Will high gas prices reduce high car prices? Or make them worse?

March 10, 2022 9:10 AM

I am going to need/really want to buy a new (to me) car in the next couple of months when the one I am currently borrowing returns to its real home. Is it likely that the very high price of gas will increase or decrease the price of new and/or used cars in the short term? I'm in Ontario, if that's relevant.
posted by jacquilynne to Shopping (5 answers total)

Gas isn't as relevant as what goes into making the car--with sanctions on/by Russia, a lot of stuff that goes into the car's body is going to get more expensive, at least temporarily. New cars are going to be more expensive, used cars as well as the components become more valuable.
posted by kingdead at 9:16 AM on March 10, 2022

If gas prices continue to rise, I suspect you will see the price of car with lower MPG ratings drop and the cars with higher MPG ratings rise.
posted by tman99 at 9:27 AM on March 10, 2022

The current issues with car prices/inflation are supply chain related. New cars and used cars are running at a premium right now - I haven't seen much in the way of gas prices affecting car prices, but cars are more expensive now due to shortages in the supply chain for sure. Even used cars.
posted by Chuffy at 10:46 AM on March 10, 2022

It will make very little difference. Gas is currently 2.5% of the average American's consumer spending. It was around 4% ten years ago, and over 6% in 1980. It's at historical lows. Gas sucks up a lot of oxygen in the media, and people who are very different from average might experience real pain when it goes up by 20%. But the fact is, the average person just doesn't spend a lot of money on gas, so changes in its price makes very little difference to the average person's disposable income.

It miiiiight make a very small difference to the prices of very poor mileage cars (luxury trucks, etc.), but I don't think those buyers are particularly sensitive to the gas price, despite what they say.

As others have said, the current high used prices are supply chain issues, and those issues are gradually resolving. People who watch this stuff are seeing used prices fall at auction/wholesale.
posted by caek at 10:46 AM on March 10, 2022

If all other factors where steady then higher consumable costs like gas would lower demand for ICE vehicles. But the numbers would be small. The bigger issue right now is that there is pent up demand, unstable supply, and (waves hands around) everything else going on.

Here in Chicago mass transit is down by about 50%, and that is just a staggering number of people using alternative modes to get around, and that is mostly cars. The Toronto TTA is even larger and I expect a very similar situation. That alone is like adding the driving population of Newfoundland to the mix. And most of the other urban centers (not you NYC!) are seeing similar shifts. Thankfully most transit users have cars, but many didn't and many need new ones.
posted by zenon at 10:59 AM on March 10, 2022