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As we head into 2024, the automotive industry in the U.S. is at a pivotal crossroads. High interest rates, rising inventory, and online sales are just a few of the factors bringing change to car buying. To gain deeper insight into these evolving dynamics, we spoke with Zach Shefska, Co-Founder and CEO of CarEdge, to understand his perspective on where the car market is headed in the coming year. Finally, normalcy may be on the horizon for some of the car market.
Rising Interest Rates Put Pressure on Buyers and Seller Alike
A key driver in the 2024 car market is the elevated interest rates, now hovering around 10% for new cars and exceeding 14% for used vehicles. This hike in rates is squeezing consumer budgets, making it challenging to find affordable monthly payments.
On the dealer side, soaring floor plan expenses – up by 200% year-over-year in some cases – are turning once profitable inventory holdings into burdensome financial obligations. One dealer reported that their inventory floorplanning expenses have jumped from $49,000 to $670,000 per month as interest rates soared and manufacturers shipped more cars to their lots.
CarEdge’s Zach Sheska reminds us that it isn’t just buyers who hurt when interest rates rise. “80% of car buyers finance their purchase, a statistic that is falling as buyers who can afford to pay cash pay in full to avoid interest. However, it’s important to note that smart dealers will be more open to negotiating prices once they encounter a buyer with car market knowledge. They’re feeling the pain of interest too, and are incentivized to move inventory quickly.”
The automotive industry is undergoing a reversal of sorts. In both new and used car markets, we’re seeing a gradual but pronounced ‘return to normalcy’ reminiscent of the pre-pandemic state of affairs.
New car inventories have made a remarkable recovery from their pandemic lows, soaring to 2.40 million from a mere 0.9 million. This substantial increase in inventory, along with the urgency to address rising floor plan expenses, is compelling dealers to adopt lower pricing and more assertive sales tactics.
Is it a buyer’s market? If 2024 will be a buyer’s market remains to be seen. The good news is that market forces are headed in the right direction.
OEMs are offering the best sales and incentives in years, aiming to increase sales volumes to achieve yearly and quarterly sales goals. These developments, coupled with heightened operational costs and the reintroduction of cash and finance incentives, are clear indicators of a market that is stabilizing and adjusting to the challenges faced during the chip shortage and production interruptions of the past years.
Used Car Prices Fall As New Car Prices Inch Lower
The average cost of new and used cars remains high, exacerbating the affordability crisis for consumers. Today, the average price of a new car has fallen ever so slightly to $47,936, and used car prices average $26,533. In 2019, the average new car sold for $36,000, and used cars averaged $23,000.
Historically, the most popular used car segment was vehicles under $20,000 with less than 50,000 miles on the odometer. That’s becoming harder to find these days. Recently, iSeeCars found that in 2023, only 11 percent of the used car market is priced between $15,000 and $20,000. The average listing in this price range has over 63,000 miles. On top of paying a higher sticker price, the average used car loan rate is now at a 20-year high of 14%.
However, increasing supply and growing dealer incentives are beginning to ease price pressures, offering some relief in a rising rate environment. To get a sense of where used car prices are headed in 2024, we can look at the best leading indicator that we have: wholesale used car price trends. At wholesale car auctions, used car prices have dropped 9% in two months. Some segments, such as used vans, compact sedans, and luxury crossovers, have dropped by 15% or greater.
Retail used car prices have been slower to fall, but are dropping nonetheless. “What’s changed more profoundly is negotiability in the used car market. CarEdge Coaches say that today, dealers are more willing to negotiate on prices and add-ons today than at any point in 2023. For car buyers willing to put in the work, a much better deal can be earned,” noted Zach.
On the new car front, year-end deals end soon. With rising new car inventory and 2024 models arriving daily, dealers and OEMs alike are eager to sell cars before the end of the year. Hyundai, Mazda, Nissan, and Honda are all offering limited 0% financing for select models. General Motors, Ford, and Kia offer financing at 1.9% APR. With the average APR approaching 9%, anything under 5% APR is a great deal.
A significant headline moving into 2024 is Amazon’s partnership with Hyundai to sell new vehicles through Amazon.com. At first glance, this would seem to indicate a shift towards online retail in the automotive sector. However, challenges remain, particularly in the relationship dynamics between auto manufacturers and car dealers.
Zach says that a reality check may be in store. “Amazon is about to find out the hard way that for legacy car brands, dealerships have the final say in vehicle pricing and customer service. Amazon’s strategy of partnering directly with OEMs may face hurdles due to the historically complex relationships between these OEMs and their dealers. Dealers will push back, especially if the Amazon partnership targets their profit centers.”
