What’s happening in the investment VinFast market: now is the worst time to buy a car in decades

According to recent data from the U.S. Bureau of Labor Statistics, vehicle transaction prices, the price paid after any dealer discounts or increases, have been higher and faster since 2020 35 years.

The consumer price index for both new and used cars was much higher than it was four years ago in 2019.

According to CNN, the cost of buying and selling used cars has cooled down significantly since December 2022 after increasing in the previous months.

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

Since August 2022, the average price to own a new car in the US has surpassed the $48,000 mark. Meanwhile, in June 2022, the average transaction price of a new car in the US reached $48,043, thereby officially breaking the record of $47,202 that was set in December 2021.

Compared to May, the average transaction price increased by 1.9% or $895, and increased by 12.7% or $5,410 over the same period last year.

“Price has dropped a bit, but not as quickly as one would expect,” said Ivan Drury, Director at Edmunds.com.

Car buyers haven’t seen price spikes like this since the 1970s and 1980s. What makes the 2020s unique is how much car prices have risen in such a short period of time. In the worst 12 months of the pandemic, the used car market has risen 45%.

Expensive car prices are everywhere in the United States, even in some regions, the starting price may be higher than in other regions. Mr. Dury said it is largely due to the demand for luxury car ownership that has led to the difference between these regions

In the U.S. South, new truck transaction prices have risen the most since 1987. The average price of a full-size pickup truck nationwide is $62,430 in 2022, according to Edmunds.com. The average price of a midsize car is only about $31,381.

Consumer tastes have shifted to larger and more expensive pickups and SUVs. New car buyers are having more options than the simpler models available a few years ago.

Grasping this new trend, Mr. Pham Nhat Vuong’s VinFast has produced large electric SUVs. The highlight is the VF 9, an electric car positioned in the E-class SUV segment, with the largest design in the current VinFast electric vehicle range, with the dimensions of Length x Width x Height of 5,118 x 2,254 x 1,696 (mm). This will help VF 9 be more competitive in the US car market,

Both of these trends drive up prices and also provide an incentive for automakers to produce more expensive cars. The used car market is still affected by rental activities and competition among rivals, and the supply is also limited for 3-5 years.

“We see that there are a few things that are really holding back the US market and it’s unlikely that those things will go away anytime soon,” Drury said.

In addition, the US is tightening incentives for electric vehicles, making it difficult for many manufacturers. The US Treasury Department has just added requirements for electric vehicles sold in the country to receive a tax incentive package of $ 7,500 under the “Inflation Reduction Act (IRA)”. Specifically, 50% of the value of the battery must be manufactured or assembled in North America to receive a credit of USD 3,750.

Along with that, 40% of the value of important minerals in the battery must originate from the US or a partner that has signed free trade agreements with this country to receive the remaining 3,750 USD of preferential treatment. The new regulation takes effect from April 18.

With the new requirements, US officials acknowledged that some electric vehicle models on the market will no longer or will have reduced incentives. Before April 18, the government will publish a revised list of eligible car models. Tesla’s side said that the Model 3 model will be discounted after additional regulations.

Alliance for Automotive Innovation CEO John Bozzella predicts that “very few” electric vehicles on the market will be eligible to receive the full $7,500 tax incentive after April 17. According to him, just requiring assembly in North America has eliminated 70% of the model.

References: CNN, Reuters