wednesday suggests that Americans are not yet sold on the idea. Gallup polled more than 1,000 adults in the US last month and found that 41% said they would not buy an electric vehicle.

    Not only are EVs still more expensive than gas-powered cars, but consumers also haven’t yet grasped the climate benefits of transitioning to zero-emissions vehicles, the poll found. Six in 10 respondents said they believe EVs help the environment “only a little” or “not at all,” Gallup reported.

    Transportation is the biggest source of planet-warming pollution in the US, and light duty vehicles – the average cars Americans drive – account for 58% of those emissions. The UN’s Intergovernmental Panel on Climate Change reported last year that aggressive, pollution-slashing changes in the global transportation sector – including the transition to EVs – could reduce the sector’s emissions by more than 80%.

    Speaking on CNN, Regan also emphasized that switching to an EV would save consumers money in the long run.

    “Folks who purchase electric vehicles will see a cost savings over the lifespan of the vehicle, because they’re not having to buy gas, having to pay for maintenance,” Regan said. “So this is a huge opportunity for everyone in this country.”

    Other countries, including the EU and China, are moving faster toward adopting EVs. In the US, California has already proposed that zero-emissions vehicles make up 70% of new car sales by 2030, and 17 other states plan to follow California’s lead.

    That means much of the US car industry will already be transitioning ahead of the proposed federal rules.

    “I believe it’s pretty doable,” Margo Oge, chair of the International Council on Clean Transportation and a former Obama EPA official, said of the aggressive transition to EVs. “The industry is there. Europe is ahead of the US, China is ahead of Europe – and these companies are global companies.”

    New federal tax credits are coming next week that aim to help American consumers save up to $7,500 on an EV. But they have incredibly complex requirements for the auto industry – including that the cars’ batteries and components come from the US or countries it has a free-trade agreement with.

    Still, Boylan said the regulations are designed to gradually work over the next decade, by which time consumers should have far more electric vehicle options to choose from.

    “You’ve got the tax credits as the carrot,” Boylan said. The proposed tailpipe regulation “provides the stick to backstop these incentives and push the industry forward.”

    Regan told CNN the rules would be phased in gradually, giving auto makers and consumers years before they fully go into effect. During that time, the administration is focused on installing more EV charging stations and expanding access to $7,500 federal EV tax credits.

    “What we’re looking at is a ramp-up period,” Regan said on CNN. “We’re going to see a massive buildup over the next couple years, and we’re starting to see those electric vehicle sales numbers grow already.”

    The EPA will take public comment on the proposal before finalizing the rules in the coming months.

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  • Video: A pause on AI development, why it’s the worst time to buy a car in decades on CNN Nightcap | CNN Business

    Video: A pause on AI development, why it’s the worst time to buy a car in decades on CNN Nightcap | CNN Business

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    The dangers of AI, the worst time to buy a car in decades, and the next Elizabeth Holmes?

    NYU’s Gary Marcus tells “Nightcap’s” Jon Sarlin why he signed an open letter calling for a six-month pause on AI development. Plus, CNN’s Peter Valdes-Dapena explains why car prices may never go back to where they were pre-Covid. And Forbes’ Alexandra Levine details the arrest of Charlie Javice, the 31-year-old fintech founder who sold her company to JPMorgan and now stands accused of fraud. To get the day’s business headlines sent directly to your inbox, sign up for the Nightcap newsletter.

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  • This is one of the worst times to buy a car in decades. 3 charts explain why | CNN Business

    This is one of the worst times to buy a car in decades. 3 charts explain why | CNN Business

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    CNN
     — 

    It has almost never been as hard to buy a new or used car in the United States as it is today, despite improving supply issues and inflation beginning to steady.

    Vehicle transaction prices — the price you actually end up paying after any dealer discounts or markups — have been climbing higher and faster since 2020 than any other point in more than 35 years, according to recent data from the Bureau of Labor Statistics.

    The consumer price indexes for both new and used cars — the average changes in vehicle transaction price over time — are much higher than they were four years ago in 2019.

