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At CarEdge, we dedicate ourselves to helping people navigate the car market, whether they’re buying or selling, with the ultimate goal of saving money, time, and hassle. This week, we’ve tapped into the expertise of CarEdge Co-Founder Ray Shefska to uncover the three biggest blunders you can make when purchasing a used car. If you like saving more and stressing less, you’ll want to avoid these costly mistakes!
1. Skipping a Pre-Purchase Inspection
Think about the little routines that keep you safe every day—like double-checking that your door is locked before you leave the house. It’s a simple step, but one that saves a lot of headaches later. Buying a used car should be approached with the same level of caution, which is why a pre-purchase inspection (PPI) is critical.
What exactly is a PPI? It’s a thorough mechanical evaluation performed before you finalize a vehicle purchase. Although there isn’t a universal checklist, your mechanic will typically examine:
Tires and suspension
Fluids
Brakes
Engine
Transmission
Exhaust system
HVAC system
And more
Each mechanic may have a slightly different process, but it’s likely they’ll identify at least one issue. It’s then up to you to decide how much maintenance you’re willing to take on post-purchase.
In 2023, auto insurance rates in the U.S. saw a staggering 24% increase, reaching an all-time high. This surge was fueled by escalating repair costs, more frequent natural disasters, and an uptick in car accidents, all contributing to significant losses for insurers. And the costs are not expected to plateau—projections indicate a further 7% rise in rates for 2024.
However, there’s a silver lining for used car buyers: auto insurance rates typically decrease by 3.4% for each year a vehicle ages. But given the sharp increases in recent years, it’s crucial to check how much insuring a particular vehicle will cost you before making a purchase.
How do you check? It’s simple. Contact your insurance provider, provide the make and model or even the VIN of the vehicle you’re considering, and request a quote. This will ensure you have a complete understanding of the ongoing costs associated with the vehicle.
Timing is everything in the used car market. We track weekly used car price updates, and it’s clear that volatility continues. But there’s hope on the horizon for deal seekers.
Historically, we start to see wholesale values for used cars decline between April and June, a trend that typically carries over to the retail market soon after.
If you’re not in a hurry, consider timing your purchase to take advantage of market trends. Retail prices for used cars tend to decrease during late spring and summer. This is often due to several factors, including increased incentives on new cars—such as APR offers, cash back, and lease deals—which attract buyers to new vehicles and can lower demand in the used market.
As dealers face high interest rates and the costs of maintaining large inventories (known as floorplanning costs), they become more aggressive in selling new cars. This in turn puts downward pressure on used car prices to maintain a reasonable price differential between new and used vehicles.
The best times to buy are typically July through August and at the end of the year when dealers are eager to meet their sales targets and offer substantial deals.
Avoiding these three pitfalls can make a significant difference in your used car buying experience. At CarEdge, we’re committed to making your car buying journey as smooth and beneficial as possible. To further enhance your buying strategy, we invite you to download our CarEdge Car Buying Cheat Sheets. These free resources are packed with tips and insights to help you negotiate better deals, understand market trends, and ultimately make informed decisions.
The latest Consumer Price Index (CPI) report for March has thrown cold water on any hopes of a decrease in car loan interest rates for the remainder of 2024. With inflation surging unexpectedly to 3.5% year-over-year, the financial landscape is bracing for continued high interest rates. And for car buyers, that means auto loan rates are unfortunately going to remain high.
However, there was some good news for drivers in the latest report. Let’s dive into the details.
Goodbye June Rate Cut: Inflation Higher Than Expected
The increase from February’s 3.2% inflation rate to March’s 3.5% signifies the highest annual gain seen in the last six months, underscoring a stubbornly high cost of living. Chances are you’ve felt it in your own day to day expenses. This uptick, fueled by rising gas prices and enduring high costs for mortgages and rent, suggests a challenging path ahead for reducing inflation. Consequently, the Federal Reserve is likely to maintain higher interest rates to combat these pressures.
Just how likely is a June rate cut at this point? Market predictions in favor of a Fed rate cute plummeted from 73% to a mere 21%. Following the CPI report, the picture is clear: interest rates are set to remain elevated.
Car Prices Fall… Slightly
Buried in the U.S. Bureau of Labor Statistic’s data-heavy CPI Report is a glimmer of good news for car buyers. Year-over-year, used car prices are down 2.2%. We’ve seen similar trends at wholesale markets. For new cars, there’s less to rejoice about. New car prices are essentially flat, falling just 0.1% in the past 12 months.
Auto Loan Rate Forecasts For 2024
For car buyers, relief is slipping out of view. Today’s inflation report means that more of the same can be expected for the next several months. According to Experian’s most recent State of the Automotive Finance Market report, today’s average car loan rates stand at 7.18% for new cars and a staggering 11.93% for used cars.
