Car Market Update For New & Used Vehicles | Watch Before Buying | Summer 2024
Summary
TLDRThe 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%.
Outlines
🚗 Auto Market Update for Summer 2024
The video script opens with an introduction to the Car Edge's quarterly auto market update. The speaker, along with his father who has 43 years of experience in the car industry, discusses the state of the new and used car markets in Summer 2024. The focus is on the days supply of inventory, which is a crucial indicator for consumers looking to buy a car. A higher days supply suggests more cars than customers, potentially leading to better deals. The industry average is 72 days supply, with some brands having significantly more. The script predicts an increase in days supply over the summer, which may lead to a decrease in new car prices. Brands with the most inventory, such as Infiniti, Chrysler, and others, are likely to offer the best deals due to their oversupply. However, these brands have also significantly increased their MSRPs, which may offset the benefits of a good deal. Brands like Kia, Honda, and Toyota have less inventory and have not raised their prices as dramatically, making them potentially more attractive options for buyers.
📉 New and Used Car Market Trends and Buying Advice
This paragraph delves into the specifics of the new car market, noting that while the average listing price for new cars has slightly decreased, the day supply is highest among the most expensive vehicles. The script suggests that consumers can expect aggressive incentives from brands with high inventory, such as Infiniti, Chrysler, and Dodge, which have raised their MSRPs significantly over the past five years. It also mentions that brands with lower inventory, like Kia, Honda, and Toyota, may not offer as many incentives but could be more motivated to sell due to recent sales declines. The script advises consumers to say no to market adjustments and to look for fair value in the current market, particularly from Subaru, Kia, Nissan, Chevrolet, and Mazda. It also touches on the overall increase in new car inventory, the expectation of further growth over the summer, and the impact of this on market dynamics and incentives offered by manufacturers.
🔋 Used Car Market Analysis and Challenges
The final paragraph of the script shifts focus to the used car market, where prices have dropped by about 5% but remain high, with the average transaction price for a used car still exceeding $22,500. The script notes that the used car market is typically slower in the summer months following the busy tax season. It also points out that used car inventory levels are tight due to the chip shortage's impact on new car production, which in turn affects the supply of used cars. The script highlights that electric vehicles (EVs) have seen a significant drop in prices, making it an opportune time to purchase a pre-owned EV. However, it also discusses the challenges faced by consumers with negative equity, which is preventing many from entering the used car market due to the inability to roll over large amounts of negative equity into new loans. The script concludes with a note on the increase in repoed vehicles at dealer auctions, which adds to the supply but often at the cost of lower quality.
Mindmap
Keywords
💡Car Market Update
💡Days Supply
💡New Car Market
💡MSRP
💡Inventory
💡Incentives
💡APR
💡Used Car Market
💡Negative Equity
💡EV
💡Repo
Highlights
Car Edge provides an auto market update every quarter.
Days supply of inventory is a crucial metric for new or used car buyers, indicating the balance between available cars and customers.
The industry average for new car days supply is 72, with some brands having significantly more or less.
New car market expects an increase in days supply over the summer of 2024.
The average listing price for new cars has slightly decreased to $47,140 in April 2024.
Brands with high days supply and increased MSRPs include Infiniti, Chrysler, Volvo, Ram, Dodge, Ford, Lincoln, Buick, Jeep, Audi, and Alfa Romeo.
These brands are expected to offer aggressive incentives and APR deals during the summer months.
Brands with the least inventory and more stable pricing include Kia, Honda, Subaru, Lexus, and Toyota.
Subaru, Kia, Nissan, Chevrolet, and Mazda are considered to offer fair value in the current market.
New car inventory has grown from a low of 886,000 in October 2021 to around 2.8 million currently.
Increased inventory leads to higher incentives as manufacturers try to attract buyers.
The Federal Reserve's rate stance may lead to more APR incentives from manufacturers to help buyers afford monthly payments.
As of May 2024, 10 vehicles offer 0% financing, with others having rates as low as 0.9% and 1.9%.
2024 is shaping up to be a buyer's market for new cars despite high MSRPs due to the chip shortage.
Used car prices have dropped by about 5% in 2024, but they remain high with an average transaction price over $22,500.
The used car market is expected to see continued price drops, especially for EVs, which have experienced significant depreciation.
Negative equity is a significant issue, with customers facing an average of over $6,000, affecting their ability to purchase.
The used EV market presents a good opportunity for buyers due to rapid depreciation.
The average interest rate for a new car loan is a little above 9%, making it a challenging time for used car purchases, except for used EVs.