    There is a silver lining. BLS data shows inflation for used cars has been cooling down just as dramatically since December 2022 as it increased in the months before that. But used cars have a long way to go before approaching 2019 sales prices and new car prices have yet to slow down.

    The average transaction price of a new car has jumped nearly $12,000 in the past five years, according to data from auto website Edmunds.com. For used cars, the average transaction price is still nearly $9,000 higher than it was in February 2018.

    “[Prices are] coming down a bit, but not coming down nearly as fast as one would hope,” said Ivan Drury, the director of insights at Edmunds.com. “If you look back, or if you’ve ever done a transaction before in your life, all of these numbers are bad.”

    Car buyers haven’t seen price hikes like these since the 1970s and 80s. What makes the 2020s unique is how much car prices rose in a short period of time. Over the used car market’s worst 12 months of the pandemic, the index rose 45%. There’s never been a 12-month period since the BLS began keeping records in 1947 when used car prices have inflated more.

    Recent trends in prices have been similar across regions of the United States, though in some areas, the starting prices may be higher than others. Preferences for more expensive vehicles in some areas drive these regional differences, Drury said.

    There’s a large market for pickup trucks and SUVs in the south, he said, where BLS data shows new car transaction prices have risen the most since 1987.

    The average price of a large pickup truck nationwide was $62,430 in 2022, according to Edmunds.com. The average midsize car price was only $31,381.

    The road to more reasonable prices for new and used cars remains littered with potholes.

    Consumer tastes have shifted towards larger and more expensive pickup trucks and SUVs. New car buyers are loading up on options, compared to more stripped-down models available a few years ago. Both of these trends drive up prices and also create incentive for automakers to produce pricier rides. The used market is still affected by the decline in leasing trade-ins and rental car companies competing with consumers for the same limited supply of three to five-year-old vehicles.

    “We’ve got a few things that are really hindering the US market,” Drury said. “I don’t see those going away anytime soon.”

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  • After a steep fall, used car prices poised to rise again | CNN Business

    After a steep fall, used car prices poised to rise again | CNN Business

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    New York
    CNN
     — 

    The price of used cars has been falling steadily, and steeply, for much of the last year. Unfortunately for car buyers, that could be about to change.

    Wholesale prices for used cars being sold at auction have risen sharply in the last few weeks, according to industry data. Higher retail prices on used car dealer lots are likely to be close behind.

    According to data from Manheim, the largest wholesale automotive marketplace, prices jumped 4% in just the last two weeks, an unusually large increase in such a short time period. While many in the industry expected the drop in prices wouldn’t last, the sudden increase caught many by surprise.

    “We did not anticipate that prices would jump as much as they have,” said Chris Frey, senior industry insights manager at Cox Automotive, which owns Manheim. “It made my eyes jump out.”

    Dealers started pulling back on their inventory of used cars as prices were declining late last year and into January. Much of the decline began late last year as a larger supply of new cars became available for purchase.

    A shortage of parts, particularly computer chips, caused automakers to scale their production back far below the demand for new vehicles, and push potential new car buyers, even rental car companies, into the used car market. That shortage of new car inventory helped drive both new and use car prices to record levels earlier last year.

    But part supplies and computer chip inventory improved in the last half of 2022, and with that used car prices started to decline. In January used car prices were down 11.6% from the year earlier, according to the Consumer Price Index, the government’s key inflation reading – the biggest 12-month decline since the depths of the Great Recession in early 2009.

    The busy selling season for used cars is only months away — it’s tied to when potential buyers get their tax refunds. Now dealers are scrambling to rebuild inventories, and that is driving up prices.

    The strong labor market, with employers unexpectedly adding more than 500,000 jobs in January, is also driving demand for used cars.

    “If you want to point at one factor that drives demand for cars, it’s jobs,” said Ivan Drury, director of insights at Edmunds. “If you’ve got a job, you’ve got a car.”

    Part of the problem in the months ahead can be traced to the early days of the pandemic three years ago. The disruptions to the new car market at that time are about to be felt by today’s used car market.

