Will Car Prices Drop in 2024?
What’s going on with the Car Market and Car Prices right now? Everyone is asking themselves this question: Is NOW a good time to buy a car? We’ll help you answer that question, for yourself, by covering new car prices, used car prices, including auction prices.
First up, new car prices. Take a look at this chart from Cox Automotive showing average transaction prices over the last 12 years. It’s ugly, no doubt, thanks to greed during the pandemic and very unfavorable inflation ever since. While prices shot sky-high, it might surprise you to know that prices are actually at a two-year low, right now. It’s not amazingly low, but it’s something.
Why is this happening now? First, the Fed slowed their money printing spree in 2022. That caused an inflationary explosion while it was happening, but now it’s having the opposite effect, like we predicted it would. Right now, without all that free money floating around, fewer folks can afford new cars with these prices and interest rates. Automakers are in general at full production, but most dealers have more inventory than they know what to do with.
Speaking of inventory, there’s plenty of it, everywhere, every city, every dealer. I drove out of Minneapolis a few weekends ago and saw a dealer billboard advertising, “We have over 1,000 cars in inventory!” That’s just crazy! New vehicle stats are at eye-opening levels right now: an average list price of $47,240 is being hit HARD with an inventory increase of 46% over last year. Dealers right now have cars sitting for an average of 72 days—that’s a lot of cars collecting dust, and expensive interest payments are adding up on those floor plan loans. And guess what? This means dealers are hungrier to deal, so you should be pushing hard for discounts, especially if you’re looking for brands like Chrysler, Jeep, and Lincoln.” And remember how we said, “Shoot for fairness” years ago? After enduring the pirate level greed this past few years, we say “Screw their need for profits! Make them have to start paying it all back!” You know what they say about Karma? We say make it hurt!
Now typically, we see a bit of a ‘spring bounce’ in car sales, right? Traditionally, Americans who get a tax rebate were itching to spend it. Well, forget about that this year. The market’s as flat as day-old soda, and sales are about as exciting as rancid milk. Jonathan Smoke from Cox Automotive tells us that the usual rush to buy isn’t happening. Shoppers are sitting tight because the economic vibes are off, and nobody’s in a great big hurry to spend big money on a new ride.” In fact, the average vehicle age of light used vehicles is still increasing and has grown to an estimated 12.7 years. That’s up from an average of 11.9 years old since the pandemic started.
As far as used car sales goes, The average list price right now is $25,540, down 4% from last year. But don’t let that fool you—prices are still way above what they were pre-pandemic. Inventory’s up, prices are trending down, thanks in part to dealers getting better buys at auctions. It’s a buyer’s market out there friends, if you’re savvy, and exercise some courage.
If you missed it go back and see our recent show covering OTD Price negotiations. It was a killer good show! “Now, here’s the recent scoop on Auction Prices, known as MMR, or Manheim Market Report— the Manheim Used Vehicle Value Index dropped like a rock to 199.2 by mid-April, marking a 13.7% year-over-year decline. And before you think it’s just a bad month, let’s be clear: it’s not just the month; it’s the new trend.
If you’ve been eyeing something a bit more upscale, luxury cars have seen a 12.7% drop. Compact cars have dropped by a steep 17.1%, and midsize isn’t far behind at 16.0%. If you’ve been waiting to buy a good sensible car, now’s definitely a good time. Pickups are down 15.0%, while SUVs and crossovers have dropped by 14.0% in price.”
EVs have taken the biggest hit with a significant drop of 18.3%, while ICE engines are only down by 13.1%. For EV’s Sales growth is stalling—only up 2.6% from last year. The hype train is slowing down. But with more models hitting the market and prices falling, there might still be opportunities to score a deal on a new EV.
So what does this mean for you, our savvy car shopping friends? Bargains, deals, and more negotiating power, that’s what. Prices are down, and if you play your cards right, you might just drive off the lot with a steal of a deal. Just don’t forget to use the OTD method we just recently presented in detail.