Automotive News outlined the many questions that remain unanswered about the Amazon-Hyundai partnership. Right now, there are more questions than answers.
A Different Approach to Online Car Buying
Here at CarEdge, we’re taking a different route to ‘fixing’ car buying, one that’s guaranteed to have more immediate impacts. By pre-negotiating fixed pricing directly with car dealers, CarEdge has introduced a new level of transparency never before seen in the new car market.
With nationwide shipping, anyone can buy a new car with fair and transparent pricing, all without the hassle of talking to a dealership salesperson. CarEdge’s team of industry experts takes care of it all. Will Amazon find a way to provide a customer experience that’s equally stress-free and pro-consumer? That remains to be seen.
Last month, U.S. electric vehicle sales surpassed 1 million annual sales for the first time ever. EV sales now account for 8% of all new cars sold in America. By 2024’s end, we expect that figure to be closer to 12%, and maybe a tad higher.
As charging infrastructure improves, more car buyers are willing to make the switch. Tesla will continue to dominate with over 50% of EV sales, but the likes of Hyundai, Kia, Ford, and GM will continue to grow in market share.
One year ago, EV transaction prices averaged 20% higher than the overall new car market. Today that price gap has narrowed to 14%. Automakers and dealers alike make less profit per EV sold than they’re historically used to with ICE vehicle sales. If EV sales continue to grow, that will put pressure on every facet of auto sales. How will the industry respond to narrowing profits? Will dealers and manufacturers simply recoup profits by raising prices in ALL vehicle segments? 2024 will shed light on that, too.
The Car Market in 2024 Will Bring Surprises
Rising interest rates, evolving market dynamics, and online car buying platforms are reshaping the way we buy cars. The gradual return to pre-pandemic norms and shifting consumer preferences hint at a market ripe with opportunities for informed buyers. While challenges like affordability persist, the increase in manufacturer and dealer incentives are promising signs.
With that said, surprises will introduce wildcards to the market. From economic recession to geopolitics, it’s impossible to know where the world will stand in 12 month’s time. Staying on top of the latest market updates will be key to making smart purchasing decisions in the evolving automotive world of 2024.
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
What do the top states for year-end car deals in 2023 have in common? It’s simple: the best states for December bargains have affordable, popular models with high inventory this month. We can’t say it enough: where there’s high new car inventory, opportunities for negotiation offer the chance for major savings. With today’s high interest rates, saving a thousand dollars means more than ever.
It’s important to keep in mind that today’s new car market is dynamic, with inventory levels, manufacturer incentives, and dealer’s willingness to negotiate constantly in flux. That’s why the latest data is critical for car buyers on the hunt for deals in December. Using CarEdge Data, we’ve looked at the market day supply of new cars in all 50 states to uncover opportunities for extra savings.
Why does market day supply matter to car buyers everywhere? If you like to save money on your car purchase, you should start paying attention to this little-known industry metric. Market Day Supply (MDS) is calculated by dividing the current inventory of a specific car model by the average number of units sold per day. In a ‘normal’ healthy market, MDS averages somewhere between 40 and 60 days of supply for mainstream models. Today, the nationwide average for new cars is 83 days of market supply. In states with the highest negotiability, MDS figures are MUCH higher.
With the power of local market data, we now have a clear picture of where the greatest oversupply of new cars is today. Without further ado, here’s a look at the best states for year-end car deals in 2023.
Remember, the key to unlocking great year-end deals lies in understanding local market dynamics. States with higher-than-average Market Day Supply (MDS) are your hotspots for negotiation. Whether you’re in the Northeast looking at a Mustang Mach-E, or in the West Coast market for a Jeep Wrangler Unlimited, the end of the year presents a unique window of opportunity.
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
If you’ve been holding off on a used car purchase due to record high used car prices, December brings good news for buyers. So far, market declines have been largely confined to wholesale auctions. Will wholesale price drops finally translate to lower sticker prices? Let’s dive in and talk about why December 2023 is different.
Prices Falling Quickly At Wholesale Auctions
For much of 2023, there has been an unusually wide gap between auto auction price trends and the listing prices we’ve seen on dealer lots. However, with changes accelerating over the past month, it looks like retail used car prices are finally about to take a dive.
In November alone, used car prices were down -5.47% at wholesale auctions, according toBlack Book weekly updates. The magnitude of this downward trend isn’t normal. In fact, prices are dropping at 5x to 6x the normal rate for some vehicle segments.