These rates are significantly impacted by the Fed’s monetary policy stance, and with the central bank likely to forgo rate cuts, we can expect these high-interest rates to continue.
The Silver Lining: New Car Inventory Brings APR Incentives
However, it’s not all doom and gloom for car buyers. The silver lining lies in today’s new car inventory numbers. With new car inventories higher than in recent years, manufacturers are offering more enticing incentives to attract buyers. These incentives include lower APRs, cash incentives, and great lease deals. These OEM incentives provide a rare opportunity to secure more favorable loan terms, even in 2024’s prevailing high-rate environment.
As of April,5 manufacturers are offering zero percent financing for select models, and four more are offering 0.9% APRs. Several additional OEMs feature APR offers under 5% right now. With the average new car selling for over $46,000, this adds up to thousands in savings over time.
In essence, while the broader economic indicators point towards continued high-interest rates for auto loans, market-driven factors like increased new car inventories and subsequent manufacturer incentives could offer some relief to car buyers. But there’s no hiding the fact that broader economic inflation continues to hit us all, even as policymakers play down the impacts.
The next CPI Report is scheduled to be released on May 15, 2024. That’s our next best look at when auto loan rates could finally be set to drop.
After bringing hybrids to the masses with the Prius over 20 years ago, Toyota resisted moving into full battery electric vehicles for as long as possible. One big competitor from Korea, however, is diving headfirst into EVs. Here’s how Hyundai is beating Toyota in one growing market segment, with the gap between the two continuing to widen.
Toyota’s bZ4X Slows to a Trickle
Toyota is aiming for millions of EV sales in just six years’ time, but in 2024, the automaker has a VERY long way to go. After launching the Toyota bZ4X as the brand’s first fully-electric model in mid-2022, sales have failed to take off.
With a base MSRP of $43,070 and fully-loaded prices climbing to $53,000, prospective buyers expect few concessions with their car. But compared to the competition, the bZ4X’s range and charging speed leave much to be desired. Especially for $50,000 and no chance of a federal tax credit.
Toyota has struggled to sell over 1,000 copies of the bZ4X per month since its debut. EV market share numbers make this clear as day. For comparison, the Prius routinely logs between 4,000 and 5,000+ sales in any given month. Toyota is used to winning, but their electric offerings have come with challenges.
Similarly, the Lexus RZ, which is powered by the same powertrain, hasn’t fared much better since launching in early 2023. Sales totaled 5,386 in all of 2023. Toyota and Lexus’ twin EVs were developed in partnership with Subaru, whose Solterra has also struggled to sell. In fact, there’s a 363-day supply of new Subaru Solterras on the market today, the fifth highest in the US market.
However, not all electric vehicles are selling so poorly in 2024. To see an example of better times, we need look no further than rival Hyundai’s EV sales.
Hyundai’s Success Proves Performance Matters to EV Buyers
Hyundai is out-selling Toyota 3:1 in one key market segment: electric vehicles. Using CarEdge Insights, we can see that 4,445 Hyundai IONIQ 5s and 2,517 Hyundai IONIQ 6s were sold in the past 45 days, as of mid April. Toyota’s sole EV, the bZ4X, totaled just 1,066 sales in the same period. The Lexus RZ tallied 912 sales.
Looking to the most recent official OEM data, here’s how EV sales have played out for the two competitors from 2022 through Q1 of 2024:
Make
Model
2022 Total
2023 Total
Q1 2024
Hyundai
IONIQ 5
22,982
33,918
6,822
Hyundai
IONIQ 6
0
12,999
3,646
Toyota
bZ4X
1,220
9,329
1,897
What’s driving Hyundai’s success?
Sure, looks could play a part, but the driving force behind Hyundai’s EV success boils down to EV performance. Buyers spending over $40,000 on their first EV expect fast charging, long range, and an all-around special vehicle. Hyundai’s EVs check all of those boxes and more.
Here’s how the IONIQ 5 compares to Toyota’s bZ4X for the 2024 model year:
Make
Model
Base MSRP
Average Selling Price
EPA Range
10-80% Charge Time
Toyota
bZ4X
$43,070
$47,641
222 - 252 miles
30 - 35 min
Hyundai
IONIQ 5
$41,800
$49,226
220 - 303 miles
18 minutes
Hyundai
IONIQ 6
$42,450
$45,415
270 - 361 miles
18 minutes
But there’s more to the story than the above EV performance numbers. The bZ4X features additional quirks that complicate ownership for anyone who travels long distances by car.
