What about the used car prices? Are they going to drop as well?
They have already started to. Go to any packed Ford lot or Chevy or Dodge lot and you'll see that Gladiators, Ram trucks, Silverado 1500s and F-150s are selling for less than MSRP. This is probably because people who bought these cars at high interest rates can't afford to trade them in for a new one right now due to their other debts.
I think that once the new car market returns to normal, then used car prices will start to come down. I still think that they are artificially high though due to shitty dealer markups on absolute shitboxes. I don't think they will return to normal until a lot of these people who overpaid for shitboxes are underwater with their car payments and their other bills. Then they'll have no choice but to sell their shitboxes for much less than what they paid for them. It may not happen for a while but it will eventually. That's when the real car crisis will begin.