Retail days-to-turn, a metric indicating how long it takes for used cars to sell, has reached a 5-year high at 55 days. This statistic suggests that used cars are staying longer on dealership lots, giving buyers more options and potentially putting pressure on dealers to make sales.
The stage is set for a buyer’s market in the used car industry, offering consumers greater choice and increased bargaining power.
Segment-Specific Price Trends
Just how quickly are used car prices dropping? A closer look at the last month’s wholesale prices reveals shocking trends. The decline in used car prices is not uniform across all segments. Here’s how some of the most volatile used car segments fared in November:
Compact Vans: Down 13.98%
Full-size Trucks: Down 6.49%
Compact Cars: Down 6.98%
Full-size Luxury SUVs: Down 5.11%
Remember, these price drops occurred in only four weeks. Normally, price changes are measured in the tenths of a percentage point. These significant price changes indicate that certain vehicle categories are experiencing rapid depreciation. With negotiation know-how, car buyers have more leverage than at any other point in 2023.
The allure of new car incentives is pulling buyers away from used car lots. As more buyers opt for new cars, the used car market is experiencing increasing downward pressure on prices. This trend indicates that used car buyers are very likely to see better deals in December. However, a used car purchase may not make sense for everyone. Let’s talk about why.
At a time when the average used car loan rate is at 14% APR, shoppers are second guessing a used car purchase with good reason. But that doesn’t mean you must hold off on buying altogether. Consider this: the best new car offers feature low and even zero percent financing offers. Our CarEdge Coaches are recommending that all used car shoppers consider low APR new car deals before committing to high interest used car loans.
For more on how new car deals will impact used car prices, check out our deep dive.
Dealership Financing Challenges
Car dealers don’t typically own their lot inventory outright. They actually finance their inventory when they buy cars at the auction, and pay monthly ‘floorplanning costs’. With interest rates at 20-year highs, car dealers are feeling the pain like the rest of us. What does it all mean for used car buyers? Buyers should know that dealers are motivated to sell their inventory sooner rather than later, even if they try to act like they don’t need to. You certainly have negotiating power, especially in December of 2023.
Words of Wisdom from Ray Shefska, CarEdge Co-Founder
CarEdge’sRay Shefska offers some valuable insights into the changing landscape of the used car market:
“We’re finally seeing a real correction in wholesale used car prices. My expectation is that we’ll soon see this translate to retail prices too. But even with stubbornly high dealership prices, you have MUCH more negotiating power today after a month of steep declines at the wholesale auctions that they buy cars from. Don’t hesitate to show the car salesperson that you’re aware of the recent used car price trends. Heck, print out the latest numbers if you have to. Not all car dealers will be willing to budge, but the smart ones will. You can always shop elsewhere.”
Expect Highly Negotiable Prices in December 2023
In conclusion, if you’re in the market for a used car, December 2023 may be the ideal time to make a purchase. High interest rates, increased inventory, slow used car sales, and enticing new car incentives have given used car dealers multiple reasons to lower their prices or at least display a willingness to negotiate. Interestingly, these same reasons are enticing more buyers to the new car market, especially with low APR offers featuring unmatched savings.
Last month, the average used car selling price was $26,752. With what we’re seeing in today’s market, we wouldn’t be surprised if that figure is 10% less by the time we see the December data. December is the best time to buy a car in ages, for both new and used shoppers alike.
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
Safety should always be a top priority when car shopping. Fortunately, the Insurance Institute for Highway Safety (IIHS) takes the guesswork out of vehicle safety ratings with their extensive crash testing. As IIHS standards evolve, more models are achieving the coveted Top Safety Pick+ status, reflecting car manufacturers’ commitment to designing vehicles that excel in crash tests. Plus, we’ve also included links to Consumer Reports reviews for each model. These are the safest new cars, trucks, and SUVs for 2024.
The Safest Sedans
According to the most recent IIHS safety tests, these are the safest cars you can buy today. All of the following sedans earned the highest safety rating of Top Safety Pick+ in testing conducted in 2023 for 2023-2024 model year vehicles.
Why it’s great: This time-tested compact car is known for standard all-wheel drive, and is a big hit in the car tuning scene. For 2024, the redesigned Impreza is available exclusively as a hatchback for the first time ever.
Flaws and Shortcomings: The Impreza is perfect for small car lovers, and there are fewer and fewer of those these days. It doesn’t get the great fuel economy that you’d expect from a compact car. Due to the standard AWD, the Impreza averages 29 miles per gallon in combined driving.
