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Buying new and used cars has been expensive for drivers this year, as limited inventory and high borrowing costs impact affordability.
“Interest rates have such a big impact on purchasing power,” said Ivan Drury, Edmunds director of insights.
However, experts say consumers may start seeing lower prices in 2024. Improvements in supply chains should increase inventories, and interest rate cuts are on the horizon.
“2024 will be a better time for consumers to buy cars than this year,” said Paul Waatti, industry analyst at market research firm AutoPacific.
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November was the third consecutive month that the average transaction price of new cars was lower than last year. According to statistics, the average selling price of new cars in November was $48,247, an increase of less than 1% from October but a decrease of 1.5% from the same period last year. data Excerpted from Kelley Blue Book.
The average price in November was slightly lower at $47,939, according to data Edmunds provided to CNBC.
“As supply increases, we tend to see more incentives”
“As supply increases, we tend to see more incentives,” Varty said.
Car shoppers can also see more models with lower price tags before discounts. As supply chains continue to normalize, “we will start to see automakers produce more cheaper lower-end models, which should help lower average monthly payments,” he said.
Electric vehicle shoppers may see more deals
Most consumers who bought new electric vehicles last year are still considered “early adopters,” buyers who prefer to have the latest technology and are less price-sensitive, Waty said.
“At this point, we’ve pretty much got all the early adopters. Now we’re seeing natural demand for electric vehicles emerge, but it’s not that strong, resulting in a slight decline in sales,” he said.
Some automakers are redirecting production to cope with lower demand. For example, Ford Plans to cut F-150 Lightening production in half in 2024: “That’s a very high number,” Drewry said.
Similarly, General Motors Drewry says it will delay the launch of its all-electric Chevrolet Silverado by a year.
“We had high hopes and a lot of expectations for these vehicles … and they didn’t materialize,” he said.
Waatti said that while the market is expected to continue growing, it won’t be at the same rate as the past 12 to 18 months.
After two to three years of “full speed ahead,” electric vehicles are now “sitting on dealer lots gathering dust,” Drury said: “We don’t have the enthusiasm we had before.”
As manufacturers and dealers look to clear out these vehicles, consumers may encounter richer incentives and cheaper new models next year.
2 things to consider when buying a car in 2024
If you’ve been waiting for prices to cool down before buying a new car, here are two key things to remember:
1. Incentives are back: According to Cox Automotive, while incentives such as rebates and discounts declined slightly in October, they rebounded to their highest point of the year in November.
Drury said as more cars appear on the lot, more incentives may arise. If you need a new car, “look for those incentives, they do exist,” he said.
“As inventory grows, consumers should expect rebates, lease subsidies, low-interest loans and other incentives to continue to increase through 2024,” Waatti added.
2. Make the most of your trade-in: The limited supply of new and economy cars over the past few years has pushed buyers into the used car market. Varty said that as demand for used cars increases, so do prices. However, used car values are declining, which means trade-in value is also weakening.
“We are no longer violating market norms and your value is not going to go up any time soon,” Drury said.
If you want to maximize the value of your car, get an estimate of the trade-in value from the dealer and then consider selling the car yourself, Waty says.
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