Although the bZ4X takes 30 minutes to charge from 10% to 80%, real-world tests show that it takes another 33 minutes just to charge from 80% to 90%. That matters if you need the extra driving range to make it to your destination. Trying to get to 100% state of charge in the bZ4X? Forget about it. That takes another hour. In Hyundai’s EVs, topping off from 80% to 90% takes another 10 minutes at most DC fast chargers, with the climb to 100% taking a similar amount of time.
An even bigger road trip hurdle: Toyota cautions on it’s own website that the bZ4X is subject to DC fast-charging limitations of various kinds. Toyota goes as far as to recommend against fast-charging more than two times per day. How does this translate to a cross-country road trip, where charging 5+ times may be required? Learn more from Toyota.
Toyota Goes All-In on Hybrids
Can you really blame them? In 2023, Toyota’s US hybrid sales climbed to new records. 2023 electrified vehicle sales of 565,800 represented 29 percent of Toyota’s sales. With recent announcements that all versions of the 2025 Camry will be hybrids, and even the redesigned 4Runner will be available as a hybrid, Toyota is moving further in that direction. Long live the Prius.
But for those wanting a true EV, without the extra baggage of a combustion engine and the maintenance needs that come with it, Toyota is moving at a snail’s pace. Despite reiterating as recently as November that it plans to sell 3.5 million EVs annually by 2030, only one additional Toyota EV is slated to arrive anytime soon. That will be a three-row electric SUV expected to launch in 2025 at the earliest. The targeted competition? Kia’s EV9 and Hyundai’s IONIQ 7.
As far as mainstream electric crossovers, Toyota fans will have to settle for the bZ4X for the foreseeable future.
Hyundai and Toyota: Two Different Game Plans
Hyundai and Toyota’s EV successes and failures highlight that in the EV market, charging, range, and overall value are paramount to buyers cross-shopping today’s electric offerings. But make no mistake: this is a story of differing priorities at the corporate level.
As Hyundai continues to refine its EV offerings, Toyota continues to prioritize hybrid models. And if Toyota’s past sales are any indication, it could be a smart move for their overall business growth in North America. Hyundai, on the other hand, is driving full speed ahead into a fully-electric future. Which will ultimately come out on top? 2024’s sales numbers will shed light on that.
Are you a bigger fan of Toyota’s hybrids, or Hyundai’s EVs? Let us know in the comments below.
In a startling turn of events, Reuters reports that Tesla has abandoned its plans to launch a $25,000 electric vehicle, a project that is integral to the company’s strategy for making electric vehicles more accessible and expanding its EV market domination. This move has sent ripples through the auto industry and financial markets. Here’s what we know about this developing story.
Update: Multiple outlets are reporting that Tesla CEO Elon Musk has responded to Reuter’s report, refuting the claims made in the article. More updates to come!
Reuters: Development of the Tesla Model 2 Halted
According to breaking news reported by Reuters, the word among Tesla leadership is that all work on the $25,000 Tesla in development is halted, effective immediately. Tesla had previously indicated in January that production of the affordable model, often referred to as the Model 2, would commence at its Texas factory in the second half of 2025.
However, the company is now shifting its focus towards developing robotaxis, despite the greater engineering and regulatory challenges this entails. This pivot was revealed in a late February meeting attended by numerous Tesla employees, where Elon Musk’s directive to prioritize robotaxis was communicated.
The decision to cancel the Model 2 project has left industry analysts questioning Tesla’s ability to meet its ambitious sales targets. Elon Musk had aspired for Tesla to sell 20 million vehicles by 2030, a goal that now seems more elusive with the affordable car’s cancellation.
The company’s current cheapest model, the rear-wheel drive Model 3 sedan, is priced at around $39,000 in the U.S., well above the intended price point of the Model 2. Federal tax credits have contributed to Tesla’s sales growth, but have been reduced or eliminated for some Tesla models in recent months.
Chinese EVs a Looming Threat
Tesla’s shift in strategy comes amid intense competition, particularly from Chinese electric vehicle manufacturers who have successfully entered the market with significantly lower-priced models. This competitive pressure appears to have influenced Tesla’s strategic redirection.
The move comes less than a week after Tesla began a ‘free’ Full Self-Driving trial for all Tesla drivers with capable hardware. It remains to be seen if Tesla’s biggest FSD promo to date will drive conversions towards the $12,000 add-on.
As Tesla discontinues its plans for the Model 2, the company’s focus on robotaxis and high-end models like the Cybertruck continues. However, this approach has raised concerns about Tesla’s market positioning and long-term profitability, given the rapid growth and pricing strategies of competitors, particularly in the burgeoning electric vehicle market in China.