    In March and April of 2020, auto plants across the nation were shut by stay-at-home orders, and many dealerships were closed. Demand for cars also fell off a cliff amid record job losses and millions of additional workers shifted to working from home rather than commuting.

    So the 2020 plunge in car sales meant that few people were signing up for three-year leases on new vehicles, contracts that would normally be coming to an end now and in turn feed those vehicles into the supply of used cars on the markets.

    “The repercussions of the pandemic are coming through,” Drury said. “The supply is definitely not going to be there.” The disruptions in the car markets in 2020 and early 2021 could affect used car prices much of the year.

    “We are entering a period of tight supply on 3- and 4-year-old vehicles, which make up the majority of [used] car sales,” said Michael Manley, CEO of AutoNation

    (AN)    , the nation’s largest car dealership, in a call with investors Friday. “And that’s going to impact wholesale prices and ultimately, retail prices.”

    It’s tough to know how long the rise in used car prices will last.

    The labor market and consumer spending is strong at the moment, but there are still worries about a possible recession. The Federal Reserve appears likely to keep raising interest rates, at least in the near term, which in turn will raise the cost of car loans, and for the financing that car dealers use when purchasing their own inventories.

    The drop in used car prices has been a major factor in the slowing of inflation, but a sustained rise in used car prices could make it more difficult for the Fed to pull back on rate hikes.

    Overall prices are up 6.4% over the last 12 months, according to CPI, but that reading has fallen for seven straight months. And prices would have risen 6.9% over the same 12 month period if used car prices had posted such a steep decline and instead just stayed unchanged.

    So broader economic conditions in the US economy are certain to have an effect on supply, demand and pricing of used cars, which makes forecasting future prices very difficult, said Frey.

    “I don’t think this latest increase is a blip. But I imagine prices could come down after spring and tax refunds land,” said Frey. But he added that forecasts are tough to make in the current market.

    “We’ve been calling for a 4% decline in prices from December last year to December this year,” Frey said. “We may have to revise that.”

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  • New cars are crazy expensive but, if you’re careful, they don’t have to be | CNN Business

    New cars are crazy expensive but, if you’re careful, they don’t have to be | CNN Business

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    New York
    CNN
     — 

    After years of parts shortages, the average price people paid for a new car in America only recently dropped back below sticker. But this ignores a larger issue: Even pre-pandemic, sticker prices were steadily ticking higher as buyers load up on options.

    Two decades of historic data from auto website Edmunds.com indicates that options are the biggest driver in rising vehicle prices — and that it’s been happening over many years.

    “Overall, the average price gap between base models and vehicles as optioned up by customers has soared, rising from 24.6% in 2002 to 38.1% in 2022.”

    The average sticker price of a new vehicle, as purchased, was about $30,000 in 2009 and reached almost $40,000 in 2019, before Covid hampered parts supply and vehicle production, according to Edmunds. Last year that figure reached almost $46,000, according to data from Edmunds.com.

    Yet the average sticker for base models, adjusted for inflation, has actually gone down a little — even as consumers have shifted from sedans to more expensive SUVs. The difference is the cost of options buyers added on.

    Steve Reed, an economist with Bureau of Labor Statistics, a government agency that measures inflation, concurred with what Edmunds’ historic pricing data indicated.

    “According to our measures, the real cost of cars relative to other things has declined,” he said.

    That’s good news for drivers willing to go no-frills: If you don’t want to pay lots of a new car, you don’t have to. Don’t dip heavily into the options list, and cars are actually relatively cheap.

    Consider the Nissan Versa, the cheapest car available for the 2023 model year.

    It has a base price of $15,730. Adjusted for inflation, that’s barely different from the base price of a Hyundai Accent in 2002, the cheapest new car available that year. This is despite the fact the 2023 Versa is loaded with standard features — including push-button start, blind spot monitoring and a touchscreen — of which many weren’t even available two decades ago.

    For lots of different types of vehicles, gaps between the lowest base price and the average sticker price as sold to customers have grown over the past two decades, according to Edmunds.com data.

    For the Mercedes E-class, for example, the difference between the base sticker price and the average sticker with options was just 11.5% in 2002 compared to 30% in 2022; for the Chevrolet Tahoe, it jumped from 14% to 41% over that same period; and for the Acura MDX it increased from 7% to 21%.

