So, here’s the scoop: recent car sales trends, manufacturing stats, and marketing strategies have given consumers the upper hand when making their next big purchase.
J.D. Power & GlobalData have reported an ongoing increase in car sales over the last few months. Prices have dropped, and the number of units sold is up from last April.
Consumers will be pleased to hear that despite hikes in MSRPs (Manufacturers Suggested Retail Prices) and shipping fees, they can still expect to pay a transaction price similar to what they would have a few years back.
Thomas King, the President of J.D. Power, described the current scenario as a mixed blessing, with dealer inventories slightly up from April but significantly higher than last May.
The total sales are on track to exceed 16 million for the first time this year. Discounts have held steady from last month, defying the usual trend of increased discounts in May to coincide with the Memorial Day Weekend shopping rush—a win-win for manufacturers and retailers.
The average transaction price in the auto industry has taken a downturn, now standing at $45,033, a 2.3% decrease from May 2023 and a notable $4,900 less than the all-time high of $49,933 seen during COVID-19.
The downward trend in pricing this year holds economic significance, representing a rare occurrence where prices are declining, echoing patterns seen around the Great Recession.
After the Great Recession, transaction prices climbed, but supply shortages led to a market shift, propelling prices to unprecedented levels. By 2022, transaction prices had surged nearly 21% due to supply shortages.
This year, we see a reversal in the trend, with prices beginning to fall. In May, retail stock hit around 1.8 million units, a slight rise from April 2024 but a substantial increase (52.7%) from May 2023, with average incentives now at 5.3% off the MSRP.
Although discounts are substantial, rising interest rates slightly offset them, as rates have somewhat stabilized. The predicted average new car loan interest rate stands at 7.1%, translating to about a $4 increase per month for a 60-month loan on a $45,000 vehicle, based on May’s data.
Want to Know When to Buy a New Car?
The end of the month and year is typically the best time to snag a car deal. Dealerships push extra discounts to meet their goals. It’s a proven way to make a savvy purchase, even if it means being a tad flexible on model specifics – could be worth it!
If inventory continues to rise, manufacturers and dealers will likely respond by offering more incentives and discounts. Anticipate future drops in interest rates, making buying even more budget-friendly.
A key factor to watch is trade-in values since they can influence the trend. When new car values dip, so do used car values, affecting almost half of all car purchases. Owners’ equity in trade-ins is now around $7,866, a drop of $1,438 from a year ago.
Your unique circumstances will ultimately determine whether it’s the right time for you to make the leap into a new set of wheels.