This development is a significant deviation from Tesla’s long-standing goal of making electric vehicles more affordable and widely accessible, a vision that has been central to its brand and business model. The cancellation of the affordable Tesla model and the company’s recalibrated focus on robotaxis and higher-end vehicles mark a critical juncture in its journey, with potential implications for its competitive edge and market share.
As Tesla navigates these strategic shifts and market dynamics, the automotive industry and investors are keenly watching to see how these changes will affect the company’s trajectory and the broader electric vehicle landscape. This is a developing story, and further updates are anticipated as more information becomes available.
As new cars fill dealership lots, OEMs are lowering prices to sell cars. From Jeep to Ford, and even Mazda’s new flagship SUV, price drops have already arrived. However, as we’re about to see, there are several other models that are in desperate need of MSRP reductions given today’s oversupply and weak sales. Don’t pay a dollar over MSRP for these new cars, trucks, and SUVs that are primed for price cuts in 2024. Especially when you have the power of CarEdge Insights at your fingertips.
Let’s dive into the details.
Nissan Altima: The Sunset of a Sedan
Base MSRP: $27,140
Average Selling Price: $30,463
Current Market Day Supply: 198 days
After decades leading Nissan sales forward, the Altima will be discontinued in 2025. It’s true that the Altima has become the butt of jokes in car culture in recent times, but its absence will be immediately felt by those who simply need an affordable ride.
But Nissan has its reasons. Altima sales have been in decline, dropping 8.5% in 2023 while most of the rest of Nissan’s lineup saw modest gains. There remains a 198-day supply in America today. With the looming discontinuation on the horizon, it’s prime time for a price drop.
The Dodge Hornet is facing a surplus, with the third-highest inventory among all new cars as of April 2024. This equates to nearly two years of supply if production were to cease today.
Why are buyers balking at the Hornet? For one thing, there are 4 recalls for the Hornet as of early 2024. Consumer Reports rates it at 55 out of 100 overall, with average reliability but above-average owner satisfaction scores. However, it’s full of compromises, too many perhaps. It’s not as spacious as competing crossovers, but it’s bigger than a sedan. Fuel economy is among the worst in the compact crossover segment at 24 miles per gallon in combined driving. There is a plug-in hybrid version that fares much better.
Jeep’s Grand Wagoneer, despite being the brand’s priciest model, is overdue for a price cut. Jeep has already reduced prices on other models in 2024, from the Wrangler to the Gladiator.
With stagnant sales, Stellantis already announced a pivot away from earlier plans of turning Wagoneer into a luxury spinoff. Simply put, the market is ripe for price negotiations on this model. Even with major discounts, are you willing to spend $100,000 on a Jeep? Believe it or not, that’s about how much these luxury Jeeps cost.
The Nissan Titan, with its price hiked by $5,000 for the 2024 model year, contrasts starkly against its modest sales figures, selling just 19,189 units in 2023. This lack of market traction, especially compared to giants like Ford’s F-Series, suggests that the Titan could see significant price negotiations or cuts to align with its market performance, making it an attractive option for truck buyers looking for value.
If Nissan truly wants to grab truck market share, they’re going to have to work for it with aggressive pricing. Don’t pay a dollar over MSRP for a new Titan in 2024.
Performance-wise, the Solterra just isn’t worth the high price tag. But I may change my thinking if Subaru takes cues from the sluggish market and drops prices by $5,000. The Subaru Solterra, already experiencing price cuts in Australia, faces slow sales in North America and even slower charging speeds.
Its strengths? High ground clearance and futuristic Subaru looks are two that come to mind. With sales failing to take off more than 18 months after launch and plenty of 2023 Solterras STILL sitting on the lot, it’s past time for a big price cut for this EV.
Volvo’s EV sales have yet to take off. With stiff competition from the likes of Tesla, the German luxury brands, and even Hyundai Motor Group, it’s not clear that they ever will. The C40 isn’t a bad car by any measure. It’s luxurious, great for urban tight spaces, and can go 297 miles on a charge.
But the price is a bit higher than many similar offerings in today’s market. Today, there’s a 425-day supply of Volvo C40s. That’s 8x the typical market average. Will Volvo take cues from today’s EV buyers and lower prices? We hope so.
While these six models have not yet seen the price cuts that other vehicles have in 2024, their high inventory and slow sales make them prime candidates for negotiation. Keeping an eye on these models could lead to significant savings, but only if you’re patient.
Even before OEMs announce revised pricing, these six models are highly negotiable, especially if you are equipped with these insights and local market data. Don’t forget that we have not one, not two, but SEVEN free car buying cheat sheets available for download. Get your free resources here.
The good news is that some automakers are already making moves and lowering prices.
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