    Overall, the average price gap between base models and vehicles as optioned up by customers rose from 24.6% in 2002 to 38.1% in 2022.

    (Of course, it’s not entirely surprising that base prices of vehicles haven’t gone up in the past couple of decades, adjusted for inflation, since that is what “adjusted for inflation” is supposed to mean. New cars are part of the overall inflation picture for economists who calculate it, accounting for a certain amount of improved quality.

    Competition is a factor, too. Car companies have found ways to keep prices down even while adding more safety technology and comfort features like standard automatic transmissions.

    These base price models may not make much money, if any, for automakers. But they can attract shoppers who can then be up-sold to more expensive versions in what’s known as a “loss leader” pricing strategy, said Michael Brisson, director of economic strategy at Moodys.

    And customers are more than willing to play along, said Matt Jones, a spokesperson for the auto pricing site TrueCar who spent 12 years working at auto dealerships.

    “The idea that people buy the most cost-effective thing? I have almost never seen that be the case,” he said.

    So, even though vehicle shoppers are getting more for their money to start with, Americans keep piling on options.

    This year, GMC started offering its most luxurious trim level, Denal Ultimate, on its heavy duty trucks.

    For General Motors’ GMC brand, for example, the gap between base models and the average vehicle with options (as sold to customers) has been growing steadily among trucks and SUVs for the last 20 years.

    Surprisingly, the gap has been growing fastest in GMC’s heavy-duty trucks, usually thought of as serious work vehicles. The average price of a GMC Sierra 2500 HD, as sold, is now double the base price.

    These customers see their big trucks as a reward for years of hard work, said Patrick Finnegan, head of marketing for GMC.

    “You may think a heavy-duty truck customer might not be in the market for that sort of thing, might not be willing to pay for it,” said Finnegan. “But it’s some of those features that they’re actually most excited about, like Bose Premium Series speakers.”

    Offering increasingly luxurious option packages is a way for automakers to take advantage of greater income disparity in the United States, said University of Michigan economist Justin Wolfers. Wealthy buyers can pay more while automakers maintain purchase opportunities for those without as much to spend.

    A different kind of competitive pressure has resulted in this rise in options, said Edmunds.com’s Drury: the competition with friends and neighbors who have the latest features on their cars. Plus, when buying a new vehicle, people seldom want less than they had before.

    Industry strategy also plays into it. Car shoppers can rarely pick and choose options individually. Instead, they usually have to buy packages of features together or even pay more for more luxurious “trim levels” to get features they want, said Tyson Jominy, an industry analyst with J.D. Power.

    “A classic example is a ‘Wheels and Tunes’ package,” Jominy wrote in an email. “There’s no inherent link between music and wheels, but if you’re an audiophile you have to get the upgraded wheels to get the branded radio, and vice versa.”

    Car shoppers can avoid getting caught in the vortex pulling them toward ever more expensive new vehicles, said Jeff Bartlett, managing editor at Consumer Reports. He worries that car shoppers seeing these rising prices for the “average new car” will use that as a guide to what their next car should cost.

    “It gives me shivers to think of people in this economic climate, thinking, ‘Oh, well, I was just going buy a $30,000 car but, hey, I guess $50,000 is average, so why not?” he said.

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  • 5 things to know for Jan. 17: Storms, Gun violence, Biden, Crypto, Australian Open | CNN

    5 things to know for Jan. 17: Storms, Gun violence, Biden, Crypto, Australian Open | CNN

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    CNN
     — 

    Prices for used cars have been high in recent years as inventory has been hampered by computer chip shortages and other pandemic-related woes. Luckily, for those who are currently shopping for a vehicle, many automakers are reporting they have more of the parts they need and are ramping up production – meaning used car prices will likely continue to plunge.

    Here’s what else you need to know to Get Up to Speed and On with Your Day.

    (You can get “5 Things You Need to Know Today” delivered to your inbox daily. Sign up here.)