Why it’s great: The Accord has been a best seller for decades, but the recent refresh has taken this sedan to a whole new level. With better styling both inside and out, the 2024 Accord is simply great.
Flaws and Shortcomings: The Accord’s chief competition has always been the Toyota Camry. The Camry’s MSRP starts at $1,400 less than the Accord. If you’re pinching pennies, the Camry may sway you with savings.
Why it’s great: For those who live in colder climates, the Outback is an all-around great choice. All-wheel drive aside, the Outback offers a spacious cabin, modern tech, and improved looks. That’s all on top of 8.7 inches of ground clearance.
Flaws and Shortcomings: If fuel economy (and emissions) is a factor in your car buying decision making, the Outback loses its appeal with just 28 miles per gallon in combined driving. Inventory is slim as is expected from Subaru, so finding a certain trim and color combo may be difficult.
Why it’s great: The 2024-2024 Toyota Prius is a gamechanger. The image above speaks for itself. With phenomenal styling and an EPA-rated 57 miles per gallon, the reimagined Prius has come a very long way over the past two decades.
Flaws and Shortcomings: Today’s drivers are all too accustomed to crossovers and SUVs. The Prius is a small hatchback, and lacks the interior space and all-terrain capabilities of its larger cousins.
Why it’s great: Drivers love the Toyota Camry for its exceptional reliability and comfortable ride, making it a dependable and enjoyable car for everyday use. Its reputation for longevity, practicality, and affordability has endeared it to a wide range of drivers.
Flaws and Shortcomings: The Toyota Camry has a conservative design and a dated infotainment system, which are some of its flaws. Its base engine offers great fuel economy, but unexciting performance. In 2025, the Camry will be sold strictly as a hybrid.
Why it’s great: The IONIQ 6 is the fastest-charging electric car on sale today for under $50,000. Hyundai’s eGMP electric platform enables the IONIQ 6 to add 250 miles of range in 18 minutes in ideal conditions.
Flaws and Shortcomings: There’s really only one big flaw, unless you’re not a fan of the styling. The IONIQ 6 does not qualify for the federal EV tax credit in the United States. The IONIQ 6’s main competitor, the Tesla Model 3, does qualify.
See the complete list of Top Safety Pick+ rated sedans at Consumer Reports.
The Safest SUVs
According to the most recent IIHS safety tests, these are the safest SUVs you can buy today. All of the following models earned the highest safety rating of Top Safety Pick+ in testing conducted in 2023, for 2023-2024 model year vehicles.
All of the following SUV models earned a perfect score in each category of the IIHS’ safety testing.
Why it’s great: The Kia Telluride, introduced in 2020, has gained popularity in the highly competitive SUV market for several reasons. It offers a spacious interior, appealing design, advanced technology features, all at a competitive price point. Despite its size, the Telluride drives like a smaller crossover, providing easy maneuverability in various driving conditions.
Flaws and Shortcomings: Compromises come at a cost. The Telluride doesn’t offer the spaciousness of a full-size SUV, nor the fuel economy of a compact SUV, but it’s a happy middle ground for most family haulers.
Why it’s great: The recently redesigned RX delivers a relaxed ride, a luxury cabin for the price, and great reliability.
Flaws and Shortcomings: The Lexus RX makes a lot more sense closer to its base MSRP. Once you’re looking at higher trim RX options, it becomes tougher to justify paying $60,000+ for what is essentially a premium Toyota.
Why it’s great: Safety, reliability, and affordable luxury characterize the popularity of the Lexus NX. A highly-acclaimed plug-in hybrid option is now available for those wanting to test the waters before committing to an EV.
Flaws and Shortcomings: This is a relatively compact SUV. If you’re looking for an abundance of passenger and cargo volume, you’ll want to look elsewhere.
Why it’s great: The UX is Lexus’ entry-level luxury compact SUV. It’s fuel efficient, reliable, and safe, and starts well under $40,000. The UX comes standard with a hybrid powertrain that’s good for 42 miles per gallon in combined driving.
Flaws and Shortcomings: Reviewers agree that the UX is noticeably small, and lacks easy-to-use infotainment.
Why it’s great: Subaru’s three-row SUV, the Ascent, boasts impressive all-around performance. Its smooth ride, practical interior, and seamless power delivery have been key factors contributing to its success.
Flaws and Shortcomings: The Ascent really only has two big shortcomings. It drives like a large SUV, and therefore lacks agility. More importantly, it doesn’t score well in the fuel efficiency department with an EPA-rated 22 miles per gallon.
