Car sales could be headed for a recovery next year, according to the analysts at Edmunds. The industry research firm is predicting that 14.8 million new vehicles will be sold in 2023, which would represent a 7 percent increase from its current estimates for 2022. The uptick would follow a rough patch for the industry, which felt the brunt of global supply chain issues. 
"2022 was a mixed bag for the entire automotive industry," said Jessica Caldwell, executive director of insights for Edmunds, in a news release. "Sales were severely dampened by limited inventory, but automakers and dealers were able to rely on a dichotomy of affluent car shoppers and individuals making necessity-based purchases to keep things afloat — and the vehicles that they could sell commanded some hefty price tags."
In addition, Edmunds is predicting that new vehicle prices will continue to cool. The average transaction price hit an all-time high of $47,681 in November 2022, but it was also the first time since July 2021 that the measure fell below the Manufacturer Suggested Retail Price (MSRP). 
This suggests that supply is recovering and car dealerships are taking a smaller margin. 
Edmunds' tip for consumers: if you've been holding off on car purchases due to lack of supply or high prices, now might be a good time to jump back into the market. 
On the downside, the researcher noted that leases will continue to become less affordable in 2023. The average monthly payment hit $583 in November, up from $471 the year before, according to Edmunds' data. It also said lease penetration was 17 percent in November, down from 28 percent the year before, which shows that buyers are opting out of the arrangement. 
Making matters worse, auto loans are also expected to become more expensive, as interest rates continue to rise across the economy in response to Federal Reserve hikes. Edmunds said the average interest rate paid over the life of a loan hit an all-time high of $8,436 in November. 
"With yet another Fed rate hike expected to be announced today, rising interest rates are increasingly top of mind for consumers in all aspects of life, including auto loans," said Ivan Drury, Edmunds' director of insights. 
"Even rates that are near or slightly below average can rack up thousands more in interest paid compared to years past, as vehicle prices have also shot up. Researching the total price of a vehicle with interest paid might show that obtaining a promotional APR on one vehicle versus another can be a deciding factor of what is affordable — and what isn't."