    After an onslaught of atmospheric rivers recently battered California with flooding, a much-needed break from the rain is finally in sight. Flood watches that covered millions in coastal Central California have expired, though crews will be busy cleaning up the damage over the next several weeks. The storm system is now advancing farther inland and is expected to bring heavy snowfall into the Four Corners Region. Up to two feet of new snow is expected in parts of Colorado by this evening, while rain is in the forecast for much of the Southwest. By midweek, the threat will be in the South. The Storm Prediction Center has already highlighted an area from East Texas to the Lower Mississippi Valley for the potential for strong storms.

    Another spate of shootings this week is shaking up communities across the US. At least six people, including a mother and her 6-month-old baby, are dead after a “cartel-style execution” occurred Monday in the town of Goshen, California. The shooting appears to be gang-related, the Tulare County Sheriff’s Office said. Separately, eight people were shot Monday at a block party in Fort Pierce, Florida, where the community was gathering to celebrate Martin Luther King Jr. Day. An investigation is ongoing to identify the shooter, authorities said. This incident marks the 30th mass shooting in the country this year, according to the Gun Violence Archive. So far in 2023, the US is averaging about two mass shootings per day.

    Following the discovery of misplaced classified documents from President Joe Biden’s time as vice president, House Republicans are demanding that the White House turn over more information – including any visitors logs to Biden’s private residence, where a batch of documents was found. The White House counsel’s office, however, said there are no visitors logs that track guests who come and go at Biden’s home in Wilmington, Delaware. “Like every President across decades of modern history, his personal residence is personal,” the counsel’s office said in a statement Monday. Some Republicans are crying foul, saying former President Donald Trump was treated differently when FBI agents searched his Mar-a-Lago residence last August. Meanwhile, the White House is labeling the Republican investigations into the documents as “shamelessly hypocritical.”

    The Biden Administration has no visitor logs for Biden’s private home, where classified documents were found


    04:19

    – Source:
    CNN

    Cryptocurrencies are rebounding after getting pummeled by losses for the better part of last year. This is prompting speculation that the so-called crypto winter – the digital asset world’s equivalent of a bear market – is over. Bitcoin, the world’s most popular crypto, is up 25% over the past month, hovering above $20,000 for the first time since November, following the collapse of the crypto trading platform FTX. Ethereum, the No. 2 crypto, is up more than 30% over the past month, trading above $1,500 on Monday. Still, Bitcoin is substantially down from its peak in November 2021, just shy of $69,000. Two months ago, when FTX imploded and sent shock waves through the industry, bitcoin plummeted to a two-year low of $15,480.

    Ben McKenzie cnntm intv

    Actor rips crypto as ‘largest Ponzi scheme in history’


    03:13

    – Source:
    CNN

    Some players at the Australian Open expressed irritation today after extreme heat postponed play for hours at the tennis tournament. As temperatures reached almost 97 degrees Fahrenheit, organizers announced at around 2 p.m. local time that matches on outdoor courts would come to a halt. Separately, a Russian flag that was displayed in the stands at the Grand Slam event has sparked controversy and a rules update from Tennis Australia. Fans will no longer be allowed to bring Russian or Belarusian flags to the site of the tournament, officials said, citing the conflict in Ukraine. The decision comes after Ukraine’s ambassador to Australia “strongly condemn[ed]” the Russian flag being displayed Monday during the first-round match between Ukraine’s Kateryna Baindl and Russia’s Kamilla Rakhimova.

    Selena Gomez responds to body shamers

    The singer and actress shared a message about body positivity after trolls on social media criticized her appearance at the Golden Globes. 

    Tampering with leopard and monkey enclosures prompts zoo closure

    There appears to be some monkey business at the Dallas Zoo… Police say the fencing of some animal enclosures was cut open in “an intentional act,” prompting the zoo to close Friday.

    ‘The Mandalorian’ season 3 trailer has arrived

    After much fanfare, Baby Yoda is back in action. Watch the new trailer here.

    Netflix plans its biggest-ever slate of Korean content

    Fans worldwide are buzzing over K-content! Netflix said over 60% of its members watched South Korean titles last year. Check out some of the international shows and films heading to the platform soon.