Transcripts
every quarter here at car Edge we give
you an auto market update my dad that
guy right there sold cars for 43 years
four years ago I roped him in to
starting car Edge we help folks buy cars
every single day we're going to talk
about the summer 2024 what's going to
happen in the new used new and used car
markets and then give you a little
update on where aprs are right now sound
good pops uh it does except I hate that
picture all right folks let's start with
the new car market we're going to give
you our rating in just a moment of how
good of a market it is to be a new car
Shopper Dad let's start with days supply
of inventory this is the most important
thing to understand if you're a consumer
in the market to buy a new or used car
the day supply means what it means the
longer the day supply the greater the
day supply the that means they have more
cars than they have customers and so you
should be able to get a better deal the
shorter day supply means they have more
customers than they have cars and it's
going to be difficult to work as good a
deal on those Brands yeah the day supply
is the number of days would take to sell
all available current inventory based on
the daily sales rate so the industry
average right now is 72 there's a 72
days supply for new cars in the United
States of America some brands have a lot
more days Supply and some brands have a
lot lower we'll dig into those in just a
moment but what's going to happen this
summer is we expect generally for days
supply of new vehicles to continue to go
up it has gone up significantly over the
past couple of months and definitely the
past couple of years yes now dad the
average listing price for new cars has
trended down just a touch the average
transaction price for a new car is $
47,2 140 back in April the most recent
data we have we expect to see you know
uh uh new car prices come down a little
bit that being said this day supply when
you kind of cross reference it with
price the day supply is highest amongst
most expensive vehicles and lowest you
know when um compared to uh most
affordable Vehicles that's not a good
situation for people who are looking for
like sub $40,000 Vehicles yeah the the
manufacturers have still committed most
of their production to the higher profit
margin higher uh equipped vehicles with
a higher
MSRP um and those that have lower msrps
uh to quote the old saying they're
selling like hot cakes ladies and Gent
gentlemen all right so then we have
those brands that have a lot of
inventory that would be Infiniti
Chrysler Volvo Ram Dodge Ford Lincoln
Buick Jeep Audi and Alpha Romeo these
are the brands that have the most overs
supplied inventory which means you can
go negotiate the best deal these are
brands that have also increased their
prices significantly msrps for these
vehicles have gone up significantly for
example RAM and and Chrysler Dodge and
Jeep stellantis their msrps have gone up
more than 50 % in the past 5 years that
is absurd the inflation rate is nowhere
near that so that's something to keep in
mind these are the vehicles that are the
most you know maybe negotiable have the
highest inventory but they're also
really expensive because the
manufacturer has jacked up that MSRP
even if you get a really good deal
you're still pretty much overpaying
because they raised the prices so much
over that time period expect for these
brands in particular in the summer
months to have really aggressive in
incentives so expect 5 10 15% off of
MSRP plus very aggressive APR incentives
we'll talk about loan interest rates in
a moment here but expect these Brands to
be the ones that are most aggressive
with their advertising and their
incentives the brands with the least
amount of inventory that would be Kia
Honda Subaru Lexus and Toyota these are
the brands that have not raised their
prices a dramatic amount Kia would be
the only exception here at Kia they
really have increased their msrps
significantly but for the most part
these affordable or more price
attainable options and they're in
significantly shorter Supply less
incentives on these vehicles during the
summer months but still opportunity
because they weren't jacked up like
crazy on the MSRP and truth be told
especially with Kia um I believe it's
five months in a row that they have
experienced sales declines so even
though they have a shorter day supply
they're probably more motivated to sell
some of the product they have uh because
sales have been down over the last five
months all right friendly reminder
there's enough inventory even for those
brands that we just described that have
low inventory to say no to Market
adjustments there are very few
exceptions to that rule maybe the most
rare specialty vehicles but say no to
Market adjustments on new cars we are
not during the chip shortage era you can
say no to Market adjustments the brands
that we think represent a fair value in
today's market Subaru Kia Nissan
Chevrolet and Mazda I know we're leaving
Toyota off this list but they are still
commanding a a pretty nice premium like
right around MSRP on most Vehicles
although you should and and you can
negotiate these brands that have enough
inventory and some vehicles at really
attractive price points that we think
they're fair value now and throughout
the summer most of these brands that are
listed here are brands that
have managed to maintain lower price
points than many of the other brands uh
they didn't get nearly as greedy as some
of the other brands and their dealers
seem to be more receptive to uh working
fairer deals for their customers than
many of the other brands out there
absolutely new car inventory is just a
macro for a moment here continue to grow
they had been as low as 886 th000 new
vehicles in inventory back in October
2021 we at around 2.8 million new
vehicles in inventory right now and our
expectation is that throughout the