Why it’s great: Arriving with standard all-wheel drive, the Solterra was engineered in partnership with Toyota. Subaru’s first EV is essentially an electric Crosstrek with a new name.
Flaws and Shortcomings: Charging speed. Range is below average at 227 miles on a charge, but charging is where the Solterra seriously falls short. Charging peaks at 100 kilowatt speeds, meaning that adding 150 miles of driving range will take about an hour at a ‘fast’ charger. Competitors like the Hyundai IONIQ 5, Kia EV6, and Tesla Model Y can do the same in well under 30 minutes. The Hyundai and Kia cost the same as the Solterra, and offer much more if you can do without the Subaru brand.
See the complete list of Top Safety Pick+ rated SUVs at Consumer Reports.
The Safest Pickup Trucks
Across the board, pickup trucks don’t score as highly on IIHS safety tests. However, these two trucks bucked the trend to earn the honors of Top Safety Pick+ in 2023 testing.
Why it’s great: There are few electric trucks on sale as we head into 2024. The Rivian R1T stands out from the legacy OEM competitors with bold, futuristic styling and supreme off road capability.
Flaws and Shortcomings: If you don’t live near a Rivian service center, getting any needed maintenance completed will be a hassle. In order to qualify for the U.S. federal tax credit, the vehicle price must not exceed $80,000. That’s tough to do with the Rivian R1T.
Where are the other trucks?! Sadly, no pickup trucks made it to the next tier of ‘Top Safety Pick’. If occupant safety is a priority, it may be wise to reconsider a truck purchase.
See the complete list of truck safety ratings at Consumer Reports.
Free Car Buying Help Is Here
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
Is there truly a perfect moment to buy a car? As it turns out, there most certainly is. In fact, the difference is so profound that new car incentives are 40% higher during the best time of the year to buy. Our team of Car Coaches, equipped with decades of combined experience, keeps a close eye on the auto market, and there’s no doubt about it—the best time of the year to buy a car has arrived.
It Pays to Be Patient
In today’s auto market, every dollar saved is magnified by interest rates that now average north of 8% for new cars, and nearly 14% APR for used cars. In other words, you’re not ‘just’ saving $5,000 on that new truck or SUV. You’re saving a lot more than that once the cost of borrowing money is factored in.
Think about the unfortunate predicament of EV, van, or truck buyers who drove home a new car in early 2023. Prices remained sky high earlier this year, but 11 months later, we’re in a different car market entirely. New car prices are down 3.5% in 2023 market-wide, but some segments have seen MUCH steeper price declines.
Retail EV prices have fallen 10% in 2023, and trucks, vans, and luxury cars have all seen similar price drops. The same Ford Mustang Mach-E or Ram 1500 that would have sold for 10% over MSRP months ago is now sitting on the lot for months at under invoice pricing.
Patience is a virtue that is handsomely rewarded in car buying. But you’re here looking for deals, so let’s get you some answers. When is the best time of the year to buy a car?
Year-End Deals Reign Supreme
In a perfect storm of downward pressure on car prices, the end of the year offers car buyers opportunities that reward patience. In December, automakers are pushing 2024 model year vehicles to dealer lots that are already full of 2023 inventory. On top of that, OEMs and dealers alike know that most folks wait until the end of the year to try and snag a deal. This results in the best new car sales of the year arriving all at once.
Anytime from now through December 31 is a great time to shop for new car deals. This year, new car sales are so attractive that used car prices could take a hit as buyers flock to new car lots. More on that here.
So, when is the best day to buy a car?
If you’re seeking the absolute best time to buy a car, look no further than the final days of December. It’s during this period that automotive manufacturers, dealers, and sales staff are highly motivated to achieve year-end sales goals. Their drive to negotiate stems from the fact that dealers receive year-end bonuses from manufacturers upon reaching annual sales quotas.
Factory-to-dealer incentives can translate into substantial income for dealerships. As a result, it’s common practice for them to offer enticing perks, including discounted prices, significant rebates, and special financing terms to customers.
These incentives not only benefit the buyers but also contribute to the dealership’s financial gains. Call it a win-win situation, something that’s all too rare in the automotive business.
Your Best Chance for a Deal Is Here
Every year, year-end car sales emerge as the most significant sales events of the year by a wide margin. Several automakers, especially U.S. domestics, currently grapple with an excess of inventory.
So, as we navigate through the final months of 2023, seize the opportunity to make the best car deal of the year. With motivations high and incentives even higher, you’re primed to make a purchase that leaves both you and your wallet smiling.
Free Car Buying Help For Everyone
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
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