Car Market Update For New & Used Vehicles | Watch Before Buying | Summer 2024

Summary

The Car Edge update for Summer 2024 discusses the new and used car market trends, emphasizing days supply of inventory as a key indicator for buyers. New car prices are expected to decrease with increased inventory, while used car prices have already dropped by 5%. Brands with high inventory like Infiniti, Chrysler, and Dodge are likely to offer aggressive incentives. Conversely, brands with lower inventory, such as Kia and Toyota, may see less negotiation room despite recent sales declines. The script highlights a buyers' market for new cars, especially with increased incentives and fair valuations, while the used car market remains challenging due to high prices and negative equity issues, except for used EVs which have seen significant depreciation.

Takeaways

• 🚗 The new car market is expected to see an increase in days supply, indicating more cars available than customers, potentially leading to better deals for shoppers.
• 📉 The average listing price for new cars has slightly decreased, with the most recent data showing a transaction price of $47,214 in April.
• 🔍 Day supply is highest among the most expensive vehicles and lowest for more affordable ones, suggesting a challenging market for those seeking vehicles under $40,000.
• 🛍️ Brands with high inventory like Infiniti, Chrysler, Volvo, and others are likely to offer more aggressive discounts and APR incentives due to oversupply.
• 📈 Brands such as RAM, Chrysler, Dodge, and Jeep have seen MSRP increases of over 50% in the past 5 years, which is significantly higher than the inflation rate.
• 🏷️ Brands with lower inventory like Kia, Honda, Subaru, Lexus, and Toyota have not raised their prices as dramatically, offering better value for consumers.
• 🔑 Kia has experienced sales declines for five months in a row, suggesting they may be more motivated to sell despite having a shorter day supply.
• 📉 Used car prices have dropped by about 5% in 2024, but the average transaction price is still over $22,500, remaining unaffordable for many.
• 🚦 The used car market is expected to remain tight with a 44-45 days supply, influenced by the chip shortage that affected new car production.
• 🔌 There is a significant depreciation in used electric vehicles (EVs), making it an opportune time to purchase a pre-owned EV.
• 💳 High negative equity due to overpayment during the pandemic has resulted in many potential buyers being unable to afford loans for used cars.

Q & A

What is the primary focus of the Car Edge auto market update?

The primary focus of the Car Edge auto market update is to discuss the trends in the new and used car markets, specifically addressing the days supply of inventory, average listing prices, and the current state of APRs (Annual Percentage Rates).

What does 'days supply of inventory' indicate for consumers in the new car market?

The 'days supply of inventory' indicates the number of days it would take to sell all available current inventory based on the daily sales rate. A longer day supply suggests more cars than customers, potentially leading to better deals for consumers, while a shorter supply indicates more customers than cars, making it harder to negotiate deals.

What is the current industry average for days supply of new cars in the United States?

The current industry average for days supply of new cars in the United States is 72 days.

What is expected to happen to the days supply of new vehicles over the summer of 2024?

It is expected that the days supply of new vehicles will continue to increase over the summer of 2024, which could lead to more inventory than customers and potentially better deals for new car shoppers.

What was the average transaction price for a new car as of April in the script?

The average transaction price for a new car as of April was $47,140.

Which brands are mentioned as having the most oversupplied inventory and therefore potentially offering better deals?

The brands with the most oversupplied inventory mentioned in the script are Infiniti, Chrysler, Volvo, Ram, Dodge, Ford, Lincoln, Buick, Jeep, Audi, and Alfa Romeo.

How have the MSRPs for RAM, Chrysler, Dodge, and Jeep changed over the past 5 years according to the script?

According to the script, the MSRPs for RAM, Chrysler, Dodge, and Jeep have increased by more than 50% over the past 5 years.

What is the current average transaction price for a used car as of the time the script was filmed?

The current average transaction price for a used car as of the time the script was filmed is over $22,500.

What is the expected trend for used car prices in the summer of 2024 according to the script?

The script expects used car prices to continue to decrease, with a particular emphasis on the depreciation of used electric vehicles (EVs), making it a good time to purchase a pre-owned EV.

What challenges are consumers facing regarding negative equity in the used car market?

Consumers are facing significant negative equity, with the latest data indicating over $6,000 in negative equity on average. This is making it difficult for many to get approved for a loan or to roll over their negative equity onto the next car loan.

What is the current average interest rate for a new car loan as mentioned in the script?

The current average interest rate for a new car loan as mentioned in the script is a little bit above 9%.