summer we'll stay near 2.8 Mill million
maybe get up to 3 million so the market
is significantly more uh d uh more more
dense no more richly populated with
options which takes some of the power
away from the dealers to have all those
Market adjustments and things like that
this is also leading to increased
incentives so uh incentives as a
percentage of an average transaction
price that's the blue line on the chart
continue to go up as manufacturers have
to you know go into their checkbook and
find ways to uh increase interest in
their product they are offering more and
incentives and we expect to to continue
to see that happen in the summer months
uh do not be surprised if you see more
and more interest rate specials uh since
the FED has indicated uh that it could
be quite some time before we see any
rate reductions from the FED which means
the manufacturers are going to have to
offer specials to get people to be able
to afford the monthly payment some of
those specials will be APR incentives as
of the time we are filming this in May
10 vehicles have 0% financing right now
there are many others that have 0.9 and
1.9% financing financing options so
folks stay patient during the summer
months find those really attractive
offers and it's to your point to to make
sure that the monthly payment makes
sense to be uh to people and they can
actually afford to buy these vehicles it
is a good time to buy a new car 2024 I
think will go down in history as like
the buyers Market again msrps are
through the roof as a result of for some
Brands I should say through through the
roof as a result of the chip shortage
and and really jacking up prices but
there's inventory there's dealers making
deals there's incentives it's a good
time to be a new car buyer right now yes
it's not a great time but it is a much
improved time than what it had been for
the past two and a half three years so
if you find yourself in the
need for a new car you're you have much
greater buying power today than you did
even six months ago
all right let's talk about used cars Dad
let's give an update on the used car
market prices are down they're down
about 5% so far at the time of filming
this video on the retail side in 2024
but they're still really high the
average transaction price for a used car
is still north of
$225,000 and continues to be
unattainable for many people especially
when you factor in interest rates we are
on the other side of tax season the
summer months are typically slower in
the used car market than Springtime
Springtime is when tax returns Galore
and people are buying those new to them
used cars I would expect we would expect
to continue to see used car inventory
levels to be pretty tight there's about
a 44 45 days Supply because there were
what was it 12 15 million new cars not
produced during the chip shortage that
will impact used car supply but
generally speaking the used car Market's
like a little bit more stagnant it's
like going down a little bit but not
particularly fast and there's not this
huge influx of new new used car
inventory to to kind of you know
accelerate that downward Trend and in
particular the prices are coming down on
EVS so if you have an interest in an EV
uh now is a good time in the pre-owned
Market to purchase an EV because well
those values have dropped Like a Rock So
year-over-year wholesale Ed car prices
are down 14% And we expect to continue
to see those Trends into the summer
month and to your point that we have
actually seen the average retail asking
price for a used EV go from
$62,000 to around $30,000 $32,000 so
wholesale prices are down 14% for the
industry wholesale prices for EVS retail
asking Prices for used EVS are down
significantly more than that like like
like hard to wrap your head around how
much they have actually gone down that
being said a lot of people are faced
with negative equity we know yes and we
expect to continue to see customers that
might be interested in buying a new used
car going in to trade their vehicle they
will be upside down significantly on
their auto loan Edmond's latest data has
us at over $6,000 in negative equity
that's going to keep a lot of used car
buyers out of the market because they're
just going to be unable to get approved
for a loan and they're not going to be
able to roll over 6 7 10 15 $20,000 in
negative equity onto that next car loan
um it's an
unfortunate circumstance that uh
happened and occurred because of the
pandemic when there was such a shortage
people just overpaid for things and now
those who overpaid uh have some of the
highest negative equity numbers we have
ever seen on average in the industry so
the used car market in general is still
very difficult there's a shortage of
used quality used cars there's actually
an increase in repoed vehicles coming at
the dealer auctions so like that's good
in the sense that it's Supply but it's
kind of bad in the sense that the
quality is low so we know there are
quality issues it's a difficult Market
to buy a used car and maybe the caveat
here would be to your point earlier Dad
if you're in the market for a used
electric vehicle I guess it's a great
time because they have depreciated so
much so fast so like put an asterisk on
this one it's a difficult used car
market especially when you factor and
it's a 14% average interest rate on a
used car loan but to your point dad
pretty good time if you're buying a used
EV exactly if you're in the used EV
Market it's a good time if you're in an
any other type of vehicle it is a very
poor time all right folks well hopefully
you enjoyed this if you did please
subscribe to the channel check out the
website car edge.com and I wouldn't
leave you hanging the average interest
rate for a new car loan a little bit
above 9% so yeah the aprs out there are
wild thank you data as always appreciate
it
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