It’s been a roller coaster ride of epic proportions for car buyers since the pandemic, with higher interest rates, lower supply and appreciation in values making it chaotic for consumers and the industry as a whole.
So, will the chaos continue in 2024?
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According to a forecast from Cox Automotive, it’s expected that the market will return closer to “normal” tendencies before the pandemic changed everything.
The report states a few factors as to why this should be the case.
New vehicle inventory is expected to rise. New inventory is expected to reach pre-pandemic levels at nearly 3 million units, which is three times the amount during the chip shortage that’s plagued the industry in recent years, according to the report. An increase in inventory will likely lead to dealerships offering more discounts, thus lowering prices to some degree. New-vehicle sales are expected to increase by less than 2% and used vehicles are expected to increase by 1%, according to the report.
There isn’t expected to be a recession. With unemployment rates expected to remain low, wage growth increasing above average and loan rates possibly coming down, the economy should be strong enough to help with vehicle affordability. The economy isn’t expected to grow robustly, but the fact that a recession will likely be avoided is good news for those looking for a new car.
Electric vehicle prices are expected to go down, which likely will affect market. While the sales of electric vehicles have fallen short of projections, the report said there still is a demand for them, and dealerships will have to get creative in selling them to a public that’s still overall leery. But with more EV models available, there likely will be more incentives and discounts that will be offered. The report said it’s expected that EV sales will exceed the 1 million units sold in 2023, and lower prices and discounts for EVs might mean the same for hybrid and gas-powered vehicles.
Overall, the report said the seller’s market that has plagued the industry since the pandemic will go away thanks to more options, better deals and more efficient processes of buying cars at dealerships.