when someone wanted to buy a new car, among the advice he received was to wait until December. The reason? With the end of the year (also the second semester, the last quarter and the month itself) came the most aggressive offers with which the dealers sought to meet the objectives they had promised the manufacturer. Now the low stock does not facilitate the big sales at the end of the year. Nevertheless, you should take advantage of December to buy a new car: in 2023 they will be more expensive… due to the banks.
Since 2020, making reliable economic forecasts is (even) more complicated. Despite this, there is something that all the experts agree on: in 2023, The interests that we will pay to the banking entities for the loans will be higher than now. Something that, inevitably, will affect the offers in the motor world: most of the promotions associated with the purchase of a new car imply mandatory financing. And if you choose to buy it without a promotion, but ask for a loan to get all the money… you will be in the same situation.
Inflation and core inflation
The World Bank forecast for 2023 is not too positive: a third of the economies are at risk of entering a recession. Of course, it also points out that it would be the mildest crisis in the last forty years and adds that the blow would be less pronounced in Spain. In our country, although it may not seem like it, inflation has given us a break: prices have moderated in the last five months. The alarms are now focused on underlying inflation.
Core inflation helps to identify and understand price developments more clearly and precisely. In his calculations he takes into account everything except energy and unprocessed food: with them a short and medium term measurement can be made to compare months or quarters. In November he came to 6.3% after a constant escalation: in January it was 2.2%.
Loan interest rates
Central banks take inflation into account to act. If we add to this the risk of a recession, the logical role goes through raise interest rates to generate a cushion that allows lowering them if that recession is more serious than expected. The consequence of this increase is an increase in the price of money, which, in turn, relaxes consumption and also prices.
The European Central Bank (ECB) has raised interest rates three times in 2022: in July it ended six years of zero rates, while in September, with inflation in the Euro Zone close to 10%, it raised interest rates by 75 basis points to 2%. In November he repeated the same percentage. These movements do not have an immediate effect, they are noticed later… so we could be aware of them in 2023.
more expensive financing
Knowing the theory, let’s go with the practice. According to the forecasts of Bloomberginterest rates would close the year at 2.5% for reach 3% in February 2023, 3.25% in March and 3.5% in May. Some figures that agree with those given by Pablo Hernández de Cos. The governor of the Bank of Spain believes that interest rates will reach their maximum in the first quarter of 2023, oscillating between 2.25% and 2.5%.
Although these forecasts are subject to many uncertainties, it should be borne in mind that interest rates They are currently at 1.25%. Therefore, those drivers who are thinking of buying a new car should hurry: in 2023, not only the prices of the vehicles themselves will rise, but also the loans and financing associated with offers and installment purchases.