Car Market Analysis Report July 2024

New Car Market

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• Prices and Inventory: The average price for new cars is around $49,000, having seen a slight decrease of \t\t1% compared \t\tto the same period last year. New car inventory has increased by 13% from the first half of 2023, providing \t\tbuyers with \t\tmore options and slightly better pricing leverage?.
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• EV Influence: The electric vehicle (EV) market continues to grow rapidly, with significant increases in \t\tboth demand and \t\tinventory. New EV prices have seen a minor decrease of 4% from last year, despite having surged by 56% over the \t\tpast \t\tfive years?.

Used Car Market

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• Prices and Trends: Used car prices have fallen by about 5% in 2024, yet they remain relatively high \t\tcompared to pre- \t\tpandemic levels. The average listing price is approximately $25,540. Used EV prices have notably dropped by \t\tnearly 20% \t\tin the first half of 2024, making them a more attractive option for buyers??.
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• Interest Rates: High interest rates continue to impact the used car market, with average loan rates for \t\tused cars hovering \t\taround 13% APR, significantly affecting the overall cost of purchasing a used vehicle?.
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• Inventory: The used car market is experiencing tight inventory, down by 4% compared to the first half of \t\t2023. This \t\tscarcity has contributed to higher prices and a more competitive market?.

Market Dynamics

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• Consumer Behavior: Consumer spending and sentiment fluctuated, with a notable decline in May followed by \t\tan uptick \t\tin June. This variability is impacting car sales and overall market stability?.
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• Trade-In Values: Trade-in values have increased significantly, providing buyers with additional leverage \t\twhen negotiating \t\tnew or used car purchases. Despite a slight decrease in the first half of 2024, trade-in values remain elevated \t\tcompared \t\tto pre-pandemic levels??.

How Does This Affect the Car Market in California?

The automotive landscape in California is always in a constant state of flux and market day supply has become even \tmore \timportant. Part of the effects that the dealer community had to experience was the MMR (Manheim Market Report) being \tdelayed \tand reporting analytics for June while the market was continually dropping. This causes a lot of inexperienced car \tdealers to over \tevaluate their vehicles and take in vehicles higher than the market will typically support.

Things You Can Do to Help Prepare for A Highly Volatile Market

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• Focus on the cheaper units – Lower priced vehicles have seen an inflation in this market, causing any \t\tunit that can be \t\tretailed for under $15k to go for higher prices at auction and vehicle under 10k to be worth gold in the private \t\tmarket and \t\tat dealer auctions. It’s not necessarily that these vehicles are better, it’s more about providing inexpensive \t\toptions to retail \t\tcustomers in a struggling economy.
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• \t\tEV tax credit – There are many used electric vehicles that qualify for an EV tax credit with customers \t\tthat are in a certain \t\tincome bracket. Although there are many dealers that have yet to embrace electric vehicles. When customers are \t\tstruggling to come up with down payments in this economy, being able to provide an instant $4k potentially for a \t\tdown \t\tpayment becomes a game changer between potentially making a deal and not being able to get a customer financed. \t

In summary, while new car buyers can benefit from improved inventory and slightly lower prices, used car shoppers \tface high \tinterest rates and competitive market conditions. The EV market continues to expand, offering more options and \tbetter deals for \tthose interested in electric vehicles.