The automobile market for the remainder of 2024 is transitioning toward greater stability after years of turbulence. Vehicle inventories, both new and used, have improved significantly, alleviating some of the extreme price pressures of recent years. New car supplies are approaching pre-pandemic levels, giving buyers more negotiating power and reintroducing modest incentives like low-interest financing and discounts. Used car prices, which had been declining, are now stabilizing at levels approximately 40% higher than pre-pandemic prices. Tight supplies, particularly for newer used models, are keeping prices elevated despite growing inventories.
Hybrid vehicles are gaining significant traction, with their market share expected to rise. They appeal to consumers as a cost-effective, fuel-efficient option. While electric vehicles (EVs) are also growing in popularity, the pace of sales has not matched production. Dealerships are increasingly offering discounts and incentives on EVs to move inventory, and buyers may find attractive deals in this segment. However, evolving technology continues to influence the resale value of EVs.
Financing remains a challenge for many buyers, with auto loan rates averaging over 8%. While these rates have begun to ease slightly, they still affect affordability, encouraging some consumers to explore lower-cost used vehicles. The broader economic outlook for the U.S. in late 2024 supports slow but steady growth, avoiding recession risks. This economic stability, paired with the improved vehicle supply, creates a more balanced market where both buyers and sellers can benefit.
Looking ahead, car buyers may see gradual price declines in specific used vehicle segments, though overall pricing will likely remain higher than pre-pandemic levels. Seasonal factors, such as year-end sales and tax considerations, could further impact pricing dynamics. Whether shopping for new or used vehicles, consumers should be prepared to negotiate, particularly for EVs, as dealerships work to clear growing inventories.
