Yahoo Finance New Car Market: Consumers May See Lower Prices in 2024, According to Experts
Will it be any cheaper to buy a car in 2024 than it was in 2023? This question is on the minds of many drivers interested in buying cars and hoping for a more affordable market than what was available last year.
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In December 2023, CNBC reported poor inventory and high borrowing costs affected affordability of new and used cars. The good news, however, is it looks like 2024 is signaling a return to normalcy for car prices.
GOBankingRates spoke to two vehicle professionals to learn why 2024 is shaping up to be a better year for consumers considering buying a car.
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Greater New Car Inventory Means More Incentives
Over the last few years, supply chain issues interrupted vehicle production. This caused the availability of new cars to fall to record lows, according to CNBC.
Doug Arrigo, chief financial officer of Chase Auto, said production is improving in 2024 for new cars which helps with affordability.
“Although there is still pent-up demand that is keeping new car prices elevated, new vehicle production is improving, which leads to an increase in incentives by dealers and manufacturers,” said Arrigo. “This also helps drive leasing offers back to the market.”
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Used Car Prices Are Also Dropping
Consumers that don’t buy a new car in 2024 may consider purchasing used cars, which will provide plenty of bang for their buck.
Much like new cars, Arrigo said production is also improving on used cars which led to used car prices coming down in 2023. Arrigo predicts this trend is likely to continue into 2024.
“We ended 2023 with used car prices down about 8% for the year,” said Amy Gieffers, senior vice president of inventory and technology at Vroom. “This makes [2024] a great time to buy a used vehicle, prior to an uptick in demand (and pricing) that happens during the tax-return spring season.”
Consumers Still Need To Watch Interest Rates
Even though interest rates are expected to decline, Arrigo still recommends consumers watch them throughout this year.
“In 2022 and 2023 we saw meaningful increases in interest rates driven by Fed policy reacting to inflation,” said Arrigo.
“But recent signs of inflation slowing have caused policy makers to significantly slow the pace of increase, and there are some signs of the Fed easing in 2024, which should help affordability considerably.”
Will 2024 Be a Better Year To Buy a Car?
The expert consensus is yes, with Gieffers citing factors like greater inventory, the stabilizing economy and lowering of interest rates all contributing to a more affordable year for buying a car.
“The auto industry saw a faster pace of recovery in 2023 than was initially expected, with some of the key industry stats showing strong momentum,” said Arrigo.
“New vehicle SAAR (sales) were up over 10% versus the year prior, and inventories were up ~50% from year-end 2022. We are hoping that these trends will continue, and cars may be more affordable in 2024.”
As a pro tip for overall car shopping, Gieffers recommends consumers note the seasons where car prices may appreciate, like tax season when consumers have more disposable income and traditional dealers have limited inventory, and off-seasons where there may be opportunities for car prices to be lower.
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This article originally appeared on GOBankingRates.com: New Car Market: Consumers May See Lower Prices in 2024, According to Experts