    Enjoying nature may lessen the need for some medications, study finds

    Here’s a sign to take the scenic route. According to a new study, visiting nature is associated with lowering the odds of using blood pressure pills and mental health medications.

    Gina Lollobrigida, a legend of Italian cinema, has died, according to members of her family. She was 95. Together with Sophia Loren, Lollobrigida came to symbolize the earthy sexuality of Italian actresses in the 1950s and 1960s. In addition to appearing in several European films, she made her English-language film debut in 1953 in John Huston’s “Beat the Devil,” alongside Humphrey Bogart.

    31

    That’s how many states have taken action to restrict TikTok on government devices, reflecting a wave of recent clampdowns by Republican and Democratic governors targeting the short-form video app. The accelerating backlash comes amid renewed security concerns about how the platform handles user data and fears that it could find its way to the Chinese government.

    “We don’t talk about a collapse, but it can happen any second.”

    – Kyiv mayor Vitali Klitschko, saying Ukraine’s critical energy infrastructure remains severely threatened and could completely collapse if it were to be hit by Russian rockets. Klitschko’s warning comes as millions of Ukrainians continue to endure a winter without electricity, water, and central heating due to relentless Russian strikes.

    Check your local forecast here>>>

    16,000 antlers and counting

    This man searches the hills of Montana for antlers after deer and elk shed them each season. Check out his extensive collection. (Click here to view)

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  • The steep plunge in used car prices — what it means, and what’s ahead | CNN Business

    The steep plunge in used car prices — what it means, and what’s ahead | CNN Business

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    New York
    CNN
     — 

    Tracking used car prices is enough to give anyone whiplash.

    Since the start of the pandemic and the resulting disruptions to new car supply chains first sent prices soaring, used car prices posted their largest annual increase on record – up 45% in the 12 months ending in June 2021, according to the Consumer Price Index – before swinging to a 12-month drop of 8.8% in the most recent reading for December.

    That was the biggest 12-month plunge in prices for used cars since June 2009, when General Motors and Chrysler were both in bankruptcy proceedings and the economy was hemorrhaging a half-million jobs a month.

    “It was a completely wild ride,” said Ivan Drury, director of insights at Edmunds.com Inc., an online resources for inventory and information on cars.

    Data from Edmunds shows the average price of a used car purchase in December at $29,533, down nearly $1,600 from the record high of $31,095 reached in April 2022. Today’s average used car price is about the same as the average new car price as recently as 2010.

    While the prices of late model used cars are down only 5% off their peak according according to Edmunds, the price of older used cars, those five years or older, have fallen 15% or more from their peaks early in 2022.

    Experts say reasons for the decline include higher interest rates that make it more expensive to finance a car purchase, limiting demand. CarMax

    (KMX)    , the nation’s largest pure used car dealer, has warned that the combination of high prices and high interest rates is creating an affordability problem for many buyers, hurting overall demand.

    But the leading reason for the drop in used car prices is the increased supply of new cars.

    It was the lack of new car inventory that drove up prices. Parts shortages, especially for computer chips, had choked off production of new cars in much of 2022, causing the lowest level of full-year US new car sales since 2011.

    The low supply of new cars caused an even bigger jump in the average price of used cars, as buyers who would otherwise buy new vehicles turned to the used car market.

    “At one point it seemed that everyone who was going to buy new ended up buying used,” said Greg Markus, executive vice president of AutoLenders, parent company of New Jersey’s largest used car dealership chain.

    That included rental car companies, which before the pandemic normally bought about 10% or more new cars per year. With limited inventory of cars to sell, automakers essentially stopped making lower-priced fleet sales, and even rental car companies were forced to turn to the used car market.

    All that has started to change in recent months. Automakers are reporting more supplies of the chips they need, and are producing and selling more cars, including a return of fleet sales. Overall, sales were up 9% in the fourth quarter compared to a year ago, and nearly 6% higher than in the third quarter, according to Cox Automotive. And with more buyers finding the new cars they want, that means lower demand for used cars.

    Experts say part of the decline in used car prices is that the price increases were not sustainable and were partly driven by buyers at used car auctions overpaying for the limited supply of used vehicles.

    “There was nowhere for these prices to go but down,” said Markus.

    There could be more declines in used car prices in the months ahead, as new car inventories continue to build. One thing that could put a floor under the used car prices: late model used cars will likely be in short supply given the reduced new car production over the last three years.

    “The supply issue is still grim,” said Markus. Because of that, “I don’t think we’re getting down to 2019 levels,” he added.

    The run-up in used car prices was a major driver in the nation’s overall inflation rate, adding about a full percentage point to the overall increase in consumer prices from April of 2021 through May of 2022. Now it’s a factor helping to bring down the pace of inflation, shaving more than a third of a point off the overall rate in December.

    This is obviously good news for those wanting or needing to buy a used car, though it can have a negative effect on car buyers by reducing the value of vehicle they hope to trade in. Edmunds shows the average trade-in value in December down nearly $3,000, or 11%, to $22,605, from the record high hit in June of 2022.

    That drop in the value of trade-ins could also be a headwind on car prices by reducing what buyers are able to pay.

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  • EPA preparing to release strict vehicle emissions rules | CNN Politics

    EPA preparing to release strict vehicle emissions rules | CNN Politics

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    CNN
     — 

    The US Environmental Protection Agency is preparing to release strict new proposed federal emissions standards for light-duty vehicles that, if implemented, would move the US car market decisively toward electric vehicles over the next decade.

    The EPA is considering emissions standards that could make up to two-thirds of new passenger vehicles sold in the US electric by 2032, according to a source familiar with the proposal.

    If implemented, the new greenhouse gas performance standards would start for light-duty vehicles that are model year 2027 and gradually increase through model year 2032.

    By 2032, the rules would ensure that 64% to 67% of all new-car sales in the US would be electric vehicles, according to the source.

    The EPA’s proposal, which was first reported by The New York Times, comes after California air regulators voted last year to ban the sale of new gasoline-powered cars by 2035 and set interim targets to phase these cars out.

    EPA spokesperson Tim Carroll did not comment on the specifics of the proposal but said the agency is working on developing new standards “to accelerate the transition to a zero-emissions transportation future, protecting people and the planet,” as directed by a previous executive order from President Joe Biden.

    “Once the interagency review process is completed, the proposals will be signed, published in the Federal Register, and made available for public review and comment,” Carroll said.

    The new rules could come as soon as Wednesday.

    The EPA proposal is a monumental step toward zero-emissions vehicles, coming as the US tries to keep up with other countries racing toward EV adoption, one expert told CNN.

    “I believe it’s pretty doable,” said Margo Oge, chair of the International Council on Clean Transportation and a former Obama EPA official. “The industry is there. Europe is ahead of the US, China is ahead of Europe, and these companies are global companies.”

    Oge noted that in the US, California is already proposing 70% new zero-emissions vehicle sales by 2030 and other states are planning to adopt California’s rules – meaning much of the US car industry will be transitioning ahead of any proposed federal rule.

    Still, the EPA’s proposal takes a different approach from California’s policy. Whereas California is mandating car companies sell a certain percentage of electric vehicles, the EPA would gradually raise greenhouse gas emissions standards to increasingly stringent levels from 2027 to 2032, pushing the industry toward electric vehicles to meet those high standards.

    The EPA rule would ensure that the rest of the country and the US car industry would follow California’s lead, Oge said.

    Biden has made electrifying the cars that Americans drive a key part of his climate goals. In 2021, the president set a new target that half of all vehicles sold in the US by 2030 would be battery electric, fuel-cell electric or plug-in hybrid.

    The US Treasury Department is set to release rules for new federal electric vehicle tax credits on April 18. While these tax credits are complex and could take time for consumers to take full advantage of, experts hope they will help accelerate the transition to EVs in the US.

    “Given the industry, the [Inflation Reduction Act] and what companies are doing globally, I just don’t see this number as being out of reach,” Oge said.

    The proposed EPA rules will go through a lengthy public comment process and could be changed before they are finalized.

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